Reference no: EM13731777

1. Case of the MRI Machine with a Compound Fracture

Shared Imaging, an Illinois company, bought an MRI machine from Neuromed, a German seller. The terms were "CIF New York, buyer will arrange and pay for customs clearance as well as transport to [Illinois]". The contract also stated that the machine remained the property of seller until the complete payment had been received. The MRI was loaded in Germany in good working order. When it arrived, it was damaged. Shared Imaging's insurer, St. Paul, sued Neuromed, and argued that since Neuromed had insisted on a "retention of title" clause that they still owned the merchandise when it was delivered in its defective state and therefore should pay for the repairs. Neuromed argued that under a CIF contract they were not responsible. Who wins, and why?

2. Case of the Gummy Oil

Empresa Estatal de Ecuador contracted to buy 140,000 barrels of unleaded gasoline from BP Oil International, on terms which were "CFR La Libertad (Ecuador)". The goods were to be loaded in Houston and the gasoline was required to have a gum content of no more than 3 milligrams per hundred liters, to be determined at the port of departure. The gasoline was tested by the Saybolt inspection company, nominated by Empresa Estatal, and the test showed quality was ok. However, when the ship arrived in Ecuador, a second test showed that now the gum content was too high, and Empresa Estatal refused to take delivery. BP had to resell the gasoline to someone else at a loss of $2 million, and sued for damages. Who wins, and why?

3. Case of the Filthy Beans

International Commodities sold 230 metric tons of small Chinese white beans to North Pacific, under terms that were "C&F Portland, Oregon". The goods were loaded in 6 containers in Hong Kong with certificates of quality signed by an independent inspection agency in Hong Kong. Upon entry to the U.S. the Food and Drug Administration tested a sample of the beans and determined that they "contained filth" and detained the shipment. North Pacific informed IC that as a result they were rejecting the shipment, and they re-sold the goods to a South African buyer. North Pacific now claims that it should receive a refund from IC. Who wins, and why?