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Holding a bill of lading not always determinative of ownership

The Facts

A cargo of frozen swordfish was carried from Jakarta to Vigo, Spain where it was declared unfit for human consumption.

The shipper had sold the cargo to buyers who had on-sold it to receivers in Spain. Payment was to be made in respect of the first sale, 45 days and in respect of the second sale, 60 days after bill of lading.

Both the invoice and the letter of credit in respect of the first sale contained rejection clauses to the effect that the letter of credit would be cancelled on the presentation of a rejection certificate.

A bill of lading was issued and passed down the line to receivers’ bankers who provided the letter of credit in respect of the second sale.

Receivers were informed by their bankers that there were discrepancies in the documents presented to obtain payment: the quality certificate was missing and the health certificate did not show the date of freezing as stipulated in the letter of credit.

Receivers waived reliance on the discrepancies and took delivery of the cargo which was then discovered to be damaged.

Payment was made to the buyers but not by the buyers to the shippers because of the rejection clause.

Receivers claimed the difference between the salvage value and the price paid from the carrier.


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