There are many small manufacturers of lower-priced stationery which are based in China. Alibama is one of such manufacturers, with limited cashflow. It entered into two (2) contracts with Barry (a large retail chain with headquarters in Singapore and operations throughout the region). Barry is experiencing strong regional growth due to its popularity with customers. It sells a wide variety of goods including furniture, clothing, household appliances and stationery.

Under each contract, Alibama agreed to sell to Barry 500 boxes of fountain pens.

Each contract states that:

• the net amount payable by Barry for each batch is US$20,000, based on CIF, Singapore, Incoterms 2020; and

• payment shall be made by Barry via an irrevocable letter of credit, issued by Ocean Bank in Singapore and confirmed by Pad Tai Bank in Bangkok, Thailand.

Based on the terms of the letter of credit, Barry's instructions were that payment shall be made only against the tender of a clean shipped bill of lading, a commercial invoice, a certificate of inspection and an insurance certificate. The cargo was described in the letter of credit as "fountain pens".

When the first batch of fountain pens was being loaded onto the ship, there was apparent leaking of ink from the fountain pens. The master proceeded to issue a clean of bill of lading which is governed by Hague-Visby Rules.

Alibama tendered the following documents to Pad Tai Bank: a clean shipped bill of lading, a commercial invoice, a certificate of inspection and an insurance policy. The certificate of insurance described the goods as "funtain pens".

When the documents were tendered to Ocean Bank in Singapore, the documents were rejected on the basis that Alibama had tendered an insurance policy rather than an insurance certificate and that the goods were described as "funtain pens".

While the goods were in transit, Barry heard from a reliable source that the fountain pens were damaged. It sent a formal letter to Ocean Bank, demanding that Ocean Bank withhold payment on the basis of poor quality and condition of the cargo.

While the goods under the first contract arrived on time, Barry also refused to arrange for a letter of credit to be issued for the fountain pens under the second contract. Alibama had already entered into freight and insurance contracts for this second batch of fountain pens and was preparing to ship them.

During the carriage, the ship made stops at some ports that were a little off the usual route for purposes of picking up last-minute additional cargo. This was not consistent with what Alibama and the carrier had agreed previously.

Question 3

Appraise the significance of a bill of the lading to Alibama, in the scenario above. In your analysis, consider the relevant functions of a bill of lading and (where applicable) the obligations of a carrier under the Hague-Visby Rules