You may recall this transaction. On May 14, 2012 Arctic Appliances and Sun Mi, Inc. enter into a C.I.F. Lon Rie (a country in Southeast Asia) contract for the sale of 1000 refrigerators at a price of $623 each with payment to be made by letter of credit, choice of Lon Rie law and a delivery date of August 10, 2012, Arctic Appliances contracts with a carrier, World Transit, to ship the goods on June, 28. 2012 from the port of Philadelphia through the Panama Canal to Lon Rie. The refrigerators, packed eight to a pallet, are loaded onto the S.S. Titan on June 27, 2012 and the carrier issues a clean, on-board bill of lading for 1000 refrigerators shipped on 125 pallets marked Arctic Appliances Deluxe refrigerators.
The Titan sails for the Panama Canal on June 28. On the fourth day, as the Titan approaches the Canal, terrorists detonate bombs causing such extensive damage that the Canal is not navigable. Reports indicate that the Canal should reopen within a week. Rather than make the lengthy and dangerous trip around Cape Horn, the Titan decides to wait in the Caribbean until the Canal is reopened. By July 12, it is clear that the Canal will not reopen until late July. On July 15, the Titan sets sail for Cape Horn. The ship encounters winter storms around the cape, hits a small iceberg and takes on some water. The damage is minor and after a slight delay the Titan continues on its journey. The ship arrives in Lon Rie on August 15, 2012.
Sun Mi eagerly awaits the goods because on July 5, 2012, it entered into a contract with Sonatu for the sale of 50 refrigerators with delivery set for August 12, 2012. When Sun Mi surrenders the bill of lading, it receives 124 pallets of refrigerators, 10 of those pallets are water damaged.
Because of the missing refrigerators and water damage to 80 refrigerators after loading onto the ship, Sun Mi tried to recover the $54,824 value of the destroyed refrigerators from the carrier, Titan. Titan denied responsibility for the loss and argued that even if it were liable, the law does not obligate it to pay $54,824 for the loss. Decide, thoroughly discussing the arguments of both parties.
5. Fleur, a French company, promised to buy 15,000 gallons of maple syrup from Quebec Enterprises, Ltd., in Canada under a C.I.F. Le Havre, France contract. Payment was to be made by an irrevocable, confirmed letter of credit upon delivery of a clean, on hoard bill of lading, a certificate of inspection and all the usual export documents. Quebec Enterprises delivered the required documents to the confirming bank in Montreal, Quebec. The inspection certificate stated that "based on a sample taken from five gallons, the maple syrup is of the kind ordered.- The bill of lading had a notation on it that the goods had been partially destroyed by water leakage after they were loaded on board the ship. Should the confirming bank pay the seller on the letter of credit? Could the bank successfully argue that the certificate, on its face, was insufficient to certify the entire order?