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Bill of Lading Issued Under Charterparty
Bill of lading issued to a third party shipper:
◦ Who is the carrier :
◦ The right of the charterer to issue such bills is dependent on an express term in the
charter normally drafted to the following effect:
The master (although appointed by owners) shall be under the orders and direction of charterers as
regards employment of the vessel, agency or other arrangements. Bill[s] of lading are to be signed
as charterers or their agents may direct, without prejudice to this charter... charterers hereby
indemnify owners against all consequences or liabilities that may arise from the master, charterers
or their agents signing bills of lading or other documents, or from the master otherwise complying
with charterers' or their agents' orders...
Muammar Law Firm 88](https://image.slidesharecdn.com/ugjzd3arr6fjswfmyxjl-signature-6ccc450fd8088ead6794c668231daa5f3eb2af29074647143b24736a9c1215b3-poli-161028133605/85/Shipping-law-88-320.jpg)
Uploaded byGhassan Muammar
Shipping law
This document provides an overview of maritime law concepts, including: - Types of vessels like liners, tramps, bulk carriers, tankers, and container ships. - International sale contracts and INCOTERMS rules regarding transfer of risk. - Accounting concepts for FOB and FOB destination contracts. - Implied obligations in contracts of affreightment, including seaworthiness, manning, reasonable dispatch, and not deviating from the agreed route. Exceptions and effects of breaching these obligations are discussed.
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- 2. Home Table Of Contents ◦Vessel Types ◦ International Sale of Contract ◦ Accounting concepts in maritime shipping ◦ Implied Obligations in a Contract of Affreightment ◦ Charterparties ◦ Voyage Charterparty ◦ Bill of Lading Bill of Lading History Functions of a Bill of Lading As a Receipt of Goods Receipt as to Quantity Receipt as to Condition Receipt as to Leading Marks Muammar Law Firm 2
- 3. Home Table Of Contents As evidence of the Contract of Carriage As Document of Title Function in Contract of Sale Function in Financing Contract of Sale Liability in Tort Third party reliance on bill of lading terms Bailment on terms Muammar Law Firm 3
- 4. Home Table Of Contents Presentation of a Bill of Lading Problems in presentation Short form bill of lading The Waybill Bill of Lading under Charterparties Muammar Law Firm 4
- 5. Home Types of Vessels MuammarLaw Firm 5
- 6. Home Liners : • Theseare vessels that ply on a regular scheduled service between groups of ports. • Liner services offer cargo space to all shippers who require them. • They sail on scheduled dates, irrespective of whether they are full or not. Tramps • The tramp pr general trader , as she is often called , does not operate on a fixed sailing schedule , but merely trades in all parts of the world in search of cargo, primarily bulk cargo • Such cargoes include coal, grain, timber, sugar, ores, fertilizers etc., • The tramp companies are much smaller than their liner cargo counterparts, and their business demands an intimate knowledge of market conditions. Muammar Law Firm 6
- 7. Bulk Carrier Muammar LawFirm 7
- 8. Crude Oil Tanker MuammarLaw Firm 8
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- 10.
- 11. LNG Carrier Muammar LawFirm 11
- 12. Car Carrier Muammar LawFirm 12
- 13. Container Ship Muammar LawFirm 13
- 14. Tug Boat Muammar LawFirm 14
- 15. Home International Sale Contract MuammarLaw Firm 15 Purchaser Seller Cargoprice Jordan Australia
- 16. HomeMuammar Law Firm16 Purchaser Confirming Bank Letter of Credit Documents International Sales Contract Seller Opening Bank Hamburg Dubai
- 17. Home Buyer/Importer Issuing Bank Advising/ConfirmingBank Beneficiary/Exporter Request for a Letter of Credit Request to Advise and Possibly Confirm Letter of Credit Advise of Letter of Credit Purchase and Sale Agreement 2 1 3 4 Muammar Law Firm 17 Letter of Credit Cycle
- 18. Home International Sale Contract FOBContract Muammar Law Firm 18 Carrier Seller Purchaser Is the Shipper Charterparty Bill of Lading Waybill
- 19. Home International Sale Contract CIFContract Muammar Law Firm 19 Carrier Seller Is the Shipper Purchaser Charterparty Bill of Lading Waybill
- 20. Home International Chamber ofCommerce Terms (INCOTERMS) ◦ CIF (Transfer of Risk) Muammar Law Firm 20 Loading on Board Before Loading After Loading Purchaser Under CIF Port of Loadng Ownership Risk Time Line CIF Seller Under CIF Risk Delivery at Port of Discharge
- 21. Home International Chamber ofCommerce Terms (INCOTERMS) ◦ FOB (Transfer of Risk) Muammar Law Firm 21 Loading on Board Before Loading After Loading Purchaser Under FOB Port of Loadng Ownership Risk Time Line FOB Seller Under FOB Risk Delivery at Port of Discharge Ownership
- 22. Home International Chamber ofCommerce Terms (INCOTERMS) ◦ FOB or CIF (Transfer of Risk) Order Bill of Lading (no consignee mentioned) Muammar Law Firm 22 Loading on Board Before Loading After LoadingPort of Loadng Ownership Time Line Seller Under FOB Risk Delivery at Port of Discharge
- 23. Home Accounting Concepts FOB Shipping MuammarLaw Firm 23 Seller Purchaser Delivery Port Shipping Port Shipping Contract
- 24. Home Accounting Concepts FOB Shipping MuammarLaw Firm 24 Purchaser Shipping Contract
- 25. Home Accounting Concepts FOB Shipping MuammarLaw Firm 25 Purchaser Accounts Point of Delivery to Purchaser CreditDebit Cargo Assets Delivery Port
- 26. Home Accounting Concepts FOB Shipping MuammarLaw Firm 26 Point of Loading Purchaser CreditDebit Cargo Assets Loading Port Seller Accounts
- 27. Home Accounting Concepts FOB Shipping MuammarLaw Firm 27 Seller Purchaser Delivery Port Shipping Port Gap of Ownership between Buyer and Seller Who owns the cargo in the Sea Trip
- 28. Home Accounting Concepts FOB Destination MuammarLaw Firm 28 Point of Loading Purchaser CreditDebit Cargo Assets Loading Port Seller Accounts
- 29. HomeMuammar Law Firm29 Incoterm 2010 Export customs declaration Carriage to port of export Unloading of truck in port of export Loading on vessel in port of export Carriage (Sea/Air) to port of import Insurance Unloading in port of import Loading on truck in port of import Carriage to place of destination Import customs clearance Import taxes EXW Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer FCA Seller Seller Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer FAS Seller Seller Seller Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer FOB Seller Seller Seller Seller Buyer Buyer Buyer Buyer Buyer Buyer Buyer CPT Seller Seller Seller Seller Seller Buyer Buyer Buyer Buyer Buyer Buyer CFR(CNF) Seller Seller Seller Seller Seller Buyer Buyer Buyer Buyer Buyer Buyer CIF Seller Seller Seller Seller Seller Seller Buyer Buyer Buyer Buyer Buyer CIP Seller Seller Seller Seller Seller Seller Buyer/Seller Buyer/Seller Buyer Buyer Buyer DAT Seller Seller Seller Seller Seller Seller Seller Buyer Buyer Buyer Buyer DAP Seller Seller Seller Seller Seller Seller Seller Seller Seller Buyer Buyer DDP Seller Seller Seller Seller Seller Seller Seller Seller Seller Seller Seller/Not including VAT/FAT
- 30. Home Implied Obligations ina Contract of Affreightment Muammar Law Firm 30
- 31. Home At common lawthe obligation to provide a seaworthy vessel is absolute and in the event of breach he will be liable . Its and undertaking not merely that they should do their best to make the ship fit but that the ship should really be fit. Should be reasonably fit/not perfect ship. Exclusions ◦ Nelson Line v Nelson (1908) (exception of any damage which is capable of being covered by the insurance) was held not to be effective in excluding liability for damage to cargo resulting from unseaworthiness. ◦ The Irbensky Proliv (2005 ) a bill of lading contained a provision excluding liability for loss or damage of any kind arising or resulting from :unseaworthiness ( whether or not due diligence shall have been exercised by the carrier, his servants or agents or others to make the vessel seaworthy) was upheld by the court. Muammar Law Firm 31 The Undertaking as to Seaworthiness 1/4
- 32. Home When a contractis subject to Hague/Visby rules: The absolute obligation at common law will be replaced by a duty to exercise due diligence to make the ship seaworthy. ◦Many modern standard charter forms adopted the Hague rules formula with the requirement to seaworthiness ◦The Baltime form excludes liability of the shipowner for loss or damage to cargo unless such loss has been caused by want of due diligence on the part of the Owners or their manager in making the vessel seaworthy and fitted for the voyage. Muammar Law Firm 32 The Undertaking as to Seaworthiness 1/5
- 33. Home 33Muammar LawFirm Nature of the Obligation ◦ Incidence of the obligation The vessel must be suitably manned and equipped to meet the ordinary perils likely to be encountered. It must also be cargoworthy in the sense that’s its in a fit state to receive the specified cargo. ◦ Obligation is discharged if the vessel is seaworthy at the time of sailing ◦ Should accident happen after sailing rendering the vessel unseaworthy the vessel owner will be liable as insurer. The Undertaking as to Seaworthiness 2/5
- 34. Home 34Muammar LawFirm Manning : vessel master • It’s a common but very strong belief that the person in charge of the vessel is the captain. • Captain: This terms is simply a naval rank. • The correct term to be used is the Master • Master duties and responsibilities The Undertaking as to Seaworthiness 3/5
- 35. Home Burden of Proof ◦Burden of proof on the party alleging it In many cases inferences may be drawn by the court. ex: presence of seawater in the hold will be normally Muammar Law Firm 35 The Undertaking as to Seaworthiness 4/5
- 36. Home Effect of Breach ◦is a condition resulting in a breach of contract ◦ is a warranty resulting in damages ◦ The ship owner obligation to provide a seaworthy vessel was classified by courts as intermediate ◦ Obligation by the court of appeal ◦ A charterer should only be allowed to repudiate his obligations under the charterparty where the breach deprived him of substantially the whole benefit which it was intended that he should obtain from the contract. 36Muammar Law Firm The Undertaking as to Seaworthiness 5/5
- 37. Home 37Muammar LawFirm • Whenever no time is specified for a particular obligation there is an implied obligation to complete the performance within a reasonable time. • Obligation is not objective but depending on what could be reasonably expected of the shipowner under the actual circumstances. • Effect of Breach ◦ To recover compensation ◦ Repudiate the contract Obligation of Reasonable Disptach Obligation of Reasonable Dispatch
- 38. Home Definition: Deviation isan intentional and unreasonable change in the geographic route of the voyage as contracted. Justifiable deviations At common law Under the Hague and Hague/Visby Rules Liberty Clauses The effect of Breach Muammar Law Firm 38 Obligation Not to Deviate from the Agreed Route 1/4
- 39. Home Justifiable deviations ◦ Atcommon law To Save Human Life or to communicate with a vessel in distress in case lives may be in danger ◦ To avoid danger to the ship or cargo Ex. When a vessel puts to a port for repairs to damage sustained on the voyage In Kish v Taylor. In Kish v Taylor 33 the vessel had been excessively overloaded. This is a classic instance of unseaworthiness which amounted to a breach of contract. In the circumstances the master was obliged to deviate. The court held the deviation justifiable even though it was the direct result of the act of the master who had created the danger and therefore could be regarded as intentional. Atkinson J said that the shipʹs master should not be put in the position of having to decide on the merits of the situation. He has to be allowed to deviate in order to save the venture. The rationale of Kish v Taylor therefore is that the existence of the peril is looked at and not the cause of the peril. Muammar Law Firm 39 Obligation Not to Deviate from the Agreed Route 2/4
- 40. Home 40Muammar LawFirm Justifiable deviations ◦ At common law Where the deviation is made necessary by some fault on the part of the charterer: In case of dangerous good loaded by the charterer without the knowledge of the shipowner Under the Hague/Visby rules Art IV rule 4 of the rules provides two further heads: 1- deviation in saving or attempting to save property at sea 2- Any reasonable deviation Obligation Not to Deviate from the Agreed Route 3/4
- 41. Home Liberty Clause: ◦ Moststandards charter forms include a clause giving the master a liberty to deviate for a specified Reasons. Ex. Clause 3 of the Gencon form: “The vessel has the liberty to call at any port or ports in any order, for any purpose, to sail without pilots, to tow and/or assist vessels in all situations and also to deviate for the purpose of saving life and/or property” Since such conditions are applied mostly for the benefit of shipowners the courts apply the principle of contra proferentem 41Muammar Law Firm Obligation Not to Deviate from the Agreed Route 4/4
- 42. Home The period Coveredby the warranty The nature of the risks covered The nature of undertaking - remedies available for breach The scope of the undertaking The safe port/safe berth relationship 42Muammar Law Firm Obligation to Nominate a Safe Seaport 1/4
- 43. Home Definition of asafe port: ◦ A port will not be safe unless , in the relevant period of time, the particular ship can reach it, use it, and return from it without , in the absence of any some abnormal occurrence, being exposed to danger which cannot be avoided by good navigation and seamanship 43Muammar Law Firm Obligation to Nominate a Safe Seaport 2/4
- 44. Home The Period Coveredby the warranty: ◦ The ‘relevant period of time’ mentioned in the definition covers the entire period from the moment of entry to the time departure. ◦ Extension of period: in case risks encountered in the approaches to a port as for ex: ice in the Elbe preventing safe access to Hamburg. Manchester was held an unsafe port for the ship involved in a case where after discharge of the cargo the masts of the vessel were too high to pass under bridges on ship canal linking the port with the sea. 44Muammar Law Firm Obligation to Nominate a Safe Seaport 3/4
- 45. Home The nature ofthe risks covered: ◦ Whether or not a port ‘is safe’ is a question of fact depending on the circumstances of each individual case. ◦ A port may be safe for one type of vessel but not for another for example : Where the draught of 250,000 ton tanker is too deep to allow it access to many ports which are otherwise perfectly safe for normal vessel. 45Muammar Law Firm Obligation to Nominate a Safe Seaport 4/4
- 46. Home Meaning of Dangerousgoods ◦ No definition is provided by common law . Merchant Shipping Act 1894: ◦ aquafortis, vitriol, naphtha, benzine, gunpowder, lucifer-matches, nitro-glycerine, petroleum , any explosive within the meaning of the Explosive Act 1875 and any good of dangerous nature. • Some danger is not in the inherent nature but in the surrounding circumstances. Such as grain shipped in bulk if it gets overheated in transit. 46Muammar Law Firm Obligation Not to Ship Dangerous Goods 1/2
- 47. Home 47Muammar LawFirm Meaning of Dangerous goods under Art IV rule 6: ◦ Goods of an inflammable, explosive or dangerous nature to the shipment whereof the carrier, master or agent of the carrier has not consented with knowledge of their nature and character, may at any time before discharge be landed at any place, or destroyed or rendered innocuous by the carrier without compensation and the shipper of such goods shall be liable for all damages and expenses directly or indirectly arising out of or resulting from such shipment. If any such goods shipped with such knowledge and consent shall become a danger to the ship or cargo, they may in like manner be landed at any place, or destroyed or rendered innocuous by the carrier without liability on the part of the carrier except to general average, if any. Obligation Not to Ship Dangerous Goods 2/2
- 48. Home 48Muammar LawFirm • Frustration occurs whenever the law recognizes that without default of either party a contractual obligation has become incapable of being performed because the circumstances in which the performance is called for would render it a thing radically different from that which was undertaken by the contract. Frustration of Contract Party A Party BPerformance of obligation
- 49. Home Voyage Charterparty 49Muammar LawFirm Time Charterparty Charterparties
- 50. Home Maritime Shipping Contract FullLoad Vessel Capacity Partial Load Vessel Capacity Bill Of LadingCharter Party 50Muammar Law Firm
- 51. Home Maritime Shipping Contract CharterParty Owner Charterer 51Muammar Law Firm
- 52. Home Maritime Shipping Contract CharterParty 52Muammar Law Firm Shipping Port Delivery Port
- 53. Home Maritime Shipping Contract Charterparty Subjectto demand and Supply 1. Standard Forms ( Ship owner and Charterer represented ) 1. United Kingdom Chamber of Shipping 2. The Baltic International Maritime Conference 3. Japanese Shipping Exchange 4. Voyage Charter Party 5. Time Charter Party 53Muammar Law Firm
- 54. Home Maritime Shipping Contract Introductory Clauses 54MuammarLaw Firm Laytime Clauses Other ClausesFreight ClausesCargo Clauses Voyage Charterparty
- 55. HomeMuammar Law Firm55 Introductory Clauses Contracting Parties The vessel Idenitfy: The agreed Voyage Serious Concern to Charterer Cargo Capacity Dead Weight Capacity Laytime Clauses Other ClausesFreight ClausesCargo Clauses Voyage Charter Party
- 56. HomeMuammar Law Firm56 Description of the type and quantity Such as : 14000 MT of Rice Wheat and/or Maize and/or Rye Introductory Clauses Laytime Clauses Other ClausesFreight ClausesCargo Clauses Voyage Charter Party
- 57. Home Freight Clauses Shipping Port Delivery Port Unit of measurement ofFreight On Discharge On Loading 57Muammar Law Firm Voyage Charter Party
- 58. Home Voyage Charter Party FreightClauses Lump Sum Basis 58Muammar Law Firm Shipping Port Delivery Port
- 59. Home Voyage Charter Party Burden of Proof Burden of proof on the party alleging it In many cases it may be inferences drawn by the court. ex: presence of seawater in the hold will be normally treated by courts as prima facie evidence of unseaworthiness 59Muammar Law Firm
- 60. Home The Bill ofLading Contract ◦ Definition A legal document between the shipper of a particular good and the carrier detailing the type, quantity and destination of the good being carried. The bill of lading also serves as a receipt of shipment when the good is delivered to the predetermined destination. This document must accompany the shipped goods, no matter the form of transportation, and must be signed by an authorized representative Muammar Law Firm 60
- 61. Home The Bill ofLading Contract ◦ Originated in 14th century as non negotiable receipt issued by shipowner for cargo received to a merchant who did not intend to travel with his goods. ◦ The liability of the carrier was strict one subject to the Common Law exceptions such as : Acts of God Public enemies Inherent Vice Muammar Law Firm 61
- 62. Home The Bill ofLading History ◦ Carriers were trying to exempt themselves even when loss resulting from their own negligence in the care of cargo ◦ The resultant combined resistance from shippers, bankers and underwriter led to the production in some countries of Model Bills of lading to cover ◦ Discussions held by same groups from major maritime nations led to the drafting of a set of rules by the Maritime Law Committee of the International law Association at a meeting held in Hague in 1921 which were incorporated into an international convention in Brussels on 25 August 1924 signed by major trading nations. Muammar Law Firm 62
- 63. Home The Bill ofLading History ◦ Major maritime nations introduced legislations to give effect to Hague Rule which in the case of the United Kingdom took the form of the Carriage of Goods By Sea Act 1924. ◦ Dissatisfation grew at the limited nature of the protection afforded to cargo owners by the Hague Rules which led to the issuance of Hague/Visby Rule in 1968 Muammar Law Firm 63
- 64. Home Functions of aBill of Lading As a Receipt of Goods: ◦ Art III Rule 3 of Hague/Visby Rules entitles the shipper to demand the issue of a bill of lading containing certain specified information: (a) The leading marks necessary for identification of the goods as the same are furnished in writing by the shipper before the loading of such goods starts, provided such marks are stamped or otherwise shown clearly upon the goods if uncovered, or on the cases or coverings in which such goods are contained, in such a manner as should ordinarily remain legible until the end of the voyage. (b) Either the number of packages or pieces, or the quantity, or weight, as the case may be, as furnished in writing by the shipper. Muammar Law Firm 64
- 65. Home Functions of aBill of Lading As a Receipt of Goods: ◦ Art III Rule 3 of Hague/Visby Rules entitles the shipper to demand the issue of a bill of lading containing certain specified information: (c) The apparent order and condition of the goods. Provided that no carrier, master or agent of the carrier shall be bound to state or show in the bill of lading any marks, number, quantity or weight which he has reasonable ground for suspecting not accurately to represent the goods actually received, or which he has had no reasonable means of checking. Muammar Law Firm 65
- 66. Home Functions of aBill of Lading As a Receipt of Goods: ◦ Art III Rule 3 of Hague/Visby Rules entitles the shipper to demand the issue of a bill of lading containing certain specified information: The above rule is a prima facie evidence of the receipt by the carrier of the goods as so described but conclusive evidence against him once the bill has been transferred to a third party acting in good faith. Muammar Law Firm 66
- 67. Home Functions of aBill of Lading Receipt of Goods Muammar Law Firm 67 Receipt By Carrier Shipper Evidence Prima Facie Third part Evidence Conclusive Indorsed
- 68. Home Functions of aBill of Lading As Receipt of Goods ◦ As to Quantity ◦ Under common law shipowner could escape liability even toward a bona fide transferee of the bill if he could establish that the goods were not in fact shipped. (Grant v Norway 1851) ◦ The effects of the above were circumvented in Art III Rule 4 of the Hague/Visby Rules which provide that statements as to quantity in a bill of lading are conclusive evidence in favour of the consignee or indorsee who takes the bill of lading in good faith. Muammar Law Firm 68
- 69. Home Functions of aBill of Lading As Receipt of Goods ◦ As to Condition: By reasonable Inspection Containerized shipping has limited the value of inspection as its limited to outward appearance of the container or other packaging and not to the goods inside. Shipper: in need of clean bill of lading for banking purposes. Carriers can avoid unqualifying statements in a B/L even where inspection reveals the cargo to be damaged if its condition is adequately described in the bill. Muammar Law Firm 69
- 70. Home Functions of aBill of Lading As Receipt of Goods • As to Leading Marks: Shipowner will not be estopped at common law from denying that the good were shipped under the marks as described in the bill of lading. In Parsons V New Zealand Shipping Co : Shipment of frozen carcasses. Quantity 622x leading mark. On delivery 507 bore the mark remaining 101 carried 522 Trial Judge: All carcasses were of equal quality and value an that the sellers ha merely attache the marks for their own bookkeeping purposes. Muammar Law Firm 70
- 71. Home Functions of aBill of Lading As a Receipt of Goods Muammar Law Firm 71 Owner Charterer and Shipper Master Charter Party IssuanceReceipt Bill Of lading
- 72. Home Functions of aBill of Lading As Evidence of Contract of Carriage Muammar Law Firm 72 As far as the shipper is concerned these terms printed on the reverse side of The Bill of Lading don’t constitute the contract of carriage itself but merely provide evidence of it. The contract is normally concluded long before the bill is issued and the terms are inferred from the carrier’s sailing announcements and from any negotiations with loading brokers before the goods are shipped. Should the goods b lost or damaged before a bill of lading is issued the shipper will not be deprived of a remedy for a breach of contract B/L Issuance Contract Concluded Before
- 73. Home Functions of aBill of Lading As a Document of Title : ◦ A bill will only operate as a document of title if its drafted as an ‘order bill’ ( a bill under which the carrier agrees to deliver the goods at their destination to a named consignee or to his ‘order or assigns’) ◦ Function in contract of sale : Must be transferrable on its face The goods must be in transit at the time of indorsement The bill must be initiated by a person with good title The indorsement must be accompanied by an intention to transfer the ownership in the goods covered by it. Muammar Law Firm 73
- 74. Home transferrable on its face goodsmust be in transit at the time of indorsement The bill must be initiated by a person with good title The indorsement must be accompanied by an intention to transfer the ownership in the goods covered by it . Muammar Law Firm 74 Bill of Lading Function in a Contract of Sale
- 75. Home Functions of aBill of Lading: As a Document of Title : ◦ Function in financing contract of sale : Letters of Credit ◦ Function in Carriage contract The holder of the bill controls the goods during transit A lawful holder of the bill has title to sue under the contract of carriage as if he had been an original party to it. The holder is entitled to delivery of the cargo at the port of discharge on presentation of the bill of lading Muammar Law Firm 75
- 76. Home Bill of ladingand third parties ◦ Liability in Tort Where a claim for loss or damage is based on the negligence of the carrier or his servants an alternative to the contractual remedy might be to sue the party responsible for the loss in tort Advantages: The sub-contractor might be financially sound The bill of lading holder may be attracted by a right of recovery in tort free from exceptions an limitations of liability provisions contained in a bill of lading. In majority of the above cases there will be no contractual relationship between the claimant an the actual tortfeasor with the result that the doctrine of the privity of contract would normally prevent the tortfeasor from invoking any of the defences available under the contract of carriage. ◦ A bill of lading holder can sue the negligent party , his agent or servant in tort. In Margarine Union v Cambay Prince (1969 the bill of lading holder case was rejected as he was not the owner of the cargo when the damage occurred. The decision was severely criticized Muammar Law Firm 76
- 77. Home Bill of ladingand third parties Muammar Law Firm 77 Shipowner Agent or Servant Sue in Tort Before or after being owner
- 78. Home Bill of ladingand third parties Muammar Law Firm 78 Shipowner Agent or Servant Sue in tort
- 79. Home Bill of ladingand third parties ◦ Third Party Reliance on Bill of Lading terms By a brief glance at the printed terms of the bill of lading the shipper will be alerted to the fact that the carrier in many cases will reserve the right to delegate performance of the carriage itself to a subcontractor although the contractual carrier will normally retain primary responsibility for due performance of the contractual obligations involved. In these circumstances it would be reasonable to expect that the carriage would be undertaken on the agreed terms including exceptions and limitation of liability provisions irrespective of the identity of the party who actually performed the contract The above result is often defeated by the intervention of the doctrine of privity of contract . Muammar Law Firm 79
- 80. Home Bill of ladingand third parties ◦ Third party reliance on Bill of Lading terms Bailment on terms (The Pioneer Container case 1994) Muammar Law Firm 80 Shipowner Sub carrier Sought a writ in rem in Hong Kong Jurisdicctionin Taiwan Bailor Bailee Sub Bailee
- 81. Home Presentation of aBill of Lading ◦ Main Characteristic: Delivery has to be made against the surrender of documents It protects the holder of the B/L in the cargo shipped. It discharges the carrier from any other obligation under the contract of carriage The carrier problem: B/L are normally issued in sets of from three to six originals and that delivery of cargo can be required against the presentation of a single original from such a set. In order to protect the carrier there is frequently a provision in the bill that ‘ one being accomplished , the others to stand void ’. Muammar Law Firm 81
- 82. Home Presentation of aBill of Lading ◦ Main Characteristic: Delivery has to be made against the surrender of documents The carrier is protected if he makes delivery against a single un-indorsed original B/L or alternatively against a single validly indorsed bill. Carrier is liable if he makes delivery against a forged document though he is unlikely to be able to detect it. Muammar Law Firm 82
- 83. Home Presentation of aBill of Lading ◦ Problems in Presentation Because of the speed up on transport operation because of containerization it happens that the cargo will arrive before the B/L., this entail: The charterer may face liability for demurrage While the shipowner may run the risk of losing the next charter. If the carrier is reasonably sure of the identity of the receiver he may run the risk of delivery without presentation of the bill of lading. In case of mis-delivery he will lose the entire protection afforded to him by the contract of carriage together with the Hague exceptions and limitations of liability and the P&I Club Protection. Muammar Law Firm 83
- 84. Home Presentation of aBill of Lading ◦ Short form Bill of Lading B/L without the terms and conditions of carriage (the rights, responsibilities and liabilities of the carrier and the shipper) printed on its back. Otherwise, in size, it is no different from the long form B/L. The shipper and the carrier are bound by the conditions of carriage (governed generally by the older Hague rules or by the more recent Hague-Visby Rules) whether printed on the B/L or not. ◦ The Waybill The waybill differs from the bill of lading in that while it acts as receipt and provides evidence of the contract of carriage, it lacks the third characteristic in that it does not constitute a negotiable document of title. So its not acceptable in L/C or where the consignee might wish to sell the goods in transit. Presentation does not apply. The consignee has merely to identify himself at the port of discharge. Muammar Law Firm 84
- 85. Home Bill of LadingIssued Under Charterparty Bill of lading issued to charterer ◦ Where bills of lading are issued for cargo shipped by the charterer they operate as receipts for the goods shipped and as a potential document of title , but do not constitute evidence of the contract of carriage. The relationship between shipowner and charterer is governed solely by the terms of the charterparty unless the latter contains provision that its terms can be modified or superseded by the subsequent issue of a bill. ◦ Neither the Hague nor Hague/Visby rules are applicable to a bill of lading in the hands of a charterer since such bill does not regulate the relations between the carrier and the holder as required by art 1(b). ◦ Many standard charter forms solve this problem by incorporating either the Hague or the Hague/Visby rules into the charterparty. Muammar Law Firm 85
- 86. Home Bill of LadingIssued Under Charterparty President of India v Metcalfe • Charterer bound by the arbitration clause Muammar Law Firm 86 Carrier Charterer Thirdparty Shipper B/L No arbitration Clause Indorsement of B/L
- 87. Home Bill of LadingIssued Under Charterparty Bill of lading issued to a third party shipper: ◦ Who is the carrier : The carrier is rarely identified in the bill of lading which may be issued in the name of the shipowner , the charterer , a sub charterer or the agent of any of them. In normal circumstances the shipowner would be regarded as the carrier despite the existence of the charterparty, he remains responsible for the management of the ship and the master signs any bills which are issued as his agent. Muammar Law Firm 87
- 88. Home Bill of LadingIssued Under Charterparty Bill of lading issued to a third party shipper: ◦ Who is the carrier : ◦ The right of the charterer to issue such bills is dependent on an express term in the charter normally drafted to the following effect: The master (although appointed by owners) shall be under the orders and direction of charterers as regards employment of the vessel, agency or other arrangements. Bill[s] of lading are to be signed as charterers or their agents may direct, without prejudice to this charter... charterers hereby indemnify owners against all consequences or liabilities that may arise from the master, charterers or their agents signing bills of lading or other documents, or from the master otherwise complying with charterers' or their agents' orders... Muammar Law Firm 88
- 89. Home Bill of LadingIssued Under Charterparty Bill of lading issued to a third party shipper: ◦ Any bill presented by the charterer and signed by the master under the authority of such a clause will be binding on the shipowner. He will be regarded as carrier for the Purposes of the resultant contract of carriage. Charterer as carrier : ◦ Even where the contract of carriage is governed by the Hague/Visby rules it is possible for the carrier to be either the shipowner or the charterer. ◦ The charterparty might itself provide that the master is authorized to sign bills as agents on behalf of the charterers. ◦ Also the charterer shall be regarded as the carrier where he contracts as principle negotiating the contract of carriage in his own name and issuing his bills of lading, ◦ Demise clause: Muammar Law Firm 89
- 90. Home Bill of LadingIssued Under Charterparty Bill of lading issued to a third party shipper: ◦ What are the terms of the contract: The B/L provide prima facie evidence of the terms of the contract of carriage though such evidence may be rebuttted by proof of other terms specifically agreed by shipper and carrier. Normally third party will not be affected by the by the terms of the Charterparty Muammar Law Firm 90
- 91. Home Functions of aBill of Lading ◦ Bill of Lading issued to Charterers: Where the shipper of the goods is also charterer of the vessel, the master will still issue a bill of lading . In such circumstances the bill of lading will merely operate as a receipt of goods shipped but will not provide evidence of the contract of carriage. The terms of the contract of carriage are found in the charterparty Should the charterer subsequently indorse the bill of lading to a bona fide purchaser for value , then the bill will become conclusive evidence of the contract of carriage so far as the indorsee is concerned. Muammar Law Firm 91
- 92. Home Bill of Ladingissued to Charterers: Muammar Law Firm 92 Master Shipper and Charterer Purchaser B/L indorsed to Purchaser B/L becomes Conclusive Evidence
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- 94. Home Point of Discharge MuammarLaw Firm 94
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- 98. Home Master duties andresponsibilities • He is the owner’s personal representative • He bears the ultimate responsibility for the safe navigation of the vessel and for the efficient loading, stowage and discharge of cargo. • He has the power to act as a lawyer, doctor or even to bury people. • He has the authority to arrest members of the crew or passengers. • If the ship is imperilled in any way , the Master may call upon all persons on board to give assistance. Muammar Law Firm 98
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