BBM Notes compiled by Njihia Kaburu

1) i) ii) iii) iv) v) vi) vii) Sale of Goods Formation of contract for sale of goods Classification of goods Implied conditions and warranties Transfer of property in goods Rights and duties of the parties Remedies of the parties International sale contracts

INTRODUCTION The law relating to the Purchase and Sale of Goods is contained in the Sale of Goods Act Cap. 31, a!s of Ke"ya. SGA a su stantial reproduction of the !nglish SGA "#$%& The !nglish Act was made part of the 'enyan law y the colonial administration on "(")("$%"& The !nglish Act has een significantly amended *nota ly in "$+$ and "$$,)& MEANING -nder s& %&*") SGA. a contract of sale of goods/ 0 is a contract where y the seller transfers or agrees to transfer the property in goods to the uyer for a money consideration. called the price&1 CONTRACT Thus the sale of goods is a contract. governed y contract law& All re2uirements for a valid contract must e met e&g& offer to sell( uy and acceptance is necessary etc& The contract can e either/ a) a sale/ where transfer is immediate3 or ) an agreement to sell4 where transfer is delayed #iffere"ce bet!ee" sale a"d a$reeme"t to sell Contract of sale "& The property passes to the uyer *ownership) at the time of the contract& 5& The ris6 passes to the uyer immediately& %& 7o resale of property& ,& The seller can sue for the price of the goods even when the goods are in his possession& 8& The seller must deliver the goods even when the uyer is insolvent& 9& :uyer can recover the goods from official receiver as the ownership of the property rests with the seller if the uyer is ad;udged insolvent& Agreement to sell "& Possession passes to the uyer at the time of the contract 5& The ris6 e&g& theft remains with the seller& %& Resale is possi le ,& The seller can sue for damages only if the uyer refuses to pay and ta6e the goods& 8& <elivery of the goods is not re2uired& 9& If the uyer has already paid the price and the seller is ad;udged insolvent. the uyer can only claim a rata le dividend as a creditor& Therefore the property in them still rests with the seller& #iffere"ce bet!ee" sale a"d co"tract of sale a"d material =here a contract is underta6ing to use s6ill in producing a particular article e&g& paint. a portrait. the contract is of wor6 and material and not contract of sale of goods& The two must e distinguished ecause of two main reasons/ 4 Contract of wor6 and material does not re2uire to e in writing while sale of goods must e in writing& "

BBM Notes compiled by Njihia Kaburu The implied conditions and warranties under the sale of goods act does not apply to contract of wor6 and material&

SUBJECT MATTER OF THE CONTRACT The su ;ect matter of the contract is goods& These are defined in the interpretation section to includes 0all chattels personal other than things in action and money. and all em lements. industrial growing crops and things attached to or forming part of the land which are agreed to e severed efore sale or under the contract of sale1 <efinition covers most movea les ut doesn>t include land. shares. de ts. claims etc. which cannot e moved away& ?oney sold as curio or collectors item 2ualifies ut not when transferred as currency& Further. Sec +. # and $ envisage the following types of goods3 a) Existin Goods These are the goods which are physically in e@istence and which are in the seller>s ownership and(or possession at the time of entering the contract& =here the seller is in possession. as an agent or a pledge. he has the right to sell them& !@isting goods may e either 0specific1 or unascertained& !) F"t"#e oods These are the goods to e manufactured. produced or ac2uired y the seller after ma6ing of the contract of sale& These goods may e either not yet in e@istence or e in e@istence ut not yet ac2uired y the seller& It>s worth noting that there can e no present sale of future goods& Property can>t pass in what is not owned y the seller at the time of the contract& So even if the parties purport to affect a present sale of future goods. in law it operates only as an agreement to sell& $) Contin ent Goods These are the goods which the ac2uisition of the seller depends upon an uncertain contingency& A viously they are a type of future goods and therefore a contract for the sale of contingent goods also operates as 0an agreement to sell1 and 0not sale1 so far as the 2uestion of passing of the property to the uyer is concerned& In other words. li6e the future goods. in contingent goods case also the property does not pass to the uyer at the time of ma6ing the contract& 7:/ A contract of sale of contingent goods is enforcea le only if the event on the happening of which the performance of the contract is dependent happens. otherwise the contract is not enforcea le * ecomes void)& d) %e#is&a!le Goods -nder sec #. where there is a contract for the sale of specific goods and the goods without the 6nowledge of the seller have perished at the time of ma6ing the contract. the contract is void& Sec $ of the act states that where there is an agreement to sell the specific goods and su se2uently the goods without any fault on the part of the seller or uyer. perishes efore the ris6 passes to the uyer. the agreement is there y avoided& CA%ACIT' TO BU' AND SE(( Governed y law concerning capacity to contract and transfer and ac2uire property& Infants and insane people must pay a reasona le price for necessaries and not necessarily the agreed price& #efi"itio" of Necessaries/ They are defined as goods suita le to the condition of life of such infant. minor or other person and to his actual re2uirement at the time of the sale and delivery as per se$ ) su se$ *+ FORM OF CONTRACT -nder s& 8 a contract may e made/ ") in writing *either with or without seal) or 5) y word of mouth *oral). or %) partly in writing and partly y word of mouth. or 5

BBM Notes compiled by Njihia Kaburu ,) may e implied from the conduct of the parties -nder s& 9 contracts for 'shs& 5))(B or more is not enforcea le unless/ a) the uyer accepts part of the goods sold. and actually receives them. or ) gives something in earnest to ind the contract or in part payment. or c) unless some note or memorandum in writing of the contract is made and signed y the party to e charged or his agent THE %RICE -nder s& ")&*") The price for goods may e/ a) fi@ed y the contract. or ) fi@ed in a manner agreed and stated in contract *e&g& independent valuation) or c) determined y the course of dealing etween the parties& Failing a ove. the uyer must pay a reasona le price3 a reasona le price is a 2uestion of fact dependent on the circumstances of each particular case& Time of payment S& "5&*")/ -nless e@pressly stated in the contract. stipulation as to time of payment is not deemed to e of the essence of a contract of sale& Seller can however give notice *post4contract) ma6ing time of essence and fi@ing a reasona le time for payment& In a sence of e@press agreement or 7otice. the seller cannot repudiate contract on ground of unreasona le delay in payment& TERMS OF THE CONTRACT These can either e/ 4 Conditions/ the reach of which destroys the root(purpose of underta6ing y a party *failure of consideration) and entitles the other to repudiate contract and sue for damages& 4 =arranties/ reach doesn>t destroy main purpose of the contract and therefore cannot lead to repudiation ut only a suit for damages& -nder s& "% parties may waive conditions or treat them as warranties& %mplied Co"ditio"s a"d &arra"ties SGA and common law however impute(imply certain terms considered so fundamental and efficacious as to re2uire incorporation into transactions& If not e@pressly stated. these can e read into a contract& Terms can also e implied y/ parties> conduct or custom and usage& Implied terms can either e conditions or warranties& S& "9*d) SGA for ids contracting out. restriction(modification etc of implied terms& A reach of condition repudiates a contract and a reach of a warranty leads to claim for damages& The SGA implies into contracts of sale the following conditions and warranties3 %mplied &arra"ties' ") Cuiet possession/ The uyer shall have 2uiet possession and en;oyment of the goods& 5) Free from encum rance/ The goods shall e free from any encum rance of change in favour of third parties& %) Trade usage(custom/ a warranty may e implied y a trade usage(custom& ,) The seller will disclose dangers of the goods ought to ignorant uyers& %mplied Co"ditio"s' -nless a different intention appears. the following conditions are implied in a Sale of goods contract i& Right to Sell/ -nder section ", *a) of the Act there is an implied condition that the seller has a right to sell the goods when property is to pass& %

BBM Notes compiled by Njihia Kaburu ii& Correspond to description/ -nder section "8 where there is a contract for the sale of goods y description there is an implied condition that the goods shall correspond with the description and if y sample and description the goods must correspond with the sample and description& iii& Fitness for Purpose/ -nder section "9 *a) of the Act where the uyer e@pressly or y implication ma6es 6nown to the seller the particular purpose for which the goods are re2uired so as to show that the uyer relies on the sellers s6ill or ;udgement. and the goods are of a description which it is in the course of the sellers usiness to supply here is an implied condition that the goods shall e reasona ly fit for such purpose& iv& ?erchanta le Cuality/ -nder section "9 * ) of the Act where goods are ought y description from a seller who deals in goods of that description whether there is an implied condition that the goods shall e of merchanta le 2uality& v& Correspond with sample/ -nder section "+ *5) *a) of the Act in a sale y sample there is an implied condition that the ul6 shall correspond with the sample in 2uality& vi& Comparing ul6 and sample/ -nder section "+ *5) * ) in a sale y sample there is an implied condition that the uyer shall e afforded a reasona le opportunity of comparing the ul6 with the sample& vii& Free form defect/ -nder section "+ *5) *c) of the act in a sale y sample there is an implied condition that the goods shall e free from any defect rendering them un4merchanta le which would not e apparent on reasona le e@amination of sample& viii& Trade usage or custom/ -nder section"9 *c) of the Act an implied condition as to 2uality or fitness for a particular purpose may e anne@ed y the usage of trade& THE RU(E OF CA()A* )M+*,The rule of ca.eat emptor *:uyer e aware) is applied in the sale of goods contract& According to this doctrine. it is the duty of the uyer to e careful while purchasing goods of his re2uirement and in the a sence of any in2uiry from the uyer3 the seller is not ound to disclose any defects in the goods& !@ceptions This doctrine is su ;ect to the following e@ceptions/ "& =here the seller ma6es a misrepresentation and the uyer relies on it this doctrine does not apply& 5& =here the seller ma6es a false representation amounting to fraud or where he conceals a defect of the goods %& =here the uyer ma6es it 6nown to the seller the purpose of which he re2uires the goods3 so as to rely on the sellers s6ill or ;udgement. then the seller should ensure that the goods serve the purpose& In this case the doctrine does not apply& ,& =here the goods are purchased y description the doctrine does not apply& 8& The doctrine does not apply where the goods sold y samples does not correspond with the sample earlier given& +& =here the seller deviates from any of the implied conditions and warranties the doctrine does not apply& TRANSFER OF %RO%ERT' IN GOODS <etermination of the e@act point at which property in the goods is transferred is important for reasons/ 4 in the event of loss or damage i&e& goods perish or deteriorate so as to determine which party ears the ris6 4 In the event of an6ruptcy. so as to determine whether the goods elong to the trustee in an6ruptcy R"les of dete#,inin -&en t&e .#o.e#t/ .asses General rule/ the property passes in accordance with the intention of the parties. e@press or implied *s& "$)& ,

BBM Notes compiled by Njihia Kaburu =here intention is not discerni le. the following statutory rules apply "& -nconditional contract of sale/ =here there is unconditional contract of sale of specific goods in a delivera le state. the property passes to the uyer when the contract is made and its immaterial that at the time of payment or delivery was postponed& 5& =here there is contract of sale of specific goods not in a delivera le state i&e& the seller has still to wor6 on them. to put them in a delivera le state the property does not pass to the uyer until the seller does the wor6 re2uired and gives notice to the uyer& %& =here there is a contract for sale of specific goods in a delivera le state ut the seller is ound to weigh. measure. test. pac6aging etc for the purpose of ascertaining the price. the property does not pass to the uyer until the seller does the a ove& ,& =here the goods when goods are delivered to the uyer on approval or Don sale or return.D the property passes 4 when uyer signifies approval or acceptance3 or 4 does any other act adopting the transaction *e&g& consuming. pledging etc)3 or 4 if he does not signify his approval(acceptance he retains the goods without giving notice of re;ection/ o eyond the time fi@ed for return3 or o the e@piration of a reasona le time if no time has een fi@ed& 8& =here there is a contract for the sale of unascertained or future goods y description. and goods of that description. and in a delivera le state. are unconditionally appropriated to the contract. either y the seller with the assent of the uyer or y the uyer with the assent of the seller. the property in the goods thereupon passes to the uyer on3 4 <elivering goods to a carrier for transmission to uyer is an e&g& of appropriation 9& =here seller reserves the right of disposal of the goods until certain conditions are fulfilled. property passes4 when the conditions are fulfilled& +& In an auction sale4 property passes at the fall of the hammer unless otherwise agreed& TRANSFER OF TIT(E Ne,o Dat 0"od Non Ha!et R"le Its a common law ma@im which meaning that a person cannot give what he doesnt have. =here goods are sold y a person who is not the owner. the uyer ac2uires no etter title than the seller had& The rule protects the true owner of the goods against anyone who uys his goods from a person who has sold without his authority or without having any right to them& S& 5% provides for ma@im/ where the seller is not the owner and is selling without owner>s consent or authority. uyer ac2uires no etter title than the seller had i&e& If seller>s title is valid. void or voida le. uyer ac2uires the same title& The ma@im is however su ;ect to e@ceptions stated in the Act& Ex$e.tions to 1Nemo #at /uod "o" 0abet2 4 Sale u"der .oidable title' -nder section 5, of the Act if the seller>s title is voida le ut he sells the goods to a ona fide purchaser who ta6es without notice of the seller>s defective title. efore the title is avoided. he passes a good title. as was the case in3 Phillips V. Brooks Ltd. Though ?rs 7orth>s title to the ring was avoida le for fraudulent misrepresentation. he pledged it to :roo6s Etd efore his title was avoided and hence :roo6s Etd& got good title& 4 Sale by Mercha"t A$e"t1 2actor' -nder the provisions of the Factors Act "##$. which applies in 'enya as a statute of general application. According to Kapadia V. Laxmidar a sale y factor passes a good title if/ 4 The agent has possession with the principal>s consent 4 The agent sells in his capacity as mercantile agent 8

BBM Notes compiled by Njihia Kaburu 4 The agent sells in the ordinary course of usiness as a mercantile agent 4 The uyer ta6es in good faith and for value Thus. a person who uys goods from a factor( ro6er( auctioneer will get full title to them even though the seller has e@ceeded his authority or authority has een revo6ed y the true owner efore sale& 4 Sale by buyer i" possessio"' If the uyer o tains possession with consent of the seller. sells or pledges them either himself or through an agent. a person who uys such goods o tains a good title of the goods as long as he ought them in good faith& -nder sec 59 *5) of the Act. if a person who has agreed to uy goods o tain their possession or documents of title efore ownership passes to him and as a conse2uence he sells to a onafide purchaser who ta6es in good faith without notice of the original sellers Eien he ac2uires a good title& 4 Sale by seller i" possessio"' -nder section 59 *") of the Act. if a seller who has already sold goods ut retains their possession or documents of title disposes them off to a ona fide purchaser for value without notice of the previous sale. he passes a good title& 4 Sale by court order' An sale y order of court of competent ;urisdiction or under any special common law or statutory powers of sale. the uyer gets a good title& 4 *itle by )stoppels' !stoppels may arise where the owner y any act leads the uyer to elieve that the seller has a right to sell& If the uyer uys such goods he gets a etter title than the seller had& -nder section 5% *") of the Sale of Goods Act the uyer gets a etter title if the owner is y his conduct precluded from denying the seller>s authority to sell& i&e& the owner has represented some other person as the owner& Fe cannot deny the apparent ownership& Fowever. the re2uirements of estoppel must e@ist& 3 Sale i" Mar3et ,.ert4 ?ar6et overt means 0open. pu lic and legally constituted mar6et&1 This the oldest e@ception to 7emodat ut does not apply in 'enya& At common law. uyers in mar6et overt ac2uired a good title even in relation to stolen goods provided that/ 4 The uyer too6 them in good faith without notice of any defect in title and 4 The sale too6 place in pu lic place& 4 Sale u"der Statutory +o!er : A sale made in e@ercise of a power conferred y statute. passes a good title& For e@ample/ - Sale y a li2uidator under the Companies Act& - Sale under the <isposal of -ncollected Goods Act& - Sale y a chargee or mortgagee under the Registered Eand Act& - Sale u"der Commo" a! +o!er: A sale made in e@ercise of a power conferred y the common law passes a good title for e@ample sale y an agent of necessity or y a pledge& TRANSFER OF RIS5 -nder s& 55 unless otherwise agreed. the goods remain at the sellerGs ris6 until the property therein is transferred to the uyer whether delivery has een made or not& =here delivery has een delayed through the fault of either uyer or seller the goods are at the ris6 of the party at fault as regards any loss which might not have occurred ut for that fault& DUTIES OF THE %ARTIES TO THE CONTRACT It is the duty of a seller to deliver the goods. in the right 2uantity and at the right time& It is the duty of the uyer to accept and pay for the goods delivered& Ance each party has performed his duty then the contract of sale is said to e performed& SE((ERS DUT'4 DE(I6ER' It is the voluntary transfer of possession from one person to another& R"les of Deli7e#/ "& <elivery is at the uyers place of usiness and if he does not have one. his residence unless if the contract states otherwise& 9

5& %& ,& 8&

BBM Notes compiled by Njihia Kaburu =here no time of delivery is specified. the seller should deliver the goods within a reasona le time& =here the goods at the time of sale are in possession of third parties. there is no delivery y the seller to the uyer unless and until such third parties ac6nowledges to the uyer that he holds the goods on his ehalf& =here the goods are not in a state of delivery unless otherwise agreed. the seller must ear all the e@penses of putting the goods in a delivera le state& -nless otherwise agreed. delivery e@penses should e met y the seller&

Deli7e#/ of -#on 8"antit/ The seller is under a strict duty to deliver the correct 2uantity as agreed& :reach of this duty entitles the uyer to re;ect the goods ut if he accepts the goods he must pay the contract price& If the 2uantity is larger than agreed the uyer may accept the goods indicated in the contract and re;ect the e@cess or re;ect the whole lot& Deli7e#/ !/ install,ent The uyer is not o liged unless he agrees to delivery of the goods y installments& BU'ER9S DUT'4 1+ ACCE%TANCE It ta6es place when the uyer/ "& Communicates with the seller confirming that he has accepted the goods& 5& =hen the goods have een delivered to him and does any act to the goods inconsistent with the ownership of the seller& %& Retains the goods after the lapse of a reasona le time without telling the seller that he has re;ected them& *+ %A' BREACH OF CONTRACT B' BU'ER Ri &ts of "n.aid selle# The seller is deemed to e unpaid when/ "& The whole price is not paid& 5& =hen a negotia le instrument e&g& a ill of e@change has een received y the seller ut the same has een dishonoured& :a) Ri &ts of t&e selle# a ainst oods 1+ Ri &t to lien It is the right to retain the possession of goods and refuse to deliver them to the uyer until the price due is paid& The seller can e@ercise the right in the following circumstances& =here the goods have een sold without any stipulation as to credit& =here credit is stipulated ut the duration of credit has e@pired& =here the uyer ecomes insolvent even though the period of credit may not have e@pired Te#,ination of (ien =hen the seller delivers the goods to a carrier or a ailee for the purpose of transmission to the uyer without reserving the right of disposal of the goods& =hen the uyer or his agent lawfully o tains possession of the goods& :y waiver of the lien/ The seller may avoid the right of lien voluntarily& *+ Ri &t of Sto..a e in t#ansit

BBM Notes compiled by Njihia Kaburu The seller may reclaim the goods in the hands of the railway or any other carrier in the process of delivery& ?a;orly. the right to stop the goods in transit arises only when they have een delivered for transmission to the uyer and the uyer ecomes insolvent& Diffe#en$e !et-een Sto..a e in t#ansit and lien (ien 4 Arises when the uyer is insolvent or not& 4 Availa le when goods are in actual possession of the seller 4 !nds when the goods are surrendered to the uyer& 4 Stipulation of credit can destroy lien& 4 Seller retains possession& Sto..a e in t#ansit 4Arises mainly when the uyer is insolvent& 4!@ercisa le only when the goods are still in transit& 4Right starts and remains as long as the goods are in transit& 4Can e enforced inspite of credit having een agreed upon& 4Seller Regains possession Sto..a e in t#ansit ends in t&e follo-in $ases4 If the uyer or his agent o tains delivery of the goods efore they arrive to the appointed destination If on arrival at the appointed destination the carrier ac6nowledges to the uyer or his agents that he holds the goods on his ehalf& If the carrier wrongfully refuses to deliver the goods to the uyer& If the goods are delivered to the master of the uyers ship& =hen a section of the goods have een delivered with an intention of delivering the other part& If the seller instructs a carrier to ta6e the goods to a different place rather than the uyers& N;B The unpaid seller who e@ercises the right of lien is only entitled to retain the goods until the uyer pays the contract price& <+ Selle#9s #i &t to #esale The seller may re4sell/ If the goods are perisha le =here the right is e@pressly reserved in the contract =here he has given notice to the uyer of his intention to resale ut the uyer does not collect them within a reasona le time& (oss d"e to Resale The unpaid seller will e a le to recover this loss from the uyer& If a profit is got after resale the seller is not ound to hand it over to the uyer& :!) Ri &ts a ainst t&e B"/e# "& A$tion fo# t&e .#i$e4where property has already passed to uyer or a payment date has een agreed 5& A$tion fo# da,a es H where uyer wrongfully refuses to accept goods& The seller can sue the uyer for damages if the property in goods has already passed to the uyer& <amages awarded will e the difference etween contract price and the current mar6et price at the time when the goods ought to have een accepted& i&e& D= M+%3 C+% BREACH OF CONTRACT B' SE((ER Ri &ts of t&e B"/e# ") Can sue for dama$es if the seller does not deliver the goods 5) Can sue to reco.er the price if the goods are not delivered& #

BBM Notes compiled by Njihia Kaburu %) Can sue for specific performa"ce& ,) Suit for breach of !arra"ty/ =here there is a reach of warranty y the seller or where the uyer elects or is compelled to treat any reach of condition as a reach of warranty. the uyer may set up against the seller/ The reach of warranty in diminution or e@tinction of price& maintain an action against the seller for damages for reach of a warranty 8) If breach of co"ditio"' !ntitles the uyer to re;ect the goods and the contract is repudiated& Ex$e.tions/ The uyer cannot re;ect the goods in the following cases If he elects to treat a reach of condition as a reach of warranty& If the contract of sale cannot e cancelled and the uyer has accepted the goods or part thereof& If the contract is for specific goods and property has passed to the uyer& >) Right to recover price and interest accruing& S%ECIA( SA(E4 AUCTION SA(E Se$ ?@ enacts the following rules incase of sale y auction =here the goods are put on sale in lots. each lot is prima4facie deemed to e su ;ect of a separate sale& The sale is complete when the auctioneer announces the completion y the fall of the hammer and until such an announcement is made any idder may withdraw his id& If the sale is not notified to e su ;ect to a right to id on ehalf of the seller. it is unlawful to the seller to id himself or employ any other person to id on his ehalf& A sale y auction may e notified to the su ;ect * uyer) to a reserved price& If the seller ma6es use of pretending idding to raise the price. the contract is voida le at the option of the uyer& INTERNATIONA( TRADE INTERNATIONA( COMMERCIA( TERMS :INCOTERMS) The I7CAT!R?S *International Commercial Terms) is a universally recogniIed set of definitions of international trade terms. such as FA:. CFR and CIF. developed y the International Cham er of Commerce *ICC) in Paris. France& It defines the trade contract responsi ilities and lia ilities etween uyer and seller& It is invalua le and a cost4saving tool& The e@porter and the importer need not undergo a lengthy negotiation a out the conditions of each transaction& Ance they have agreed on a commercial term li6e FA:. they can sell and uy at FA: without discussing who will e responsi le for the freight. cargo insurance. and other costs and ris6s& The I7CAT!R?S was first pu lished in "$%9444I7CAT!R?S "$%9444and it is revised periodically to 6eep up with changes in the international trade needs& The complete definition of each term is availa le from the current pu lication444I7CAT!R?S 5)))& The pu lication is availa le at your local Cham er of Commerce affiliated with the International Cham er of Commerce *ICC)& ?any importers and e@porters worldwide are accustomed to and may still use the I7CAT!R?S "$#). the predecessor of I7CAT!R?S "$$) and I7CAT!R?S 5)))& -nder the I7CAT!R?S 5))). the international commercial terms are grouped into !. F. C and <. designated y the first letter of the term *acronym). as follows/ GRA-P T!R? Stands for ! !J= !@ =or6s F FCA Free Carrier FAS Free Alongside Ship $

BBM Notes compiled by Njihia Kaburu FA: Free An :oard C CFR Cost and Freight CIF Cost. Insurance and Freight CPT Carriage Paid To CIP Carriage and Insurance Paid To < <AF <elivered At Frontier <!S <elivered !@ Ship <!C <elivered !@ Cuay <<- <elivered <uty -npaid <<P <elivered <uty Paid In practice. trade terms are written with either all upper case letters *e&g& FA:. CFR. CIF. and FAS) or all lower case letters *e&g& fo . cfr. cif. and fas)& They may e written with periods *e&g& F&A&:& and c&i&f&)& In international trade. it would e est for e@porters to refrain. wherever possi le. from dealing in trade terms that would hold the seller responsi le for the import customs clearance and(or payment of import customs duties and ta@es and(or other costs and ris6s at the uyerGs end. for e@ample the trade terms <!C *<elivered !@ Cuay) and <<P *<elivered <uty Paid)& Cuite often. the charges and e@penses at the uyerGs end may cost more to the seller than anticipated& To overcome losses. hire a relia le( customs ro6er or freight forwarder in the importing country to handle the import routines& Similarly. it would e est for importers not to deal in !J= *!@ =or6s). which would hold the uyer responsi le for the e@port customs clearance. payment of e@port customs charges and ta@es. and other costs and ris6s at the sellerGs end& EABCD t&e na,ed .la$eE Ex Bo#Fs !@ means from& =or6s means factory. mill or warehouse. which is the seller>s premise& !J= applies to goods availa le only at the sellerGs premises& :uyer is responsi le for loading the goods on truc6 or container at the sellerGs premises. and for the su se2uent costs and ris6s& In practice. it is not uncommon that the seller loads the goods on truc6 or container at the sellerGs premises without charging loading fee& In the 2uotation. indicate the named place *sellerGs premises) after the acronym !J=. for e@ample !J= ?om asa and !J= Cape Town& The term !J= is commonly used etween the manufacturer *seller) and e@port4trader * uyer). and the e@port4trader resells on other trade terms to the foreign uyers& Some manufacturers may use the term !@ Factory. which means the same as !@ =or6s& FCA CD t&e na,ed .oint of de.a#t"#eE F#ee Ca##ie# The delivery of goods on truc6. rail car or container at the specified point *depot) of departure. which is usually the sellerGs premises. or a named railroad station or a named cargo terminal or into the custody of the carrier. at sellerGs e@pense& The point *depot) at origin may or may not e a customs clearance centre& :uyer is responsi le for the main carriage(freight. cargo insurance and other costs and ris6s& In the air shipment. technically spea6ing. goods placed in the custody of an air carrier are considered as delivery on oard the plane& In practice. many importers and e@porters still use the term FA: in the air shipment& The term FCA is also used in the RA(RA *roll on(roll off) services& In the e@port 2uotation. indicate the point of departure *loading) after the acronym FCA. for e@ample FCA ?om asa and FCA 7airo i& Some manufacturers may use the former terms FAT *Free An Truc6) and FAR *Free An Rail) in selling to e@port4traders& FAS CD t&e na,ed .o#t of o#i inE F#ee Alon side S&i. ")

BBM Notes compiled by Njihia Kaburu Goods are placed in the doc6 shed or at the side of the ship. on the doc6 or lighter. within reach of its loading e2uipment so that they can e loaded a oard the ship. at sellerGs e@pense& :uyer is responsi le for the loading fee. main carriage(freight. cargo insurance. and other costs and ris6s& In the e@port 2uotation. indicate the port of origin *loading) after the acronym FAS. for e@ample FAS 7ew Kor6 and FAS ?om asa& The FAS term is popular in the rea64 ul6 shipments and with the importing countries using their own vessels& FOB CD t&e na,ed .o#t of o#i inE F#ee On Boa#d The delivery of goods on oard the vessel at the named port of origin *loading). at sellerGs e@pense& :uyer is responsi le for the main carriage(freight. cargo insurance and other costs and ris6s& In the e@port 2uotation. indicate the port of origin *loading) after the acronym FA:. for e@ample FA: Lancouver and FA: ?om asa& -nder the rules of the I7CAT!R?S "$$). the term FA: is used for ocean freight only& Fowever. in practice. many importers and e@porters still use the term FA: in the air freight& In 7orth America. the term FA: has other applications& ?any uyers and sellers in Canada and the -&S&A& dealing on the open account and consignment asis are accustomed to using the shipping terms FA: Arigin and FA: <estination& FA: Arigin means the uyer is responsi le for the freight and other costs and ris6s& FA: <estination means the seller is responsi le for the freight and other costs and ris6s until the goods are delivered to the uyerGs premises. which may include the import customs clearance and payment of import customs duties and ta@es at the uyerGs country. depending on the agreement etween the uyer and seller& In international trade. avoid using the shipping terms FA: Arigin and FA: <estination. which are not part of the I7CAT!R?S *International Commercial Terms)& CFR CD t&e na,ed .o#t of destinationE Cost and F#ei &t The delivery of goods to the named port of destination *discharge) at the sellerGs e@pense& :uyer is responsi le for the cargo insurance and other costs and ris6s& The term CFR was formerly written as CMF& ?any importers and e@porters worldwide still use the term CMF& In the e@port 2uotation. indicate the port of destination *discharge) after the acronym CFR. for e@ample CFR 'arachi and CFR ?om asa& -nder the rules of the I7CAT!R?S "$$). the term Cost and Freight is used for ocean freight only& Fowever. in practice. the term Cost and Freight *CMF) is still commonly used in the air freight& CIF CD t&e na,ed .o#t of destinationE CostG Ins"#an$e and F#ei &t The cargo insurance and delivery of goods to the named port of destination *discharge) at the sellerGs e@pense& :uyer is responsi le for the import customs clearance and other costs and ris6s& In the e@port 2uotation. indicate the port of destination *discharge) after the acronym CIF. for e@ample CIF Pusan and CIF Singapore& -nder the rules of the I7CAT!R?S "$$). the term CIF is used for ocean freight only& Fowever. in practice. many importers and e@porters still use the term CIF in the air freight& C%T CD t&e na,ed .la$e of destinationE Ca##ia e %aid To The delivery of goods to the named place of destination *discharge) at sellerGs e@pense& :uyer assumes the cargo insurance. import customs clearance. payment of customs duties and ta@es. and other costs and ris6s& In the e@port 2uotation. indicate the place of destination *discharge) after the acronym CPT. for e@ample CPT Eos Angeles and CPT 'isumu& CI% CD t&e na,ed .la$e of destinationE Ca##ia e and Ins"#an$e %aid To

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BBM Notes compiled by Njihia Kaburu The delivery of goods and the cargo insurance to the named place of destination *discharge) at sellerGs e@pense& :uyer assumes the import customs clearance. payment of customs duties and ta@es. and other costs and ris6s& In the e@port 2uotation. indicate the place of destination *discharge) after the acronym CIP. for e@ample CIP Paris and CIP 'isumu& DAF CD t&e na,ed .oint at f#ontie#E Deli7e#ed At F#ontie# The delivery of goods to the specified point at the frontier at sellerGs e@pense& :uyer is responsi le for the import customs clearance. payment of customs duties and ta@es. and other costs and ris6s& In the e@port 2uotation. indicate the point at frontier *discharge) after the acronym <AF. for e@ample <AF :uffalo and <AF =elland& DES CD t&e na,ed .o#t of destinationE Deli7e#ed Ex S&i. The delivery of goods on oard the vessel at the named port of destination *discharge). at sellerGs e@pense& :uyer assumes the unloading fee. import customs clearance. payment of customs duties and ta@es. cargo insurance. and other costs and ris6s& In the e@port 2uotation. indicate the port of destination *discharge) after the acronym <!S. for e@ample <!S ?om asa and <!S Stoc6holm& DE0 CD t&e na,ed .o#t of destinationE Deli7e#ed Ex 0"a/ The delivery of goods to the 2uay *the port) at destination at sellerGs e@pense& Seller is responsi le for the import customs clearance and payment of customs duties and ta@es at the uyerGs end& :uyer assumes the cargo insurance and other costs and ris6s& In the e@port 2uotation. indicate the port of destination *discharge) after the acronym <!C. for e@ample <!C ?om asa and <!C ?aputo& DDU CD t&e na,ed .oint of destinationE Deli7e#ed D"t/ Un.aid The delivery of goods and the cargo insurance to the final point at destination. which is often the pro;ect site or uyerGs premises. at sellerGs e@pense& :uyer assumes the import customs clearance and payment of customs duties and ta@es& The seller may opt not to insure the goods at his(her own ris6s& In the e@port 2uotation. indicate the point of destination *discharge) after the acronym <<-. for e@ample <<- ?om asa and <<- ?um ai& DD% CD t&e na,ed .oint of destinationE Deli7e#ed D"t/ %aid The seller is responsi le for most of the e@penses. which include the cargo insurance. import customs clearance. and payment of customs duties and ta@es at the uyerGs end. and the delivery of goods to the final point at destination. which is often the pro;ect site or uyerGs premises& The seller may opt not to insure the goods at his(her own ris6s& In the e@port 2uotation. indicate the point of destination *discharge) after the acronym <<P. for e@ample <<P :u;um ura and <<P 'isumu& COM%I(ED B'4 F#an$is NHi&ia 5a!"#"+ IMISG ((+B :Hons+)G ((+MG %&+D :$ont)G (e$t"#e#G B"siness De.a#t,entG MMUST+ IIIIIIIIIIIIIIIIIIIIIIIIIIIII-at$& t&is s.a$eIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIII

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