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The statement of Justice Scrutton in the decision of Arnhold Karberg & Co v Blythe Green, Jourdain & Co 12 has often been cited as a powerful weapon by those who deemed a CIF contact to be a sale of documents contact. However, in the appeal of this case, an important dissention was made by both Warrington and Bankes LJJ against Scrutton J’s decision with regard to his famous statement concerning the essence of CIF as a sale of documents, whereby Bankes LJJ pointed out: “I am not able to agree with the view of the contact, that it is a sale of documents relating to goods. I prefer to look upon it as a contract for the sale of goods to be performed by the delivery of documents.”13 Warrington LJ opinioned concurrently with Bankes LJJ in the same case.14 Directed by their Lordships’ opinions, more and more people began to relocate the essential character of CIF in its legal meaning rather than in a practical process, and from then on, case law also has inclined to support the side of CIF being a sale of goods contract in of this argument. To give one example, in Smyth (Ross T) & Co Ltd v Bailey (TD), Son & Co15, Lord Wright also indicated that although a CIF sale can be completed after the loss of the goods concerned by the transfer of documents it does not necessarily follow that a CIF contract is a sale of documents contract.
In addition, Scrutton J himself, the originator of the documentary basis view, also later yielded to the opposing side. In his book, he suggested that the difference between the two views was in essence, one of language rather than substance16, and after his elevation to the Court of Appeal, he stated that: “I need not discuss, what perhaps is merely a question of words, whether that sale is a sale of goods or of documents. One of the features of a sale CIF is that, in the absence of special terms, the seller claims payment against presentation of shipping documents.” 17
2. In a CIF contract, delivery is satisfied by the delivery of documents and not by actual physical delivery of the goods, only because the bill of lading is considered to be a symbol of the goods.
According to the arguments in favor of documentary sale, it seems that the consideration for the CIF contract rests undoubtedly in the documents and not in the goods. However, there are quite a lot arguments which will testify that this is only a matter of appearances. The first of these is to explore of the relationship between the documents and the goods. Under a CIF contract the documents, although vital in that they must be delivered to the buyer, are vital only because they represent the goods; they are in fact symbols for the goods18. Here, an analogy may be used to help make the argument more clear - in this respect, the relationship of the documents to the goods can be analogous to the receipt to a TV and there is no way one can possibly suggest that a TV purchaser’s paying when he is handed the receipt for the TV is buying the receipt rather than the TV itself. In the case of international trade, people usually cannot deliver actual possession of the goods, therefore the bill of lading is considered to be a symbol of the goods, and the law merchants universally recognize it as a symbol. Property in the goods passes by such endorsement and delivery of the bill of lading, just because it reflects the intention of the parties that the property should pass, just as under similar circumstances the property would pass by an actual delivery of goods. So, if we separate customs or practice from their legal essence, we can see that symbolic delivery is merely for convenience and nothing more. 19
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