Cargo Claim - Claim Clause in an Import Export Contract

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Cargo Claim
What Do You Know If Shipment Lossed or Damaged

Cargo Claim Overview

Cargo Claim refers to that in international trade, one party breaks the contract and causes losses or damages to the other part directly or indirectly, the injured party may ask for compensation for the losses or damages.

It is necessary to include a discrepancy and claim clause in a contract. In case the goods delivered are inconsistent with the contract stipulations, the buyer should make a claim against the seller within the time limit of reinspection under the support of an inspection certificate or survey report issued by a nominated surveyor.

On the Basis of Terms and Conditions of the Contract

There are two types of undertakings entered into in every sales contract.

The more important one of the two types is called a condition which is a clause associated with the essence of the contract. This clause actually goes to the root of the contract. If one party breaks a condition, he will break the foundation of the contract and leads to an action for fundamental breach of the contract.

The less important types of undertaking is called a warranty. Since a warranty does not go to the root of the contract, the injured party can not cancel the contract, but he is entitled to be compensated for breach of warranty.

On the Basis of Consequence of Breach of Contract

If one party breaks the contract and makes the other party unable to obtain the main profit, then this is called "material breach". In this case, the injured party has the right to cancel the contract. Meanwhile, he may also ask for compensatin for losses.

If one party breaks the contract, but the case is not so serious and the other party will not lose any main profit, this is called "minor breach". In this case, the injured party can not cancel the contract. However, he may ask for compensation for losses.

In "United Nations Convention on Contracts for the International Sales of Goods", these two undertakes are termd fundamental breach and non-fundamental breach.

Claim Clause in the Contract

Clause in respect of claim in an import and export contract can be fixed as follows:

Discrepancy and Claim Clause
Discrepancy and claim clause also includes, besides stipulating that if any party makes breach of contract, the other party is entitled to lodge a claim against the party in breach, other aspects in respect of proofs presented when lodging a claim and effective period for filing a claim,etc.
Proofs: Clause in this respect stipulates the relevant proofs to be presented and relevant authority competent for issuing the certificate. The proofs should be complete and clear, and the authority should be competent for issuing the relevant certificate. Otherwise, claims can be refused by the other party.

Period for claim: Period for claim refers to the effective period in which the claimant can make a claim against the party in breach. Claims beyond the agreed effective period can be refused by the party in breach. Therefore, claim period should be reasonably fixed.

Penalty: Clause in respect of penalty in a contract should stipulate that "any party who fails to perform the contract shall pay an agreed amount as penalty for compensating the other for the damages". Penalty clause is fixed when the seller fails to make timely delivery: the buyer fails to open the relevant L/C or the buyer fails to take delivery on time, and the penalty ceiling is also included in the contract.

In some sale contracts, the two parties often stipulate clauses on settlement of claim as well as inspection and claim causes.

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Cargo Claim What Do You Know If Shipment Lossed or Damaged

Cargo Claim
What Do You Know If Shipment Lossed or Damaged