Carriage of Goods by Sea Transportation is a key element in today’s business world. Along with the sale of goods one must ship them some how to the customer. In cases of international shipment there are many different rules and regulations that the shipper must follow in order to legally transport their goods. When a company ships their goods they generally ship by common carriers, in other words a carrier that transports more than parties goods. If however a party contracts to employ an entire vessel, then that is know as charter party.
The following paper focuses on the Common Carriage and aspects such as bill of lading, the carriers duties under a bill of lading, the carriers immunities, liability limit, time limitations, and third-party rights. A general ship or a common carrier is a vessel that the owner or operator willing carries goods for more than one person. There are three different types of common carriers. First is a conference line which is an association of seagoing carriers who have joined together to offer common freight rates. Those that chose to ship all or a large share of their cargo through this process receives a discounted rate. Second is an independent line, which is when the vessel has their own rate schedules.
Generally, independent lines have a lower rate than that of the conference discounted price. Finally the third aspect of common carrier is tramp vessels which are similar to independent lines by the fact that they have their own rate schedule, but they differ from both in that they don’t operate on established schedules. The next topic is the bill of lading, which is an instrument issued by an ocean carrier to a shipper that serves as a receipt of the contract of carriage, and as a document of title for the goods. The treaty that governs the bill of lading is the International Convention for the Unification of Certain Rules of Law Relating to Bills of Lading. It is also known as the 1921 Hague Rules and the Brussels convention of 1924.
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The Hague Rules were extensively revised in 1968 by a Brussels Protocol. The amended version is known as the Hague-Visby Rules. Most countries are a party to the 1921 Hague Rules, and a few have adopted that Hague-Visby amendments such as France and the United Kingdom. A bill of lading serves three purposes, First it is a carrier’s receipt for goods. Second it is evidence of a contract of carriage, and finally it is a document of title. This means that the person rightfully in possession fo the bill is entitled to possess, use, and dispose of the goods that the bill represents.
One aspect of the bill of lading is that of the receipt for goods. A bill of lading must describe the goods put on board a carrier, and state the quantity and their condition. The process once goods are to be shipped goes as follows, first the form is filled out in advance by the shipper, then as the goods are loaded aboard the shop, the carrier’s tally clerk will check to see that the loaded goods comply with the goods listed. The carrier, however is only responsible to check for outward compliance. If all appears correct the agent of the carrier will sign the bill and return it to the shipper. This process leading up to the bill called a clean bill of lading.
If however a discrepancy is noted by the carriers clerk then a notation may be added to the bill of lading. This is called a caused bill of lading, which is a bill of lading indicating that some discrepancy exists between the goods loaded and the goods listed on the bill. These bills are normally unacceptable to third parties, including a buyer or the goods under a CIF contract or a bank which has agreed to pay the seller under a documentary credit on receipt of the bill of lading and other documents. Later notations will have no effect, and the bill will be treated as if it were clean. When using bill of lading your need to distinguish between two different types, the straight bill and the order bill. A straight bill is issued to a named consignee and is nonnegotiable.
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The transfer of a straight bill gives the transferee no greater rights than those rights of his transferor. An order bill, on the other hand, is negotiable and conveys greater rights. One that holds an order bill has a claim to title and, by surrendering the bill, to delivery of the goods. When a carrier is at sea they must follow the following duties under a bill of lading.
First is the must make the ship seaworthy. They also must properly manning, equipping, and supplying the ship. Next they are to make the holds, refrigerating, and cool chambers, and all other parts of the ship in which goods are carried, fit and safe for their reception, carriage, a preservation. Finally the are to properly and carefully loading, handling, stowing, carrying, keeping, caring for, and discharging the goods carried.
All of these restrictions are strictly enforced by the courts. Like in the case of Co. Pty. , Ltd. v.
Lancashire Shipping Co. , Ltd. in which cargo was damaged by water due to the negligent work of a shipfitter employed by a ship repair company. The courts held that the carrier had failed to use due diligence in making the ship seaworthy. The next issue of carriage of goods by sea are the liability limits. In the past carriers have long attempted to set monetary limits on their liability in the event that they were found liable for loss or damage ot a cargo.
One reason why there was strong international interest to amend the Hague rules was the belief that its monetary limits were inadequate. The limits do not apply if the parties agree to higher amounts. They also do not apply if the carrier acted either with intent to cause damage, or recklessly and with knowledge that damage would probably result. Courts, not unsympathetic to their issues, have sometimes adopted these suggestions.
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When damages do occur the injured party must act according to certain time limits. They must be instituted within one year after the goods were or should have been delivered. The claim may be initiated by filing suit or commencing a arbitration proceeding. Finally the last section of the carriage of good by sea are the third party rights. The Hague and Hague-visby Rules apply only to the carrier and the party or parties shipping goods under a bill of lading. To extend the liability limits of the conventions to their employees, agents, and even independent contractors, carriers have added a clause to their bill of lading, known as a Himalaya Clause.
The Himalaya Clause is a term in a bill of lading which purports to extend to third parties the carrier’s liability limits established by the Hague and Hague-Visby Rules. Case 11-4 M. Golodetz & Co. , Inc.
v. Cazarniko-Rhonda Co. , Inc. The sellers contracted to sell to the buyers between 12, 000 and 13, 200 tons of sugar.
The payment was to be make upon a clean on board bill of lading, meaning that the freight had been paid. Then a fire broke out on the ship and 200 tons of sugar were lost. The parties are disputing that the question is who is to stand to lose in respect of the 200 tons of sugar which was destroyed by or as a consequence of the fire. The board of appeals held that the loss must fall on the sellers. Under the terms of the contract the sellers are entitled to be paid the price on tender of clean on board bills of lading evidencing freight having been paid.
Counsel for the buyers challenged these submissions root and branch. They argue that the bill of lading was not clean, and the bill of lading was rightly rejected as being un merchantable. The judge concluded that it was a clean bill of lading and that the buyers should have accepted it and paid the price. The judge disagreed with the decision of the board of appeal and on the grounds that the decision seemed to have been based solely on considerations of law. Case 11-5 Barclays Bank, Ltd. v.
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Commissioners of Customs and Excise Bruitrix purchased 100 cartons of washing machines in February 1961 from a Dutch supplier. The delivery was against acceptance of bill of exchange to be payable 37 days after shipment. Barclays Bank were in fact also collecting agents for the shippers bank, but that fact is immaterial. On Feb. 15 1961 the consignment was shipped under a bill of lading to order of shippers. It was shipped by Htdig & Pieters of Rotterdam.
The documents came forward and the bill of exchange was accepted by Bruitrix in Feb. 1961. The goods were then discharged and out into a transit warehouse and held to the order of Bristol Steam Navigation co. On June 2, 1961 Bruitrix pledged the bills of lading with the bank as security for advances made by the bank on overdraft. On Sept.
26 the shipowners asked the bank for payment of their charges. The issue is that the bills of lading were still documents of title for the goods to which they related, so that effective pledge of the goods could be made by deposit of the bills of lading endorsed in blank with the bank. The judge decided that the pledge made on June 2, bye deposit of the bill of lading was a valid pledge and as a consequence the judgement went to the plaintiffs. Case 11-7 Croft & Scully Co.
v. M/V Skulptor Vuchetich et al. This case is basically about the limitations that one can put on containers and how many items per container are to be considered one package. The Background is this Croft & Scully contracted to ship 1755 cases of soft drink for Houston to Kuwait.
They arranged to ship the soda on board the M/V Skulptor Vuchetich, which arrived on Dec. 8, 1977. The cases were loaded into a container closed and sealed and stored till the ship came in to port. When the ship came in the agent of the vessel prepared a bill of lading and hired shippers Stevedoring to load the containers on the vessel. Upon loading the containers with a fork lift one of Stevedore’s employees dropped the container and 42, 120 cans hit the ground and were damaged. Croft and Scully cued Good pasture Shippers Stevedoring and Skulptor and her owners to pick up the tab.
Croft and Scully are arguing the Himalaya Clause limiting recovery to $500 violates public policy. Even if liability is limited to $500 per package, Croft and Scully argues the cardboard cases of soft drinks rather than the 20 foot container should constitute the relevant package. The judgement was affirmed in part, reversed in part and remanded in part.
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