countries. Its enforcement was aided by a series of regulations enabling Customs officers to require 'certificates of origin' and 'declarations of ultimate destination' in respect of imports and exports to and from certain neutral countries and places.

(2) C.i.f. contracts.

We shall do well in the first place to set clearly before us the nature of this contract as recently stated by Hamilton J. (as Lord Sumner was in 1911) in a judgment1 which was supported by the minority judgment of Kennedy L.J. in the Court of Appeal and affirmed by the House of Lords. ‘A seller under a contract of sale containing such terms'—that is, a c.i.f.

contract

'has firstly to ship at the port of shipment goods of the description contained in the contract; secondly to procure a contract of affreightment, under which the goods will be delivered at the destination contemplated by the contract; thirdly to arrange for an insurance upon the terms current in the trade which will be available for the benefit of the buyer; fourthly to make out an invoice as described by Blackburn J. in Ireland v. Livingston2 or in some similar form; and finally to tender these documents to the buyer so that he may know what freight he has to pay and obtain delivery of the goods, if they arrive, or recover for their loss if they are lost on the voyage. Such terms constitute an agreement that the delivery of the goods, provided they are in conformity with the contract, shall be delivery on board ship at the port of shipment. It follows that against tender of these documents, the bill of lading, invoice, and policy of insurance, which completes delivery in accordance with that agreement, the buyer must be ready and willing to pay the price.'

It will be noted that performance of a c.i.f. contract involves the bringing into existence by the seller of two subsidiary contracts, affreightment and insurance.

A pre-war c.i.f. contract between British firms provides for the delivery of goods at Hamburg. The goods are shipped by a German vessel which is on the high seas when war with

1 Biddell Brothers v. E. Clemens Horst Co. [1911] 1 K. B. at p. 220 cited by Warrington L.J. [1916] 1 K. B. at 513.

2 (1873) L. R. 5 H. L. 406.

Germany breaks out. At that moment further performance of the contract becomes illegal; the buyers cannot call upon the sellers to tender the documents, nor can the sellers call upon the buyers to pay for the goods1. A further point was taken for the sellers, namely that 'the seller's only duty was to procure the necessary shipping documents,' that is, the bill of lading and the policy of insurance, and if these documents were valid 'at the time when they were procured,' it mattered not what happened subsequently and the purchaser was bound to accept them. Having regard to the enemy destination of the goods, it was unnecessary to decide this point in this case, but it cropped up again in our next two cases and was settled in favour of the buyer. In these cases2 there were pre-war c.i.f. contracts between firms which were British or carrying on business in England, for the shipment of beans from neutral oriental ports to neutral European ports, Naples and Rotterdam. In both cases the beans were shipped before the war upon German vessels and insured against ordinary marine risks, in one case by an English policy, in the other case by a German policy. No question arose as to the ultimate destination of the goods in either case. Upon the outbreak of war both vessels made their way to ports of refuge. In both cases the sellers tendered the documents to their respective buyers at the appropriate date, namely three months from dates of bills of lading, but of course those documents consisted in the one case of a German bill of lading and an English marine policy, in the other of a German bill of lading and a German marine policy. Now the point in which these cases go beyond Duncan, Fox&Co.'s case above discussed is that there the c.i.f. contract itself became illegal upon the outbreak of war because the destination was an enemy port; but in these cases it is one or both of the subsidiary contracts, whose existence is essential to performance of a c.i.f. contract, that became illegal. Shortly put, is their continued existence, their continued validity, up

1 Duncan, Fox & Co. v. Schrempft & Bonke [1915] 3 K. B. 355 (C. A.). 2 Arnhold Karberg & Co. v. Blythe, Green, Jourdain & Co.; Theodor Schneider & Co. v. Burgett & Newsam [1916] 1 K. B. 495 (C. A.).

to the date of the tender of the documents embodying them essential? The Court of Appeal have answered, Yes, and in consequence the buyer may refuse to accept such documents and to pay the price. They have ceased to be valid and effective and have, by considerations of public policy, become void and unenforceable. Moreover, the bills of lading are not merely invalid, but to carry out the obligations contained in them, the shipowner being an enemy, would be illegal.

The foregoing are cases where the c.i.f. contract or one or both of the subsidiary contracts became illegal upon the outbreak of war. We now come to the case1 where the effect of the war upon the subsidiary contract of affreightment and by consequence upon the c.i.f. contract itself is to make them impossible of performance. The goods were consigned from an oriental port to Antwerp on board a British vessel which shortly after the outbreak of war was seized and taken into Hamburg. Subsequently the documents were tendered and Bailhache J. held that the buyers were bound to accept them. No question of illegal destination arose, Antwerp not having fallen. "The fact that it became impossible to perform the contract did not prevent the tender of the documents from being valid.'

In the last case Bailhache J. pointed out that the real origin of the buyer's objection to accept the documents when tendered was that the policy of insurance merely covered marine risks and excepted war risks by means of the F.C. and S. clause. How does this question of insurance under a c.i.f. contract stand in relation to war? As we have seen, Lord Sumner spoke of 'an insurance upon the terms current in the "trade" as an essential part of performance of a c.i.f. contract.' Current at what point of time? At the date of shipment. In several cases it has been held or assumed that in the months preceding the outbreak of war insurance against war risks was not 'current in the trade,' but this must always be a question of fact in each case. Moreover, it is always open to the buyer to supplement

1 In re Arbitration between Weis & Co. and Crédit Colonial et Commercial [1916] 1 K. B. 346.

his protection against loss or damage by effecting a more comprehensive or different insurance himself1.

The degree of sanctity with which the c.i.f. seller's obligation of insurance has been invested, has involved during the past year a judicial construction of that obligation which has been so literal, so technical, as to occasion surprise in a commercial case2. Lush and Rowlatt JJ. had already held in 1913 that even when the goods have arrived safely, the buyer is entitled to demand his 'pound of flesh' and can refuse to accept them on the ground that the c.i.f. seller had omitted to insure them3.

In connexion with insurance under a c.i.f. contract, some light has also been thrown upon an obscure section of the Sale of Goods Act, 1893, s. 32, sub-s. 3, as follows:

'Unless otherwise agreed, where goods are sent by the seller to the buyer by a route involving sea transit, under circumstances in which it is usual to insure, the seller must give such notice to the buyer as may enable him to insure them during their sea transit, and if the seller fails to do so the goods shall be deemed to be at his risk during such sea transit.'

What does this mean? There is less authority on what it does mean than there is on what it does not mean, and so far no one has been able to discover any vital use for it. Bailhache J. said in Wimble v. Rosenberg1 that it does not apply to the ordinary contract for the sale of goods f.o.b., but the Court of Appeal (Vaughan Williams and Buckley L.JJ., Hamilton L.J. dissenting) said it did. But they found it unnecessary to apply it to the contract then before them. Hamilton L.J. indicated the class of contract to which, in his opinion, the sub-sections applied-neither f.o.b. nor c.i.f. In his judgment Bailhache J.

1 C. Groom, Limited v. Barber [1915] 1 K. B. 316, contains an interpretation of the expression 'War risk for buyer's account' occurring in a c.i.f. contract.

2 Manbre Saccharine Co. v. Corn Products Co. [1919] 1 K. B. 198; Wilson, Holgate & Co. v. Belgian Grain & Produce Co. [1919] W. N. 180.

3 Orient Co. v. Brekke & Howlid [1913] 1 K. B. 531.

4 [1913] 1 K. B. 279.

[1913] 3 K. B. 743 (C. A.)—for reasons which appeared to convince Lord Reading C. J. in a later case in the Court of Appeal (1917) 33 T. L. R. 516 (C. A.), though it was not open to that court to differ from the decision of the majority in Wimble v. Rosenberg.

said obiter that it did not apply to c.i.f. contracts or to contracts ex-ship,' and in Law & Bonar v. British American Tobacco Co.1 the question of its applicability to c.i.f. contracts was raised directly before Rowlatt J. The goods were consigned from Calcutta to Smyrna on board a British vessel under a bill of lading dated 20th July, 1914, and on or about the 13th August the British vessel with her cargo was sunk by a German cruiser. The contract being c.i.f., the seller had effected an insurance which was admittedly upon the terms then 'current in the trade,' that is, excluding war risks. The buyer refused to accept the documents when tendered and claimed that under s. 32 (3) of the Sale of Goods Act he was entitled to notice from the buyer to enable him to insure against war risks. Rowlatt J. without saying that the sub-section would not 'apply to a contract c.i.f. made at a time when insurances other than those to be provided by the seller-e.g. against war risks are usual,' held that it did not apply to a contract c.i.f. (made 6th and 7th May, 1914, in this case) when it is not customary to insure against war risks, and gave judgment for the sellers. Surely this amounts to saying that it does not apply to a c.i.f. contract at all, because, if it was made at a time when it was customary to insure against war or any other abnormal risks, then a policy against those risks would be 'current in the trade' and the seller would not fulfil his obligations unless he tendered such a policy.

Later the Court of Appeal had an opportunity of reconsidering Wimble v. Rosenberg in the case of a contract f.o.b. and followed it, but again holding that it did not prevent the particular sellers from recovering as the buyers had sufficient knowledge of the facts to enable them to insure2.

It seems therefore that the sub-section we have been discussing, though originally a barbarism imported from Scotland, can apply to a contract f.o.b. but from the nature of things, it being customary for the buyer under such a contract to send

1 [1916] 2 K. B. 605.

2 Northern Steel & Hardware Co. v. John Batt & Co. (1917) 33 T. L. R. 516 (C. A.).