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Bills Of Lading 1 Notes

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BILLS OF LADING (1)
((i) As Evidence of Contract or Contract (ii) As Receipt)

SUMMARY
- NOTE: A substantial part of this topic is about the evidential value of a B/L -> extent to which a carrier is bound by statements in the B/L, whether vis-à-vis the original shipper, or a subsequent endorsee
B/L as Evidence of Contract or Contract
- As between the carrier and the original shipper?
o B/L is merely evidence (The Ardennes)
 They made an oral contract to ship straight to London
 But the B/L, when drawn up, permitted deviations
 Court held they were BOUND by the oral contract -> B/L only evidenced the
CoC
o Although NOTE: the carrier can still try and argue that the subsequent B/L was a variation to the original oral CoC
 But then he'd have to make out the elements for variation: consideration,
intention etc
- As between the carrier and an indorsee?
o B/L contains the contract of carriage (Leduc v Ward)
 Almost the exact reversal of Ardennes, the carrier tried to rely on the original
CoC to argue for deviations, but this was rejected, since the B/L contained the CoC vis-à-vis the endorsee
- Does COGSA alter the law on this point?
o No, although s5(1)(a) is poorly drafted and looks as though it does
TWE is a carrier bound to the original shipper/indorsee by a false statement in the B/L
-
- Two possible routes:
o 1) Common law
 Arguing estoppel by representation -> being bound by a statement of fact

2) Statutory
 Arts 3(3) and 3(4) HV
 B/L is prima facie evidence of receipt by the carrier of the goods for the shipper
 For a third party, it becomes conclusive evidence
 Art 3(3) states what the shipper can demand from the carrier
 But it does not limit what sort of binding statements can be made by the carrier
 Otherwise 3(3) would have cut down a lot of the value of a B/L
 Q: Must the B/L be issued in response to a demand then?
 A: In the Martha K, the Court considered it would be ridiculous if the protections didn't apply just because the carrier proactively issued the B/L as opposed to doing it in response to a demand
 S4 COGSA
1 A bill of lading which—
(a)represents goods to have been shipped on board a vessel or to have been received for shipment on board a vessel; and
 (b)has been signed by the master of the vessel or by a person who was not the master but had the express, implied or apparent authority of the carrier to sign bills of lading,
 shall, in favour of a person who has become the lawful holder of the bill, be conclusive evidence against the carrier of the shipment of the goods or, as the case may be, of their receipt for shipment.
 NOTE: only applies to third parties, not the original shipper
- NOTE: Always consider S4 first in a Problem QUestion!
(a) The fact that the goods were shipped
- Original shipper

Common law (estoppel by representation)? NO
 1) Master has no authority to bind the carrier by the statement that goods were shipped (Grant v Norway)
 2) If no contract was made when booking shipping space, and goods weren't even loaded, then there is no contract of carriage (Heskell problem)
 If there is no contract of carriage, then this would be using estoppel as a sword, which is not allowed in English law
 3) Also hard to prove reliance
 The shipper is on the ground, he should know whether the goods were shipped or not!
o Statutory argument? NO
 1) Art 3(4) only makes the B/L prima facie evidence of receipt of the goods by the carrier for the original shipper, which is the original position anyway
 2) S4 COGSA only applies to subsequent lawful holders of the B/L (i.e. not the original shipper)
- Indorsee

Common law (estoppel by representation)? NO
o Statutory argument? YES
 1) Art 3(4) HV applies -> but only if the H-V rules apply
 If there is no contract of carriage, then H-V rules cannot apply
 2) S4 COGA should apply
 Treitel has argued that S4 refers to a "carrier", and you can't have a carrier without a contract of carriage
 But Peel: S4 was intended to get around the Heskell problem, so it would be odd if it were limited by the Heskell problem
(b) The quantity of goods shipped (where some of the goods were shipped)
- Original shipper

Common law? NO
 1) Grant v Norway problem
 2) Reliance problem

Statutory argument? NO
 Same as in (a)
- Indorsee

Common law? NO

2  Grant v Norway

Statutory argument? YES
 If at least some goods were shipped, there is no Heskell problem
(c) The mercantile quality of goods shipped
- NOTE: quality -> inherent quality (e.g. Grade 1 Argentinian beef)
o Distinguish this from condition, Grade 1 beef that has spoilt is still Grade 1
- Original shipper

Common law? NO
 Captain has no authority to bind shipowners as to quality of goods (Cox v
Bruce)
o Statutory argument? NO
 Same as (a)
- Indorsee

Common law? NO
 Same as above, Cox v Bruce

Statutory argument? NO
 You cannot make statements as to quality binding against the carrier,
because quality is simply not for the carrier to attest to!
 Even if you could make the statement binding, there would be no cause of action!
 Your cause of action would be against the seller for supplying you grade 2 beef instead of grade 1
 It's not anything the carrier has done that changed your beef from grade 1 to grade 2!
(d) The identification marks on the goods shipped
- What is an identification mark?
o Could be either (a) statement that the goods were shipped or (b) statement as to quantity!
o Imagine a stamp saying "500 tons of Argentinian beef" and it's actually pork instead!
 Identification mark would be statement goods were shipped

Imagine stamp says "500 tons of beef" but only 200 tons were shipped
 Identification mark would be statement of quantity
- Figure out what statement it is -> follow the analysis

For both (a) and (b), common law arguments will fail due to Grant v Norway problem
(e) The "apparent order and condition" of the goods at the time of shipment
- Original shipper

Common law? YES
 Compania Naviera v Churchill

Statutory argument? NO
- Indorsee

Common law? YES
 Compania Naviera v Churchill

Statutory argument? PARTLY
 1) Can use Art 3(4)
 2) But cannot use S4 COGSA -> S4 only applies to the fact of shipment and quantity
- Does carrier have to issue a statement saying "goods in apparent good order and condition"?
3 NO
If goods do not even appear to be in apparent good order and condition, he can just say so!
o But he has to be reasonably precise, has to specify the extent to which they were in apparent good order and condition
Are the rules different if the shipper/indorsee sues the carrier for tortious misrepresentation?
- Three possible grounds of suit: (i) tort of deceit, (ii) negligent misrepresentation, (iii) s2(1) MA
- But s2(1) MA will not work here

It only allows you to sue where you enter into a contract in reliance

If you're a shipper, you're already in a contract with the carrier

If you're an endorsee, you're saying you relied on a statement in entering into a contract with the seller
 And then you acquire rights under the contract of carriage, but that won't suffice for s2(1) MA
- Tort of deceit

You get your reliance remedies (as if you'd never entered into the contract)
o See The Saudi Crown
 What was the misleading statement in the Saudi Crown?
 Date of shipment
- If you turn it into a statement that the goods were shipped, could you bring a claim in misrepresentation?
o NO -> Grant v Norway

If master has no authority to bind the shipowner, hard to see how the shipowner can be liable in misrepresentation (no representation)
Are disclaimers by the carrier, e.g. "shippers' load and count" effective?
- E.g. "weight unknown" "said to contain"
What is the carrier trying to do here?
o He's trying to basically say "I didn't make this representation"
- Shipper in The Mata K tried to argue that the "weight unknown" clause was invalid under Art
III R8

But this argument failed

The point is that Art III R8 only applies too statements that "have the effect of relieving the carrier from such a liability or lessening such liability"
o Whereas statements like "weight unknown" only have evidential value typically
- "Said to contain"
o If carriers are going to rely on qualifying statements, not unreasonable for a shipper to say "well you should be clear when you're employing a qualifying statement"
o "Stc" was the subject of ambiguity in River Gurara
 Phillips LJ thought it arguable that "Stc" just means "I've been told this, and
I'm passing along what I've been told"
o "Stc" was also present in Kyokuyo, but no one in that case argued that it was a qualifying statement!
 No one seemed concerned about it at all! Odd
- Policy

From a policy perspective, in a world of container transport, how can you know what's in the container

Desirable for carriers to protect themselves via qualifying statements

o

Remedies against the (a) master of the ship or (b) seller of the goods
(a) Master 4

Can sue for breach of implied warranty of authority (Rasnoimport)
o But might you have a Heskell problem?
 YES!
 Your remedy -> is to be put in the position had the contract been performed > i.e. if the agent HAD the authority
 But if you have no contract of carriage, even if the agent had the authority,
then you would have had no remedy against the shipowner!
o Another problem: S4 COGSA
 Master might rely on S4 COGSA to argue that you nevertheless have a claim against the carrier!
 So you've not lost anything -> master is no longer liable
(b) Seller
- Claim in relation to the goods themselves

Breach of obligation to ship goods
- Claim in relation to the documents
What contracts of carriage are governed by the HV Rules?
- Art I(b) -> contract of carriage covered by a B/L or any similar document of title
- Art X
o (a) the bill of lading is issued in a contracting State, or

(b) the carriage is from a port in a contracting State, or

(c) the contract contained in or evidenced by the bill of lading provides that these
Rules or legislation of any State giving effect to them are to govern the contract
- If you end up with a contract of carriage covered by a B/L, you can presume the H-V rules apply

NOTE: a straight B/L (a non-negotiable B/L that makes goods deliverable simply to a named person) IS considered a B/L for the purposes of s1(4) COGSA 1971 and the
Hague and Hague-Visby rules

You are not expected to know what are the contracting countries
- Can you evade the HV rules?
o Yes -> don't use a document to which the H-V rules apply
 E.g. use a sea waybill?
- How might a carrier shrink their obligations under H-V?
o They can expressly reallocate responsibility (Jordan II) up to a point

You can only reduce it up to the point of actual carriage
 So you can say loading is not for me, stowage is not for me, etc

If you get authorised deck cargo, then H-V rules also do not apply
 [presumably some HV exemptions are also disapplied in cases of deviation!]
Package Limitation (Art IV R5(a) HV)
- NOTE Art IV R5(c): Where a container, pallet or similar article of transport is used to consolidate goods, the number of packages or units enumerated in the bill of lading as packed in such article of transport shall be deemed the number of packages or units for the purpose of this paragraph as far as these packages or units are concerned. Except as aforesaid such article of transport shall be considered the package or unit.
o Go see seminar
- The Courts will not consider a container to be a "package or unit" for the purposes of Art IV
R5(a)
5 The Mata K [1998] 2 Lloyd's Rep. 614
Facts
- Defendants (shipowners/carriers) let their vessel Mata K to the plaintiffs (charterers/shippers)
for the carriage of 25,000 tonnes of muriate of potash from one safe berth Vnetspils to South
Korea and Japan

In the B/L, under "Gross weight", it stated "11,000 MT"
o The box marked "SHIPPED" included the following: "Weight, measure, quality,
quantity, condition, contents and value unknown"
o Clause 46: "Quantity/quality of cargo as determined by an International Independent
Surveyor… together with Master to be final and binding for both parties. Owners to be responsible for quantities of cargo taken on board"
- It was alleged on final discharge at Sodeguara, Japan, that there was a shortfall of about 2705 tonnes
- Defendants argued that all the cargo was discharged - thus any shortage must be due to the total B/L quantity not being shipped

But plaintiffs argued that the Ds were bound by the bill of lading quantity -> not open to them to say that the whole quantity was not shipped

Plaintiffs further argued this fell within s4 COGSA: providing that a B/L under certain circumstances will become "conclusive evidence against the carrier of the shipment of the goods"
- Contract of carriage was subject to H-V Rules
- CORE issue: were the Ds bound by the quantity of goods stated in the B/L?
o Ans: NO
Held (Clarke J)
Issue 1: Can the argument based on S4 COGSA succeed?
- 1) The S4 argument turns on whether the B/L represents 11,000 tonnes of goods to have been shipped in the first place

"The essential question under this head is whether s. 4(a) is satisfied, namely whether the bill of lading represents 11,000 tonnes of goods to have been shipped"
- 2) As a question of construction, the B/L did not represent that 11,000 tonnes of potash were shipped

A B/L with the qualification "weight unknown" was not a representation that 11,000 tonnes were shipped

"If this question is to be answered on the construction of the bill of lading as it stands,
the answer, in my judgment, is No. The reason is that given in a number of decided cases, namely that a bill of lading which states that 11,000 tonnes of cargo were shipped "quantity unknown" is not a representation that 11,000 tonnes were shipped. Any other conclusion would give no meaning to the expression
"quantity. . .unknown"."
- 3) The plaintiffs next argued that the phrase "weight… unknown" was of no effect due to Arts
III R3 and R8 H-V
o But Clarke J rejected this

6 4) Under Art III R3 H-V, the plaintiffs had to prove that they demanded a bill of lading showing the weight of the goods (and that therefore the Ds breached this duty, and thus R8 is engaged)
o "no suggestion or evidence here that the plaintiffs asked the Ds to issue a B/L
showing the shipment of 11,000 tonnes without the qualification "weight…
unknown""
o "On the contrary the natural inference is that the shippers were content with a bill of lading in standard Congenbill form, which includes the provision "weight. . .unknown"
as part of its printed form."
o "If they had wanted a bill of lading in a different form they would surely have drafted one."
 NOTE: here again, certainty is prized, with commercial parties expected to be aware of what they are agreeing to and to take steps to negotiate otherwise if they want to modify their obligations
- 5) Furthermore, "show" under Art III R3, and "represent" under s4 COGSA mean the same thing

"It seems to me that it would make little sense to hold that a bill of lading in this form
"shows" the quantity of cargo shipped within the meaning of art. III, r. 3 but that it does not "represent" the quantity of cargo shipped within the meaning of s. 4"
- 6) Finally, even if the plaintiffs could establish the relevant demand under Art III R3, the
"weight… unknown" provision would not count under Art III R8

"even if shippers make a demand within the meaning of art. III, r. 3, if the carriers then introduce a provision such as "weight. . .unknown" that provision would not be a
 . . .clause, covenant or agreement. . .relieving the carrier or the ship from liability for loss or damage to or in connection with goods arising from negligence, faulty or failure in their duties and obligations provided in the
Article or lessening such liability . . .
o within the meaning of art. III, r. 8."
o This is because the provision "does not have the effect of relieving the carrier from such a liability or lessening such liability"
 It merely makes clear what the B/L is evidencing and what it is not
Issue 2: Can the argument based on Clause 46 charter-party (a conclusive evidence clause) succeed?
- 7) "The plaintiffs say that the effect of that clause as incorporated into the bill of lading is that the shippers and receivers are bound by the quantity of the cargo as determined by the relevant independent surveyor so that it would not be open to the shippers and is not open to the holders or indorsees of the bill of lading (or their assignees) to challenge the amounts loaded as so determined"
- 8) However, clause 46 (a conclusive evidence clause) is inconsistent with the express provision of the B/L stating that weight is unknown. Thus it must be rejected (either not incorporated, or incorporated but of no effect)
o "cl. 46 is repugnant to the "weight. . .unknown" provision in the bill of lading. As such,
it cannot prevail over it and (as Scrutton puts it) must be rejected. It follows that, in my judgment, either cl. 46 was not incorporated into the bill of lading or, if it was, as a matter of construction, it must yield to the express provision of the bill of lading to which I have referred."

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