International business laws lesson 05

59 Carrier and Carriage of Goods UNIT UNIT III 60 International Business Law LESSON 61 Carrier and Carriage of Goods CARRIER AND CARRIAGE OF GOODS CONTENTS 5.0 Aims and Objectives 5.1 Introduction 5.2 Carrier and Carriage of Goods 5.3 5.4 5.5 5.6 5.2.1 Rights, Duties and Liabilities of a Common Carrier 5.2.2 Carriage of Scheduled and Non-scheduled Goods 5.2.3 Carriage of Dangerous Goods Contract of Carriage 5.3.1 Classification of Carriers 5.3.2 Definition of a Contract of Carriage Common Carriers 5.4.1 Responsibility of Common Carrier and Bailee 5.4.2 Distinction between a Common Carrier and a Private Carrier 5.4.3 Carriage of Goods by Land 5.4.4 Rights of a Common Carrier 5.4.5 Duties of a Common Carrier 5.4.6 Liabilities of a Common Carrier Carriage of Goods by Rail 5.5.1 Railways Liability 5.5.2 When does the Liability Terminate? 5.5.3 Responsibility of a Railway Administration as a Carrier of Goods Carriage of Goods by Sea 5.6.1 Conditions Implied 5.6.2 Delivery of Goods 5.6.3 Shipowner's Lien 5.7 Contract of Affreightment 5.8 Charter Party 5.9 5.8.1 US Law 5.8.2 Typical Clauses 5.8.3 Charter-parties 5.8.4 Customary Rights Bill of Lading 5.9.1 Affreightment 5.9.2 Rules of Law 5.9.3 In Defaults of Express Contract Contd… 62 International Business Law 5.10 5.9.4 Express Stipulations 5.9.5 Short Statement of Principle 5.9.6 Main Types of Bill 5.9.7 A Sample of the Issues Carriage by Air 5.10.1 Passenger Ticket 5.10.2 Baggage Check 5.10.3 Air Way Bill 5.10.4 Limitation of Carrier's Liability 5.11 Let us Sum up 5.12 Lesson End Activity 5.13 Keywords 5.14 Questions for Discussion 5.15 Suggested Readings 5.0 AIMS AND OBJECTIVES After studying this lesson, you should be able to: z Understand the meaning of carrier and carriage of goods z Study about contract of carriage and common carriers z Know about the carriage by different means z Describe the IATA rules of contract, UNCTAD rules on shipping, conference systems in shipping 5.1 INTRODUCTION The Carriers Act, 1865 and the Railways Act, 1890 apply to carriage of goods by land Carriers Act applies only to common carriers as distinguished from private carriers A common carrier may be any individual, firm or company, which transports goods as regular business for money, over land or inland waterways A private carrier carries his own goods and may occasionally carry goods for selected persons He is not covered by the Carriers Act, but by the Indian Contract Act 5.2 CARRIER AND CARRIAGE OF GOODS 5.2.1 Rights, Duties and Liabilities of a Common Carrier Duties To receive and carry goods from all corners, indiscriminately To carry the goods safely To carry by his customary route without deviating from it unnecessarily To obey instructions of the consignor To deliver the goods within the agreed time at the stipulated place Rights The common carrier has the right to refuse carriage of goods in the following circumstances: z If he has insufficient or no room in his carrier z If the goods are of a type other than what he professes to carry z If the goods are not required to be carried by his customary route or to his usual destination z If the goods are dangerous to carry or expose him to risk z If the goods to be carried are not offered at a reasonable time and in reasonable manner z If the consignor is not prepared to pay reasonable amount in advance Liabilities z A common carrier is an insurer of goods, but there are certain exceptions to this rule z He is not liable for any loss or damage to goods caused by an Act of God or natural calamity, like the vehicle being struck by lightening z He has no liability in case of injury caused by enemies of the state, e.g foreign with whom the country may be at war z He cannot be held responsible for loss due to any inherent vice or natural deterioration of goods in transit For e.g evaporation of liquids, deterioration of fruit etc z He is not liable for any loss due to neglect on the part of consignee Such as defective packing of goods 5.2.2 Carriage of Scheduled and Non-scheduled Goods Goods are classified into scheduled and non-scheduled categories Goods of high value are termed as scheduled goods For e.g gold coins, precious stones, currency notes, work of art, articles of ivory or sandalwood, etc The carrier can charge extra for carrying such costly articles provided their value exceeds Rs 100 and will be liable for loss or damage only if the value and description of goods has been disclosed by the consignor in advance or if the loss is due to a criminal act of the carrier, his agents or servants Other types of goods are called non-scheduled goods 5.2.3 Carriage of Dangerous Goods It is the duty of the consignor to warn the carrier when dangerous goods such as explosives, acids or poisons are booked for carriage In the absence of such warning, the consignor will be responsible for any probable adverse consequences Check Your Progress 1 What is the difference between common carrier and private carrier? ……………………………………………………………………………… ……………………………………………………………………………… What are the duties of a common carrier? ……………………………………………………………………………… ……………………………………………………………………………… 63 Carrier and Carriage of Goods 64 International Business Law 5.3 CONTRACT OF CARRIAGE A contract of carriage is a contract between a carrier of goods or passengers and the consignor, consignee or passenger Contracts of carriage typically define the rights, duties and liabilities of parties to the contract They are usually evidenced by standard terms and conditions printed on the reverse of a ticket or carriage document Purchasing a ticket, filling out a waybill, or receipt of a Bill of lading usually constitutes acceptance of a contract of carriage 5.3.1 Classification of Carriers In the commercial life of any country, the need for carrying goods from one place to another cannot be over emphasised Also, goods are to be moved from one country to another For these purposes, a contract of carriage is to be entered into The persons, organisations or associations which carry goods are known as carriers Goods may be carried by land (including inland waterways), sea or air Accordingly, the law relating to carrying of goods is contained in the following enactments: In case of carriage of goods by land: (i) The Carriers Act, 1865 (ii) The Railways Act, 1989 In case of carriage of goods by sea: ™ The (Indian) Bills of Landing Act, 1856 ™ The Carriage of Goods by Sea Act, 1925 ™ The Merchant Shipping Act, 1958 ™ The Marine Insurance Act, 1963 In the case of carriage of goods by air: The Carriage by Air Act, 1972 Wherever there is no specific provision for a particular matter in these statutes, then the Indian Courts resort to English Common Law 5.3.2 Definition of a Contract of Carriage A contract of carriage of goods is a contract of bailment for reward, or locatio operis faciends However, the contract of bailment is modified by the different statutes mentioned above in the case of carriage of goods by land, sea or air Classification of Carriers Generally speaking carriers are classified into: (i) common carriers, (ii) private carriers, and (iii) gratuitous carriers Common Carriers: The Carriers Act, 1865 defines a common carrier as any individual, firm or company (other than the government, who or which transports goods as a business, for money, from place to place, over land or inland waterways, for all persons (consignors) without any discrimination between them Private Carriers: A private carrier is one who does not transport goods from one place to another regularly; he may engage in some casual jobs of carrying goods for certain selected persons between certain terminals In fact, he carries his own goods and that’s why he is known as a private carrier and not a common carrier Also, he does not make a general offer to carry goods for any one from one place to another for hire However, he may enter into a contract with someone to carry goods on the terms agreed upon between them In such a situation, it is a contract of bailment Therefore, such transactions are not covered by the Common Carriers Act, 1865 Gratuitous Carrier: When a person carries goods of another free of charge, he is a gratuitous carrier Similarly a person may give lift in his transport to another person voluntarily without any compensation Thus a gratuitous carrier may carry not only goods but persons also free of charge 5.4 COMMON CARRIERS A common carrier is an organization that transports people, goods, or services and offers its services to the general public under license or authority provided by a regulatory body A common carrier holds itself out to provide service to the general public without discrimination for the "public convenience and necessity" A common carrier must further demonstrate to the regulator that it is "fit, willing and able" to provide those services for which it is granted authority Common carriers typically transport persons or goods according to defined and published routes, time schedules and rate tables upon the approval of regulators Public airlines, railroads, bus lines, cruise ships, motor carriers (i.e., trucking companies) and other freight companies generally operate as common carriers Although common carriers generally transport people or goods, in the United States the term may also refer to telecommunications providers and public utilities In certain U.S states, amusement parks that operate roller coasters and comparable rides have been found to be common carriers; a famous example is Disneyland Regulatory bodies may also grant carriers the authority to operate under contract with their customers instead of under common carrier authority, rates, schedules and rules These regulated carriers, known as contract carriers, must demonstrate that they are "fit, willing and able" to provide service, according to standards enforced by the regulator However, contract carriers are specifically not required to demonstrate that they will operate for the "public convenience and necessity." A contract carrier may be authorized to provide service over either fixed routes and schedules, i.e., as regular route carrier or on an ad hoc basis as an irregular route carrier It should be mentioned that the carrier refers only to the person (legal or physical) that enters into a contract of carriage with the shipper The carrier does not necessarily have to own or even be in the possession of a means of transport Unless otherwise agreed upon in the contract, the carrier may use whatever means of transport approved in its operating authority, as long as it is the most favourable from the cargo interests’ point of view The carriers' duty is to get the goods to the agreed destination within the agreed time or within reasonable time The person that is physically transporting the goods on a means of transport is referred to as the “actual carrier” When a carrier subcontracts with another provider, such as an independent contractor or a third party carrier, the common carrier is said to be providing "substituted service." The same person may hold both common carrier and contract carrier authority In contrast, private carriers are not licensed to offer a service to the public Private carriers generally provide transport on an irregular or ad hoc basis for their owners Common carriers are subject to special laws and regulations which differ depending on the means of transport used, e.g sea carriers are often governed by quite different rules than road carriers or railway carriers In common law jurisdictions as well as under international law, a common carrier is absolutely liable for goods carried by it, with four exceptions: z An act of nature z An act of the public enemies 65 Carrier and Carriage of Goods 66 International Business Law z Fault or fraud by the shipper z An inherent defect in the goods A sea carrier may also, according to the Hague-Visby Rules, escape liability on other grounds than the above mentioned, e.g a sea carrier is not liable for damages to the goods if the damage is the result of a fire onboard the ship or the result of a navigational error committed by the ships master or other crewmember Carriers typically incorporate further exceptions into a Contract of Carriage, often specifically claiming not to be a common carrier An important legal requirement for common carrier as public provider is that it cannot discriminate, that is refuse the service unless there is some compelling reason (e.g post doesn't allow to send cash) As of 2007, the status of telecommunication providers as common carriers and their rights and responsibilities is widely debated (network neutrality) It is also important to remember that the term common carrier does not exist in continental Europe but is distinctive to common law systems, particularly law systems in the U.S.A A person who carries goods occasionally or free of charge is not a common carrier A carrier must carry goods of the consignor for hire and not free of charge in order to be called a common carrier Further, he must be engaged in the business of carrying goods for others for money from one place to another The Carriers Act, 1865 defines a common carrier as any individual, firm or company (other than the government, who or which transports goods as a business, for money, from place to place, over land or inland waterways, for all persons (consignors) without any discrimination between them Furthermore he is bound to carry goods for all persons (consignors) without any discrimination provided: the freight chargeable by him is paid to him; there is accommodation on his conveyance; and there is nothing objectionable or illegal about the carrying of goods of a particular consignor If, in spite of the above conditions being satisfied, a carrier reserves to himself the right to accept or reject an offer, he is not a common carrier It is worth noting that the Carriers Act, 1865 covers only common carriers of goods and not passengers 5.4.1 Responsibility of Common Carrier and Bailee We know that a bailee is responsible only when the goods entrusted to him are lost or damaged due to his fault or negligence But the responsibility of a common carrier is more onerous; he is to deliver the goods safely Therefore, in the case of a common carrier, it is immaterial whether the loss or damage to the goods is due to his or someone else’s negligence 5.4.2 Distinction between a Common Carrier and a Private Carrier The distinction between the two is as follows: A common carrier publicly undertakes to carry from place to place the goods of any person who chooses to employ him A private carrier does not carry regularly from place to place but is an occasional carrier A common carrier is bound to carry the goods of any person provided certain conditions are satisfied A private carrier is free to accept or reject the goods for carriage The liabilities of a common carrier are determined by the Common Carriers Act, 1865 A private carrier’s liability is not determined by the Common Carriers Act, 1865 He is liable as a bailee as given in the Indian Contract Act, 1872 5.4.3 Carriage of Goods by Land As mentioned above, the following two statutes govern the carriage of goods by land: The Carriers Act, 1865 The Railways Act, 1989 The Carriers Act, 1865 This Act defines the term “common carrier” and provides for his rights, duties and liabilities As regards matters not covered by this Act, the rules of English Common Law will apply 5.4.4 Rights of a Common Carrier His rights are: He is entitled to the settled remuneration and in case no remuneration was settled, to a reasonable remuneration He has a right to refuse to carry goods under certain circumstances (as enumerated under the duties of a common carrier) He has a lien on the goods for his remuneration He can refuse to deliver them until his charges are paid If the consignee refuses to take delivery of the goods, when tendered, the common carrier has a right, to deal with the goods as he thinks reasonable and prudent under the circumstances He has a right to recover reasonable expenses incurred by him as a result of the consignee’s refusal to take delivery After giving notice to the consignee, the common carrier may even sell perishable goods He can recover damages from the consignor if the goods are dangerous or are loosely packed and the carrier suffers injury therefrom He can limit his liability subject to the provisions of the Carriers Act 5.4.5 Duties of a Common Carrier His duties are: A common carrier is bound to carry goods of all persons who choose to employ him He can, however, refuse to carry goods under the following circumstances: ™ if there is no accommodation in the carriage; ™ if the person employing him is not willing to pay reasonable charges for the carriage of goods; ™ if the goods are such which he is not accustomed to carry; ™ if the goods are to be carried over a route which is not his regular route; ™ if the goods are-dangerous and as such subjecting him to extraordinary risk; ™ if the consignor refuses to disclose the nature of the goods to be carried; and ™ if the goods are not properly packed ™ if a carrier refuses to carry the goods of a person for any reason other than those mentioned above, he may be held liable for damages 67 Carrier and Carriage of Goods 68 International Business Law He must carry the goods over the usual and customary route and take all reasonable precautions for their safe carriage He must not deviate from the usual route unless rendered necessary by exceptional circumstances He must deliver the goods at the agreed time and if no time had been fixed, within a reasonable time At Common Law, he is an insurer of the goods in the sense that he warrants to carry the goods safely and securely 5.4.6 Liabilities of a Common Carrier The liability of a common carrier of goods is laid down in the Carriers Act, 1865 For this purpose, the Act has classified the goods into two categories: i Scheduled goods, and ii Non-scheduled goods The scheduled goods are those which are enumerated in a Schedule to the Act They are valuable articles like gold, silver, precious stones and pearls, bills and hundis, currency and bank notes, glass, china silk, articles of ivory, time pieces, musical and scientific instruments, etc All other goods are non-scheduled For scheduled articles exceeding Rs 100 in value, the carrier is liable for loss and damage only: i if the value and the description of the goods are disclosed by the consignor to the carrier; or ii if the loss or damage is due to a criminal act of the carrier, his agent or servant The carrier can charge extra for carrying scheduled articles, but he cannot limit his statutory liability by any special agreement As regards non-scheduled articles, a common carrier can limit his liability by special agreement with the consignor But even in this Section case he will be liable under of the Act In case of loss or damage, the claimant must notify the carrier within six months of the date of knowledge of the loss or damage 5.5 CARRIAGE OF GOODS BY RAIL The Indian Railways Act, 1890 lays down the duties and liabilities of the railway administration as a career of goods These are similar to the duties and liabilities of common careers 5.5.1 Railways Liability Railways are liable for loss, destruction or non-delivery of goods arising from any cause except the Acts of God, war or public enemies, fire, explosion or any unforeseen risk, arrest, restraint or seizure under legal process, restrictions imposed by the Central or State Govts, natural deterioration or wastage due to inherent defect, vice or quality of goods; latent defects, and any act of omission or negligence on the part of consignor or his agents 5.5.2 When does the Liability Terminate? Transit of goods by the railways terminates on the arrival of the goods at the destination and the expiry of free days allowed for unloading of consignment from the railway wagon, without payment of demurrage The liability of the railways as a carrier terminates with the termination of transit However, for the period of days ii a bill of lading where the goods are to be carried in a general ship and the person consigning the goods is known as a shipper In both these contracts, the ship owner (the carrier) undertakes the responsibility of carrying the goods of a consignor (i.e., either the charterer or the shipper) safely and securely to the destination Whether in the form of a charter party or a bill of lading — is governed by the (Indian) Bills of Lading Act, 1856 and the Carriage of Goods by Sea Act, 1925 Conditions Contained in a Contract of Carriage by Sea: he terms included in a contract of carriage by sea are of two kinds These are: Express terms, and Implied terms Express terms are those which the parties have specifically agreed to and embodied in the contract Implied terms are those which law implies in every contract of carriage by sea unless excluded specifically There are four implied terms: (i) Implied warranty of seaworthiness: The ship owner, when he enters into a charter — party for a voyage impliedly warrants that the ship is seaworthy This is an assurance by the ship owner, at the time of entering into the charter party, that (a) the ship is fit to encounter the ordinary perils of navigation during voyage and (b) to carry the specific cargo This warranty of seaworthiness extends only to (a) seaworthiness at the time of sailing and (b) ‘fitness at the time of loading the cargo Once the ship has sailed or the goods are on board, this warranty ceases to operate But in case the voyage is divided into stages, the ship must be seaworthy at the commencement of each voyage (ii) Implied warranty of commencement of voyage: Another implied warranty is that the ship shall be ready to commence the voyage and shall carry out the same with all reasonable dispatch and diligence (iii) Non-deviation of voyage: Also there is an implied condition that there shall be no unnecessary deviation Deviation means the going off from the settled or the usual or customary course of voyage between the two termini (iv) Shipper not to ship dangerous goods: The shipper (i.e., the consignor of goods in case the charterer undertakes to carry goods of others under bills of lading) shall not ship dangerous goods If the shipper ships dangerous goods and if on account of it the charterer suffers any damage, he can recover it from the shipper 5.8 CHARTER PARTY A charter party is a contract providing for a hiring of a whole ship Its terms may amount to a leasing of the ship, when the master and the crew of the ship become the servants of the charterer A charter party may be for a particular period, or for a particular voyage In the former case it is called a time charter party and in the latter case, a voyage charter party has no specific form; the form varies from trade to trade depending on the customs of the trade Charter Party (Lat charta partita, a legal paper or instrument, divided, i.e written in duplicate so that each party retains half), a written, or partly written and partly printed, contract between merchant and shipowner, by which a ship is let or hired for the conveyance of goods on a specified voyage, or for a defined period Also, a written contract between shipowner and charterer whereby a ship is hired; all terms, conditions and exceptions are stated in the contract or incorporated by reference 73 Carrier and Carriage of Goods 74 International Business Law A charter party is the contract between the owner of a vessel and the charterer for the use of a vessel The charterer takes over the vessel for a certain amount of time or for a certain point-to-point voyage There are two main types of charter, a voyage charter and a time charter There is a subtype of time charter called the demise or bareboat charter In a voyage charter, the charterer hires the vessel for a single voyage, while the vessel's owner (or disponent owner) provides the master, crew, bunkers and supplies In a time charter, the vessel is hired for a specific amount of time The owner still manages the vessel but the charterer givers orders for the employment of the vessel, and may sub-charter the vessel on a time charter or voyage charter basis The demise or bareboat charter is a time charter in which the charter takes responsibility for the crewing and maintenance of the ship during the time of the charter, assuming the legal responsibilities of the owner and is known as a disponent owner 5.8.1 US Law (Note the US regime below can also be applied into charter parties or contracts of carriage subject to the laws of other jurisdictions.) COGSA, the Carriage of Goods by Sea Act, does not apply of its own force to charter parties, but does apply to bills of lading issued to a shipper by the charterer (in the US) in conjunction with charterer's operations As a practical matter, many charter party forms stipulate the applicability of COGSA or the Harter Act to the relations between owner and charterer Such a stipulation is valid and enforceable even without the issuance of a bill of lading Law suits brought for the breach of an obligation under a charter party are generally within the admiralty jurisdiction As long as the agreement is executory, for inadequate performance the remedy is in personam which allows the plaintiff to go to state court under the "saving to suitors" clause If, however, a charter breach creates a maritime lien, the suit is in rem, against the vessel itself, with exclusive admiralty jurisdiction What has been said above mostly applies to commercial operations and voyages In pleasure boating, the most frequent charter arrangement is the bareboat charter The voyage or time charter is only used for larger yachts and is more the exception than the rule Charter fleets are mostly made up of boats belonging to individuals or companies who only use their boats on a part time basis or as an investment a recent arrangement in recreational boating is the time-share chartering in which several charterers are assigned a certain number of days per month or season in a manner which resembles time-share for residential resorts 5.8.2 Typical Clauses A charter-party may contain these clauses: Bunker clause: A bunker clause stipulates that charterers shall accept and pay for all fuel oil in the vessel's bunkers at port of delivery and conversely, owner shall pay for all fuel oil in the vessel's bunkers at port of re-delivery at current price at the respective ports It is customary to agree upon a certain minimum and maximum quantity in bunkers on re-delivery of the vessel Ice clause: An ice clause is inserted in a bill of lading or a charter-party when a vessel is bound for a port or ports which may be closed to shipping by ice when the vessel arrives or after the vessel's arrival Lighterage clause: A lighterage clause is inserted into charter-parties which show as port of discharge any safe port in a certain range, e.g Havre/Hamburg range Negligence clause: A negligence clause tends to exclude shipowner's or carrier's liability for loss or damage resulting from an act, default or neglect of the master, mariner, pilot or the servants of the carrier in the navigation of manoeuvring of a ship, not resulting, however, from want of due diligence by the owners of the ship or any of them or by the ship's husband or manager Ready berth clause: A ready berth clause is inserted in a charter-party, i.e a stipulation to the effect that laydays will begin to count as soon as the vessel has arrived at the port of loading or discharge "whether in berth or not" It protects shipowner's interests against delays which arise from ships having to wait for a berth 5.8.3 Charter-parties Charter-parties are, as we have already explained, either for a voyage or for a period of time A charter-party for a voyage is a formal agreement made between the owner of the vessel and the charterers by which it is agreed that the vessel being tight, staunch and strong, and every way fitted for the voyage, shall load at a certain named place a full cargo either of goods of a specified description or of general merchandise, and being so loaded shall proceed with all possible dispatch either to a specified place or to a place to be named at a specified port of call, and there deliver the cargo to the charterers or their assigns There are clauses which provide for the amount of freight to be paid and the manner and time of payment; for the time, usually described as lay days, to be allowed for loading and discharging, and for the demurrage to be paid if the vessel is detained beyond the lay days; usually also a clause requiring the cargo to be brought to and taken from alongside at merchant's risk and expense; a clause that the master shall sign bills of lading for the cargo shipped either at the same rate of freight as is payable under the charter-party or very commonly at any rate of freight (but in this case with a stipulation that, if the total bill of lading freight is less than the total freight payable under the charter-party, the difference is to be paid by the charterers to the master before the sailing of the vessel); and there is usually what is called the cesser clause, by which the charterer's liability under the charter-party is to cease on shipment of the cargo, the shipowner taking a lien on the cargo for freight, dead freight and demurrage The charter-party is made subject to exceptions similar to those which are found in bills of lading There are also usually clauses providing for the commissions to be paid to the brokers on signing the charter-party, the address commission to be paid to the agents for the Vessel at the port of discharge, and other matters of detail The clauses in charter-parties vary, of course, indefinitely, but the above is probably a sufficient outline of the ordinary form of a charter-party for a voyage What has been said with regard to bills of lading as to the voyage, the place of delivery, the exceptions and excepted perils, and the liability of the shipowner and his lien applies equally to charter-parties It may be desirable to add a few words on demurrage, dead Freight, and on the cesser clause Demurrage is, properly speaking, a fixed sum per day or per hour agreed to be paid by the charterer for any time during which the vessel is detained in loading or discharging over and above the time allowed, which is, as we have said, usually described as the lay days Sometimes the number of days during which the vessel may be kept on demurrage at the agreed rate is fixed by the charter-party If no demurrage is provided for by the charter-party, and the vessel is not loading or discharging beyond the lay days, the shipowner is entitled to claim damages in respect of the loss which he has suffered by the detention of his ship; or, if the vessel is detained beyond the fixed number of demurrage days, damages for detention will be recoverable Sometimes there is no time fixed by the charter-party for loading or discharging The obligation in such cases is to load or discharge with all dispatch that is possible and reasonable in the circumstances; and if the loading or discharging is not done with such reasonable dispatch, the shipowner will be entitled to claim damages for detention of his ship The rate of demurrage (if any) will generally be accepted as the 75 Carrier and Carriage of Goods 76 International Business Law measure of the damages for detention, but is not necessarily the true measure When the claim is for detention and not demurrage the actual loss is recoverable, which may be more or may be less than the agreed rate of demurrage The contract usually provides that Sundays and holidays shall be excluded in counting the lay days, but unless expressly stipulated this exception does not apply to the computation of the period of detention after the lay days have expired Dead freight is the name given to the amount of freight lost, and therefore recoverable by the shipowner from the charterer as damages if a full and complete cargo is not loaded in accordance with the terms of the charter-party The cesser clause has come into common use because very frequently the charterers are not personally interested in the cargo shipped They may be agents merely, or they may have chartered the vessel as a speculation to make a profit upon the bill of lading freight The effect of the clause is that when the charterers have shipped a full cargo they have fulfilled all their obligations, the shipowner discharging them from all further liability and taking instead a lien on the cargo for payment of all freight, demurrage or dead freight that may be payable to him It has become an established rule for the construction of the cesser clause that, if the language used will permit it, the cesser of liability is assumed to be co-extensive only with the lien given to the shipowner; or, in other words, the charterers are released from those liabilities only for which a lien is given to the shipowner The shipowner is further secured by the stipulation already referred to, that if the total freight payable under the bills of lading is less than the full chartered freight the difference shall be paid to the shipowner before the vessel sails A difficulty which sometimes arises, notwithstanding these precautions, is that although an ample lien is given by the charter-party, the terms of the bills of lading may be insufficient to preserve the same extensive lien as against the holder of the bills of lading The shippers under the bills of lading, if they are not the charterers, are not liable for the chartered freight, but only for the bill of lading freight; and unless the bill of lading expressly reserves it, they are not subject to a lien for the chartered freight The master may guard against this difficulty by refusing to sign bills of lading which not preserve the shipowner's lien for his full chartered freight But he is often put into a difficulty by a somewhat improvident clause in the charter-party requiring him to sign bills of lading as presented See Kruger vs Moel Tryvan, 1907 A C 272 A time charter-party is a contract between the shipowner and charterers, by which the shipowner agrees to let and the charterers to hire the vessel for a specified term for employment, either generally in any lawful trade or upon voyages within certain limits A place is usually named at which the vessel is to be re-delivered to the owners at the end of the term, and the freight is payable until such re-delivery; the owner almost always pays the wages of the master and crew, and the charterers provide coals and pay port charges; the freight is usually fixed at a certain rate per gross register ton per month, and made payable monthly in advance, and provision is made for suspension of hire in certain cases if the vessel is disabled; the master, though he usually is and remains the servant of the owner, is required to obey the orders of the charterers as regards the employment of the vessel, they agreeing to indemnify the owners from all liability to which they may be exposed by the master signing bills of lading or otherwise complying with the orders of the charterers; and the contract is made subject to exceptions similar to those in bills of lading and voyage charterparties This is the general outline of the ordinary form of a time charter-party, but the forms and their clauses vary, of course, very much, according to the circumstances of each case It is apparent that under a time charter-party the shipowner to a large extent parts with the control of his ship, which is employed within certain limits according to the wish and directions, and for the purposes and profit of, the charterers But, as we have already explained at the beginning of this article, the shipowner continues in possession of his vessel by his servant the master, who remains responsible to his owner for the safety and proper navigation of the ship The result of this, as has been already pointed out, is that the holder of a bill of lading signed by the master, if he has taken the bill of lading without knowledge of the terms of the time charter-party, may hold the owner responsible for the due performance of the contract signed by the master in the ordinary course of his duties, and within his ostensible authority as servant of the shipowner, although in fact in signing the bill of lading the master was acting as agent for and at the direction of the time charterer, and not the shipowner In the language of the ordinary time charter-party the ship is let to the charterers; but there is no true demise, because, as we have pointed out, the vessel remains in the possession of the shipowner, the charterer enjoying the advantages and control of its employment Where the possession of a ship is given up to a hirer, who appoints his own master and crew, different considerations apply; but though the instrument by which the ship is let may be called a charter-party, it is not truly a contract of affreightment 5.8.4 Customary Rights There are certain rights and obligations arising out of the relationship of shipowner and cargo-owner in circumstances of extraordinary peril or urgency in the course of a voyage, which, though not strictly contractual, are well established by the customs of merchants and recognized by the law It is obvious that, when a ship carrying a cargo is in the course of a voyage, the master to some extent represents the owners of both ship and cargo In cases of emergency it may be necessary that the master should, without waiting for authority or instructions, incur expense or make sacrifices as agent not only of his employer, the shipowner, but also of the cargo-owner Ship and cargo may be in peril, and it may be necessary for the safety of both to put into a port of refuge There it may be necessary to repair the ship, and to land and warehouse, and afterwards re-ship the cargo For these purposes the master will be obliged to incur expense, of which some part, such as the cost of repairing the ship, will be for the benefit of the shipowner; part, such as the warehousing expenses, will be for the benefit of the cargo-owner; and part, such as the port charges incurred in order to enter the port of refuge, are for the common benefit and safety of ship and cargo Again, in a storm at sea, it may be necessary for the safety of ship and cargo to cut away a mast or to jettison, that is to say, throw overboard part of the cargo In such a case the master, acting for the shipowner or cargo-owner, as the case may be, makes a sacrifice of part of the ship or part of the cargo, in either case for the purpose of saving ship and cargo from a danger common to both Voluntary sacrifices so made and extraordinary expenses incurred for the common safety are called general average sacrifices and expenses, and are made good to the person who has made the sacrifice or incurred the expense by a general average contribution, which is recoverable from the owners of the property saved in proportion to its value, or, in other words, each contributes rateably according to the benefit received The law regulating the rights of the parties with regard to such contribution is called the law of General Average It must, however, be remembered that the owner of the cargo is entitled under the contract of affreightment to the ordinary service of the ship and crew for the safe carriage of the cargo to its destination, and the shipowner is bound to pay all ordinary expenses incurred for the purpose of the voyage He must also bear all losses arising from damage to the ship by accidents But when extraordinary expense has been incurred by the shipowner for the safety of the cargo, he can recover such expense from the owner of the cargo as a special charge on cargo; or when an extraordinary expense has been incurred or a voluntary sacrifice made by the shipowner to save the ship and cargo from a peril common to both, he may require the owner of cargo to contribute in general average to make good the loss 77 Carrier and Carriage of Goods 78 International Business Law A written contract between the owner of a vessel and the one (the charterer) desiring to empty the vessel setting forth the terms of the arrangement, i.e., freight rate and ports involved in the contemplated trip A contract of affreightment in writing by which the owner of a ship or other vessel lets the whole, or a part of her, to a merchant or other person for the conveyance of goods on a particular voyage in consideration of the payment of freight This term is derived from the fact that the contract which bears this name was formerly written on a card and afterwards the card was cut into two parts from top to bottom, and one part was delivered to each of the parties, which was produced when required, and by this means counterfeits were prevented This instrument ought to contain: the name and tonnage of the vessel; the name of the captain; the names of the letter to freight and the freighter; the place and time agreed upon for the loading and discharge; the price of the freight; the demurrage or indemnity in case of delay; such other conditions as the parties may agree upon When a ship is chartered this instrument serves to authenticate many of the facts on which the proof of her neutrality must rest and should therefore be always found on board chartered ships When the goods of several merchants unconnected with each other, are laden on board without may particular contract of affreightment with any individual for the entire ship; the vessel is called a general ship, because it is open to all merchants, but where one or more merchants contract for the ship exclusively it is said to be a chartered ship Check Your Progress Define the following: Charter Party ……………………………………………………………………………… ……………………………………………………………………………… Dead Freight ……………………………………………………………………………… ……………………………………………………………………………… 5.9 BILL OF LADING A Bill of Lading is a type of document that is used to acknowledge the receipt of a shipment of goods and is an essential document in transporting goods overland to the exporter's international carrier A through Bill of Lading involves the use of at least two different modes of transport from road, rail, air and sea The term derives from the noun "bill", a schedule of costs for services supplied or to be supplied, and from the verb "to lade" which means to load a cargo onto a ship or other form of transport In addition to acknowledging the receipt of goods, a Bill of Lading indicates the particular vessel on which the goods have been placed, their intended destination, and the terms for transporting the shipment to its final destination Inland, ocean, through, and airway bill are the names given to bills of lading A bill of lading is a document acknowledging the shipment of goods, signed by or on behalf of the carrier and containing the terms and conditions on which it has been agreed to carry the goods It is a quasi-negotiable instrument It is a document of title and can be transferred by endorsement and delivery It is generally used for the carriage of goods on a general ship, i.e., a ship which is used for the carriage of the goods of several merchants who wish to have them conveyed by her and which is not employed for the carriage of a charterer’s goods only Lord Blackburn says, “a bill of lading is a writing, signed on behalf of the owner of the ship in which goods are embarked, acknowledging the receipt of the goods and undertaking to deliver them at the end of the voyage, subject to such conditions as may be mentioned in the bill of lading It is sometimes an undertaking to deliver the goods to the shipper by name, or his assigns, sometimes to order of assigns, not naming any person which is apparently the same thing and sometimes to a consignee by name or assigns, but in all its usual forms it contains the word assigns” A bill of lading is issued when goods are delivered for carriage to a general ship, which offers to carry them The position of the owner of a general ship is that of a common carrier A bill of lading may be used even when a ship is chartered A bill of lading acknowledges the receipt of goods is a document of title to the goods and is also a contract of carriage of goods A bill of lading, as a document of title to the goods, can be transferred to another person by endorsement and delivery This characteristic of a bill of lading resembles that of a negotiable instrument, but in the strict legal and technical sense it is not a negotiable instrument It may be said that it is negotiable only in the popular sense A bill of lading may be issued even where the ship is chartered In such a case charter party will be the document evidencing the contract of affreightment, while the bill of lading would only operate as a mere acknowledgement of the receipt of the goods 5.9.1 Affreightment Affreightment (from freight) is a legal term used in shipping Contract of Affreightment is the expression usually employed to describe the contract between a ship-owner and another person called the charterer, by which the ship-owner agrees to carry goods of the charterer in his ship, or to give to the charterer the use of the whole or part of the cargo-carrying space of the ship for the carriage of his goods on a specified voyage or voyages or for a specified time The charterer on his part agrees to pay a specified price, called freight, for the carriage of the goods or the use of the ship A ship may be let like a house to a person who takes possession and control of it for a specified term The person who hires a ship in this way occupies during the specified time the position of ship-owner The contract by which a ship is so let may be called a charter-party; but it is not, properly speaking, a contract of affreightment, and is mentioned here only because it is necessary to remember the distinction between a charter-party of this kind, which is sometimes called a demise of the ship, and a charter-party which is a form of contract of affreightment 5.9.2 Rules of Law The law with regard to the contract of affreightment is, of course, a branch of the general law of contract The rights and obligations of the ship-owner and the freighter depend, as in the case of all parties to contracts, upon the terms of the agreement entered into between them The law, however, interferes to some extent in regulating the effect to be given to contracts Certain contracts are forbidden by the law, and being illegal are therefore incapable of enforcement The most important example of illegality in the case of contracts of affreightment is when the contract involves trading with an enemy 79 Carrier and Carriage of Goods 80 International Business Law The law interferes again with regard to the interpretation of the contract The meaning to be given to the words of the contract, or, in other words, its construction, when a dispute arises about it, must be determined by a judge or court The result is, that certain more or less common clauses in contracts of affreightment have come before the courts for construction, and the decisions in these cases are treated practically, though not perhaps quite logically, as rules of law determining the sense to be put upon certain forms of expression in common use in shipping contracts A third way in which the law interferes is by laying down certain rules by which the rights of the parties are to be regulated in the absence of any express stipulation with regard to the matter dealt with by such rules This is done either by statutory enactment, as by that part (Part VIII) of the Merchant Shipping Act 1804 which deals with the liability of ship-owners; or by established rules of the unwritten law, the common law as it is called, as, for instance, the rule that the common carrier is absolutely responsible for the safe delivery of the goods carried, unless it is prevented by an Act of God or enemies of the Queen These rules of law, whether common law or statute law, regulating the obligations of carriers of goods by sea, are of most importance in cases in which there is an affreightment without any written agreement of any kind It will, therefore, be convenient to consider first cases of this kind where there is no express agreement, oral or written, except as to the freight and destination of the goods, and where, consequently, the rights and obligations of the parties as to all other terms of carriage depend wholly upon the rules of law, remembering always that these same rules apply when there is a written contract, except insofar as they are qualified or negated by the terms of such contract 5.9.3 In Defaults of Express Contract The rules of the common or ancient customary English law with regard to the carriage of goods were no doubt first considered by the courts and established with regard to the carriage of goods by common carriers on land These rules were applied to common carriers by water, and it may now be taken to be the general rule that shipowners who carry goods by sea are by the English law subject to the liabilities of common carriers (See, as to the grounds and precise extent of this doctrine, the judgments in Liver Alkali Company v Johnson (1874), L.R., Ex 338, and Nugent v Smith (1876) C.P.D 423.) In practice goods are not often shipped without a written contract or acknowledgment of the terms upon which they are to be carried For each separate consignment or parcel of goods shipped a bill of lading is almost invariably given, and when a whole cargo is agreed to be carried the terms are set out in a document called a charter-party, signed by or on behalf of the ship owner on the one part, and the shipper, who is called the charterer, on the other part But at present we are considering the relations of ship owner and shipper independently of any express contract, as in a case when goods are shipped and received to be carried to the place to which the ship is bound for certain freight, but without any further agreement as to the terms of carriage In such a case the rights of the parties depend on the rules of law, or, which is much the same thing, upon the warranties or promises which though not expressed must, as the courts have held, be implied as arising from the relation between the parties as shipper and carrier The obligations on the one side and the other may be defined shortly to be as follows: The shipper must not ship goods of a nature or in a condition which he knows, or ought, if he used reasonable care, to know to be dangerous to the ship, or to other goods, unless the ship owner has notice of or has sufficient opportunity to observe their dangerous character The shipper must be prepared, without notice from the ship owner, to take delivery of his goods with reasonable dispatch on the arrival of the ship at the place of destination, being ready there to discharge in some usual discharging place The shipper must pay the agreed freight, and will not be entitled to claim delivery until the freight has been paid In other words, the shipowner has a lien on the goods carried for the freight payable in respect of the carriage On the other hand, the obligation upon the ship owner is first and foremost to deliver safely at their destination the goods shipped, and this obligation is, by the common law, subject to this exception only that the ship owner is not liable for loss or damage caused by the Act of God or the king's enemies; but by statute [Merchant Shipping Act, 1894, Part (VIII)] it is further qualified to this extent that the ship owner is not liable for loss, happening without his actual fault or privity, by fire on board the ship, or by the robbery or embezzlement of or making away with gold or silver or jewellery, the true nature and value of which have not been declared in writing at the time of shipment; and, further, the ship owner is not liable for damage to or loss of goods or merchandise beyond an aggregate amount, not exceeding eight pounds per ton for each ton of the ship's tonnage The shipowner is bound by an implied undertaking, or, in other words, is made responsible by the law as if he had entered into an express undertaking: (1) that the ship is seaworthy; (2) that she shall proceed upon the voyage with reasonable dispatch, and shall not deviate without necessity from the usual course of the voyage It is not the purpose of this article to discuss minute or doubtful questions; but in their general outline the obligations of shipper and shipowner, where no terms of carriage have been agreed, except as to the freight and destination of the goods, are such as have been described above The importance of appreciating clearly this view of the relations of shipper and shipowner arises from the fact that these fundamental rules apply to all contracts of affreightment, whether by bill of lading, charter-party or otherwise, except insofar as they are modified or negatived by the express terms of the contract The document signed by the master or agent for the shipowner, by which are acknowledged the shipment of a parcel of goods and the terms upon which it is to be carried, is called a bill of lading The document still used today, initially appeared some centuries ago as a bill (account) presented to shippers for all the charges incurred with his cargo until properly secured and stowed on board Since in the era of sailing ships it was not uncommon for cargo and ship to become lost, and therefore this bill was not only proof that cargo expenses were paid, but became mainly a proof that the cargo was really on board and thus become a negotiable property title Under this type of carriage, the bill of lading assumes two main tasks, as cargo receipt and property title In liner shipping it assumes a triple identity: property title, cargo receipt and carriage contract In tramp shipping, object of this wiki entry, the carriage contract is the charter party 5.9.4 Express Stipulations It must not be supposed that even these primary obligations, which are introduced into every contract of affreightment not by express terms of the contract It has now become common form to stipulate that the shipowner shall not be liable for any loss arising from the negligence of his servants, or that he shall not be liable for loss by the excepted perils even when brought about by the negligence of his servants And with regard to seaworthiness, it is not uncommon for the shipowner to stipulate that he shall not be responsible for loss arising even from the unseaworthiness of the ship on sailing, provided that due care has been taken by the owner and his agents and servants to make the ship seaworthy at the commencement of the voyage There is indeed no rule of English law which prevents a shipowner from exempting himself by the terms of the bill of lading from liability for damage and loss of every kind, whether arising from unseaworthiness or any other cause whatsoever 81 Carrier and Carriage of Goods 82 International Business Law In such a case the goods are carried at their owner's risk, and if he desires protection he must obtain it by insurance In this respect the law of England permits greater freedom of contract than is allowed by the law of some other states The owners, agents and masters of vessels loading in the United States of America are forbidden by an act of Congress, commonly called the Harter Act, passed in the year 1893, to insert in their contracts of affreightment any clause exempting the shipowner from liability for the negligence of his servants; but it is at the same time enacted that, provided all reasonable skill and care has been exercised by the shipowner to make the vessel seaworthy and fit for the voyage at its commencement, the shipowner shall not be liable for any loss caused by the negligence of the master or crew in the navigation of the vessel, or by perils of the sea or certain other causes set forth in the act It is now very usual to insert in the bills of lading of British vessels loading in the United States a reference to the Harter Act, incorporating its provisions so as to make them terms and conditions of the bill of lading The difficulty of construing the terms of bills of lading with regard to the excepted perils, often expressed in obscure and inexact language, has given rise to much litigation, the results of which are recorded in the law reports Where such difficulties arise the question must be, What is the true and natural meaning of the language used by the parties? This question is not governed by the general rules which we have endeavored to explain: but the words of the contract must always be considered with reference to these rules, which are founded upon the well-established customs of merchants recognized and formulated by the courts of law The bill of lading sometimes contains a clause as to the shipowner's lien Without any express provision for it the shipowner has by the common law a lien for freight If it is desired to give the shipowner a lien for demurrage (see below) or other charges, it must be expressly provided for The lien is the right of the shipowner to retain the goods carried until payment has been made of the freight or the demurrage, or other charge for which a lien has been given The lien may be waived, and is lost by delivery of the goods, or by any dealing with the consignee which is inconsistent with a right of the shipowner to retain possession of the goods until payment has been made The shipowner may preserve his lien by landing the goods and retaining them in his own warehouse, or by storing them in a public warehouse, subject to the conditions required by the Merchant Shipping Act (1894) A bill of lading (sometimes referred to as a BOL or B/L) is a document issued by a carrier, e.g a ship's master or by a company's shipping department, acknowledging that specified goods have been received on board as cargo for conveyance to a named place for delivery to the consignee who is usually identified A through bill of lading involves the use of at least two different modes of transport from road, rail, air, and sea The term derives from the noun "bill", a schedule of costs for services supplied or to be supplied, and from the verb "to lade" which means to load a cargo onto a ship or other form of transport 5.9.5 Short Statement of Principle The standard short form bill of lading is evidence of the contract of carriage of goods and it serves a number of purposes: It is evidence that a valid contract of carriage, or a chartering contract, exists, and it may incorporate the full terms of the contract between the consignor and the carrier by reference (i.e the short form simply refers to the main contract as an existing document, whereas the long form of a bill of lading (connaissement intégral) issued by the carrier sets out all the terms of the contract of carriage); It is a receipt signed by the carrier confirming whether goods matching the contract description have been received in good condition (a bill will be described as clean if the goods have been received on board in apparent good condition and stowed ready for transport); and It is also a document of transfer, being freely transferable but not a negotiable instrument in the legal sense, i.e it governs all the legal aspects of physical carriage, and, like a cheque or other negotiable instrument, it may be endorsed affecting ownership of the goods actually being carried This matches everyday experience in that the contract a person might make with a commercial carrier like FedEx for mostly airway parcels, is separate from any contract for the sale of the goods to be carried, however it binds the carrier to its terms, irrespectively of who the actual holder of the B/L, and owner of the goods, may be at a specific moment 5.9.6 Main Types of Bill Straight bill of lading: This bill states that the goods are consigned to a specified person and it is not negotiable free from existing equities, i.e any endorsee acquires no better rights than those held by the endorser So, for example, if the carrier or another holds a lien over the goods as security for unpaid debts, the endorsee is bound by the lien Although, if the endorser wrongfully failed to disclose the charge, the endorsee will have a right to claim damages for failing to transfer an unencumbered title Also known as a non-negotiable bill of lading Order bill of lading: This bill uses express words to make the bill negotiable, e.g it states that delivery is to be made to the further order of the consignee using words such as "delivery to A Ltd or to order or assigns" Consequently, it can be endorsed by A Ltd or the right to take delivery can be transferred by physical delivery of the bill accompanied by adequate evidence of A Ltd.'s intention to transfer Also known as a negotiable bill of lading Bearer bill of lading: This bill states that delivery shall be made to whosoever holds the bill Such bill may be created explicitly or it is an order bill that fails to nominate the consignee whether in its original form or through an endorsement in blank A bearer bill can be negotiated by physical delivery Surrender bill of lading: Under a term import documentary credit the bank releases the documents on receipt from the negotiating bank but the importer does not pay the bank until the maturity of the draft under the relative credit This direct liability is called Surrender Bill of Lading (SBL), i.e when we hand over the bill of lading we surrender title to the goods and our power of sale over the goods Other terminology: A sea or air waybill is a non-negotiable receipt issued by the carrier It is most common in the container trade either where the cargo is likely to arrive before the formal documents or where the shipper does not insist on separate bills for every item of cargo carried (e.g because this is one of a series of loads being delivered to the same consignee) Delivery is made to the consignee who identifies himself It is customary in transactions where the shipper and consignee are the same person in law making the rigid production of documents unnecessary The UK's Carriage of Goods by Sea Act, 1992 creates a further class of document known as a ship's delivery order which contains an undertaking to carry goods by sea A straight bill of lading by land or sea, or sea/air waybill are not documents of title to the goods they represent They no more than require delivery of the goods to the named consignee and (subject to the shipper's ability to redirect the goods) to no other This differs from an "order" or "bearer" bill of lading which are possessory title 83 Carrier and Carriage of Goods 84 International Business Law documents and negotiable, i.e they can be endorsed and so transfer the right to take delivery to the last endorsee 5.9.7 A Sample of the Issues In most national and international systems, a bill of lading is not a document of title, and does no more than identify that a particular individual has a right to possession at the time when delivery is to be made Problems arise when goods are found to have been lost or damaged in transit, or delivery is delayed or refused Because the consignee is not a party to the contract of carriage, the doctrine of privity of contract states that a third party has no right to enforce the agreement However, whether this is a problem to the consignee depends on who owns the goods and who holds the risks associated with the carriage This will be answered by examining the terms of all the relevant contracts If the consignor has reserved title until payment is made, the consignor can sue to recover his or her loss But if ownership and/or the risk of loss has transferred to the consignee, the right to sue may not be clear in contract, although there could be remedies in tort/delict (the issue of risk will have been most carefully considered to decide who should insure the goods during transit) Hence, a number of international Conventions and domestic laws specifically address when a consignee has the right to sue The legal solution most often adopted is to apply the principle of subrogation, i.e to give the consignee the same rights of action held by the consignor This enables most of the more obvious cases of injustice to be avoided In the municipal law of the U.S., the issue and enforcement of bills which may be documents of title, is governed by Article of the Uniform Commercial Code However, since bills of lading are most frequently used in transborder, overseas or airborne shipping, the laws of whatever other countries are involved in the transaction covered by a particular bill may also be applicable including the Hague Rules, the Hague-Visby Rules and The Hamburg Rules at international level for shipping, The Warsaw Convention for the Unification of Certain Rules for International Carriage by Air 1929 and The Montreal Convention for the Unification of Certain Rules for International Carriage by Air 1999 for air waybills, etc It is customary for parties to the bill to agree both which country's courts shall have the jurisdiction to hear any case in a forum selection clause, and the municipal system of law to be applied in that case choice of law clause The law selected is termed the proper law in private international law and it gives a form of extraterritorial effect to an otherwise sovereign law, e.g a Chinese consignor contracts with a Greek carrier for delivery to a consignee based in New York: they agree that any dispute will be referred to the courts in New York (since that is the most convenient place — the forum conveniens) but that the New York courts will apply Greek law as the lex causae to determine the extent of the carrier's liability Check Your Progress Fill in the blanks: A common carrier may be any individual, firm or company, which transports goods as regular business for ………………… Goods of high value are termed as ………………… A contract of carriage of goods by sea is called a ………………… 5.10 CARRIAGE BY AIR The Carriage by Air Act, 1972 governs the carriage of goods by air The provisions of this Act apply to domestic flights in the same manner, as they are applicable to international flights carrying cargo The various documents relating to carriage by air are briefly described hereunder 5.10.1 Passenger Ticket The Passenger Ticket issued by a carrier must show (i) the place and date of issue, (ii) places of departure and destination, (iii) the agreed stopping place, (iv) the name and address of the carrier, and (v) the statement that the carriage is subject to the liabilities mentioned therein The absence or loss of passenger ticket does not affect the validity of the contract of carriage, but if the carrier accepts a passenger without a ticket, he cannot enjoy the benefit of limiting his liability 5.10.2 Baggage Check For the carriage of baggage, the baggage check, made out in duplicate must contain the following particulars: The place and date of issues Places of departure and destination, Name and address of the carrier or carriers, The number of passenger tickets, A statement that the baggage will be delivered to the bearer of baggage check, The number and weight of the package, The amount of the value declared in accordance with Rule 22 (2), and A statement that the carriage is subject to rules relating to liability stated therein If the baggage check does not contain the particulars set out in (4), (6) and (8) above, the carrier shall not be entitled to the benefit of rules limiting liability 5.10.3 Air Way Bill This is a document handed over by the consignor to the carrier along with the goods The Air Way Bill is prepared in triplicate, the first copy being for the carrier, the second which must accompany the goods, is for the consignee and the third is to be retained by the consignor, after the carrier has signed it in token of acceptance of goods The Air Way Bill must contain the specified particulars for the correctness of which the consignor is responsible and he will be liable for all damages suffered due to the incompleteness of the particulars The Air Way Bill is the prima facie evidence of the conclusion of contract of carriage, of the receipt of goods as well s the statement relating to the weight, dimensions, packing of the goods and the number of package 5.10.4 Limitation of Carrier's Liability Passengers on a journey involving an ultimate destination or a stop in a country other than the country of origin are advised that the provisions of a treaty known as the Warsaw Convention may be applicable to the entire journey, including any portion entirely within the country of origin or destination For such passengers on a journey to, or from, or with an agreed stopping place in the United States of America, the Convention and special contracts of carriage embodied in applicable tariffs provide that the liability of certain carriers parties to such special contracts, for death of or personal injury to passengers is limited in most cases to proven damages not to exceed U.S.$75,000 per passenger, and that this liability up to such limit shall not depend on negligence on the part of the Carrier For such passengers travelling by a carrier not a party to such special contracts or on a journey not to, from, or having an agreed stopping place in the United States of America, liability of the carrier for death or personal injury to passengers is limited in most cases to approximately U.S.$10,000 or U.S.$20,000 The names of carriers parties to such special contracts are available at all ticket offices of such carriers and may be examined on request Additional protection 85 Carrier and Carriage of Goods 86 International Business Law can usually be obtained by purchasing insurance from a private Company Such insurance is not affected by any limitation of the carrier’s liability under the Warsaw Convention or such special contracts of carriage For further information please consult your Airline or Insurance Company Representative The limit of liability of U.S $75,000 above is inclusive of legal fees and costs, except that in case of a claim brought in a State where provision is made for separate award of legal fees and costs, the limit shall be the sum of U.S.$58,000 exclusive of legal fees and costs 5.11 LET US SUM UP A contract of carriage is a contract between a carrier of goods or passengers and the consignor, consignee or passenger Contracts of carriage typically define the rights, duties and liabilities of parties to the contract The Air Way Bill is prepared in triplicate, the first copy being for the carrier, the second which must accompany the goods, is for the consignee and the third is to be retained by the consignor, after the carrier has signed it in token of acceptance of goods The Air Way Bill must contain the specified particulars for the correctness of which the consignor is responsible and he will be liable for all damages suffered due to the incompleteness of the particulars The document signed by the master or agent for the shipowner, by which are acknowledged the shipment of a parcel of goods and the terms upon which it is to be carried, is called a bill of lading A charter party is a contract providing for a hiring of a whole ship Its terms may amount to a leasing of the ship, when the master and the crew of the ship become the servants of the charter 5.12 LESSON END ACTIVITY Explain the following: Contract of carriage Charter party Bill of Lading Air way bill 5.13 KEYWORDS Carriers Act: Carriers act applies only to common carriers as distinguished from private carriers Bill of Lading: A Bill of Lading is a type of document that is used to acknowledge the receipt of a shipment of goods and is an essential document in transporting goods overland to the exporter's international carrier Charter Party: A charter party is a contract providing for a hiring of a whole ship 5.14 QUESTIONS FOR DISCUSSION Explain briefly about carriage and contract of carriage What is bill of lading? Explain different modes of carriage of goods Check Your Progress: Model Answers CYP 1 Common Carrier vs Private Carrier: A common carrier may be any individual, firm or company, which transports goods as regular business for money, over land or inland waterways A private carrier, carries his own goods and may occasionally carry goods for selected persons He is not covered by the Carriers Act, but by the Indian Contract Act Duties of a Common Carrier: (1) To receive and carry goods from all corners, indiscriminately (2) To carry the goods safely (3) To carry by his customary route without deviating from it unnecessarily (4) To obey instructions of the consignor (5) To deliver the goods within the agreed time at the stipulated place CYP Liabilities of Railways: Railways are liable for loss, destruction or non-delivery of goods arising from any cause except the acts of God, war or public enemies, fire, explosion or any unforeseen risk, arrest, restraint or seizure under legal process, restrictions imposed by the Central or State Govts, natural deterioration or wastage due to inherent defect, vice or quality of goods; latent defects, and any act of omission or negligence on the part of consignor or his agents CYP Charter Party: A charter party is a contract providing for a hiring of a whole ship Its terms may amount to a leasing of the ship, when the master and the crew of the ship become the servants of the charterer Dead Freight: Dead freight is the name given to the amount of freight lost, and therefore recoverable by the shipowner from the charterer as damages if a full and complete cargo is not loaded in accordance with the terms of the charter-party CYP money Scheduled goods Contract of affreightment 5.15 SUGGESTED READINGS Herbert M Bohlman & Mary Jane Dundas, The Legal Ethical, and International Law Environment of Business, 4th Edition, South-Western College Publishing, 1999 Miller, Roger LeRoy; Cross, Frank B., Legal Environment Today: Businessmen Its Ethical, Regulatory & International Law Krishnaveni Muttai, Logistics Management Kapoor S K, International Law, Central Law Agency, 13th ed., Motilal Nehru Road, Allah bad, 2000 Kapoor N D, Elements of Mercantile Law, 26th ed., Sultan Chand & Sons, New Delhi, 2002 Gulshan S S, Business Law, Excel Books, New Delhi, 2002 Mithani D M, International Economics, 3rd ed., Himalaya Publishing House, Mumbai, 2000 87 Carrier and Carriage of Goods ...60 International Business Law LESSON 61 Carrier and Carriage of Goods CARRIER AND CARRIAGE OF GOODS CONTENTS 5.0... Legal Ethical, and International Law Environment of Business, 4th Edition, South-Western College Publishing, 1999 Miller, Roger LeRoy; Cross, Frank B., Legal Environment Today: Businessmen Its Ethical,... Liability 5.11 Let us Sum up 5.12 Lesson End Activity 5.13 Keywords 5.14 Questions for Discussion 5.15 Suggested Readings 5.0 AIMS AND OBJECTIVES After studying this lesson, you should be able to: