Cargo disputes
lesson 4 - Risk and property normally transfer at different times 

When you buy a car, you gain the keys at the same time as you assume the risk of it being damaged. In other words, you get title to the car at the same time as you assume the risk of damage to it. So if you drive off the forecourt and crash, it is your problem not the car dealership's problem. 

For various sensible reasons this is rarely the case when goods are shipped across the oceans. Instead, risk between buyer and seller normally passes when the goods are loaded onboard a vessel (at least with CIF and FOB shipments), but title can often pass much later, when the goods have been paid for and the buyer has obtained the bills of lading, or even later. 

You can download the animated PowerPoint just below this slide. It helps visualise what we're talking about. 

The logic behind this is to recognise that once the seller has complied with their physical duties and shipped the goods if they get damaged while in transit, the seller shouldn't be held responsible: the seller has performed by delivering the goods. The seller may still own the goods at that point, but the buyer, once they have the bills of lading, will then have title and can sue the carrier.   

Accordingly, this "limbo" period where the buyer may have risk but not property in the goods is rarely a problem. It merely means that (a) the seller can't be sued when they have delivered and therefore aren't at fault; but (b) the buyer can sue the carrier, once they have the bills of lading. 

Transfer of risk 
and property (Dynamic)
Transfer of risk 
and property (static)

© 2020 by Francis Hornyold-Strickland.