CIP INCOTERMS 2000—seller’s duty to procure a carriage contract on usual terms—seller’s duty to procure insurance—deck carriage—damages

In early October 2006, the seller, a UK manufacturer of customised special vehicles, sold three four-wheel-drive Land Rover ambulances to the buyer, a Croatian company involved in geophysical and seismic work in the oil and gas industry. The buyer needed the ambulances to use them at two camps in Libya where it was doing seismic work. The goods were sold on the basis of “CIP, Tripoli”, INCOTERMS 2000. The seller engaged GSC, a freight forwarder, to arrange carriage of the goods. GSC in turn contracted with BLL for the carriage. BLL advertised ro-ro service to Libya. However, had GSC visited the website of BLL, it would have been apparent that BLL was unlikely to be able to provide a ro-ro service and that vehicles were, at least sometimes, strapped to other cargo carried on deck. The booking confirmation sent by BLL stated: “ALL VEHICLES WILL BE SHIPPED WITH ‘ON DECK OPTION’ this will be remarked on your original bills of lading … ”. GSC did not seek copies of the printed terms of the bills of lading. It received unsigned originals of the bills of lading which, in cl 7, referred to the carrier’s option to carry the goods on deck. GSC procured insurance in the form of a certificate containing the clause “Warranted shipped under deck”. The vehicles were stored on deck and apparently washed overboard. The buyer had to hire alternative vehicles for a long period of time (until 2008) since, being a Croatian company emerging from that country’s troubled past, it could not afford the cost of replacement. The buyer settled its claim against BLL for £50,000. This amount was less than the buyer’s loss and the buyer claimed against the seller for breaching its obligations to contract on usual terms for the carriage and/or to obtain insurance entitling the buyer to claim directly from the insurer. The seller denied the breach and disputed the amount of damages. The seller further contended that, if it were liable to the buyer, its liability ought to be reimbursed by GSC because of the latter’s breach of its obligations as a freight forwarder to use reasonable care and skill.