Nb Power Turbines

NB Power Turbines

There are many different factors to investigate when trying to determine who would need to cover the costs of an accident such as the turbines falling to the bottom of Saint John Harbor. The first step would be to identify which incoterm was agreed upon between the buyer and the seller. Since the shipment was traveling via boat, we know that they could have only had four choices: FAS, FOB, CFR and CIF.

If the incoterm was Free Alongside Ship (FAS), then the shipper was not obligated to provide for main carriage of goods or insurance. This means that the shipper delivers the purchase alongside the ship on the dock or barge.  The shipper could, however, contract for carriage at the buyer’s risk and cost if requested by said buyer. In this case, the buyer was responsible for all costs and insurance in getting the product to themselves. In the case of the turbines, the seller (Siemens) would not be at fault either way as there was obviously a company that was contracted to move the equipment (Irving Equipment). NB Power would have to pay for the damages or to replace the equipment they had just bought if they did not take out insurance in the contract with Irving Equipment. If they did purchase insurance, Irving Equipment would therefore be responsible for those costs. Depending on the details of the insurance, all costs should be covered by Irving Equipment.

If the incoterm was Free on Board (FOB), then the shipper is responsible for delivering the package on board a ship, in preparation of delivery. In that case, the shipper assumes all risks of loss or damage to the goods until they have been delivered on board. If Siemens did not have insurance in their contract with Irving Equipment, Siemens would be responsible for the bill. If they did have insurance listed in their agreement, then Irving Equipment would be responsible. NB Power should have all costs covered as they would only be responsible once the goods were placed on the ship.

If the incoterm was Cost and Freight (CFR), then the seller clears the goods for export and delivers them on board the ship at the port of shipment. The seller is responsible for contracting for and paying the costs associated with transport of the goods to the destination. Siemens would then be fully responsible for the packages that fell into the water as they had contracted Irving Equipment. They must have had a contract in place and if insurance was noted, then Irving Equipment would have to pay for the damages. All costs should be covered as NB Power only assumes responsibility once the packages arrive on board.