UNIT 4

1. What are the liabilities of Carries of Goods by Sea under the Hague - Visby
Rules? *****
2. Discuss the laws relating to Export Import Licensing. ***
3. Discuss the problems of Container Transport.
4. Discuss the legal problems of Container Transport. **
5. Explain Carriage of Goods by Sea. **
6. What is Marine Insurance? Explain in detail the various types of Marine
Policies. **
7. Discuss various kinds of Marine Insurance. **

SHORT NOTES
1. Suitable Ship
2. Freight
3. Freight and Insurance.
4. Licensing of Exports and Imports. **
5. Carriage by Rail. ****
6. Export Import license Rules.
7. Consignment Notes.
8. Justification for Deviation of Sea Route. ***
9. Pre-Shipment Inspection.
10. Export Transaction.
11. Kinds of Marine Insurance. **
12. Hague Visby Rules. **
13. Carriage of Goods by Air.
 UNIT 4
QUESTION NO: 1
1. What are the liabilities of Carries of Goods by Sea under the Hague - Visby
Rules ? *****
2. Hague Visby Rules. ** (6 Marks)

ANSWER:

LIABILITIES OF CARRIERS OF GOODS BY SEA UNDER THE HAGUE-VISBY RULES

Shipping has always been the oldest mode of transport in India. It has also highly benefited International
Trade. In order to flourish International Trade, there must be an involvement in the transaction of
goods by sea between a buyer in one country and a seller in another country. The carrier plays a
very significant and important role in this contract and it is necessary to understand its involvement
in the marine contract in regard to his obligations and immunities.
Delivery of goods is one of the most significant obligations of carriers and a core issue of Carriages of
Goods by Sea. The carrier's obligations under the contract are to be discharged after the delivery of
goods is complete. The law governing the carrier's liability has existed for a considerable period.
When goods are shipped on a chartered vessel for a consignee they face specific difficulties in the
incident if the cargo is lost or damaged. Therefore, the carrier has to be identified as to who the
cargo claims can be conducted and establish a defined term in the contract of carriages

The Hague and Hague/Visby Rules define the “carrier" as including “the owner or the charterer who
enters into a contract of carriage with a shipper".
The carrier has also been identified as the person that has the name in the contract of
Carriages of Goods by Sea that concludes the shipper. The carrier can be clearly identified by a
contract as being the ship-owner or the charterer. However, in some situations, the carrier can either
be the charterer, ship-owner, or sub-charterer. It is all related to the circumstances and commercial
position of the vessel.

The Indian Carriages of Goods by Seas Act, 1925 defines a carrier as the owner or the charterer who
enters into a contract of carriages with a shipper.

OBLIGATIONS AND LIABILITIES OF CARRIER (ARTICLE III of THE RULES)

The modern law regarding the laws of Carriages of Goods by Sea has a specific liability regime that is
based on the international conventions which have narrow equity for bargaining powers between
the ship-owners or the carriers and the cargo owners. The Brussel Convention of 1924 which is
 known as the Hague Rules later amended by the Visby Protocol and now known as the Hague-
Visby Rules of 1968 has been ratified by most of the countries and based on this international
regime the adaptation of national legislation

As said in Maxine Footwear Co Ltd v Canadian Marine Ltd, as per Art III R1 the carrier's duty starts at
least before the loading process till the time the voyage begins.

The main duty of a carrier is to issue a Bill of Lading, and exercise due diligence to keep the ship sea-
worthy and care for the goods without deviating from the agreed route.
Rule 1: The carrier shall be bound before and at the beginning of the voyage to exercise due diligence
to:
i. Make the ship seaworthy.
ii. Properly man, equip, and supply the ship:
iii. 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, and preservation.

Rule 2: Subject to the provisions of Article IV, the carrier shall properly and carefully load, handle,
stow, carry, keep, care for, and discharge the goods carried or agent

Rule 3: After receiving the goods into his charge, the carrier or the master of the carrier shall issue to
the shipper a bill of lading on demand of the shipper, showing,
i. The leading marks necessary for identification of the goods as the same are furnished in writing
by the shipper before the loading of such goods starts provided such marks are stamped or
otherwise shown clearly upon the goods if uncovered, or on the cases or coverings in which such
goods are contained, in such a manner as should ordinarily remain legible until the end of the
voyage.
ii. Either the number of packages or pieces, or the quantity, or weight, as the case may be, as
furnished in writing by the shipper,
iii. The apparent order and condition of the goods

Rule 4: Such a bill of lading shall be prima facie evidence of the receipt by the carrier of the goods as
therein described. However, proof to the contrary shall not be admissible when the bill of lading has
been transferred to a third party acting in good faith.

Rule 5: The shipper shall be deemed to have guaranteed to the carrier the accuracy of the marks,
number, quantity, and weight, as furnished by him at the time of shipment, and the shipper shall
indemnify the carrier against all loss, damages, and expenses arising or resulting from inaccuracies
 in such particulars. The right of the carrier to such indemnity shall in no way limit his responsibility
and liability under the contract of carriage to any person other than the shipper.

Rule 6: Unless notice of loss or damage and the general nature of such loss or damage be given in
writing to the carrier or his agent at the port of discharge before or at the time of the removal of the
goods into the custody of the person entitled to delivery thereof under the contract of carriage, or, if
the loss or damage be not apparent, within three days, such removal shall be prima facie evidence
of the delivery by the carrier of the goods as described in the bill of lading.
In the case of any actual or apprehended loss or damage, the carrier and the receiver shall give all
reasonable facilities to each other for inspecting and tallying the goods.

Rule 7: After the goods are loaded, the bill of lading to be issued by the carrier, master, or agent of the
carrier, to the shipper shall, if the shipper so demands, be a "shipped" bill of lading, provided that if
the shipper shall have previously taken up any document of title to such goods, he shall surrender
the same as against the issue of the "shipped" bill of lading.

Rule 8: Any clause, covenant, or agreement in a contract of carriage relieving the carrier or the ship
from liability for loss or damage to, or in connection with, goods arising from negligence, fault, or
failure in the duties and obligations provided in this article or lessening such liability otherwise than
as provided in these Rules, shall be null and void and of no effect.

Exemptions –

1. The carrier is not liable for loss, damage or delay resulting from an act of the shipper or his
agents, servants and subcontractors, an inherent defect, quality or vice of the goods,
(attempted) rescue or salvage operations or a cause that could neither be prevented nor
avoided.

2. The carrier cannot rely on the exemptions listed for loss, damage or delay attributable to
defects in the means of transportation, including defects in any container supplied by the
carrier. The ‘catalogue of exemptions’ in art 4.1 CGC is not a combination of all the
exemptions under the different unimodal conventions, but instead just a rather short list.

The first two exemptions will hardly raise any questions; they correspond with art IV(2)(i) and
(m) HVR, but also with art 18(2)(a) and (b) MC and art 17(4)(b), (c) and (d) CMR. The
explicit mention of (attempted) rescue or salvage operations is necessary because such
operations can of course simply be avoided, but should never be avoided.

The problem with the other events listed in art IV(2) HVR is that it is not always easy to see why
they would exempt the carrier. As a contract of carriage requires the carrier to achieve a
 certain result – the delivery of the goods to the consignee in the same sound condition – he
should only be able to escape liability in exceptional circumstances.

An error in navigation, for instance, is always avoidable, and the consequences thereof should
therefore remain for the account of the carrier. The occurrence of a ‘fire’ alone should not
per definition exempt the carrier from liability. This depends on the question of whether the
cause of the fire could be prevented or avoided.

The perils of the sea or an act of God will often be unavoidable, but surely not if the master
obtains a storm warning in advance. Mutatis mutandis the same then applies for the
remaining exceptions. Since these are exceptions to the general rule of art 3.1 CGC, the
carrier bears the onus of proof of the occurrence of one of the causes listed in art 4.1 CGC,
the causal link between that cause and the loss, damage or delay and, if required, the extent
to which the exempted cause contributed to the loss, damage or delay.

If the carrier succeeds, the onus of proof shifts to the shipper/consignee. Article 4.2 CGC
stipulates that the carrier remains liable if (and to the extent that) the shipper/consignee
proves that the loss, damage or delay is attributable to the use of a defective ship, train,
truck, airplane or other means of transportation. These defects also extend to containers. The
carrier cannot escape liability if the loss, damage or delay is attributable to the use of
leaking containers or malfunctioning reefer containers that he has supplied.

QUESTION NO: 2

1. Discuss the laws relating to Export Import Licensing. ***

2. Licensing of Exports and Imports. ** (6 Marks)
3. Export Import license Rules. (6 Marks)
4. Export Transaction. (6 Marks)

ANSWER:

Introduction
Import means bringing into India any goods by land, sea or air. Unregulated import can cause conflict in
domestic values due to the acceptance of social values. The domestic industries can also be crippled
due to the import of the countries where the wages are low and the domestic industries are unable to
compete since they cannot lower down their prices of goods than the cost of goods and also they
have the obligation to the worker union

Exports are the goods and services produced in one country and purchased by residents of another
country. It doesn't matter what the good or service is. It doesn't matter how it is sent. It can be
 shipped, sent by email, or carried in personal luggage on a plane. If it is produced domestically and
sold to someone in a foreign country, it is an export.

India’s import and export system is governed by the Foreign Trade (Development & Regulation) Act of
1992 and India’s Export Import (EXIM) Policy. Imports and exports of all goods are free, except
for the items regulated by the EXIM policy or any other law currently in force. Registration with
regional licensing authority is a prerequisite for the import and export of goods. The customs will
not allow for clearance of goods unless the importer has obtained an Import Export Code (IEC)
from the regional authority.
An import-export license is mandated by various federal agencies, and it identifies what products are
shipped or delivered between international locations. A license may or may not be required for
importers or exporters, depending on the product.

EXPORT POLICY
Goods can be exported freely if they are not mentioned in the classification of ITC (HS). Below follows
the classification of goods for export:
· Restricted
· Prohibited
· State Trading Enterprise
1. Restricted Goods
Before exporting any restricted goods, the exporter must first obtain a license explicitly permitting the
exporter to do so. The restricted goods must be exported through a set of procedures/conditions,
which are detailed in the license.
.

2. Prohibited Goods
These are the items which cannot be exported at all. The vast majority of these include wild animals, and
animal articles that may carry a risk of infection.

3. State Trading Enterprise (STE)

Certain items can be exported only through designated STEs. The export of such items is subject to the
conditions specified in the EXIM policy.

PROCEDURES:
The exporting activity involves several commercial and regulatory procedures. The export
documentation involves the preparation or specified number of copies of the prescribed documents
pertaining to the different procedures.

Step 1. Receipt of an Order

The exporter of goods is required to register with various authorities such as the income tax department
and Reserve Bank of India (RBI). In addition to this, the exporter has to appoint agents who can
collect orders from foreign customers (importer).
Step 2. Obtaining License and Quota
After getting the order from the importer, the Indian exporter is required to secure an export license from
the Government of India, for which the exporter has to apply to the Export Trade Control Authority
and get a valid license.
Step 3. Letter of Credit
The exporter of the goods generally ask the importer for the letter of credit, or sometimes the importer
himself sends the letter of credit along with the order.
Step 4. Fixing the Exchange Rate
Foreign exchange rate signifies the rate at which the home currency can be exchanged with the foreign
currency i.e. the rate of the Indian rupee against the American Dollar. The foreign exchange rate
fluctuates from time to time. Thus, the importer and exporter fix the exchange rate mutually.
Step 5. Foreign Exchange Formalities
An Indian exporter has to comply with certain foreign exchange formalities under exchange control
regulations. As per the Foreign Exchange Regulation Act of India (FERA), every exporter of the
goods is required to furnish a declaration in the form prescribed in a manner.
The declaration states:
● The foreign exchange earned by the exporter on exports is required to be disposed of in
the manner specified by RBI and within the specified period.
● Shipping documents and negotiations are required to be done through authorised dealers
in foreign exchange.

Step 6. Preparation for Executing the Order

The exporter should make required arrangements for executing the order:
i. Marking and packing of the goods to be exported as per the importer’s specifications.
ii. Getting the inspection certificate from the Export Inspection Agency by arranging the
pre-shipment inspection.
iii. Obtaining insurance policy from the Export Credit Guarantee Corporation (ECGC) to get
protection against the credit risks.
iv. Obtaining a marine insurance policy as required.
v. Appointing a forwarding agent (also known as custom house agent) for handling the
customs and other related matters.

Step 7. Formalities by a Forwarding Agent-

The formalities to be performed by the agent include -
 i. For exporting the goods, the forwarding agent first obtains a permit from the customs
department.
ii. He must disclose all the required details of the goods to be exported such as nature,
quantity, and weight to the shipping company.
iii. The forwarding agent has to prepare a shipping bill/order.
iv. The forwarding agent is required to make two copies of the port challans and pays the
dues.
v. The master of the ship is responsible for the loading of the goods on the ship.
vi. The loading is to be done on the basis of the shipping order in the presence of customs
officers.
vii. Once the goods are loaded on the ship, the master of the ship issues a receipt for the
same.

Step 8. Bill of Lading

The Indian exporter of the goods approaches the shipping company and presents the receipt copy issued
by the master of the ship and in return gets the Bill of Lading. Bill of lading is an official receipt
which provides the full description of the goods loaded on the ship and the name of the port of
destination.

Step 9. Shipment Advise to the Importer

The Indian exporter sends shipment advice to the importer of the goods so that the importer gets
informed about the dispatch of the goods. The exporter sends a copy of the packing list, a non-
negotiable copy of the Bill of Lading, and commercial invoice along with the advice note.

Step 10. Presentation of Documents to the Bank

The Indian exporter confirms that he possesses all necessary shipping documents namely; Marine
Insurance Policy. The Consular Invoice, Certificate of Origin, the Commercial Invoice, the Bill of
Lading. Then the exporter draws a bill of exchange on the basis of the commercial invoice. The bill
of exchange along with these documents is called Documentary Bill of Exchange. The exporter
then hands over the same to his bank.

Step 11. The Realization of Export Proceeds

In order to realize the proceedings of the export, the exporter of the goods has to undergo specific
banking formalities. On submission of the bill of exchange, these formalities are initiated.
Generally, the exporter receives payment in foreign exchange.

PROCESSING OF AN EXPORT ORDER

1. Having an Export Order
2. Examination and Confirmation of Order
 3. Manufacturing or Procuring Goods
4. Clearance from Central Excise
5. Pre-Shipment Inspection
6. Appointment of Clearing and Forwarding Agents
7. Goods to Port of Shipment
8. Port Formalities and Customs Clearance
9. Dispatch of Documents by Forwarding Agent to the Exporter
10. Certificate of Origin
11. Dispatch of Shipment Advice to the Importer:
12. Submission of Documents to Bank:

At the end of the process, the exporter presents the following documents to his bank for the release of
his amount due to the importer.

IMPORT POLICY
The Indian Trade Classification (ITC)-Harmonized System (HS) classifies goods into three categories:
1. Restricted
2. Canalized
3. Prohibited
Goods not specified in the above mentioned categories can be freely imported without any restriction, if
the importer has obtained a valid IEC. There is no need to obtain any import license or permission
to import such goods. Most of the goods can be freely imported in India.

1. Licensed (Restricted) Items

Restricted items can be imported only after obtaining an import license from the relevant regional
licensing authority. The goods covered by the license shall be disposed of in the manner specified
by the license authority, which should be clearly indicated in the license itself. The list of restricted
goods is provided in ITC (HS). An import license is valid for 24 months for capital goods, and 18
months for all other goods.

2. Canalized Items
Canalized goods are items that may only be imported using specific procedures or methods of transport.
The list of canalized goods can be found in the ITC (HS). Goods in this category can be imported
only through canalizing agencies. The main canalized items are currently petroleum products, bulk
agricultural products, such as grains and vegetable oils, and some pharmaceutical products.

3. Prohibited Items
These are the goods listed in ITC (HS) that are strictly prohibited on all import channels in India. These
include wild animals, tallow fat and oils of animal origin, animal rennet, and unprocessed ivory.

PROCEDURES
Import trade refers to the purchase of goods from a foreign country. The procedure for import trade
differs from country to country depending upon the import policy, statutory requirements and
customs policies of different countries. In almost all countries of the world import trade is
controlled by the government. The objectives of these controls are proper use of foreign exchange
restrictions, protection of indigenous industries etc. The imports of goods have to follow a
procedure. This procedure involves a number of steps.

1. Obtaining I.E.C. No.:

Before starting the import procedure, the importer has to obtain an I.E.C. (Import Export Code) number.
This number is used in filling the formalities of import procedure, To get this number, the importer
has to apply to the regional Import-Export Licensing Authority in the prescribed form.

2. Obtaining Registration Cum Membership Certificate (RCMC):

Importers get various benefits in the form of subsidies and exemption in excise duty, tax, etc. To get
these benefits, they have to show RCMC. After getting the I.E.C. number, the importer applies for
RCMC. The RCMC is issued by, Import Promotion Council., Federation of Indian Import
Organization, Import Development Authority, etc. Along with the application, the importer has to
submit a bank certificate and IEC number. If the authority is satisfied, then they will issue RCMC.

3. Opening a letter of credit:

Better of credit is issued by the importer’s bank in favor of the exporter. In this letter, the bank
undertakes guarantee for making payment on behalf of the importer. The importer approaches his
bank and instructs the j bank to issue a letter of credit in favor of the exporter. The importer also
instructs the bank about the documents to be collected from exporter before making payment.

4. Arrival of goods:
Goods are shipped by the exporter as per the specifications of the importer. When goods reach the
importer’s country, the captain of the ship informs the dock officer and instructs him to receive the
goods and record the details about the goods on the document called import general manifest. This
document gives details of about imported goods.

5. Informing importer:
After the arrival of goods, the dock authorities inform the importer about the arrival of goods. The
importer prepares a document called bill of entry which contains details about the imported goods
and submits this document to the customs officer to get customs clearance.
 6. Customs clearance:
The customs officer examines the bill of entry carefully and assesses the custom duty to be paid by the
importer and after assessing the duty amount, the bill of entry is given to the appraiser officer who
verifies the details given in the bill. If the appraiser officer is satisfied with the information given in
bill of entry, then he returns the bill to the importer for making payment of custom duty.

7. Obtaining Foreign Exchange:

After obtaining the license (or quota, in case of an established importer), the importer has to make
arrangement for obtaining necessary foreign exchange since the importer has to make payment for
the imports in the currency of the exporting country.

The foreign exchange reserves in many countries are controlled by the Government and are released
through its central bank. In India, the Exchange Control Department of the Reserve Bank of India
deals with foreign exchange.
For this, the importer has to submit an application in the prescribed form along-with the import license
to any exchange bank as per the provisions of Exchange Control Act. The exchange bank endorses
and forwards the applications to the Exchange Control Department of the Reserve Bank of India.
The Reserve Bank of India sanctions the release of foreign exchange after scrutinizing the
application on the basis of exchange policy of the Government of India in force at the time of
application.
The importer gets the necessary foreign exchange from the exchange bank concerned. It is to be noted
that whereas import license is issued for a particular period, exchange is released only for a specific
transaction. With liberalization of economy, most of the restrictions have been removed as rupee
has become convertible on current account.

International Trade Promotion Measures and Schemes

Details of various trade promotion measures and schemes available to business firms to facilitate their
export and import operations are announced by the government in its export-import (EXIM) policy.
Major trade promotion measures (especially those related to exports) are as follows:

1. Duty drawback scheme:

Since goods meant for exports are not consumed domestically, these are not subjected to payment of
various excise and customs duties. Any such duties paid on export goods are, therefore, refunded to
exporters on production of proof of exports of these goods to the concerned authorities. Such
refunds are called duty draw backs. Some major duty draw backs include refund of excise duties
 paid on goods meant for exports, refund of customs duties paid on raw materials and machines
imported for export production. The latter is also called customs drawback.

2. Export manufacturing under bond scheme:

This facility entitles firms to produce goods without payment of excise and other duties. The firms
desirous of availing such facility have to give an undertaking (i.e., bond) that they are
manufacturing goods for export purposes and will export such products on their production.
3. Exemption from payment of sales taxes:
Goods meant for export purposes are not subject to sales tax. Even for a long time, income derived from
export operations had been exempt from payment of income tax. Now this benefit of exemption
from income tax is available only to 100 per cent Export Oriented Units and units set up in Export
Processing Zones (EPZs)/Special Economic Zones (SEZs) for select years.

4. Advance licence scheme:

It is a scheme under which an exporter is allowed duty free supply of domestic as well as imported
inputs required for the manufacture of export goods. As such the exporter is not required to pay
customs duty on goods imported for use in the manufacture of export goods. The advance licences
are available to both the types of exporters—those who export on a regular basis and also to those
who export on an adhoc basis. The regular exporters can avail such licences against their production
programmes. The firms exporting intermittently can also obtain these licences against specific
export orders.

5. Export Promotion Capital Goods Scheme (EPCG):

The main objective of this scheme is to encourage the import of capital goods for export production.
This scheme allows export firms to import capital goods at negligible or lower rates of customs
duties subject to actual user condition and fulfilment of specified export obligations.
If the said conditions are fulfilled by the manufacturers, then they can import the capital
goods either at zero or at a concessional rate of import duty. This scheme is especially beneficial to
the industrial units interested in modernisation and upgradation of their existing plant and
machinery.

6. Export finance:
Exporters require finance for the manufacture of goods. Finance is also needed after the shipment of the
goods because it may take sometime to receive payment from the importers. Therefore, two types
of export finances are made available to the exporters by authorised banks. They are termed as pre-
shipment finance or packaging credit and postshipment finance. Under the preshipment finance,
finance is provided to an exporter for financing the purchase, processing, manufacturing or
packaging of goods for export purpose.
 Under the post-shipment finance scheme, finance is provided to the exporter from the date
of extending the credit after the shipment of goods to the export country. The finance is available at
concessional rates of interest to the exporters.

QUESTION NO: 3
1. Discuss the problems of Container Transport.
2. Discuss the legal problems of Container Transport. **

ANSWER:
Introduction
Container transport refers to the transportation of goods in standardized re-sealable transportation boxes
by rail and sea that are designed in types and sizes designated by the International Organization for
Standardization and are convenient for carrying with the sea, and land vehicles, can be used on a
recurring basis and transferred to transport vehicles, and provided with ease of loading and
discharge and a special technical mechanism.
Containers have different technical structures based on their intended use. For example,
break bulk, dangerous cargo, bulk cargo, and refrigerated cargo containers have different structures,
and different types and sizes of containers are designed according to the properties of the cargo in
the international arena. The International Organization for Standardization has laid down standard
container sizes of 20’, 30’, and 40’.

In modern international transport goods other than bulk cargo are often carried in containers. Containers
are particularly suitable for multimodal transport. If for example. The goods have to pass through
three stages of transportation, they are carried by land from an inland depot to the port of loading,
then by sea, and finally again by land to an inland destination. They will travel in the same
container from the place of loading to that of discharge and the physical labor as well as the cost of
conveying them from one vehicle of transportation to the next is reduced.

Conceptualization of containers took place in the Convention for Safe Containers CSC/CCC as
containerization developed, it became necessary to raise the minimum safety standards for
containers. This resulted in the adoption of the (CSC). Although it is one of the few texts
exclusively dedicated to containers, the CSC does not directly illuminate the debate about the
conceptualization of containers.
 The Customs Container Conventions (1956/1972-the CCC Conventions) give a similar yet
not identical definition of containers. The CCC 1972 introduces a potentially important element by
(eventually) linking a container to a country of registration. The Convention on Customs Treatment
of Pool Containers used in International Transports (the Pool Convention) takes a similar approach.

We can list the benefits of using containers in practice as follows;

1. ensures safe transport, loading, discharge, transfer, and maintenance of commodity by protecting
it from all external and environmental factors
2. reduces cost as more than on cargo can be carried in the same container.
3. Is time-saving as loading and discharge can be performed more rapidly and faster, and is
therefore cost-reducing.
4. can be stored outdoors and therefore reduces warehouse costs
5. reduces risk of damage to cargo due to fire, seawater, and rainwater.
6. saves up in packaging costs.
7. is suitable for carrying and maintaining dangerous articles.

Container transportation also has certain drawbacks, besides its above-stated benefits. Among these
drawbacks are thefts that are widely encountered due to the carriage of valuable cargo in containers,
danger of carrying illicit commercial goods, and the requirement for high sums of technical
materials in loading, discharge and stacking of containers, from a financial point of view, and need
to make investments for warehouse locations, land and railway connections.
In the face of these properties and its benefits, container transportation has witnessed a
boom since the 1960s, leading to construction of special container ships. The USA, UK, Sweden,
Germany, Denmark, Japan, and China are among the countries in which container transportation
has witnessed rapid development.

The course of business in container transport

● The course of business in container transport is that the exporter, having made arrangements with
a forwarder or directly with the office of a container shipping line will send his goods to the
nearest container depot of the forwarder or shipping liner is also called container freight station
(CFSs).
● If the exporter intends to stuff a full container load(FCL), the forwarder or shipping line will be
prepared to send an empty container to the exporter for loading.
 ● If the exporter has arranged for the delivery of goods to the overseas buyer’s place of business,
the container would be door-todoor container.
● If the cargo is less than a full container load (LCL) the exporter will send it to the container
freight station, where it will be consolidated with the goods of other exporters in a groupage
container. On arrival at the place of destination, it will be taken to a container freight station
where it will be degrouped.

Liability of the container operator

If the goods conveyed in the container are lost or damaged in transit or a delay occurs and it is sought to
hold the container operator liable, a difficulty arises. The international conventions applying to the
various modes of international differ considerably with respect to the conditions of liability of the
carrier and the maximum limits of his ability

Container bills of lading

If a shipping line engages in combined transport, it may issue container bills of lading. Such documents
are genuine bills of lading. They are subject to Hague or the Hague-Visby Rules by force of law, as
far as the carriage by sea is concerned.

Legal Problems of Container Transport:

1. In terms of Container Safety Approval Plate and its Inspection :

International Maritime Organization (IMO) adopted International Convention for Safe Containers in
1972 in order to ensure safety of life and property during handling, stacking and transportation of
containers, to render container transportation easier, and to determine the control and inspection
principles for containers, structural and operational requirements and to regulate safety and security
issues in the global arena.

2. Applicable Provisions In Case of Containers Carried By Multimodal Transport :

Multimodal transport is the transportation of goods under a single contract with minimum two different
modes of transport. The carrier is liable for the entire carriage of the goods even though its
transportation to the point of destination by different modes of transport.
 3. The Carrier’s Liability upon Receipt of Cargo in Terms of the Types of Container
Transportation
In terms of the types of container transportation, it is crucial to establish the receipt time of cargo by the
maritime transporter in respect of the beginning of maritime transporter’s liability. It is widely seen
that in the event of claims for container damage or claims for damage to cargo carried in the
container, the action is filed with the maritime transporter with the allegation that the maritime
transporter is directly liable for the claim. However, this claim of animosity may not always be true.
Because, principally, it must be established which transporter was responsible when the damage
occurred according to the type of container transportation.

4. The Effect on Maritime Transporter’s Liability of the Bill of lading Clauses in Container
Transportation I
n container transportation, in order to establish the transporter’s liability, the following information must
be identified:
a. the owner of the container,
b. where and by whom the cargo is loaded into the containers,
c. whether the transporter knows the details of the cargo in the container,
d. who witnessed the closing and sealing of the container,
e. whether the container was opened during carriage
f. at which stage the damage has occurred.

5. Container Detention Charges and Liability

As owner of the container will use the container for other transports, it requests the consignee to
empty and return the container within a certain period of time. A period of time allowed for the
consignee to return the container empty is generally agreed as “free time” and if these periods are
exceeded, the consignee is requested to effect the payments that have been agreed.

6. Obligation to Inspect and Notify of Damages to Containers and Cargo in Containers

In practice, in container transportation, cargo damages notification is served earliest after the opening
of the containers at the warehouse of the consignee and examination of experts appointed by the
insurance company. This procedure generally takes more than three days.

QUESTION NO:4
1. Explain Carriage of Goods by Sea. **

ANSWER:
Introduction
Until the development of railroads, the most prominent and oldest mode of transport was by water.
Overland transportation of goods was relatively slow, costly, and perilous. For this reason, the law
governing carriage of goods by sea developed much earlier than that governing inland
transportation. It has also highly benefited International Trade. Historically, there have been several
attempts at establishing uniform international law in this field, including the Hague Rules (1924);
the Hague/Visby Rules (1968); the Hamburg Rules (1978); and so forth.

The Hague Rules are the result of the International Convention for the Unification of Certain Rules of
Law Relating to Bills of Lading. It was signed in Brussels on August 25, 1924. The Hague rules
became known as the Hague/Visby rules on the adoption of The Protocol to Amend the
International Convention for the Unification of Certain Rules of Law Relating to Bills of Lading.
This protocol was adopted to amend the original treaty in Brussels in 1968. It came into force on
June 23, 1977. They do not stand alone as an independent set of rules but act only to modify the
pre-existing Hague structure. The rules are therefore known as the Hague/Visby rules.

During the 1970s pressure mounted from developing countries and major shipper nations for a full re-
examination of cargo liability regimes in Hague-Visby Rules. Developing countries raised concerns
and in answer to those concerns, The Hamburg Rules came into existence that is the result of the
United Nations Convention on the Carriage of Goods by Sea, which was adopted in Hamburg on
March 31, 1978, and came into force on November 1, 1992.
Developing nations stated that the Hague rules were unfair in some respects. These concerns
stemmed mainly from the fact that they were seen to be drawn up by the mainly ‘colonial maritime
nations’ and had the purpose of safeguarding and propagating their interests at the expense of other
nations.
The United Nations responded to this concern by drafting the Hamburg Rules. The Hamburg rules are
far more than a simple amending of the Hague/Visby regime and came up with a completely
different approach to liability.

The Hamburg Rules establish a relatively uniform legal regime governing the rights and obligations of
shippers, carriers, and consignees under a contract of carriage of goods by sea. It was prepared at
the request of developing countries, and its adoption by States has been endorsed by such
intergovernmental organizations as the United Nations Conference on Trade and Development
(UNCTAD), the Organization of American States (OAS), and the Asian-African Legal Consultative
Committee (AALCO).
Note: Shipper is the person or company who is usually the supplier or owner of commodities shipped.
Also called Consignor. Carrier is a person or company that transports goods or people for any
person or company and that is responsible for any possible loss of the goods during transport.

UNITED NATIONS CONVENTION ON THE CARRIAGE OF GOODS BY SEA, 1978

(HAMBURG RULES)

Scope of application (Article 2)

The provisions of this Convention are applicable to all contracts of carriage by sea between two different
States, if:
i. the port of loading is located in a Contracting State, or
ii. the port of discharge is located in a Contracting State, or
iii. one of the optional ports of discharge is the actual port of discharge and such port is located in a
Contracting State, or
iv. the bill of lading or other document evidencing the contract of carriage by sea is issued in a
Contracting State, or
v. the bill of lading or other document evidencing the contract of carriage by sea provides that the
provisions of this Convention or the legislation of any State giving effect to them are to govern
the contract.
The provisions of this Convention are applicable without regard to the nationality of the ship, the
carrier, the actual carrier, the shipper, the consignee, or any other interested person.

LIABILITY OF THE CARRIER UNDER THE CONVENTION

Article 4: Period of responsibility

The responsibility of the carrier for the goods under this Convention covers the period during which the
carrier is in charge of the goods at the port of loading, during the carriage and at the port of
discharge.
The carrier is deemed to be in charge of the goods
1. from the time he has taken over the goods from
a. the shipper, or a person acting on his behalf; or
b. an authority or other third party to whom, the goods must be handed over for shipment;

2. until the time he has delivered the goods:

a. by handing over the goods to the consignee; or
 b. in cases where the consignee does not receive the goods from the carrier, by placing them
at the disposal of the consignee in accordance with the contract or with the law, or with
the usage of the particular trade, applicable at the port of discharge; or
c. by handing over the goods to an authority or other third party to whom, the goods must
be handed over.

Article 5: Basis of liability

i. The carrier is liable for loss resulting from loss of or damage to the goods, as well as from delay
in delivery, if the occurrence which caused the loss, damage or delay took place while the goods
were in his charge unless the carrier proves that he took all measures that could reasonably be
required to avoid the occurrence and its consequences.
ii. Delay in delivery occurs when the goods have not been delivered at the port of discharge
provided for in the contract of carriage by sea within the time expressly agreed upon or, in the
absence of such agreement, within the reasonable time
iii. The person entitled to make a claim for the loss of goods may treat the goods as lost if they have
not been delivered within 60 consecutive days following the expiry of the time for delivery
iv. The carrier is liable
a. for loss of or damage to the goods or delay in delivery caused by fire, if the claimant
proves that the fire arose from fault or neglect on the part of the carrier,
b. for such loss, damage or delay in delivery which is proved by the claimant to have
resulted from the fault or neglect of the carrier, in taking all measures that could
reasonably be required to put out the fire and avoid or mitigate its consequences.

v. With respect to live animals, the carrier is not liable for loss, damage or delay in delivery
resulting from any special risks inherent in that kind of carriage.
vi. The carrier is not liable, except in general average, where loss, damage or delay in delivery
resulted from measures to save life or from reasonable measures to save property at sea.
vii. Where fault or neglect on the part of the carrier, combines with another cause to produce loss,
damage or delay in delivery the carrier is liable only to the extent that is attributable to such fault
or neglect, provided that the carrier proves the amount of the loss, damage or delay in delivery
not attributable thereto.

Article 8: Loss of right to limit responsibility

i. The carrier is not entitled to the benefit of the limitation of liability provided in article 6 if it is
proved that the loss, damage, or delay in delivery resulted from an act or omission of the carrier
done with the intent to cause such loss, damage or delay, or recklessly and with the knowledge
that such loss, damage or delay would probably result.
 ii. a servant or agent of the carrier is not entitled to the benefit of the limitation of liability provided
for in article 6 if it is proved that the loss, damage, or delay in delivery resulted from an act or
omission of such servant or agent, done with the intent to cause such loss, damage or delay, or
recklessly and with the knowledge that such loss, damage or delay would probably result.

Article 9: Deck cargo

● The carrier is entitled to carry the goods on deck only if such carriage is in accordance with an
agreement with the shipper or with the usage of the particular trade or is required by statutory
rules or regulations.
● If the carrier and the shipper have agreed that the goods shall or may be carried on deck, the
carrier must insert in the bill of lading or other document evidencing the contract of carriage by
the sea a statement to that effect.
In the absence of such a statement, the carrier has the burden of proving that an
agreement for carriage on deck has been entered into.
● Where the goods have been carried on deck contrary to the provisions of this article or where the
carrier may not under this article invoke an agreement for carriage on deck, the carrier,is liable
for loss of or damage to the goods, as well as for delay in delivery, resulting solely from the
carriage on deck.

LIABILITY OF THE SHIPPER

Article 12: General rule

The shipper is not liable for loss sustained by the carrier or the actual carrier, or for damage sustained by
the ship unless such loss or damage was caused by the fault or neglect of the shipper, his servants or
agents.
Nor is any servant or agent of the shipper liable for such loss or damage unless the loss or damage was
caused by fault or neglect on his part.

Article 13: Special rules on dangerous goods

● The shipper must mark or label in a suitable manner dangerous goods as dangerous. Where the
shipper hands over dangerous goods to the carrier or an actual carrier, the shipper must inform
him of the dangerous character of the goods and, if necessary, of the precautions to be taken.
● If the shipper fails to do so and such carrier does not otherwise have knowledge of their
dangerous character:
○ the shipper is liable to the carrier for the loss resulting from the shipment of such goods,
and
 ○ the goods may at any time be unloaded, destroyed, or rendered innocuous, as the
circumstances may require, without payment of compensation.

TRANSPORT DOCUMENTS

Article 14: Issue of bill of lading

ISSUANCE-When the carrier or the actual carrier takes the goods in his charge, the carrier must, on
demand of the shipper, issue to the shipper a bill of lading

2. DELEGATION- The bill of lading may be signed by a person having authority from the carrier. A
bill of lading signed by the master of the ship carrying the goods is deemed to have been signed on
behalf of the carrier.

3. SIGNATURE- The signature on the bill of lading may be in handwriting, printed in facsimile,
perforated, stamped, in symbols, or made by any other mechanical or electronic means, (with the
law of the country where the bill of lading is issued

Article 15. Contents of bill of lading

The bill of lading must include the following particulars:
i. the general nature of the goods, the leading marks necessary for identification of the goods, an
express statement, if applicable, as to the dangerous character of the goods, the number of
packages or pieces, and the weight of the goods or their quantity otherwise expressed, all such
particulars as furnished by the shipper,
ii. the apparent condition of the goods;
iii. the name and principal place of business of the carrier,
iv. the name of the shipper;
v. the consignee if named by the shipper, the port of loading under the contract of carriage by sea,
and the date on which the goods were taken over by the carrier at the port of loading:
vi. the port of discharge under the contract of carriage by sea;
vii. the number of originals of the bill of lading, if more than one;
viii. the place of issuance of the bill of lading:
ix. the signature of the carrier or a person acting on his behalf;
x. he freight to the extent payable by the consignee or other indication that freight is payable by
him;
xi. the statement, if applicable, that the goods shall or may be carried on deck; (n)
xii. the date or the period of delivery of the goods at the port of discharg if expressly agreed upon
between the parties; and
xiii. any increased limit or limits of liability where agreed in accordance

Article 18. Documents other than bills of lading

Where a carrier issues a document other than a bill of lading to evidence the receipt of the goods to be
carried, such a document is prima facie evidence of the conclusion of the contract of carriage by sea
and the taking over by the carrier of the goods as therein described. Such documents are:
● Mates receipt
● Waybill
● Letter of indemnity

QUESTION NO: 5
1. What is Marine Insurance? Explain in details the various types of Marine
Policies. **
2. Discuss various kinds of Marine Insurance. **
3. Kinds of Marine Insurance. **(6 Marks)

ANSWER:
Introduction
The word “Insurance” means, coverage by contract whereby one party undertakes to indemnify or
guarantee another against loss by a specified contingency or peril. Marine insurance refers to a
contract of indemnity it is an assurance that the goods dispatched from the country of origin to the
land of destination are insured.
Marine transport faces a relatively higher degree of threat as compared to other modes of
transport, such as road, rail, and air. The range of perils offered by the sea is very wide, ranging
from weather or natural hazards to cross-border conflicts to pirate attacks. It not only becomes
essential for all the people associated with a particular ship (the ship owner, the cargo owners, the
intermediaries, etc.) to avail a marine insurance policy, the law mandates all the vessels engaged in
commercial transport to have a suitable marine insurance policy to mitigate the potential risks.

Marine insurance, therefore, is a type of insurance that covers the losses or damages caused to the cargo
of any ship, or the ships, cargo vessels, terminals, or any marine transport in which goods are
carried from the point of origin to the final destination. It also covers the risks faced by various
 intermediaries. It provides comprehensive coverage for all the probable risks faced by a vessel at
the sea.

The term originated when parties began to ship goods via sea. Despite what the name implies, marine
insurance applies to all modes of transportation of goods. For instance, when goods are shipped by
air, the insurance is known as the contract of marine cargo insurance.

TYPES OF MARINE INSURANCE

As per Marine Insurance Act, 1963, marine insurance is defined as, “A contract of marine insurance is
an agreement whereby the insurer undertakes to indemnify the assured, in the manner and to the
extent thereby agreed, against marine losses, that is to say, the losses incidental to marine
adventure.”

Due to a very wide ambit of marine insurance, different categories of it are classified based on different
factors. Broadly, the classification of marine insurance depends on two factors – the coverage area
of the insurance policy, and the structure of the insurance contract. Each of the two categories is
further sub-categorized, based on the different needs and suitability of the person entering into the
insurance contract.

Types of Marine Insurance – based on coverage area

The coverage area of an insurance policy is the geographical area or the protected area in which the
benefits of an insurance policy apply. The following types of marine insurance are classified, based
on the coverage area of the insurance policy –
1. Hull & machinery insurance – Hull is the most noticeable part of any ship. It is the watertight
body of a ship or a boat that protects the cargo inside the ship from being damaged. Hull and
Machinery Insurance, therefore, covers the loss or the damage caused to the body of the ship or
any machinery or equipment in it, used for the functioning of the ship. It mostly covers accidents
caused due to collisions, or the damages caused by earthquakes and explosions. This type of
insurance is generally taken by the owners of the ship.

2. Marine cargo insurance – Marine cargo insurance is a type of property insurance that covers
the cargo owners against any loss or damage caused to their cargo during its transit. It has
extensive coverage, but also has certain limitations, for instance, the cargo owners lose their
claims if the packaging of the cargo was defective. It also comes with a third-party liability,
which covers the damages caused to the port, or a ship, or a railway track due to the presence of
defective cargo.
 3. Liability insurance – Liability insurance covers the financial liability of the person who is
insured. It covers primarily the liabilities which arise due to the damages or injuries caused to the
third party, for instance, the death or personal injury caused to any third party traveling in the
ship

4. Freight insurance – Freight insurance covers the liability of the shipping company or the
logistics provider for the damage or loss caused to the shipment during transit due to events
outside the control of the company.

Types of Marine Insurance policies – based on the structure of the contract

A ‘policy is a document that embodies the terms and conditions of the contract of insurance. It
essentially is a written form of agreement between the insurance company and the person insured. It
generally contains provisions regarding the coverage area, the limitations of insurance policies, etc.
Thus the different types of policies available under marine insurance are –

1. Open policy – An open policy, also called a floating policy, provides coverage for an indefinite
number of transit journeys during the subsistence of the policy. This is especially beneficial for
companies which are involved in high-volume trade, as they are saved from taking an insurance
policy on each transit journey. It covers all the transit journeys of the insured until the policy is
canceled or until the last of the payment is realized, whichever is earlier.

2. Voyage policy – A voyage policy works on the same lines as the marine cargo insurance. Under
this policy, the insurance company agrees to cover the losses or damages caused to the cargo
during a specific voyage. It expires when the vessel reaches its destination, irrespective of the
time it takes to reach there. Usually, it is bought by small exporters who ship their goods by sea
only on some occasions.

3. Time policy – A time policy, as the name suggests, is issued for a fixed period of time. The
vessel may make any number of voyages during this period. Generally, the insurance company
issues this policy for one year, however, the period may vary depending on the agreement
between both parties.

4. Mixed policy – A mixed policy is a combination or a mix of voyage and time policies. The
insurance company, while issuing this policy, agrees to cover the loss or damage to the ship for a
particular voyage till a particular period of time.
5. Single vessel policy – A single vessel policy insures only a single ship of the insured.

6. Fleet policy – The person insured has an option of either insuring a single ship by a policy, or of
insuring several ships under one policy. If he chooses the latter option, he undertakes a ‘Fleet
Policy’, under which a fleet of ships is insured under a single policy.

7. Unvalued policy – Every insurance policy is either an unvalued or a valued policy. Under an
unvalued policy, the insurance company does not assign a value to the thing insured (the vessel
or the cargo), at the time of underwriting the policy. The valuation of the property is done only
after the claim of insurance has been filed. However, for a successful claim, the true value of the
property has to be proved by the insured by way of invoices or estimates, before the valuation.

8. Valued policy – In a valued policy, the insured property is given a specific value when the
policy is issued, and before any claims are made. When the claim is made by the insured, a pre-
estimated or the specified amount is given, which does not depend on the amount of loss
incurred by the insured. The depreciation of the property also does not affect the amount of
claim, under a valued policy.

9. Block policy – A block policy is an all risks policy. Unless a contrary intention is expressed by
the insurer, it essentially covers all the risks to which the goods are exposed when they are in
transit, bailment, and on the premises of the third party. There are two popular types of block
policy – furrier’s block policy, and jeweler’s block policy since fur and jewelry are two high-
value commodities that are exposed to a greater threat of theft.

10. Port-risk policy – A port-risk policy covers ships that are either docked or are undergoing repair
works at the port. It is an all-risk policy that covers all the risks unless otherwise agreed between
the parties. It provides coverage for physical damages to the vessel as well as protection and
indemnity but excludes any liability arising on account of the crew and cargo.

11. Named policy – A named policy is one in which the name or names of the ships is mentioned in
the contract of insurance.

12. Wager policy – A wager policy protects from loss of the property of which the insured does not
have legal proof of possession. This means, when the insured is not able to prove an insurable
interest in the property, the insurance company may issue a wager policy to him. Under it, the
 whole claim of the insured is subject to the discretion of the insurer and the merits of the claim
made. It is not a written policy as it is issued in contravention of the law.

QUESTION NO: 6
1. Pre-Shipment Inspection. (6 Marks)

ANSWER:
A pre-shipment inspection is a step taken by trade operators (buyers, suppliers, agencies) to
inspect newly manufactured products before they are shipped for export/import.

The purposes of a pre-shipment inspection are to:

• Check the quantity and quality of the merchandise

• Check products for any defects
• Ensure products meet the safety requirements of the destination market
• Issue report for import and billing
• Pre-shipment inspections were officially introduced in 1994 as an agreement to improve
international trade standards under the General Agreement on Tariffs and Trade (GATT),
which was later replaced by the World Trade Organisation (WTO).

A number of obligations were included in the “Agreement on Pre-Shipment Inspection,”

stating that pre-shipment investigations should be applied according to the following
principles:

• Non-discrimination
• Transparency
• Protection of confidential business information
• Avoidance of delays
• Price verification based on the price of identical or similar goods in the country of exportation,
in which the exporter has the opportunity to explain the price charged
• Inspection agencies establish appeals procedures, the findings of which are made available to
other exporters

With global development, international buyers will continue to face significant impediments to
growth in World markets. Differing national standards and requirements, an increase in
fraudulent trade-conduct are some of the obstacles that distort the trade equation. A solution
 with minimum cost and delay needs to be found. The most effective method is Pre-
Shipment Inspection.

Pre-Shipment Inspection Procedure

• Visit suppliers with the necessary equipment and instruments

• Sign compliance documents before PSI inspection services are performed
• Perform quantity verification
• Conduct final random inspection
• Package, label, tag, instruction checking
• Workmanship checking and function test
• Size, weight measurement
• Carton drop testing
• Bar code testing
• Sealing of carton
QUESTION NO: 7
1. Carriage by Rail. **** (6 Marks)

ANSWER:
Summary of More Important Provisions The carriage of goods by rail is regulated by the
Railways Act, 1989. Some of the more important provisions contained in the Act are
summarised below:
1. Maintenance of rate books, etc., for carriage of goods (Section 61).
Every railway administration shall maintain, at each station and to such other places where goods
are received for carriage, the rate books or other documents which shall contain the rate
authorised for the carriage of goods from one station to another and make them available for
the reference of any person during all reasonable hours without payment of any fee.

2. Provision of rate risks (Section 63).

Where any goods are entrusted to a railway administration for carriage, such carriage shall,
except where owner’s risk rate is applicable in respect of such goods, be at railway risk rate.
185 Any goods, for which owner’s risk rate and railway risk rate are in force, may be
 entrusted for carriage at either of the rates and if no rate is opted, the goods shall be deemed
to have been entrusted at owner’s risk rate.

3. Forwarding note (Section 64).

Every person entrusting any goods to a railway administration for carriage shall execute a
forwarding note in such form as may be specified by the Central Government.
The consignor shall be responsible for the correctness of the particulars furnished by him in the
forwarding note. He shall indemnify the railway administration against any damage suffered
by it by reason of the incorrectness or incompleteness of the particulars in the forwarding
note.

4. Railway receipt (Section 65).

A railway administration shall issue a railway receipt in such form as may be specified by the
Central Government:
(a) in a case where the goods are to be loaded by a person entrusting such goods, on the
completion of such loading; or
(b) in any other case, on the acceptance of the goods by it.
A railway receipt shall be prima facie evidence of the weight and the number of packages stated
therein.

5. Carriage of dangerous or offensive goods (Section 67).

No person shall take with him on a railway or require a railway administration to carry such
dangerous or offensive goods, unless (i) he gives a notice in writing of their dangerous or
offensive nature to the railway servant authorised in this behalf; and (ii) he distinctly marks
on the outside of the package containing such goods their dangerous or offensive nature.

6. Liability of railway administration for wrong delivery (Section 80).

Where a railway administration delivers the consignment to the person who produces the railway
receipt, it shall 186 not be responsible for any wrong delivery on the ground that such
person is not entitled thereto or that endorsement on the railway receipt is forged or
otherwise defective.
Responsibilities of a Railway Administration as a Carrier of Goods. Sections 93 to 112 of the
Railways Act, 1989 contain provisions on this subject. These provisions are summarised
below.

1. General responsibility of a railway administration as carrier of goods (Section 93).

A railway administration shall be responsible for the loss, destruction, damage or deterioration in
transit, or non-delivery of any consignment (goods entrusted to a railway administration for
carriage), arising from any cause except the following, namely:
(i) An act of God;
(ii) An act of war;
(iii) An act of public enemies;
(iv) Arrest, restraint or seizure under legal process;
(v) Orders of restrictions imposed by the Central Government or a State Government or by an
officer or authority subordinate to the Central Government or a State Government
authorised by it in this behalf;
(vi) Act of omission or negligence of the consignor or consignee endorsee or the agent or servant
of the consignor or the consignee or the endorsee;
(vii) Natural deterioration or wastage in bulk or weight due to inherent defect, quality or vice of
the goods;
(viii) Latent defects;
(ix) Fire, explosion or any unforeseen risks.

Liability of a common carrier vis-a-vis the liability of a railway administration. 187 The liability
of a railway administration is the same as that of a common carrier. In other words, even
where any loss, destruction, damage, deterioration or non-delivery is proved to have arisen
from any one or more of the aforesaid nine cases, a railway administration shall not be
relieved of its responsibility unless it further proves that it has used reasonable foresight and
care in the carriage of the goods [Union of India v Orissa Textile Mills, AIR (1979) Ori.
165].
A railway administration, like a common carrier, is bound to carry the goods of every person
who is willing to pay the freight and comply with other requirements.

2. Delay or retention in transit (Section 95).

A railway administration shall be responsible for the loss, destruction, damage or deterioration of
any consignment proved by the owner to have been caused by the delay or detention in their
carriage. The railway administration can, however, avoid liability if it proves that the delay
or detention arose for reasons beyond its control or without negligence or misconduct on its
part or on the part of any of its servants.

3. Owner’s risk rate or railway risk rate (Section 97).

A consignment may be carried by a railway administration either at owner’s risk rate or railway
risk rate. Owner’s risk rate is a special reduced rate whereas railway risk rate is an ordinary
tariff rate. Owner’s risk rate is lower than the railway risk rate for the simple reason that the
goods in this case are carried at the owner’s risk. In case of owner’s risk rate, the railway
administration is not responsible unless it is proved that any loss, destruction, damage or
deterioration or non-delivery of goods arose from negligence or misconduct on the part of
the railway administration or its servants.

4. Liability for damage to goods in defective condition or defectively packed (Section 98).
Goods tendered to a railway administration to be carried by railway may be (a) in a defective
condition or (b) defectively packed. As a result of these, goods are liable to damage,
deterioration, leakage or wastage. If the fact of such condition or defective or improper
packing has been recorded by the sender or his agent in the forwarding note, the railway
administration is not responsible for 188 any damage, deterioration, leakage or wastage
unless negligence or misconduct on the part of the railway administration or of its servants
is proved.

5. Liability after termination of transit (Section 99).

Whether the goods are carried at owner’s risk rate or railway risk rate, the liability of the railway
administration for any loss of goods within a period of seven days after the termination of
 transit is that of a bailee under Sections 151, 152 and 161 of the Indian Contract Act, 1872.
But where the goods are carried at owner’s risk rate the railway administration is not liable
for such loss, destruction, damage, deterioration or non-delivery of goods except on proof of
negligence or misconduct on the part of the railway administration or any of its servants.

After seven days from the date of termination of transit the railway administration is not liable in
any case for any loss of such goods. Notwithstanding this provision, the railway
administration is not responsible after the termination of transit for the loss, destruction,
damage, deterioration or non-delivery of articles of perishable goods, animals, explosives
and other dangerous goods.

6. Responsibility as carrier of luggage (Section 100).

A railway administration shall not be responsible for the loss, destruction, damage, deterioration
or non-delivery of any luggage unless a railway servant has booked the luggage and given a
receipt therefor. Also it is to be proved that the loss, etc., was due to the negligence or
misconduct on the part of the railway administration or on the part of any of its servants.
In the case of luggage which is carried by the passenger in his own charge, the railway
administration shall not be responsible for the loss, etc., unless it is proved that the loss, etc.,
was due to the negligence or misconduct on the part of the railway administration or on the
part of any of its servants.

7. Responsibility as a carrier of animals (Section 101).

A railway administration shall not be responsible for any loss or destruction of, or injuries to, any
animal carried by railway arising from fright or restiveness of the animal or from
overloading of wagons by the consignor.

8. Exoneration from liability in certain cases (Section 102).

A railway administration shall not be responsible for the loss, destruction, damage or
deterioration or non-delivery of any consignment —
(i) When such loss, etc., is due to the fact that a materially false description of the consignment is
given; or
(ii) Where a fraud has been practised by the consignor or the endorsee, or by an agent of the
consignor, consignee or the endorsee; or
(iii) Where it is proved by the railway administration to have been caused by, or to have arisen
from –
(a) Improper loading or unloading by the consignor, or the consignee or the endorsee, or by an
agent of the consignor, consignee or the endorsee;
(b) riot, civil commotion, strike, lock-out, stoppage or restraint of labour from whatever cause
arising whether partial or general; or
(iv) For any indirect or consequential loss or damage or for loss of particular market.

QUESTIION NO: 8
1. Carriage of Goods by Air. (6 Marks)

ANSWER:
Introduction
During the last few decades, transportation of cargo by air became more and more important. Due to
their high speed and reliability, modern aircraft are widely used especially for the transport of
urgent, sensitive, and high-quality products and goods. Especially within the field of international
and transcontinental transportation.
In the background of the flourishing air cargo transportation industry, the demand for legal
security and certainty is of imminent importance. This refers mainly to cases of troubles related to
the transported goods, which are leading to contractual problems, especially on liability, between
the parties involved. Therefore it is useful for the consignor and the consignee to work on the basis
of internationally widely accepted and used rules governing the carrier´s liability. On the other
hand, the carrier can protect and insure himself better against possible losses, if he is bound to rules
of a certain degree of uniformity.
Before starting to analyze the problematic spheres of contracts and liability, it is useful to have an
overview of the major sources of law related to the carriage of goods by air. The following are the
sources:

● the Warsaw Convention for the Unification Of Certain Rules Relating To International Carriage
By Air, 1929 as amended by the Hague Protocol on September 28, 1955; and
● the Montreal Convention (Convention for the Unification of Certain Rules for International
Carriage by Air) was signed on May 28, 1999.
● The Carriage by Air Act, 1972.
 1. Warsaw Convention 1929
The first international air convention, the "Convention for the Unification of Certain Rules relating to
International Carriage by Air", was signed in Warsaw in 1929 (hereinafter referred to as "Warsaw
Convention 1929"). As its title suggests, the convention is aimed at unifying the rules on
international carriage by air.
According to Article 1 (1) the Warsaw Convention 1929 "applies to all international
carriage of persons, luggage or goods performed by aircraft for reward. It applies equally to
gratuitous carriage by aircraft performed by an air transport undertaking."
The Warsaw Convention 1929 was negotiated at a time when commercial aviation was at its
infancy. Two major considerations shaped the liability regime laid down by the Warsaw
Convention 1929. On the one hand, it was seen necessary to protect air carriers (which at the time
were mainly state-owned) from open-ended liability in case of damage to or loss of cargo or
baggage and injury or death of passengers. On the other hand, shippers and passengers needed to be
reassured that if something went wrong they would have an effective remedy against the carrier and
be compensated. The Warsaw Convention 1929 entered into force on 13 February 1933 and has
been adopted by 151 States.
The major areas in which the Warsaw Convention 1929 achieves uniformity may be summarised as
follows.
● standardizes particulars to be included in the documents of carriage;
● creates a penalty for non-compliance with the particulars to be included in the documents of
carriage, (carrier loses monetary cap limiting his liability);
● sets out rules whereby the claimant does not need to prove the fault of the carrier, or his agents,
in respect of a loss
● specifies a limited number of defenses to liability for the benefit of the air carrier
● fixes a monetary cap limiting the liability of the air carrier
● defines the circumstances in which the carrier may lose the benefit of the monetary cap limiting
his liability
● sets out rules as to time limitation and jurisdiction
● provides for the exclusive application and mandatory effect of the rules laid down

One of the major provisions of the Warsaw Convention 1929 concerns the monetary cap limiting the air
carrier's liability. This was fixed by reference to the monetary unit of the French or Poincaré franc,
which was in circulation in France at the time and consisted of a specified quantity of gold defined
by the Warsaw Convention 1929 (hereinafter referred to as "gold franc").
 The monetary cap is 125,000 gold francs (about US$ 5,000 at the rates of exchange
prevailing in 1929)21 for passenger injury or death, 250 gold francs (about US$ 10) per kilogram
for loss or damage to cargo or registered baggage, and 5,000 gold francs (about US$ 200) per
passenger for unregistered baggage.
However, dissatisfaction in some countries with the level of the monetary limit of the air carrier's
liability, especially for passengers, and the erosion of the value of the gold franc standard after the
Second World War, led to calls for change.

2. Hague Protocol 1955

In 1955, a protocol was adopted in The Hague to amend the Warsaw Convention 1929 (hereinafter
referred to as "Hague Protocol 1955"). The Hague Protocol entered into force on 1 August 1963
and has been adopted by 136 States. It doubles the monetary cap on the carrier's liability in respect
of passenger injury or death from 125,000 to 250,000 gold francs. However, the Hague Protocol
does not change the financial limitation of the carrier's liability in respect of cargo and registered
baggage (which remains at 250 gold francs), or in respect of unregistered baggage (which remains
at 5,000 gold francs per passenger).
Some other innovations of the Hague Protocol 1955 include the following.
● simplifies the particulars to be included in the documents of carriage, however, maintains the
penalty for non-compliance with the particulars to be included in the documents of carriage
(carrier loses monetary cap limiting his liability);
● specifies that legal costs are excluded from a claimant's award of damages;
● introduces an incentive for out-of-court settlements

Finally, it is important to note, that the United States has refused to ratify the Hague Protocol. Therefore
transportation of goods by air from and to the USA from another state who has ratified the WC and
HP is still governed by the rules of the WC in the original version of 1929.

3. Montreal Convention 1999

Against this background and in order to unify the fragmented liability regime of the Warsaw-system
conventions, the "Convention for the Unification of Certain Rules Relating to International
Carriage by Air" (hereinafter referred to as "Montreal Convention 1999") was adopted in Montreal
on 28 May 1999. The Montreal Convention 1999 entered into force on 4 November 2003 and has,
to date, been adopted by 70 States.
The Montreal Convention 1999 provides that it "shall prevail over any rules which apply to
international carriage by air" as between the Contracting States to the Montreal Convention 1999,
which are also Contracting States to one or more of the Warsaw-system conventions. Thus, as
 between States which are Contracting States to any one of the Warsaw system conventions and the
Montreal Convention 1999, the Montreal Convention 1999 takes precedence.

● Liability has been fastened on the carriers for damages sustained in the event of the destruction,
damage or loss to cargo. However, the carriers are not liable in case of any inherent defect in
such cargo, defective packing, act of war etc.
● Under Article 22 of the Convention in the case of carriage of baggage, the liability of the carrier
in the case of destruction, loss, damage, or delay is limited to Rs.20000 per passenger. Said
Article provides that in the case of carriage of cargo, the liability of the carrier is limited to a sum
of Rs. 350 per kilogram. However, the above limits for carriage of baggage and cargo do not
apply in cases where the consignor has declared the value at delivery and has paid supplementary
sum. In such cases, carrier is liable to pay the declared amount, unless he proves that the declared
value is greater than the actual value.
● Under Article 31, a complaint is a pre-condition for instituting any action against the carrier,
except in cases of fraud. Such complaint should be made forthwith after discovery of the
damage, and, at the latest, within 7 days from the date of receipt of checked-in baggage and 14
days from the date of receipt of cargo. In case of delay, such a complaint should be made within
a period 21 days from the date on which cargo was placed at his disposal.
● The right to claim damages is extinguished if no action is instituted within a period 2 years from
the date of arrival or expected arrival at destination for instituting any claim for damages. •
● Given the aforesaid limitation of liability of carriers under the Act, value of disputes concerning
loss, damage or destruction of baggage/ luggage of passengers, generally would not meet the
‘Specified Value’ under the Commercial Courts Act i.e. Rs. 1 Crore. However, there may be
cases where the plaintiffs would seek to get around this limitation by alleging wilful misconduct
or recklessness of the carrier. The veracity of such allegation would be crucial to determine the
jurisdiction of the Commercial Courts.

4. The Carriage by Air Act, 1972 (National)

Carriage by Air Act, 1972 came into force on May 15, 1973, superseding the erstwhile Indian Carriage
Act, 1934. On December 19, 1972, the Carriage by Air Act was passed by the Parliament and was
enforced on March 23, 1973.
It is an Act to give effect to:-
● the Warsaw Convention for the Unification Of Certain Rules Relating To International Carriage
By Air, 1929 as amended by the Hague Protocol on September 28, 1955; and
● the Montreal Convention (Convention for the Unification of Certain Rules for International
Carriage by Air) signed on May 28, 1999.
The Act makes provision for applying the rules contained in the said Conventions to international and
non-international carriage by air and for matters connected therewith. The above Conventions
govern the liability of air carriers for injury or death of passengers, for destruction or loss of or
damage to baggage and cargo, and losses caused by delay in international carriage of passengers,
baggage, and cargo. These Conventions have been incorporated as Schedules to the Act.

Listed below are some of the key provisions of the Carriage by Air Act, 1972:
i. Liability in case of death- The liability of a carrier with reference of the death of a passenger is
determined by the First Schedule, the Second Schedule and the Third Schedule. Further, “the
liability shall be enforceable for the benefit of such of the members of the passenger’s family as
sustained damage by reason of his death.”
ii. Documents of Carriage covered by the Act: In each Schedule, chapter II deals with the
‘documents of the carriage.’ These documents are as follows:
a. Passenger Ticket
b. Baggage check
c. Air consignment note or Airway bill

iii. Jurisdiction of the Act: As per the Carriage by Air Act, all the three Schedules confer the
jurisdiction wherein petitioner can bring an action for recompense. Four jurisdictions are
provided by the First and Second Schedule, whereas, an additional jurisdiction in the form of
Fifth jurisdiction have been given by in the Third Schedule. These are listed below –
a. The ordinary place of residence of the Carrier, or
b. Carrier’s principal place of business, or
c. Establishment or place where contract has been entered into, or
d. Place of Destination, or
e. Passenger’s permanent or principal residence.

iv. Liability of the Carrier: The Schedules of the Act provides that the carrier is accountable for
the injury or damage caused in the cases of wound or death “of a passenger or any other bodily
injury suffered by a passenger, if the accident which caused the damage so sustained took place
on board the aircraft or in the course of any of the operations of embarking or disembarking.”

v. The provisions relating to the combined carriage: Chapter IV of all the Schedules deals with
combined carriage. On the issue of combined carriage, the Act states that where a carriage has
been carried out “partly by air and partly by any other mode of carriage,” then in such cases the
 provisions of the Schedule will be applicable. Further, the parties are not prevented “in the case
of combined carriage from inserting in the document of air carriage conditions relating to other
modes of carriage, provided that the provisions of this Schedule are observed as regards the
carriage by air.”

QUESTION NO:9
1. Justification for Deviation of Sea Route. ***(6 Marks)

ANSWER:
The carrier, having provided a seaworthy vessel that is fit to go to sea with her cargo on board and having
received the shipment into his care, must perform the voyage dictated by the contract of carriage. Under the
Rules, the carrier is obliged, in the absence of any agreement to the contrary, to carry the cargo directly to its
Destination (Reference: Hague Rules, Article IV, rule 4).

A deviation is a departure from the intended voyage or contract of carriage. It can occur either where voyage
courses are expressly stated or not, but any departure from the customary route may be treated as a
deviation.
Therefore, the route of the voyage is crucial to the proper fulfillment of the contract of carriage. Any
unjustifiable deviation from the agreed, direct, or customary route will constitute a breach of the contract of
carriage. A deviation is justifiable in only three situations.

Firstly, if there is an area or immediate danger, the carrier may deviate from protecting and
preserving the cargo.
In certain circumstances, if the well being of the load so demands, it may be the carrier "s duty to
deviate. Secondly, the carrier may deviate to save human life. However, he may not
unnecessarily delay the vessel at the scene of a casualty. Finally, the contract of carriage may
permit a deviation from the contractual voyage if it contains a "liberty to deviate" clause. It is not
safe to rely on such clauses as they are interpreted in a most narrow and restrictive manner.

The Rules, which will usually be incorporated into the contract of carriage, excuse deviations to
save life and or property, or for any other reasonable purpose. It is virtually impossible to define
what is meant by reasonable. However, the question of whether a deviation is reasonable will be
considered not only from the carrier but also on the cargo owners.

The carrier is also under an obligation to ensure that the vessel proceeds promptly to her
destination. The duration of the voyage is crucial to the proper fulfillment of the contract of
carriage. Any unnecessary delay will be treated in the same way as a deviation from the
contractual voyage.

If the vessel deviates from the agreed, direct, or customary route, or in the event of delay in the
prosecution of the voyage, the Master should notify owners immediately. Besides, he should
ensure that the precise and detailed reasons for the deviation or delay are thoroughly and
accurately recorded, and documents such as the logbook, ship to shore communications, course
recorders, and charts must be made available to owners.

However it should be noted that deviation does not necessarily mean a physical change in the
course and can occur in a simple case of slowing down to receive stores at an intermediate off-
port-limits call.

Justifiable Deviation

The deviation can be justified (i.e., excused) in the following cases;

 to save human life or aid a ship in distress where human life may be in danger
 where reasonably necessary for obtaining medical or surgical aid for any person onboard
 where reasonably necessary for the safety of the ship
 if authorised by any special term in the insurance policy
 where reasonably necessary to comply with an express or implied warranty
 where caused by circumstances beyond the control of the Master
 where caused by barratry of the Master or crew (if barratry is an insured risk). Barratry is
defined as "An act committed by the Master or mariners of a vessel, for some unlawful or
fraudulent purpose, contrary to their duty to the owners, whereby the latter sustain an
injury. It may include negligence, if so gross as to evidence fraud."

The Master has full authority to deviate from the intended route for the safety of life, the ship,
her cargo or the environment.

Effects Of Deviation on Cover

When a ship, without a justifiable cause such as above, deviates, the insurance policies become
null and void from the time of deviation. It is important to note that even if a loss occurs after the
deviation is completed and the vessel has regained her normal route, the insurers will not be
liable for such a loss. Therefore, the effect of an unjustified deviation is for the shipowner to lose
all his normal insurance cover. Besides, he loses rights and defenses available to him under the
relevant Carriage of Goods by Sea Act.

Notification of Deviation

A Master should advise his management Company as soon as possible of any actual or intended
deviation so that owners, charterers, cargo interests, and insurers can be advised. When the
deviation, from whatever cause, is completed, the Master must again notify the Company.

Port of refuge

A port or place of refuge is a port or place to which a vessel proceeds in consequence of an

accident, sacrifice, or other extraordinary circumstance. The loading port or discharge port/place
can be the port/place of refuge. In case of deviation to a port/place of refuge, the Master must
send (in addition to the previously mentioned information) followings :

1. A sketch plan showing the actual deviation of the vessel and the date/time of reaching its
point of deviation on resuming its voyage.
2. Consumption of fuel, lube oils, deck and engine stores specified from the point of
deviation to the port of refuge. Furthermore, during the stay at a port of refuge until
reaching the original point of deviation.
3. As above for wages and overtime,
4. As above for crew maintenance, i.e. daily food cost x number of crew.
5. Any additional expenses not paid for by agent.

QUESTION NO: 10

1. Freight (6 Marks)

2. Freight and Insurance (6 Marks)

ANSWER:

FRIEGHT:

Freight refers to products, goods, or merchandise that are transported in a ship, train, airplane,
truck, or van. In other words, we can carry freight by air, sea, or land.
In this context, the term cargo means the same as freight. However, unlike freight, we cannot use
cargo as a verb.

Historically, freight has referred to transportation by land, unlike cargo which is for sea or air
transportation. Once freight arrives on land, it is transported to its destination by drayage
carriers. That is why the terms freight train or freight truck are much more common than cargo
trucks or trains. Ships and planes are generally called cargo planes or cargo ships. However,
there is a lot of overlap today and you might see and hear the two terms – cargo and freight –
used interchangeably in virtually all situations.

What are the 3 Main Types of Freight Transportation?

Businesses that require the transport of goods and products can choose among the three freight
transportation types. So, what are the different types of freight? The main transportation types
are air freight, ocean freight, and truck freight, with each type offering unique benefits.

To leverage the benefits they provide, it is important to carefully identify which one is suitable
for your business. Several important factors, including the transportation cost, the value, size,
and weight of your goods, and shipment urgency, require consideration to aid in decision-
making.
Let’s take a look at the potential benefits and possible drawbacks each freight transportation type
can bring to the table before making a decision.

Air Freight
To know if air freight is suitable for your business, you should know what air freight is first.

Air freight is the shipment or transportation of freight or goods via an air carrier or plane. It is a
crucial mode of transport because of its scope which is more vast than others. Air freight serves
supply chain systems that demand and rely on speed transport service.

Many companies choose air freight due to its shorter transit time. Air freight is a top choice for
transporting perishable goods like food and some medications, as well as retail and hardware
products. Speed is air freight’s most prominent strength, and this quick service enables
companies to easily replenish inventory, minimize cost, and boost profit.

Benefits of Air Freight

 Significantly shorter transit time, which makes it ideal for transporting perishable goods
 High reliability of service, as planes operate on a fixed schedule
 Enhanced security measures and level of protection, which maintains the quality of cargo
and products
 Minimal documentation is required
 Less cargo handling
 Vast scope, which allows for sending of cargo to almost anywhere
Shortcomings of Air Freight

 Most expensive type of freight transportation due to the higher fuel cost and extra
expenses, such as tickets and fees
 May be dependent on weather conditions
 Strict product limitations, including batteries and explosives
 Size and weight restrictions, making it unsuitable for moving big and heavy cargo
Ocean Freight
Many industries use ocean freight to transport their goods. But what is ocean freight?

Also known as maritime or ship freight transportation, ocean freight uses sea vessels for
transporting cargo. Ships can carry immensely large loads of goods for a more affordable cost,
making ocean freight often the ideal mode of transport for businesses that ship heavy goods in
bulk. Companies that use ocean freight the most are those that transport building supplies,
engines, metals, and even animals and livestock. Agriculture products and wet bulk products like
petroleum are also often moved by sea.

While ocean freight takes time to deliver cargo, it is often the perfect mode of transport when
shipping heavier loads from one country to another.
Benefits of Ocean Freight

 Capable of transporting oversized, bulky, and large volumes of cargo

 A more affordable option for long-distance shipments, with ocean freight four times less
costly than air transport
 Strengthened safety of shipments, as ship containers are designed to carry large loads and
even hazardous cargo
 Environment-friendly, with ships being the mode of transport with the lowest carbon
footprint
Shortcomings of Ocean Freight

 Slower, time-consuming shipments, making ocean freight ideal only for those with a long
lead time
 May be challenging to track shipment progress
 Requires further land transport for cargo to reach the final destination
 Heightened risk due to the possibility of sinking sea vessels
 Lack of infrastructure, such as ports and terminals
Truck Freight
What is truck freight?

Truck freight is the most common type of freight transportation. Also called road freight, truck
freight transportation is the perfect choice for companies that require fast delivery of goods and
products directly to a business, warehouse, or end customer.

Common industries that rely on road freight include agriculture, eCommerce, grocery,
machinery, retail, and more. Freight trucks are durable and secured, making them capable of
transporting large and heavy loads. They come in different types and sizes to accommodate your
specific needs. Equipped to deal with possible delays, truck freight provides a seamless transfer
of goods and products interstate or overseas.

Benefits of Road Freight

 Most economical, offering the best prices for freight transport

 Great flexibility, as freight trucks can accommodate local and overseas, long- and short-
haul deliveries
 Convenient door-to-door delivery services
 Quick and timely delivery, particularly with small cargo shipments
 Allows for easy tracking and tracing of shipment by both the business and end customer
Shortcomings of Road Freight

 Prone to delays due to weather conditions and unforeseen circumstances on the road
 Contributes to road traffic
  Increased risk due to lack of control over the way your goods are handled
 Size and weight restrictions, considering truck size and state laws
 Less environmental-friendly compared to other freight transportation types

INSURANCE:

Insurance is a means of protection from financial loss in which, in exchange for a fee, a party
agrees to compensate another party in the event of a certain loss, damage, or injury. It is a form
of risk management, primarily used to hedge against the risk of a contingent or uncertain loss.
An entity which provides insurance is known as an insurer, insurance company, insurance
carrier, or underwriter. A person or entity who buys insurance is known as a policyholder, while
a person or entity covered under the policy is called an insured. The insurance transaction
involves the policyholder assuming a guaranteed, known, and relatively small loss in the form of
a payment to the insurer (a premium) in exchange for the insurer's promise to compensate the
insured in the event of a covered loss. The loss may or may not be financial, but it must be
reducible to financial terms. Furthermore, it usually involves something in which the insured has
an insurable interest established by ownership, possession, or pre-existing relationship.
The insured receives a contract, called the insurance policy, which details the conditions and
circumstances under which the insurer will compensate the insured, or their designated
beneficiary or assignee. The amount of money charged by the insurer to the policyholder for the
coverage set forth in the insurance policy is called the premium. If the insured experiences a loss
which is potentially covered by the insurance policy, the insured submits a claim to the insurer
for processing by a claims adjuster. A mandatory out-of-pocket expense required by an insurance
policy before an insurer will pay a claim is called a deductible (or if required by a health
insurance policy, a copayment). The insurer may hedge its own risk by taking out reinsurance,
whereby another insurance company agrees to carry some of the risks, especially if the primary
insurer deems the risk too large for it to carry.
What are common types of insurance?
There are many types of insurance, but some common types are described here.
Health insurance:
Helps you pay for doctor fees and sometimes prescription drugs. Once you buy health insurance
coverage, you and your health insurer each agree to pay a part of your medical expenses —
usually a certain dollar amount or percentage of the expenses.
Life insurance:
Pays a beneficiary you select a set amount of money if or when you die. The money from your
life insurance policy can help your family pay bills and cover living expenses. There are different
types of life insurance. One is term life insurance, which pays a benefit only if the insured person
dies during the term of the policy (usually from one to 30 years). Another is whole life insurance,
which pays a benefit whenever the insured person dies.
Disability insurance:
Protects individuals and their families from financial hardship when illness or injury prevents
them from earning a living. Many employers offer some form of disability coverage to
employees, or you can buy an individual disability insurance policy.
Auto insurance:
Protects you from paying the full cost for vehicle repairs and medical expenses due to a collision.
In most states, the law requires you to have auto insurance when operating a motor vehicle.
Homeowner’s or renter’s insurance:
Covers your home and the personal belongings inside in the event of loss or theft; helps pay for
repairs and replacement. If you have a mortgage on your property, most lenders require you to
have homeowner’s insurance. If you’re renting, the landlord might require you to have renter’s
insurance.

QUESTION NO: 11

1. Consignment Notes (6 Marks)

ANSWER:
The word consignment comes from the French consigner, meaning "to hand over or transmit",
originally from the Latin consignor "to affix a seal", as it was done with official documents just
before being sent.

Consignment is an arrangement in which goods are left in the possession of an authorized third
party to sell. Goods sold in this way are said to be "consigned" to a third party for sale. Items
sold on consignment are typically sold by consignment shops, which receive a percentage of the
revenue from the sale (sometimes a very large percentage) in the form of commission.

Consignment deals are made on a variety of products, such as artwork, clothing and accessories,
and books. Some types of retail sales may be viewed as a special form of consignment where
producers rely on retail stores to sell their products to consumers, although secondhand stores
and thrift stores are more typically associated with the practice of consignment.

Consignment arrangements, however, would not include retailers such as Walmart or most
supermarkets, which purchase goods outright from wholesalers and then sell their items at
a markup.
What is a Consignment Note?

Document accompanying goods that is filled by the shipper. It serves as proof that a contract for
carriage has been concluded and describes its content. It also serves as a receipt when goods are
picked up from the shipper and delivered to the recipient.

What information should be included in the consignment note?

The consignment note can be designed in any way: French legislation and European CMR
regulations do not impose any specific format. In all cases, however, the document must include
a certain amount of information:
 The date
 Carrier's name and address, SIREN number or intracommunity number
 The date the merchandise was picked up
 Type, quantity and weight of merchandise
 Sender's name and recipient's name
 Address of loading and unloading site
All parties involved in the road transport of goods are able to draw up this consignment note. In
practice, it is often built by the company providing the road haulage service.

Features:

 In consignment agreement the possession of goods transfer from one party to another.
 The relation between the two parties is that of consignor and consignee, not that of
buyer and seller.
 The consignor is entitled to receive all the expenses in connection with consignment.
 The consignee is not responsible for damage of goods during transport or any other
procedure.
 Goods are sold at the risk of the consignor with profit or loss belonging to the
consignor only.
A consignor who consigns goods to a consignee transfer only possession, not ownership, of the
goods to the consignee. The consignor retains title to the goods. The consignee takes possession
of the goods subject to a trust. If the consignee converts the goods to a use not contemplated in
the consignment agreement, such as by selling them and keeping the proceeds of the sale for the
consignee, the crime of conversion has been committed.