Always Fashion (as the seller) entered into a contract with Forever50, a big fashion retail store in Singapore (as the buyer), to sell leather gloves and linen shirts, CIF Singapore. The overall value of the contract is relatively low.

Always Fashion is a small factory with limited resources, serving primarily its own domestic market. Nonetheless, it has plans to expand its sales into the region. In contrast, Forever50 intends to go for an initial public offering in the near future. It has a well-established regional logistics team. It does not require the cargo on an urgent basis since it buys from many different factories within the region and have enough stock of gloves and linen shirts to meet customers' demand for the next six months.

Always Fashion arranged for the cargo to be shipped to Singapore, on board the MV Speedy, owned by Leaky Inc. Always Fashion is not very familiar with the export regulations, regional logistics providers and insurance providers. Its owners had selected Leaky Inc., based on a recommendation from family friends. The carriage is expected to arrive in Singapore three (3) weeks from the date of leaving the port of origin.

The cargo of linen shirts was loaded into Hold No. 1, while the cargo of gloves was loaded into Hold No. 2. The master issued a clean bill of lading which was governed by the Hague-Visby Rules.

Independent contractors hired by Leaky Inc. had just completed repairs to the ship prior to the loading of the cargo. As the independent contractors are well-known, experienced and respected, the master and the crew of MV Speedy trusted them and did not conduct any checks. However, the independent contractors had failed to tighten some of the storm valves of the ship. As a result, seawater started to seep into Hold No. 1.

When the crew discovered this, the master deviated to a nearby port to fix the storm valves. This resulted in a one-day delay of the ship's arrival at the Singapore port. The master had also confessed to his crew that he was worried about the safety of the route and the deviation, given the increasing number of reported incidents about piracy and tsunamis. He wanted to complete the journey and reach the Singapore port as soon as possible.

On arrival at the Singapore port, an inspection of the cargo found that all the linen shirts in Hold No. 1 were stained, waterlogged and damaged. In addition, while Hold No. 2 was dry, with no evidence of water seepage, the gloves had become mouldy.

Question 3

Indicate a possible Incoterm which may be feasible for both Always Fashion and Forever50, based on the facts in the scenario above. Support your answer with reasons as to why that Incoterm would be feasible for both parties.

Provide details relating to the seller's and the buyer's obligations and the passing of risk under that Incoterm.

Identify two (2) possible reasons why Always Fashion would wish to continue with shipments on CIF terms.