Insurance Of The Cargo On FOB Contracts

Many experts suggest that exporters (sellers) of China should conclude contracts on CIF terms with foreign buyers to better protect their interests in international trade. However due to various reasons, exporters of China mostly conclude FOB contracts.Aware of this trade practice, the author of this dissertation analyzes the whole process of the transportation under FOB terms from the perspective of insurance and seeks for possible solutions to it for the purpose of better protecting the interests of exporters in China. What should be taken into account, however, is that the research of marine insurance in China seems to be too general and no research has been made for a specific type of contract. Therefore this is a brand-new topic.By taking a vertical approach to this research, the dissertation divides the whole process of translation under FOB into four sections and raises problems about the cargo insurance that each section should pay attention to. Now China has entered WTO and the "Companies Marine Policy of the Institute of London Underwriters" is more and more applied in insurance market and international trade. On this situation, the author, by analyzing concrete precedents and citing large amount of cases both inside China and abroad, tries to deeply analyze "UK's Marine Insurance Act, 1906", "International Rules for the Interpretation of Trade Terms", "U.N. Convention Of Contracts For The International Sale Of Goods" and other relevant rules. And integrating them with China's Insurance Law and Contract Law, it also explores the problems of cargo insurance that each transportation section should pay attention to and their solutions.In the first chapter, the author explores the advantages that the FOB contract has in freight and insurance premium, and at the same time analyzes three types ofmain risks under FOB contract, which are a generalization of the risks that FOB contract meets in each transportation section. It is right these three types of risks that lead to the problems of insurance in each section.Aware of the importance of insurable interest for this dissertation, the author studies the insurable interest on FOB and its relevant problems in the second chapter so as to lay a foundation for the following discussionThe following four chapters are the centre of the dissertation, each of which studies a transportation section with its problems of insurance and their solutions.The third chapter points out the "vacuum" of insurance in Section 1: on one hand, the buyer can not claim for compensation because he does not take any risk and has no insurable interest; on the other hand, the seller can not either because he does not procure any insurance although he takes risks. In this chapter, three solutions to this problem are put forward.The fourth chapter deals with three problems. First, it analyzes the seller's duty of notification. After citing cases of UK and China, the author argues that the sellers do not necessarily fulfill his duty of notification, but he is suggested to give it out if he considers the exact word-choosing of laws. Then the dissertation studies the insurable interest when a loss occurs before the entire contract quantity has been loaded. By a comparative analysis of two similar cases, the author warms that the seller should take much care of wording when concluding a contract. Finally, the author stresses the relationship between the taking of risks, the delivery of goods and the transfer of insurable interest. The dissertation explores the determination of the time to transfer the insurable interest, the delivery of goods, the transfer of the insurable interest and the delay of delivery. It says that the time to transfer the insurable interest of the goods should be determined in accordance with the delivery principles and emphasizes that risks should be separated from property in applying FOB terms, that is, the insurable interest is transferred with the transfer of risks, but not the property.The fifth chapter targets the insurance of Section 3. It first suggests that the seller should buy the contingency insurance if he wants to avoid the risk arising ifthe buyer rejects the goods. Then it studies the insurance interest before and after executing the right to stoppage, especially pointing out that the unpaid seller has enormous interest from the goods before the buyer sends out the notice of stoppage and consequently he should follow the principle of economic interest to recognize the insurable interest of the seller. Finally, this says that, because of the particularity of the regulation regarding the transfer of the risks of selling and buying, insurance companies have the technological defence to consider that the buyer of the goods on seas and thus suggests that the buyer when he receives the policy of the goods should ask the insurance company to give up the technological defence in order to confirm the operation of the assignment of the policy .The sixth chapter briefly introduces that the seller can buy the contingency insurance to guard the risks arising if the buyer rejects the goods. At the same time, it points out the seller can also buy the export credit insurance to guard some special risks.By the discussion of the insurance under FOB in different transportation sections, the dissertation will make the exporters in China be aware of the problems of insurance in each section when they are exporting under FOB. In addition, this dissertation is also of significance for the legislation of marine insurance in that it puts forward some suggestions of legislation in the process of the discussion of each problem of insurance.