· LC was open. The fact that

·        
Right and obligations of NEB

o   Rights:

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§  NEB could proceed
against CIB under the Bill of exchange. It could also go against the Seller ltd
under the same document.

o   Obligations: it has
the obligation to pay under the performance bond unless fraud is proven.

·        
Right and obligations of CIB

o   Rights: They have gone
bankrupt so they have limited rights…

o   Obligations: They are
the acceptor of the bill so they are liable to it.

·        
Right and obligations of BUYER INC

o   Rights:

§  Use the performance
bond for the deficiency in quality. The bank is obliged to pay as per their
request on the 12th of august.

o   Obligations:

§  Liable to sellers for
the price of the goods even though LC was open. The fact that bank went
bankrupt is not a risk of Seller’s but Buyers.

§  Conditions of the
goods: they would have to prove that goods were not shipped in good condition
in case Sellers claims that the  use of
the  performance bond was not legitimate. 

·        
Right and obligations of SELLER LTD

o   Rights:

§  It can sue Buyer’s for
the price of the goods as they haven’t been paid and property have passed when
Buyer collected the B/L (not mentioned in the text but we presume, see payment
clause 12 of GAFTA 100)

o   Obligations:

§  It has to ship goods
in good condition. GAFTA 100 is a tale quale contract. Since it is mentioned
that deterioration of the goods is of pre-shipment origin, they are likely
liable for the defect in the goods. But in case of a claim in this respect,
burden of proof may be on the buyer’s side. This will depend also on the certificate,
if their intention was to certify that goods were shipped in good condition,
they maybe final and Buyer’s request on the performance bond may not be
legitimate. Of note, this is unlikely given the information given, as standard
GAFTA terms for certificate is only for quality and not condition (clause 5).

§  It is liable to NEB
under the bill of exchange which amount has been credited on their account.

·        
Right and obligations of SELLER SA

o   Rights: As a
guarantor, Sellers SA does not become a party to the contract hence it has no
right under the contract.

o   Obligations:

§  They are liable under
the guarantee for performance of their subsidiary.

§  The guarantee
guarantees the original performance obligations. So the question would arise on
whether they have to guarantee the conditions of the goods knowing the contract
has changed on the 10th of June.

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