Unformatted text preview: ADMIRALTY I
I. CARRIAGE OF GOOD A. Carriage Under Bills of Lading
1. Historical Introduction
(a) Contracts of carriage / contracts of affreightment >>> contracts to transport
cargo from one place to another
(b) Players in the waterborne transport owners >>> the persons who own commercial vessels; charterers >>> persons who contract to use the carrying capacity of a vessel
owned by another; shippers >>> persons who want their goods transported from one place to
another (seller); consignees >>> persons who are entitled to receive the goods after they
have been discharged from the carrying vessel; freight forwarders >>> transportation specialists who assist shippers by
arranging for the transport of their goods; (NVOCC) nonvessel operating common carriers >>> person who
untertakes to transport goods of shippers as though they had their own
vessels but who, in reality, contract with owners or charterers of vessels to
actually perform the transportation function.
(c) Cost: both parties will probably pay about the same amount for carriage.
However, the importer generally passes the coast on to the consumer.
(ii) 1st Party Carrier: either party may obtain, and the cost gets passed on to the
(iii) Benevolent Carrier: pay the insurance and freight yourself (then pass the
(e) CIF: (Cost, Insurance, Freight) The exporter (supplier) pays insurance and freight
to the specified destination.
(a) FOB: (Freight on Board) Risk of any loss / damage passes from the seller to the
buyer when the goods pass the ship’s rail at the port of loading.
(b) Charter: Used when you have and entire ship-load:
(i) Voyage charter party: charter for just one trip (i.e. taxi).
(ii) Slot Charter: ex. chartering 100 cargo spaces
(iii) Time Charter: Charter for a period of time, not just one voyage. It is up to
the TC to find work for the ship.
Demise/Bareboat Charter: Charter gets the “bareboat.” (Only vessel
(h) Liner Service: ship that follows the same route over & over.
(a) Tramp Service: roams from port to port on different jobs.
(b) Bill of Lading:
(i) serves as a receipt by the carrier that it has received the goods;
(ii) embodies the K of carriage >>> contains K terms & conditions;
(iii) document of title as well as document of delivery >>> whom and where to
(k) Functions of carrier:
(i) Navigational 1 (ii) Commercial
(l) Non-Vessel Operating Common Carrier: carrier does not own or operate the
vessel. It subcontracts out to an operating carrier.
(a) Letter of Credit: Essentially, a promise from a bank to pay you for the bill of
Seller -------- Buyer (sales contract)
Seller --------- Carrier (transporter) >>> carrier undertakes to deliver the goods
on the Seller’s behalf to the Buyer (contract of carriage) Seller has now become the shipper, who arranged for the transport of the
goods Buyer has now become the cosignee Carrier who has contracted to deliver the goods to the buyer-cosignee Bill of lading >>> a document issued by the carrier when the goods have
been received by it for transport from one port to another. 2.
Legislation >>> In U.S, carriage of goods by sea is governed primarily by three
statutory regimes: The Harter Act 46 USCA 30702-30707, Pg. 3 2 COGSA 46 USCA 30701, pg. 6. The Federal Bills of Lading Act (the Pomerane Act) Note: U.S. have adopted the Hague Rules BUT HAVE NOT adopted the Visby
3. BILLS OF LADING
1. EXAM TIPS:
(a) First, you must establish the regime applicable;
(b) Then the identity of the parties.
2. Definition: a document which is signed by the carrier or its agent
acknowledging that goods have been shipped on board a specific vessel that is
bound for a particular destination and stating the terms on which the goods are to
(a) Generally, whoever has provided credit for the deal has the BofL.
1. 3 Functions:
(a) a formal receipt and acknowledgment that the goods of a certain kind,
quantity, and condition have been handed over for shipment.
(b) a memorandum of the contract of affreightment concluded between the
carrier and the shipper. It is only evidence of the K. The actual K is formed
before the issuance of the BoL.
(c) a document of title to the goods themselves which enable the shipper to
sell them by endorsement and delivery of the BoL (i.e. DELIVERY
(i) Negotiable: (“TO ORDER of a cosignee”) may be delivered to any
person who presents the BoL.
A person to whom the bill is negotiated acquires title to the goods,
and the carrier who issued the bill becomes obligated to the
person to whom the bill has been negotiated to hold the goods
under the terms of the bill as if the carrier had issued the bill
directly to that person.
Carrier will be liable for mis-delivery. Reason why Order is still paper is so carrier still has it.
(ii) Non-negotiable: (“STRAIGHT BoL” or “Sea-Way bill” >>> the goods are
to be delivered to a consignee) consignee is 1 particular name to be
delivered to. (no original needed, usually it is in electronic form unlike an
“TO ORDER” which is still in Paper).
Must contain the words “Non [or] Not-negotiable” on its face.
Note: through bill of lading: for multimodal operators that
take goods from door to door, on land and sea (Freight
Forwarders, Sea Carriers now doing this)
3. Typical Contents:
(a) names of shipper & consignee;
(b) description of goods (i.e. shipping marks for i.d. purposes);
(c) stipulations for payment;
(d) details of the condition of carriage.
4. Private Carriage: 3 (a) Pomerene, COGSA, and Harter do not apply.
(b) BofL may only serve as a receipt.
5. Common Carriage:
(a) Constitutes a receipt & evidence of the K of carriage.
(a) Provisions strictly construed against the issuer or draftsman.
(b) Separately negotiated or added terms will prevail over the printed form
of the K.
(c) BoL terms may supersede an earlier terms or agreements negotiated
between the parties unless specifically preserved in the BoL.
JCB SALES v. WALLENIUS LINES, p. 13
(i) there was damage to a machine and equipment being shipped.
(ii) there was no BofL, only a data freight receipt, which is not a document
(iii) parties agreed that Hague would govern the document.
(i) What law governed the DFR (SeaWaiver)? (COGSA? Hague Visby
(ii) Are DFRs contracts of carriage under COGSA?
(iii) Did the parties intend to apply the higher limit under the Hague
Court’s analysis: COGSA limits liability in the event of damage to or loss of cargo to $500 per
package or per customary freight unit UNLESS the nature and value of
such goods have been declared by the shipper before shipment and
inserted in the BofL; Hague Visby Amendments increased the liability to the higher of the
equivalent of 10,000 francs per package or unit or 30 francs per kilo of gross
weight of the goods; Because US have not ratified the Visby Amendments the $500
liability controls in cases where COGSA applies. Court said that COGSA was N/A because the DFR was not a document of
COGSA only applies to BoL’s and other similar documents of title. COGSA applies to all contracts for carriage of goods by sea to or from
ports of the US in foreign trade.
It regulates rights and liabilities under every BofL or similar document
of title which is evidence of the contract of carriage. However, in this case, it did not matter whether the DFRs are bill of
lading covered by COGSA because even if Visby (which the US has
not adopted) is applied here, it does not offend COGSA because
COGSA states that you may increase liability, but not decrease
it >>> by agreement between the carrier and the shipper
another maximum amount may be fixed; in no event the carrier
shall be liable for more than the amount of damages actually
sustained. 4 Thus, if the Hague Visby Rules were into the contract of
carriage, that constituted an agreement under COGSA. The parties’ agreement to apply the higher liability
under the Hague Visby Rules does not offend
7. POMERENE BILLS OF LADING ACT
>>> The Pomerene Act applies to bills of lading covering interstate
transport and shipments departing from U.S. ports in the foreign
>>> It applies to water transports and to overland transport.
>>> Does not apply to bills of lading issued for
shipments inbound to U.S.
(a) §80113(a): carrier issuing a BoL is liable for non-receipt of
any part of the goods described in the BoL by the date shown
OR for misdescriptions contained in the bill of lading.
(b) §80113(b): Common Carrier is not liable:
(i) when goods are loaded by the shipper; and
(ii) when the BoL:
(1) describes goods in terms of marks or labels or in a
statement about kind, quantity or condition; or
(2) is qualified by “contents of packages unknown,”
“said to contain,” or “shipper’s weight, load, and
count” or other words that indicate that the carrier is
relying on shipper’s representations (shipper must
show proper loading)
(iii) to the extent carrier does not know whether any part of the
goods was received or conform to the description.
Note: Where goods shipped in a bulk are loaded by a shipper who
makes available to a common carrier the means for weighing the
goods, a request by the shipper for the carrier to make a determination
of the kind and quantity of the goods precludes the carrier from
subsequently qualifying the bill of lading by the insertion of such terms
as “shipper’s weight.” In cases where the goods are loaded by a common carrier, the
carrier is obligated to count the packages or determine the kind and
quantity of bulk cargo >>> here, the insertion by the carrier of some
qualification as “shipper’s weight” has no legal effect except for
goods concealed in packages. C. HARTER ACT (§ 46 USC 190, et seq.)
(a) K’s of carriage (transportation of goods by water) between U.S. ports and
foreign ports and inland (between U.S. ports) water carriage under BOL’s.
(b) Does not cover shipments entering US from foreign ports;
(c) Applies outside the tackle to tackle period. The Harter Act does not apply to K for carriage of live animals.
(a) Provisions are in effect from the time when the carrier receives the goods until
the goods are properly delivered. 5 This is a longer time than just when goods are loaded on and off the vessel.
(b) Proper delivery occurs when carrier or its agent:
(i) discharges cargo onto a fit wharf;
(ii) gives notification to the cosignee,
(iii) segregates by bill of lading and count;
makes accessible to consignee, and
(v) allows the consignee a reasonable opportunity to take possession of
proper delivery also occurs when the cargo is turned over to a
designated authority pursuant to a regulation or custom of the port.
(a) Section 1: prohibits carriers from inserting any exculpation clauses in a BoL
or shipping document completely relieving the carrier from liability for loss or
damage to a cargo arising out of negligence or fault in proper loading, stowage,
custody, care and proper delivery of the cargo. However, a carrier may insert into K of carriage a clause that provides that it is liable only
for damage caused by its fault, or that it is not liable for any damage or loss that was not
caused by its fault. The Harter Act has been interpreted as permitting a carrier to insert a clause
into K of carriage that limits its liability for loss or damage to cargo caused by
its negligence or fault to a specified amount, if such provision is reasonable.
(Antilles Ins. Co. v Transconex Inc.)
(b) Section 2: prohibits any exculpation clause whereby the carrier may relieve
himself from exercising due diligence to properly equip, man, provision and
outfit the vessel and to exercise due diligence in providing a seaworthy and
capable of performing her intended voyage vessel. A Carrier may not limit its vicarious liability vis-a-vis the obligations of the master, officers,
agents, or servants to carefully handle, stow, care for, and properly deliver the cargo. Although the Harter Act does not provide for limitation of liability, the courts have
held that limited liability in exchange for a reduced freight rate, where reasonable, is
valid under the Harter Act. (Antilles Ins)
(c) Section 3: Defenses to the carrier: provides for exoneration of the carrier in
certain circumstances IF the carrier exercised due diligence prior to the
voyage to make the vessel in all repects seaworthy and to properly man,
equip and supply the vessel (burden is on carrier):
(i) NOT liable for damage or loss to cargo resulting from faults or errors in
navigation of the vessel;
(ii) NOT liable for errors in management of the vessel;
NOT liable for losses arising from: dangers of the sea; acts of God (vis majeur); acts of public enemies; inherent defect, quality, or vice of the goods; insufficiency of packaging; seizure under the legal process; loss resulting from any act or omission of the shipper or owner of
the cargo; saving or attempting to save the goods at sea.
(d) Section 5: Penalty to carriers who do not follow this 6 (e) Section 7: this does not apply to the carriage of live animals D. COGSA (46 USC § 1300, et seq.) >>> must be international trade, domestic US does not
> COGSA applies by force of law to K for the carriage of goods by sea, to or from foreign ports
and U.S. ports.
> COGSA expressly preempts the Harter Act with respect to all K for carriage
pertaining to foreign trade.
> Unlike the Harter Act, COGSA does not apply by force of law to voyages
between U.S. ports, or to voyages on inland waters.
> COGSA provides that the parties may incorporate its provisions into their K of carriage for
voyages between U.S. ports >>> in such circumstances it is generally accepted that COGSA
applies (Pan Am. World Airways v Cal. Stevadore & Ballast); Courts have held that the
incorporation of COGSA as a contract term does not give the provision superior rank, but rather it is
to be regarded as another term in the K (Commonwealth Petrochemicals v S.S. Puerto Rico). 7 In situations where COGSA does not apply by force of law, parties may by agreement
incorporate by reference all of COGSA or selected provisions or modify the provisions of
> Even where COGSA is applicable by force of law, it may not apply to the entire
time period during which the carrier has possession of (or is by contract responsible
for) the goods.
However, a carrier may insert in BoL a provision that COGSA applies
during the entire period of time that the carrier is responsible for the goods
>>> COGSA imposes certain duties on carrier but also provides them with a
wide range of defenses, and it provides for limited liability. COGSA applies to K of carriage covered by BoL. Charter parties are not statutorily subject to COGSA.
A BofL issued to the charterer by the owner of a vessel is regarded as a mere receipt while in
the charterer’s possession >>> this BoL is not a K of carriage and is not subject to COGSA.
(Unterweser Reederei Aktiengesellschaft v Potash Importing Copr. of Am.)
o However, where such BoL is transferred to a third party, such as the cosignee of the
goods, under circumstances that confer rights in the third party with respect to
delivery of the goods, the BoL is then subject to COGSA, and it has become a K of
carriage vis-à-vis that third party and the issuer of the BoL (the carrier). In such situations the charter party controls the legal relations between the owner
and charterer, and BoL, subject to COGSA, controls the legal relations between the
carrier and the cosignee.
A charter party may incorporate the terms of COGSA in whole or in part.
If incorporated in part, the COGSA provisions that are incorporated are treated as ordinary K
provisions that must be harmonized with or subordinated to conflicting K terms. (U.S. v
M/V Marilena P).
A BoL may incorporate the terms of the charter party as to which the cosignee will be bound,
provided the terms are not inconsistent with the provisions of COGSA; a cosignee may be liable
to pay charter hire or demurrage, or be subject to an arbitration clause depending on the terms
of incorporation. (Yone Suzuki v Cent. Argentine Ry.).
An incorporation clause will be given effect so long as the charter party is adequately identified
in the BoL (Lucky Metals Corp. v M/V Ave.) COGSA applies to the carriage of all goods, wares, merchandise, articles, or cargo other
than live animals and goods carried on deck pursuant to the agreement of the parties. 1. COGSA Incorporated Hague rules into US law.
(a) Purpose was to achieve international uniformity and to redress the edge in bargaining
power enjoyed by carriers over shipper and cargo interests by setting out certain duties
and responsibilities of carriers that cannot be avoided even by express contractual
(b) Very Pro-Carrier Statute.
2. Burdens under COGSA: Burden of going forward with evidence; Ultimate burden of non-persuasion;
3. Definitions 8 (a) “Carrier” may be vessel itself (invoking in rem liability), owner of the vessel or charterer
of the vessel (or multiple parties) who enters in a contract of carriage with a shipper If the owner enters into K of carriage and issues BoL, it is the COGSA carrier. Where the charterer of the vessel (such as time charterer) enters into a K to
carry a shipper’s goods, it is the COGSA carrier. It is possible for both the vessel owner and the charterer of the vessel to be
held liable as COGSA carriers with respect to the same transaction >>>
where the charerer issues its BoL signed by the master, or signed by the
chareterer “for the master” as authorized in the charter party, courts
permit a shipper whose cargo has been damaged or lost to sue both the
chareterer and the vessel owner (Pac. Employers Ins. V M/V Gloria).
(b) “K of Carriage”: applies only to this particular shipment evidenced by a BoL.
(c) “Good” is anything carried other than live animals.
(d) “Ship” is any vessel used for the carriage of goods by sea.
(e) “Carriage of goods” covers the period from the time when goods are loaded on to the
time when they are discharged from the ship.
4. Application: (§§1300-1301) Applies to all K’s for carriage of goods by sea to or from ports
of the US in foreign trade.
(a) Period of Responsibility: Tackle to Tackle which “has traditionally meant from the
moment when the ship’s tackle is hooked on at the loading port until the moment when
the ship’s tackle is unhooked at discharge.
If shore tackle is being used, that moment has traditionally been when the goods
cross the ship’s rail.” (Tetley). “some physical act of possession associated with
transfer of risk from a shore interest to a ship interest.” (KNAUTH).
>>> COGSA applies only from the time goods are loaded on board the vessel to the
time when they are discharged from it.
(i) for chute, this is when it hits the ship’s end of the chute;
(ii) with liquids, when ship’s pipe connects with phlange;
(iii) on gangplank, when over hull.
COGSA may be extended to other stages of the transaction by
agreement of the parties: Mannesman Demag Corp. v. M/V Concert
Express (5th circuit 200)
a) Here cargo damaged after ocean voyage on trip from Md to IN, covered
under a through B/L, Ocean carrier offering door to door service, so the
truck is a subcontracted.
b) Because COGSA applies tackle to tackle, the Harter Act in this case
applies to the period between the discharge of the cargo from the
vessel and “proper delivery.”
c) In Mannesman, the court held that for a through Bill of Lading for
multimodal transport, “proper delivery” for Harter Act purposes took
places when the goods were handed over to the inland carrier.
d) So here when the goods were damaged the Harter Act was not
compulsorily applicable, and therefore the COGSA limit does not apply
(because in K they tied COGSA limitation to when Harter is
compulsorily in force).
e) They could have limited liability for the entire trip, but where the...
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- Fall '07