## Facts

- A California hop merchant (seller) contracted to sell and ship hops from San Francisco to the United Kingdom on c.i.f. terms to London, Liverpool, or Hull.
- The buyer (an assignee of the original purchaser) agreed to pay “90s. per 112 lbs., c.i.f. … Terms net cash.”
- The contracts did not expressly state “payment against documents” or specify the precise time of payment.
- When performance was due, the seller demanded payment upon tender of shipping documents (bill of lading, insurance policy, invoice).
- The buyer refused to pay until arrival and inspection of the goods and rejected reliance on a third-party quality certificate; the buyer sought a physical sample, which the seller declined to send.
- The seller refused to ship after the buyer insisted on post-arrival payment.
- The buyer sued for damages for non-delivery; the seller counterclaimed for damages for non-acceptance.

## Issues

1. Under a c.i.f. contract stating “terms net cash” but not expressly addressing timing, must the buyer pay upon tender of conforming shipping documents while the goods are in transit?
2. May the buyer withhold payment until arrival and inspection of the goods?
3. Can an “option” as to time of payment be implied from contractual silence in a c.i.f. “net cash” sale?

## Decision

- The House of Lords reversed the Court of Appeal and restored the trial judgment for the seller.
- It held that, absent contrary stipulation, a standard c.i.f. contract requires payment against tender of conforming shipping documents.
- The buyer had no right to defer payment until arrival and inspection.
- The buyer’s refusal to pay against documents was a repudiation, entitling the seller to treat the contract as discharged and to refuse shipment.
- The seller succeeded on the buyer’s non-delivery claim and on the seller’s counterclaim.

## Legal Principles

- In a standard c.i.f. sale, the seller performs by shipping goods of the contract description and tendering conforming shipping documents (typically bill of lading, insurance policy, and invoice); tender of documents constitutes “delivery” for payment purposes.
- “Net cash” in a c.i.f. context requires cash payment upon tender of conforming documents, not upon physical arrival of the goods.
- A buyer is not entitled to insist on pre-payment inspection on arrival as a condition to paying against documents; the buyer’s protection lies in contractual/statutory remedies if the goods do not conform.
- No “option” as to time of payment is implied merely because the contract is silent; mutual obligations require that a duty to tender documents corresponds to a duty to pay upon such tender.
- General statutory concurrency of delivery and payment (as in sale of goods legislation) is satisfied in c.i.f. trade by documentary delivery.

## Conclusion

The House of Lords confirmed the documentary character of c.i.f. contracts: where the contract is c.i.f. on “net cash” terms and contains no contrary agreement, the buyer must pay upon tender of conforming shipping documents and cannot postpone payment until the goods arrive for inspection.


E. Clemens Horst Co. v. Biddell Bros., [1912] A.C. 18 (H.L.)