On 17 February 2019, Tahai Electronics (Tahai), a Chinese company entered into a contract with Blas Electronics Sdn Bhd (Blase), a Malaysian company. The contract was for the supply of 10,000 plasma television (TVs) at RM10,000 per unit and 20,000 monitor screens (Monitors) at RM8000 per unit, Incoterm CIF from the Port of Shanghai to Port Klang. Blase had informed Tahai that the equipment should be delivered by 1 May 2019. The contract had no choice of law clause.

On 1 April 2019, Tahai entered into a contract with Lotus Shipping Corp, a Chinese company that owns the vessel named the Serenity, for cargo transportation. The equipment were packed by Tahai in two containers: Container A contained the TVs while Container B contained the Monitors. The contract specified that the cargo were fragile and should be stored below deck.

Tahai had delivered the cargo to the Serenity at the dock in Shanghai on 10 April 2019. The master of the Serenity made a brief check of the cargo against the description and issued a clean bill of lading. The master informed the crew of the Serenity that the cargo should be stored below deck. The crew stored Container A below deck but secured Container B on deck.

On 15 April 2019, Tahai had taken a contract of marine insurance with Mingshan Insurance, a Chinese insurance company. Tahai's policy incorporated the Institute of Cargo Clauses C. The policy had specified the route to be taken, from the Port of Shanghai to Port Klang. Blase did not think that the insurance was adequate and insured the goods for an additional value of RM400,000. Blase asked Tahai to reimburse the premium of the second insurance policy.

The journey should take 20 days. During the 13th day of the journey, the Serenity received an emergency call to deviate the ship from the usual route in order to save passengers of a nearby cruise liner in distress. The Serenity sailed to the distressed cruise liner and saved 100 passengers and 20 crew members. The rescue mission resulted in delays. Nevertheless, the Serenity continued with the journey. Unfortunately, it encountered a heavy storm and Container B was washed overboard.

On 5 May 2019, the Serenity finally arrived in Port Klang. Blase's employees presented the bill of lading to the carrier. They were informed that Container B was washed overboard. They only received Container A. Upon inspection, Blase discovered that most of the TVs were defective due to water seepage into the plasma screens.