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Moreover, what makes those who insist on the CIF contract’s documentary character feel vindicated is that the ruling in Scrutton’s judgment has been observed in many later cases, and some of them take this point even further. Perhaps the strongest example is what Justice McCardie held in Manbre Saccharine Co Ltd v Corn Products Co Ltd, whereby he said that the obligation of the vendor is to deliver documents rather than goods----to transfer symbols rather than the physical property represented thereby.3 There are, similarly, many other examples of the supposed absolute importance of documents that can be used by supporters of this argument to conclude that documents seem to be the essence of the CIF contract.
These decisions have resulted in the strengthening of the position of the documents in a CIF contract; they explicitly lay down the notion that the documents in themselves do not simply represent the goods but in a manner of speaking are the goods themselves.
2. The nature of performance of a CIF contract leads to the assumption that it is sale of documents rather than goods.
It is widely accepted that in a CIF contract there are three stages of delivery, i.e. “provisional delivery” on shipment, “symbolical delivery” on tender of the documents, and “complete delivery” when the goods are handed over to the buyer4, but the contractual obligation of delivery is satisfied just by delivery of documents and not by actual physical delivery of the goods. The buyer cannot refuse the documents and ask for the actual goods, nor can the seller withhold the documents and tender the goods they represent. On presentation of the shipping documents, if they are complete and regular, the buyer is bound to pay the price, irrespective of the arrival of the goods. Whatever happens to the goods in transit, the bill of lading and the insurance policy, provide an almost complete, continuous cover from the port of shipment to the port of destination. So, if the buyer fails to pay, it will be considered as a wrongful repudiation, but where the seller tenders documents which purport to cover the contract goods but in fact do not, the buyer usually can only recover the price, as well as damages for breach.5
On the other hand, without the documents properly tendered, the buyer is not bound to accept them or to pay the price. For example, when goods are sold under a CIF contract, if the seller does not effect insurance upon them for the transit, they will not be delivered in accordance with the contract even where they arrive safely at their destination, and non-existence of an insurance policy is a ground for rejection of the documents6. Indeed, case law also supports this view that if examination of the physical goods of the contract is made a condition of payment on the contract then that contract ceases to be a CIF contract in its true sense. In Holland Colombo Trading Society Ltd v Segu Mohamed Khaja Alawdeen,7 the Judicial Committee of the Privy Council advised that a contract expressed to be on CIF terms permitting any tender or delivery of the goods or of the bill of lading was not a true CIF contract.
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