CARRIAGE OF GOODS

Goods which are the subject matter of an export transaction, have to be move from the
place of dispatch to that of destination. This carriage has an international character. It
may be executed by sea, air or land or by a combination of these modes of
transportation.
If it done by only one of them, the international transport in unimodal and if it is
carried out by a combination of them it is multimodal.
Unimodal international transport is governed by International Conventions. They
have been adopted by many countries and they are of great use.
a) Sea transport: The Hague Visby Rules relative to Bill of Lading.
b) Air transport : The Warsaw Convention.
c) Land transport : Convention on Contracts for International Carriage of Goods
by Roads.
Multimodal
United Nation Convention on International Multimodal Transport of Goods, 1980
CARRIAGE OF GOODS BY SEA

Carriage is frequently the final step in a contract for the sale of goods. The shipper is
often the vendor of the cargo. The ultimate consignee is often the buyer of the cargo. Risk and
title to the goods will often pass during the course of the contract of carriage. There is a
general presumption that title passes when risk passes but this is a rebuttal presumption. The
exact point at which risk and title pass depends on the terms of the contract of sale and the
intention of the parties.

Contract of Affreightment: A contract to carry goods by sea is called the “contract of

affreightment” and the consideration or charges paid for the carriage is called the “freight”. A
contract of affreightment may take either of the two forms, namely—

1. Charter party: where an entire ship, or a principal part of a ship is placed at the
disposal of merchant known as a 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.
2. 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.

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There are three persons involved in a contract of affreightment. These are:-
1) Ship-owner: A person who is the owner of the ship and undertakes to transport the
goods is called a “ship-owner”. In other words, he is the carrier of the goods.
2) Charterer: A person, who hires the ship and delivers the goods to the ship-owner
for transportation, is called a charterer. In other words, he is the consignor of the
goods and is also known as a shipper.
3) Consignee: - A person to whom the goods are addressed and to whom the ship-
owner should deliver the goods is called a “consignee”.

THE CARRIER’S ( IMPLIED)RESPONSIBILITIES UNDER A BILL OF

LADING

The common law implies three undertakings by the carrier into a contract of carriage
by sea.
I. SEAWORTHINESS

When goods are to be carried by sea the fitness of the vessel which is to do so is
obviously a matter of concern to any person having an interest in the goods. At
common law it is an implied term of the contract of contract that the ship shall be
seaworthy. A ship is not seaworthy if it has a defect which a prudent owner would
have required to be rectified before sending the ship to sea. This requirement is
absolute; the ship must be seaworthy and it is not enough that every effort has been
made to make it so.
The ship must be seaworthy in two respects. It must be fit to sail on the particular
voyage or a particular stage of the voyage and it must be fit to receive the particular
cargo..
E.G. The Maori King (Cargo owners) v Hughes1, a ship was held to be unseaworthy
in respect of a cargo of frozen meat because refrigeration equipment was defective. In
this respect the ship must be seaworthy when the cargo is loaded and there is no
breach of the implied term if it becomes unfit for the cargo after the cargo has been
loaded.
II. DEVIATION

1
[1895] 2 QB 550, CA

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There is an implied undertaking at common law in any contract for the carriage of
goods by sea that the vessel will at unreasonably deviate for the agreed route or, if
there is no agreed route, form the usual route or, if there is no usual route, from the
direct route. Since the undertaking is implied it can be excluded by an express term in
the contract.
There is no breach of the term if a ship deviates on reasonable grounds as, for
example, to avoid the dangerous weather or to save the life at sea, although deviation
to save property at sea is not a permitted deviation art common law as it is under the
Hague-Visby Rules.2

III. DELAY

At common law there is an implied undertaking by the carrier that the voyage will be
carried on without undue delay. In many cases delay will amount to deviation.
IV. NOT TO LOAD GOOD LIABLE TO CAUSE DANGER OR DELAY TO
SHIP
There is an obligation on the part of the shipper not to load the hip with dangerous
goods or goods likely to cause delay to the ship

DUTIES OF A CARRIER BY SEA

In case of carriage of goods by sea, the carrier is the ship-owner or the charterer who
enters into a contract with the consignor (shipper) for the carriage of goods. The
duties of a carrier by sea are:-
1) Duty to exercise due diligence: - It is the most important duty of a carrier by sea.
The duty requires that the carrier shall be bound, before and at the commencement of
the voyage, to exercise due diligence in respect of the following:-
(a) To make the ship seaworthy
(b)To properly man, equip and supply the ship
(c) To make the holds, refrigerating and cool chambers, and all other parts of the ship
in which the goods are carried, fit and safe for their reception, carriage and
preservation.

2
Rio Tinto Co v Seed Shipping Co (1926) 42 TLR 381

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The words “before and at the beginning of the voyage” are important in respect of
the above stated duties. This means the period from at least the beginning of the
loading until the vessel starts on the voyage. If there is failure to exercise due
diligence during that period, the carrier will be held liable for the loss. Thus, where
the ship was seaworthy when the cargo was loaded but was lost in fire before the
beginning of voyage, the carrier was held liable for the loss.
2) Duty to load and handle the goods properly:-It is another duty of the carrier to be
careful in dealing with the goods to be carried on board the ship. This duty requires
that the carrier shall properly and carefully load, handle, stow (i.e. store or fill
properly), carry, keep, care for and discharge the goods carried by him.

THE CARRIER’S IMMUNITIES

Under the Hague-Visby Rules the carrier will not be liable for loss of or damage to
the cargo caused by the events below3. It should however be noted that these
immunities will not avail the carrier if he ahs not exercised due diligence to make the
ship seaworthy and the loss or damage was caused by the unseaworthiness.

(a) Act, neglect or default of the master, mariners, pilot or the servants of the
carrier in the navigation or in the management of the ship. While few problems
have arisen concerning “navigation”, difficulties have arisen on what is meant by
“management of the ship”. It does not include care of the cargo, which is a separate
duty.

(b) Fire, unless caused by actual fault or privity of the carrier.

(c) Perils, dangers and accidents of the sea or other navigable waters. These are
dangers to which the sea transit is particularly prone, such as stranding, storms,
collision and seawater damage.
 To come within the immunity it must be shown that the loss or damage was
caused by something more than the ordinary action of wind and waves.

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Art. IV (2)

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  There must be an element of fortuity about the event and it must not be some
occurrence which in the ordinary course of events should have been foreseen
and guarded against.
 Also, the carrier may be protected by this immunity even though the peril of
the sea was not the immediate cause of the loss or damage.

(d) Act of God. This is any natural event for which no human agency is responsible
and against which precautions could not reasonably have been taken.
(e) Act of war. This is any direct hostile act resulting from war. War probably
includes civil war and does not necessarily involve an official declaration of war.

(f) Public enemies. The nature of these is unclear, though most authorities instance
pirates.

(g) Arrest or restraint of princes, rulers or people or seizure under legal process.
The phrase “princes, rulers or people” in effect means “established governments” and
the immunity covers cases of government action such as embargoes, import bans,
quarantine restrictions and the like.

(h) Quarantine restrictions. In view of the preceding immunity there appears to be no

reason for the appearance of this as a separate immunity as far as English law is
concerned.

(i)Act or omission of the shipper or owner of the goods, his agent or representative

(j) Strikes or lockouts or stoppages or restraints of labour whatever cause whether

partial or general.

(k) Riots or civil commotions. A civil commotion has been said to be an intermediate
stage between a riot and a civil war.4

(l) Saving or attempting to save life or property at sea.

4
Bolivia Republic v Indemnity Mutual Marine Assurance Co Ltd [1909] 1 KB 785, CA

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(m) Wastage in bulk or weight or any other loss or damage arising from an
inherent defect, quality or vice of the goods. This exception, which in the common
law is known as “inherent vice”, covers any loss occurring through some natural
defect or quality in the goods themselves, as, for example, acid in the fertilizers
eventually rotting the bags in which they were packed.”
The immunity will naturally not avail the carrier if the damage, though arising from
the nature of the goods, was caused by bad stowage.

(n) Insufficiency or inadequacy of marks

(o)Insuffiency of packing. This immunity, like the previous one, will not apply where
there has been bad stowage.

(p) Latent defects not discoverable by due diligence

(q) Any other cause arising without the actual fault or privity of the carrier or
without the fault or neglect of the agents or servants of the carrier…….The carrier
will be able to claim the benefit of this immunity only to the extent that he can prove
the absence of fault, privity or neglect.

BILL OF LADING

The term “bill of lading” may be defined as a document acknowledging the shipment
of the goods, and containing the terms and conditions upon which the goods are to be
transported by the ship. It is signed by the ship-owner or his authorized agent or by
the master of the ship. It should also be stamped.
However, it must be observed that all countries do not follow the same form of
legislation globally.

FUNCTIONS OF THE BILL OF LADING5

A. Bill of Lading as a Receipt: - The bill of lading will acknowledge the

quantity of goods put on board, their description and their condition. The bill
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http://www.essexcourt.net/uploads/publication/BILLOFLD.doc

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 of lading form will usually be completed by the shipper or his forwarding
agent and sent to the carrier.
As the goods are loaded they will be checked by tally clerks and if the
particulars are found to be correct the bill of lading will be signed for the
carrier by his agent, the loading broker. However, the evidentiary value of the
bills in all these cases is not the same in all case and it depends upon the
circumstances of the case such as whether the bill falls within the Carriage of
Goods by Sea Act 1971 or not.

Bill Of Lading Falling Within The Carriage Of Goods By Sea Act 1971
Under Article III (3) of this Act, the carrier has to include the leading marks, the
number of packages or pieces or the quantity or weight of the goods and the
apparent order and condition of the goods on the bill of lading. The statements
made on the bill of lading are regarded as prima facie evidence of the receipt of
the goods as described under III(4).

B. THE BILL OF LADING AS A DOCUMENT OF TITLE

1. A document of title is one which the law recognizes as representing the goods
so that the transfer of the document to a party will vest in that party the
ownership or possession of the goods to which the document relates, provided
that this transfer of rights was intended by the parties.
2. The ability to transfer property rights in goods by the transfer of a document
is the keystone of international trade practice.
3. The bill of lading has long been recognized by the courts, following
mercantile usage, as having this quality. In E Clemens Co V Bidell Bros6, the
buyer under a CIF contract was offered a bill of lading but refused to pay until
the goods themselves were delivered. It was held that since possession of the
bill of lading amounted in law to the possession of the goods the seller was
entitled to perform his part of the contract by handing over the document.

C. BILL OF LADING AS A NEGOTIABLE INSTRUMENT

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[1912] AC 18, HL

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 1. A bill of lading is a document of title of the goods mentioned in it i.e. it is a
symbol of the ownership of the goods. Thus, the consignee named in a bill of
lading is the owner of the goods mentioned in it, and cans ell them while they
are still in sea i.e. in transit.
2. The goods can be sold by the consignee by transferring the bill of lading to the
purchaser.
D. BILL OF LADING AS EVIDENCE OF THE TERMS OF CONTRACT
The bill of lading is not only the contract, but also an evidence of the terms of the
contract because the contract of affreightment is made between the ship owner and
the shipper before the bill of lading is issued.

KINDS OF A BILL OF LADING

A bill of lading is of the following types:-

1) Clean bill of lading: - It is a bill of lading which acknowledges the receipt of the
goods in their perfect condition. The perfect condition of the goods is indicated by
using certain words in the bill of lading such as “shipped in good order and condition.
2) Qualified bill of lading: - It is a bill of lading which does not acknowledges the
receipt of goods in the perfect condition. The use of certain words such as “goods
shipped in a damp condition: or “weight, value and contents unknown”: indicate that
the goods are not in a perfect condition..

3) Through bill of lading: - It is a bill of lading which is issued by a ship-owner for

the transportation of goods partly in his own ship, and partly in the ship of another
ship-owner for an inclusive freight. Sometimes the goods are to be carried partly by
sea and partly by land, and the ship-owner has charged for both the carriages i.e. by
sea and land. In such cases also, the bill of lading issued by the ship-owner is a
through bill of lading. It may be noted that in such cases, in the absence of any
contrary provision, a contract is considered to be made with the ship-owner who
issues the bill of lading , and he would be liable for the loss occurring on any part of
the journey.

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4) Received for shipment bill of lading: - It is a bill of lading which states that the
goods have been received for shipment. It may be noted that it is not a “proper bill of
lading”. It operates only as a receipt of the goods received for shipment.
5) A proper bill of lading, also called the “shipped bill of lading” is issued only after
the goods are loaded on the ship. If a “received bill of lading” is held by the charterer,
he must after the loading of the goods, surrender it to the ship-owner and obtain from
him the “shipped bill of lading”.
7) Negotiable and non negotiable bill of lading
8) Charter party bill of lading
9) Container bill of lading
10) Switch BOL
11) Electronic BOL

OTHER DOCUMENTS (RELATED TO CARRIAGE BY SEA)

Mate’s receipt: - It is a temporary receipt given by the person incharge of the ship as
an acknowledgement that the goods have been received on board the ship. After the
bill of lading is prepared, this receipt is handed over to the master in exchange for the
bill of lading. It may be noted that a mate’s receipts is not a document of title. It
simply entitles the holder to receive the bill of lading from the master of the ship.

Sea way- bill: - A sea way bill is a receipt for goods carried by sea but differs from a
bill of lading in that it is not a document of title. It contains or evidences an
undertaking by the carrier to the shipper to deliver the goods to an identical person.
The shipper may, at any time before the delivery of the goods, change the identity of
the person to whom delivery is to be made. The consignee obtains delivery not by
presenting the way-bill, which remains in the hands of the shipper, but by production
of acceptable evidence of his identity as consignee.

Delivery orders:-An exporter, who ships the bulk cargo and receives one bill of lading
in respect of it, or an indorsee of this bill of lading, may afterwards, while the goods
are in transit, sell various unascertained portions of the cargo to different buyers. He
clearly cannot transfer the bill of lading to all the buyers and must find some other
way to satisfy each buyer’s demand for some document evidencing his right to the

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goods he has bought which will enable him to collect or resell them. In such cases a
delivery order may be used, “delivery order” is not a precise term and the legal status
and effect of such a document will depend on its nature and the circumstances in
which it is issued.
A delivery order is not a document of title unless proved to be so by reason of
mercantile custom.

CLAUSES OF A BILL OF LADING

A bill of lading issued in case of a general ship contains the clauses in respect of
terms of the contract of affreightment. These are generally the same as contained in a
“charter party”. The clauses of a bill of lading should state the following particulars:-

1) Name of the parties

2) Name of the ship

3) Port of loading

4) Port of destination

5) Name of the consignee

6) Marks for the identification of the goods such as number of package

7) Statement regarding the condition of the goods and their quantity or quality or

weight

8) Other terms and conditions of contract of affreightment such as amount of freight,

expected perils etc

COMPARISON BETWEEN A CHARTER PARTY AND A BILL OF LADING

Charter party Bill of lading

1) It is a document by which the charterer It is not the document by which the

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enters into a contract with the ship-owner ship is in contract with the
charterer.It
for the hire of the whole or substantial part acknowledges the receipt of goods
by
of the ship. the ship-owner for carriage.
2) It always contains all the terms and It may or may not contain all such
conditions of the contract mutually terms and conditions.
agreed between the ship-owner and
charterer.
3) It is the governing document between It is an acknowledgement of the
the ship-owner and charterer. It does not receipt of the goods loaded on the
acknowledge the receipt of the goods. ship.
4) It is not a document of title to the It is a document of title to the
goods
goods. mentioned in it.
5) It does not possess any characteristic It possesses some of the
of a negotiable instrument. And thus, it characteristics of a negotiable
cannot be transferred to a third person. instrument. However, it is not
negotiable in the legal sense of
the term.

6) It may be for a particular voyage or It is always for a particular

for a particular period of time. destination.
7) It requires a stamp of higher amount. It requires a stamp of less
amount
as compared to a charter party.
8) It may amount to lease of the ship to It can never amount to lease of
the the charterer. ship to the charterer.

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