The bill of lading is a legally binding document containing the agreement between the carrier and the shipper. It serves as the evidence of the existence of such contract, and itself cannot be considered as the contract of carriage. The parties must first of all reach an agreement before bill of lading is drafted. The bill would have the terms reached in the contract of carriage but can also refer to the terms and conditions in a charter party. The English law accepts the simple inclusion of a clause referring to the charter, but some countries may require that the parties attach a full charter to the bill of lading.
The bill of lading between Jay and the Reliable shipping lines (RSL) does not only act as the proof of the receipt of goods form the seller by the carrier. Bill of lading would also offer some of the grounds from which RLS could base its argument during its defense against Bruno. The first important aspect to note is that anything that was never written down in the bill of lading does not exist and cannot be used to sue the carrier company.
Reliable shipment lines signed a clean bill of lading. The law states that bill of lading acts as the evidence on the conditions the goods were received from the shipper.it should include the condition the goods were at the time of receipt. The carrier company would therefore have hard time avoiding the liability arising from its misrepresentation in the Bill of lading. The various legislations that have taken place in various parts of the world have limited the chances of carrier companies escaping their liability for misrepresentations in the Bill of lading.
Early legislations such as the English Bill of lading act 1855 and the American act, 1893 were some of the first legislations that sought to restrict carriers avoiding problems of misrepresentation in the bill of lading. These acts later paved way for the global recognition of carriers’ rights restrictions, leading to the Hamburg, Hague and Hague-Visby rules. However, the Reliable Shipping Lines could use some of clauses that would enable it to limit the extent of its liability
The carrier company cannot be accused for the goods because the law recognizes that all the participating carriers together with their agents would be responsible for the goods while on sea but not when being handled on the land by a different group of people. The company could defend itself by saying that it was never aware of the internal conditions of the goods being transported. The law also protects the carrier from being accused of delaying while docking in another port. Some of the damaged goods were as a result of the act of God. And the law states clearly that the carrier is never liable for the inconveniences caused damaged goods due to delay, acts of God, thieves, civildisobedience, lockouts or even strikes.
The ship passed through a port, an action that was not in the bill of lading. The law however allows the carrier to change course and follow any route it deems best so long as it intends to reach the owner of the goods on the ship. Article 3(3) and 3(4) of the Hague rules clearly state that it is important that bill of lading to contain at least some essential information about the goods being transported. The seller of the goods did not complete the task and mainly just used a verbal assurance to pay when things go wrong.
Jay did not sign anywhere that the goods were not in good condition and although the carrier agents recognized that the goods were faulty, they agreed to transport them because it was most likely that Jay could not find sufficient evidenceto prove that the damages were caused by the carrier company.The carrier is not allowed to insert false information about the goods being transported. He is not to modify anything that’s the demand of the law. It states that the carrier is not obliged to enter information it would not be easy to check reasonably.
The transported goods are regarded as deck cargo. The carrier is protected by the law against taking responsibility for the damaged groups that are transported as deck cargo. The law states that the carrier is immune ,exonerated or exempted by an applicable law from taking such a responsibility.it is not clear whether the bill of lading had any agreement concerning where the goods should be carried, but if it had, the carrier is expected to use any mode of transport available to ensure the goods reach their destination.
The carrier can carry goods anywhere they seem possible, transport the goods under the deck or on the deck without informing the seller or the buyer. When the carrier proceeded to another port that was not agreed between them, it still acted within the law because the law allows the carrier to do that. The buyer should receive the transported goods, bad or good. The law also covers the performance of carrier that might affect the state of the transported goods.it states that should Bruno refuses to accept the goods, he should wait in the carrier until it comes back again to pick the goods, in case Bruno doesn’t need them.
Carrier’s lien found in the bill of lading states that the merchant would indemnify the carrier from any loss and against any liability, expense or damage that may arise in the process of the carrier transporting the goods from the seller to the buyer. This clause means that the reliable shipping line would be more likely to win any charges brought against in regarding any damage, loss expenses or any form of liability. The suit must also fall within an acceptable time frame allowed by the law for such suits to be initiated. If Bruno failed to initiate the legal suit within 3 days after receiving the goods, then the carrier company would have no case to answer since he failed to follow the laid down regulation and would definitely lose the case even when other factors are not considered.
The English law uses the term ‘apparent’ to show that the carrier company relies on the facts given to it by the shipper that the goods are in good condition. The carrier company would ship the goods based on what they see externally and not on what is happening inside. The good state of the external parts of the goods is assumed to show that even the inside part is good. In cases of perishable goods like in this case, apparent good condition and order refers to the transported goods’ ability to withstandordinary transportation methods.
Over the years, various clauses have come up mainly from the main statutory provision for seacarriage. All these provisions have however continue to place the carrier at an advantage over any mishaps that might happen during the transportation of goods over the sea. The Hague-Visby rulesintroduced limits per kilogram or per unit limit of the goods transported. In most cases the shipper would rely on the higher limit between those two.
These compensation amount to considerable amount of money that many shipment companies are not really keen on paying. If the bill of lading had any statement that might force the carrier company to compensate for the goods but is not willing or able, it is allowed to invoke the valuable protection of the limitation convention by contractual stipulation in the bill of lading with the following words
Nothing in this bill of lading shall operate to limit or deprive the carrier of any statutory protection, defense,exception,or limitation of liability authorized by any applicable laws statutes or regulations of any country. The carrier shall have the benefit of the said laws, statutes or regulations as if it were the owner of any carrying ship or vessel.
The limitation convention therefore provides a legal ground for a shipping company to limit the liability it is exposed to due to the ambiguity of the industry. The fact that Jay permitted the carrier company to transport the goods while in poor conditions could also be used by the Reliable shipping lines to limit their liability in this case because the law allows them to do so.Jay would sign that that he agrees to limit the liability of the carrier company because he knows where the problem arose from. When he assured them to compensate them incase Bruno takes legal action, he can either pay money or specify the limitations further as stated in the limitation convention
It is agreed by the merchant that the carrier qualifies and shall be regarded as a person entitled to limit liability under any applicable convention on the limitation of liability for maritime claims notwithstanding that the carrier may have secured space on board the relevant vessel by means of a slot charter, bill of lading, waybill or other form of contract of carriage. Subject to any law compulsory applicable to the carriage to the contrary, and save to that extent, the fund to which the carrier may limit its liability in respect of all claims arising out of an incident shall be part or proportion of the limitation fund applicable to the actual carrier that is available for the carrier’s claim against the actual carrier.
The mentioned holes in the tins of milk may have come as a result of the condition in which they were stored either before loading or after their discharge. The law protects the carrier company from such liabilities.
The carrier shall have no liability whatsoever for any loss or damage to the goods while in its actual or constructive possession before loading or after discharge, howsoever caused
Further loopholes that the carrier could take advantage of include exists in the Hague-Visby rule which aim at ending the confusion caused by transporting unspecified number of units or packages. If the bill of lading had no specific number of units of each of the transported goods, the law allows the carrier company to regard them as one package and therefore limit the amount it is required to pay ascompensation. The transported goods were of small packages and using per-package limit during compensation would be advantageous to the carrier company because it would pay less compared to weight based limits.
Many carrier companies have refused to transport enumerated packages or even discourage owners of the goods form carrying out enumeration of the goods to be transported. This is simply to escape the risk of paying higher compensations in case of accidents. The reliable shipment company could also states that it accepted the enumeration on the goods, in case it did, only on the basis of said to contain. This would require the owner of the goods to prove that the number he received were not the same ones loaded on the ship for transportation. In this case, doing that would be tricky because proving the number of goods sent would require the qualities of the goods to be valid for the purposes of limitation on charges as stipulated in the Hague-Visby rules.
Reliable Shipment Company has the advantage of exceeding its limits further. This would be possible because Bruno is not in a position to prove that the carrier company had been involved in a willful act of misconduct.Hague-Visby and Hamburg rules allow the carrier companies to extend their liability limits on their shipment contract. But this would only be possible if the hipper and the carrier company had agreed earlier before the shipment takes place.
Carriage of goods by sea act 1971 gives more power to the bill of lading as the binding contract between the shipper and the carrier company. The bill of lading remains the evidence of the binding legal agreement and anything that is not stated in the document cannot be used against the carrier company. The reliable shipment lines must therefore ensure that it goes through the document keenly to found any loophole that may be used to scrap their liability limitations and therefore be ready to ask for compensation from Jay as they had agreed earlier. The act states that
Without prejudice to article X(c) of the rules, the rules shall have the force of law in relation to-
- Any bill of lading if the contract contained in or evidence by it expressly provides that the rules shall govern the contract, and
- Any receipt which is a non-negotiable document marked as such if the contract contained in or evidenced by it is a contract for the carriage of goods by sea which expressly provides that the rules are to govern the contract as if the receipt were a bill of lading
Article 3 requires that the carrier ensure that the ship to be used for the transportation purposes is seaworthy. The carrier should ensure that the ship is well equipped and manned by well-trainedpersonnel with adequate supply of all the requirements need during transportation. The ship should have cool and refrigerating chambers to ensure that the goods transported are not spoiled before reaching their destination. However, the case in discussion involves the goods that were already damaged and the carrier had already signed a clean bill of lading.
It would have no option but to accept liability concerning this failure. The carrier would not be protected under article 4 that seeks to protect the carrier and the ship from any liability regarding a loss or damage that arose due to the negligence of the seller or owner of the transported goods.
The carrier could however invoke the Article 4 (m) and article 4 (n) which states that he should not be liable to loss due to the wastage or weight or any loss or damage arising from the defect, quality or the vice of the goods, andinsufficiency of packing. The carrier had passed through another port, which was not indicated on the bill of lading. Upon Bruno establishing this fact, he may want to use that against the carrier company. The good news is that the law under the article 6 protects the carrier from such liability. It states that
Notwithstanding the provisions of the preceding articles, a carrier or an agent of the carrier and the shipper shall in regard to any particular goods be at liberty to enter into any agreement in any terms as to the responsibility and liability of the carrier for such goods, and as to the rights and immunities of the carrier in respect of such goods, or his obligations as seaworthiness, so far as his stipulation is not contrary to the public policy or the care of diligence of his servants or agents in regard to the loading, handling, storage,carriage,custody, care and discharge of the goods carried by sea, provided that in this case no bill of lading has been or shall be issued and that the terms agreed shall not be embodied in a receipt which shall be a non-negotiable document and shall be marked as such
The article 7 goes further to states that all things mentioned in the chapter should not prevent the shipping company from having any reservation, conditions or even in entering an agreement with the shipper. TheReliable Shipping Lineshad reservations when it agreed to transport the goods that were not in a good condition.it is important to remember that in English law, a charter attached to a bill of lading may be of immense importance in case a claim is brought up concerning the bill of lading.
The terms laid down in the charter could be useful to the carrier company in reducing or avoiding the liabilities arising from the damaged groups. This is affected by two conditions, the claimant being part of the charter party or a third party to the bill of lading. Bruno being a member to the charter party would mean that the carriage company refer to the charter party terms and find loopholes from which it could use to reduce the liability it is exposed to.
From the above arguments, it is therefore upon the judge to decide which side of the facts labeled before him or her, has more supporting facts than the other. The carrier company however stands a good chance of winning any legal action taken against it if they get the services of a very articulate lawyer to put the points across in more clear and understandable manner.
Court Case Study
Serena Navigation Ltd. v. Dera Commercial Establishment – The “Limnos”, Queen’s Bench Division (Commercial Court) 28-29 April; 15 May 2008,  2 Lloyd’s Rep, 166.
Serena navigation had carried shipment of corn from United States of America on behalf of the Dera commercial establishment. Dera commercial establishment sued Serena navigations for the damages of the goods while transported in the sea. The judges had noted that the goods in question had only a small percentage of them that had gotten wet in the process of transporting them to the Dera commercial establishment. The cargo owners pleaded with the court to make Serena navigations limited pay for the damages.
By reason of the matters alleged above, Dera commercial establishments has suffered loss and damage and has been put to expense. The establishment further went ahead to give the value of the goods which were not delivered to the tune of $ 1,742.40.the court established the subject of dispute was in the article 5(a) of Hague- Visby which states that
Unless the nature and value of such goods have been declared by the shipper before shipment and inserted in the bill of lading, neither the carrier nor the ship shall in the event be or become liable for any loss or damage in connection with goods in an amount not exceeding 666.77 per package or unit or 2 per kilogram of gross weight of the goods lost or damaged, whichever is higher
The court established that Dera commercial establishments had not suffered loss or damage to its goods as it claimed. The English law demands that the claimant mustprove that the lost or damaged goods were physically lost or damaged. Regarding economic loss, Dera had assumed that the goods had lost value but had not carried out an actual evaluation and test find out if this fact was true. Serena navigations could therefore not be liable to presumed losses.
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