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ance company's liability for contribution in general average is determined on the principle as laid down in the English law which reads as follows:

"ARTICLE 73. Item 1.-Subject to any express provision in the policy, where the assured has paid, or is liable for, any general average contribution, the measure of indemnity is the full amount of such contribution if the subject matter liable to contribution is insured for its full contributory value; but if such subject matter be not insured for its full contributory value, or if only part of it be insured, the indemnity payable by the insurer must be reduced in proportion to the under insurance, and where there has been a particular average loss which constitutes a deduction from the contributory value, and for which the insurer is liable, that amount must be deducted from the insured value in order to ascertain what the insurer is liable to contribute."

"Item 2.-Where the insurer is liable for salvage charges the extent of his liability must be determined on the like principle."

We will take, for example, a merchant who insures his shipment at invoice value only and show in just what position he would be placed should he be called upon to contribute in general average-assuming that all other conditions were normal. Say, for instance, he has a shipment of the invoice value of $1,000 and so insured for $1,000. On arrival of the vessel, a general average assessment of 10% is levied by reason of some general average act, and the basis of contributory value-as stated in the formula above -produces an arrived landed value of $1,500 (the invoice, plus 10% and freight) therefore, the amount to be deposited in general average would be $150.00. Now as the merchant has only insured the shipment for the invoice value of $1,000, the insurance company is therefore only liable for two-thirds of the assessment, viz., $100.00 (being 10% of the insured value) leaving the owner in the unenviable position of contributing the balance, or $50.00.

It is the practice of marine insurance companies to place upon their policies and contracts the following clause which emphasizes and makes plain the situation as outlined above:

"In all cases of general average and/or salvage expenses where the contributory value as stated in the adjustment

exceeds the declared value, the liability of this company shall be limited to the proportion which the amount insured bears to said contributory value."

Prudent merchants will, therefore, be sure that all shipments moving at their risk are fully insured in order to obtain the wider protection afforded, and further, it might be added, broadly speaking, in the event of a loss arising under the policy, the measure of recovery is based on identically the same valuation formula.

Assignment No. 5

American Foreign Trade

Definitions of Export Quotations

Adopted at a conference participated in by committees of various trade organizations and called by the National Foreign Trade Council on December 16, 1919.

These are, in their order, the normal situations on which an export manufacturer or shipper may desire to quote prices. It is understood that unless a particular railroad is specified, the property will be delivered to the carrier most conveniently located to the shipper. If the buyer, for the purpose of delivery, or in order to obtain lower transportation charges, desires that the goods be delivered to a carrier further removed from the shipper and entailing a greater cost than delivery to the carrier most favorably situated, the carrier to which the buyer desires delivery of the goods should be named in the quotation. The term "cars or lighters" as used herein, is intended to include river, lake or coastwise ships, canal boats, barges, or other means of transportation, when so specified in the quotation.

1. When the price quoted applies only at inland shipping point and the seller merely undertakes to load the goods on or in cars or lighters furnished by the railroad company serving the industry, or most conveniently located to the industry, without other designation as to routing, the proper term is: "F. O. B. (named point)"

Under this quotation:

A-Seller must

(1) place goods on or in cars or lighters;
(2) secure railroad bill of lading;

(3) be responsible for loss and/or damage until goods have been placed in or on cars or lighters at forwarding point, and clean bill of lading has been furnished by the railroad company.

B-Buyer must

(1) be responsible for loss and/or damage incurred thereafter;

(2) pay all transportation charges including taxes, if any;

(3) handle all subsequent movement of the goods.

2. When the seller quotes a price including transportation charges to the port of exportation without assuming responsibility for the goods after obtaining a clean bill of lading at point of origin, the proper term is:

"F. O. B. (named point) FREIGHT PREPAID TO (named point on the seaboard)"

Under this quotation:

A-Seller must

(1) place goods on or in cars or lighters;
(2) secure railroad bill of lading;

(3) pay freight to named port;

(4) be responsible for loss and/or damage until goods have been placed in or on cars or lighters at forwarding point, and clean bill of lading has been furnished by the railroad company;

B-Buyer must

(1) be responsible for loss and/or damage incurred thereafter;

(2) handle all subsequent movement of the goods; (3) unload goods from cars;

(4) transport goods to vessels;

(5) pay all demurrage and/or storage charges;

arrange for storage in warehouse or on wharf where necessary.

3. Where the seller wishes to quote a price, from which the buyer may deduct the cost of transportation to a given point on the seaboard, without the seller assuming responsibility for the goods after obtaining a clean bill of lading at point of origin, the proper term is:

"F. O. B. (named point) FREIGHT ALLOWED TO (named point on the seaboard)"

Under this quotation:
A-Seller must

(1) place goods on or in cars or lighters;
(2) secure railroad bill of lading;

(3) be responsible for loss and/or damage until
goods have been placed in or on cars or lighters
at forwarding point, and clean bill of lading has
been furnished by the railroad company.

B-Buyer must

(1) be responsible for loss and/or damage incurred thereafter;

(2) pay all transportation charges (buyer is then

entitled to deduct from the amount of the invoice the freight paid from primary point to named port);

(3) handle all subsequent movement of the goods; (4) unload goods from cars;

(5) transport goods to vessel;

(6) pay all demurrage and/or storage charges;
(7) arrange for storage in warehouse or on wharf
where necessary.

4. The seller may desire to quote a price covering the transportation of the goods to seaboard, assuming responsibility for loss and/or damage up to that point. In this case, the proper term is:

"F. O. B. Cars (named point on seaboard)"

Under this quotation:

A-Seller must

(1) place goods on or in cars;

(2) secure railroad bill of lading;

(3) pay all freight charges from forwarding point to port on seaboard;

(4) be responsible for loss and/or damage until goods have arrived in or on cars at the named port.

B-Buyer must

(1) be responsbile for loss and/or damage incurred thereafter;

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(2) unload goods from cars;

(3) handle all subsequent movement of the goods;
(4) transport goods to vessel;

(5) pay all demurrage and/or storage charges;
(6) arrange for storage in warehouse or on wharf
where necessary.

5. It may be that the goods, on which a price is quoted covering the transportation of the goods to the seaboard, constitutes less than a carload lot. In this case, the proper term is:

"F. O. B. Cars (named port) L. C. L."
Under this quotation:
A-Seller must

(1) deliver goods to the initial carrier;
(2) secure railroad bill of lading;

(3) pay all freight charges from forwarding point
to port on seaboard;

(4) be responsible for loss and/or damage until goods have arrived on cars at the named port. B-Buyer must

(1) be responsible for loss and/or damage incurred thereafter;

(2) handle all subsequent movement of the goods; (3) accept goods from the carrier;

(4) transport goods to vessel;

(5) pay all storage charges;

(6) arrange for storage in warehouse or on wharf where necessary.

6. Seller may quote a price which will include the expense of transportation of the goods by rail to the seaboard, including lighterage. In this case, the proper term is:

"F. O. B. Cars (named port) Lighterage FREE." Under this quotation:

A-Seller must

(1) place goods on or in cars;

(2) secure railroad bill of lading;

pay all transportation charges to, including lighterage at, the port named;

(4) be responsible for loss and/or damage until goods have arrived on cars at the named port.

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