Risk of Loss in Shipment Contracts Assignment Help
1. In the disasters,what should the buyer have insisted upon in his/her contract with regard to risk of loss?Explain.
2. What should the seller have tried to put in the contract? Explain.
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Impact of disaster on the buyers' contract
Transportation of goods is always a risky business as we have already seen from the pictures mentioned; goods may be damaged or even lost due to natural disasters. During such scenarios the main question that arises is who is the one who should be held responsible for such a loss. A normal practice which is followed is:
- If the buyer is the one at risk of receiving damaged goods or are even lost, then the buyer is liable for the price compensation as the buyer is the one who bears the loss.
- The normal followed method is mainly the FOB method or the Free On-Board method where the buyer faces the consequence for a damaged shipment and the buyer alone has to bear the risk.
The most preferable method of shipment to battle scenarios of natural calamities would have been a CIF or a Cost, Insurance and Freight method where both parties are held accountable for the potential risks (Langvardt, et al. 2019).
Implementable changes on contract
A risk prone contract is never the best way to consider business such as shipments, hence the contract changes of desire would be a CIF shipping agreement or the Cost, Insurance and Freight. Thus, when a CIF shipping agreement is used, the seller is primarily responsible for the goods while shipment, which automatically provides the maximum level of insurance and freight charges till the shipment reaches its destination, which is chosen by the buyer (Langvardt, et al. 2019). Whereas, once the delivery has been made for the shipment at the destination, the buyer resumes all responsibility for unloading and any further processing or shipping costs needed as per the buyers' interest.
Contract of the seller
It is always the seller's responsibility to offer maximum security regarding any shipment to the buyer. For the best output CIF agreement is the desirable agreement method in consideration. Some of the key factors to focus while developing a contract would be:
The contract structure which needs to be followed be such where neither the buyer nor the seller faces minimal risks of losses for a natural disaster is the CIF seems to fit the interest best, where both the parties are held liable for the risk factors and the losses conceived and hence none is in an absolute field of disadvantage.
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