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Parties Notes

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PARTIES
Abbreviations
- CoC -> Contract of Carriage
- HL -> House of Lords
- CA -> Court of Appeal
- BoL or B/L -> Bill of Lading
- FOB -> Free on board
- CIF -> Cost insurance freight
- [ ] -> writings in square brackets are my own opinions/comments on cases and articles
- LoC -> Letter of Credit
- HVR -> Hague-Visby Rules
Summary
- These cases seem to consider the question of: who can be sued?
o The Rewia established the general rule, The Hector, The Starsin both departed from it

The Hector -> identity of carrier clause was TRUMPED by a typed statement stating that the carrier was the charterer

The Starsin -> terms which parties have chosen to include will be given more weight compared to pre-printed terms
- Also, when can a third-party take the protection of a contract (specifically, Himalaya clauses aka exemptions from liability)
o Midland Silicones introduced the rogue 4-step agency exception to the privity rule
(essentially a separate contract that incorporates the terms of the original contract,
including the Himalaya clause), and Eurymedon tried to explain how this separate contract arises (unilateral offer that either matures into a contract after performance or is accepted by performance)
- IMPT to distinguish the different types of charterparties (so you can understand what's going on in the cases)
o Time charterparties -> the charterer hires the ship, the master and crew for a certain amount of time
 Shipowner retains possession of the ship and thus holds the goods on bailment
 Carver: Time charterparties are "contracts for the provision by the shipowner of services by means of the use of the ship, the master and crew being provided by the shipowner, who also retains possession of the ship"
o Demise charterparties -> the charterer hires the ship but without its crew
 Shipowner temporarily transfers possession of the ship
 Carver: "Demise charterparties are simply contracts for the hire of the ship,
the master and crew being normally provided by the charterer who therefore
(through such employees) conducts the carriage operation."
- FOB -> Free on board (duty is to get the goods onto the ship)
o Benjamin's: :The f.o.b. contract has, in the words of Devlin J.,1 become "a flexible instrument", so much so that no really satisfactory definition of such a contract is possible. The central idea is that the seller is bound at his expense to place the goods
"free on board" a ship for transmission to the buyer from a port or range of ports specified in the contract

The "classic" f.o.b. contract was described in Wimble, Sons & Co v Rosenberg. Its essential features are that the seller must at his own expense put the goods on board a ship which has to be nominated or designated by the buyer. The seller is not bound to reserve shipping space in advance nor to bear any expense of shipment which arises after the goods have been put on board"
1 --CIF -> Cost Insurance Freight (duty is to procure shipping and tender the documents to the buyer)
o Benjamin's: "A C.I.F. contract is an agreement to sell goods at an inclusive price covering the cost of the goods, insurance and the freight payable for the carriage of the goods to the destination specified in the contract.
o The essential feature of such a contract is that a seller, having shipped, or bought afloat, goods in accordance with the contract, can (and must) fulfil his part of the bargain by tendering to the buyer the proper shipping documents: if he does this, he is not in breach even though the goods have been lost before such tender.
o In the event of such loss the buyer must nevertheless pay the price on tender of the documents, and his remedies, if any, will be against the carrier or against the underwriter, but not against the seller on the contract of sale."
**IMPT: CRPTA does not apply to contracts of carriage by sea, EXCEPT FOR EXEMPTION AND
LIMITATION CLAUSES (see s6(5))
o so it DOES apply to Himalaya clauses!
Both carrier and shipper are neutral terms

Shipper can be buyer/seller depends on type of contract and terms, etc

CoC is between carrier and shipper
Implied contracts

There can be an implied contract between the shipper/consignee and servant/contractor of the carrier incorporating the terms of the B/L (Scruttons,
Eurymedon)
 But NOTE: simpler to just use CRTPA
 Another alternative: Art IVbis R2 HV, which applies to "servant or agent of the carrier (such servant or agent not being an independent contractor)"
 Performance of an obligation already owed to someone else (e.g. stevedores unloading the goods) can constitute good consideration (Eurymedon)
 In practice we usually go through (1) CRTPA, (2) Art 4bis R2, then (3)
Eurymedon!
o There can also be a Brandt v Liverpool implied contract between the carrier and subsequent holder of the B/L
 But NOTE: in modern times, the holder of the B/L can just rely on s2(1) and s2(4) COGSA
 Cannot use CRTPA (CRTPA only applies to charterparties wrt exclusions/limitations of liability)
 The Brandt v Liverpool implied contract is largely irrelevant today, unless
COGSA doesn't apply because the wrong type of document is passed on
 Only arose because of the property gap problem under the old 1855
Act!
 Benjamin's: For e.g., delivery may be taken by a buyer under a letter of indemnity, or under a delivery order other than a ship's delivery order as defined by that Act, no other carriage document being transferred to him or identifying him as the person to whom delivery is to be made; goods may be sold after a bill of lading has become
"spent" and the bill may then be transferred to, and delivery of the goods be claimed by, the buyer; the goods may be delivered to a buyer against a bill of lading which has not been indorsed, or properly indorsed, to him
 In Aramis -> Court declined to imply a Brandt v Liverpool contract
 1) No consideration

Party didn't agree to pay any outstanding consideration 2 

2) No offer and acceptance

No acceptance -> because they DIDN'T EVEN DELIVER the goods (non-delivery of one part of the goods)
o Short delivery isn't really acceptance as well!
3) Also no intention to create legal relations

Because they didn't act any differently

Pyrene v Scindia

There was also an implied contract in Pyrene v Scindia to make the seller a party to the FOB contract even where the buyer's agent arranges shipping space
 By delivering the goods alongside the ship, the seller makes an offer, but he says ONLY on the terms of the contract of carriage
 By lifting the goods, the shipowner accepts the goods

Convinced?
 Not really!
o Why does Devlin J rely on this "fiction"?
 To enforce the limitation in the Hague rules
 To find a way to enforce the Hague rules against the Seller

Is this device really needed?
 NOT REALLY
 If ship simply sails away without loading goods: seller can just sue the buyer,
and then buyer can just sue the carrier!
 If the carrier damages the goods, same!

**Pyrene v. Scindia Navigation [1954] 2 Q.B. 402, 420-429
Notes
- Core issue: whether seller is privy to the contract of carriage/affreightment under FOB
contract

The answer seems to simply be: yes!
o Because in all three categories listed by Devlin J: he says the seller is clearly a party to the contract under Categories 1 and 2 (being the one that procures the B/L)
o And this case is Category 3, and it is clearly the three parties' intentions that the seller is a party to the contract so far as it affects him
 Alternative analysis: there is an implied contract between seller and shipowner
- Devlin has 3 categories

1) B nominates the ships, S puts the goods on the ship on account of the buyer and procures a BoL in terms usual to the name
 The S is directly a party to the contract of carriage, at least until he takes out the BoL in the B's name

2) In modern times, it's often necessary to book space well in advance, so the S
makes arrangements (with the ship?) and takes the BoL in his own name
 Then he tenders the BoL to the B and the B pays
 Similar to cif contract

3) The B gets his agent to book space, and gets the BoL in his own name
Facts
- Sellers delivered a fire tender sold under a contract of sale f.o.b. London, alongside a ship nominated by the buyers.

3 While the tender was being lifted on to the vessel by the ship's tackle and before it was across the rail it was dropped and damaged.
- Under the contract of sale the property had not then passed.
- Seller sued shipowners in tort for the cost of repairing the tender
- Shipowners admitted liability, but claimed that the amount was limited by Art 4(5) Hague
Rules
- Sellers made 3 arguments (from digest):
o (a) as the tender had not crossed the ship's rail it was never loaded on to the ship and therefore, since the accident occurred outside the period specified in article 1 (e),
the rules did not apply

(b) the rules were not incorporated in the contract of carriage because no bill of lading had been issued

(c) even if the rules could be applied to the operation of loading at the time of the accident, they had no application as between themselves and the shipowners because they were not a party to the contract of affreightment/carriage (under a fob contract the buyer makes the contract of affreightment with the shipowner)
- Court rejected all three arguments, held that sellers were bound by Hague Rules
Held (Devlin J)
- 1) Court rejected (a) and (b)
- 2) Seller made two arguments wrt (c) -> at 420-429

(i) That they were not a party to the contract of carriage

(ii) That even if they were, the rules would not apply to them, "for by their own terms they regulate only the relations between the carrier and the holder of the bill of lading and the plaintiffs were never holders of the bill of lading"
- 3) Devlin J rejected (ii) first.
o He held that on proper construction of the rules, the phrase that the plaintiffs relied on ("from the moment at which such bill of lading or similar document of title regulates the relations between a carrier and a holder of the same") was
 (1) only meant to apply to B/Ls issued under a charterparty and
 (2) only meant to define the moment at which the B/L became a contractual document within the meaning of the rules, and not the parties to the contract

He also held that this construction was reinforced by the French text (which is the only authoritative version of the Hague rules and of equal authenticity to the English version of the Hague-Visby rules)
 "If there is any doubt the French text makes it quite clear. Having regard to the preamble to the Act and the fact that the French text is the only authoritative version of the Convention, I think, notwithstanding Mr.
Megaw's objection, that it is permissible to look at it."
- 4) Devlin J then considered (i): whether or not the seller was privy to the contract of carriage

"There is nothing novel about the idea of a third party coming in to enforce a contract either as an undisclosed principal or as a beneficiary"
o "it is necessary that I should examine in greater detail than I have hitherto done the circumstances in which the contract was made in order to determine whether the inference of agency can properly be drawn from them."
- 5) The FOB contract has become a flexible instrument

i.e. sometimes terms/duties can vary -> Devlin outlined three categories of cases

for e.g. "Sometimes the buyer engages his own forwarding agent at the port of loading to book space and to procure the bill of lading; if freight has to be paid in advance this method may be the most convenient. In such a case the seller

4 ---discharges his duty by putting the goods on board, getting the mate's receipt and handing it to the forwarding agent to enable him to obtain the bill of lading."
o "The present case belongs to this third type; and it is only in this type, I think, that any doubt can arise about the seller being a party to the contract."
 [presumably because ONLY in this third category, the seller isn't the one procuring the B/L at all! The buyer's agent is the one procuring it, thus the B/
L is in the B's name]
6) If the sellers are not privy to the contract of carriage, this implies that the ship can sail off without loading the goods, and the sellers would have no redress against the ship. This goes against what the three parties would have accepted.
o "if, as the plaintiffs contend, there is no contractual relationship between them and the defendants, how do they get these goods on board? If the ship sails off without loading the goods the plaintiffs are in breach of their contract of sale. Have they no redress against the ship? Mr. Megaw argues that they would have none, and that visà-vis the sellers the ship in loading acts as a volunteer. This seems to me to be a position which none of the three parties would have accepted for a moment."
7) Furthermore, from the shipper's POV, the shipper must be acting as the seller's agent in requiring the shipowner to lift the seller's goods from the dock, otherwise he would be guilty of conversion

"He cannot intend otherwise; the intention is inherent in the act; he must either profess agency or confess himself a wrongdoer. For if the shipowner lifts the seller's goods from the dock without the seller's authority he is guilty of conversion to which the shipper, by requiring him to do it, makes himself a party."
8) From the shipowner's POV, they would expect to have redress against the shipper if they were sued for conversion

"If the shipowners were sued for conversion they would surely have redress against the shipper. A person who requests a carrier to handle goods must have the right to deal with them or it would not be safe to contract with him."
9) Thus, it was the intention of all three parties that the seller should participate in the contract of affreightment so far as it affected him

"I think the inference irresistible that it was the intention of all three parties that the seller should participate in the contract of affreightment so far as it affected him."
o "If it were intended that he should be a party to the whole of the contract his position would be that of an undisclosed principal and the ordinary law of agency would apply.
But that is obviously not intended; he could not, for example, be sued for the freight."
10) As an alternative, it could be said that there is an implied contract between the seller and the shipowner for the shipowner to load the goods

This implied contract must incorporate the shipowner's usual terms since no other terms could have been contemplated

"there is an alternative way by which, on the facts of this case, the same result would be achieved. By delivering the goods alongside the seller impliedly invited the shipowner to load them, and the shipowner by lifting the goods impliedly accepted that invitation. The implied contract so created must incorporate the shipowner's usual terms"
11) However, this alternative solution is less suitable

"I do not think that the solution fits so well the circumstances of this case."
o "First, it means that if the goods were not lifted there would be no contract; and while that does not arise in this case, a solution that leaves it in the air is not so acceptable as one that covers it.
5 Secondly, I find it difficult to infer that the shipowner by lifting the goods intended to make any new contract; he would not know where the property in the goods lay

Thirdly, I doubt whether the seller intended to make any separate contract when he sent down the goods; I think that he, too, would have supposed that they would be dealt with under the contract of affreightment."
12) Thus overall, the plaintiffs/sellers are bound by the Hague rules as embodied in the contract of carriage, and thus can recover no more than 200

"In my judgment the plaintiffs are bound by the Hague Rules as embodied in the contract of carriage and, accordingly, can recover no more than £200"
oShipowner or Charterer's Bill?
The Rewia [1991] 2 Lloyd's Rep. 325
Notes
- Core issue: shipowner's or charterer's bill?
- Charterers signing the B/L "for the Master" is strong evidence that the contract under the B/L
is with the shipowners, not charterers

But not conclusive evidence (see The Hector and The Starsin, below)
- Probably only applies to charterparties other than demise charterparties -> since in demise cases, the Master of the ship is someone new, has no authority to sign on behalf of the owner
Facts
- The plaintiff cargo owners brought an action against the English sub-charterers of the vessel
Rewia, and three other defendants, including the owners of the vessel.
- 1) The defendant shipowners contested jurisdiction, arguing that they were domiciled in
Germany, a Contracting State to the EEC Judgments Convention, and so should be sued in the courts of that State

The plaintiffs argued, on the basis of Article 6(1) of the Convention, that the contract under the bill of lading was with the English sub-charterers. This would have given them a cause of action against English defendants, and the shipowners could then be joined to the English action.
o However, Court held that the plaintiffs' contract was in fact with the shipowners ->
thus they had no claim against the English sub-charterers
- 2) The defendants also objected against the jurisdiction of the English Courts on the basis of a jurisdiction clause in the bill of lading which provided that any dispute arising under the bill of lading should be decided in the country 'where the carrier has its principal place of business.'
o Although it was unnecessary to decide the point, the majority of the Court took the view that a company's principal place of business was its chief or most important place, rather than the place where most of its business was done: it was the place from which the company's business was 'independently controlled or managed' in the sense of being managed 'without any further control.' Although the day to day management of the ship took place in Hong Kong, it was always subject to the control of the directors in Hamburg; so the principal place of business of the defendant was
Hamburg.
Held (Leggatt LJ, with whom Nicholls and Dillon LJ agreed)
- 1) "a bill of lading signed for the Master cannot be a charterers' bill unless the contract was made with the charterers alone, and the person signing has authority to sign, and does sign,
on behalf of the charterers and not the owners. Accordingly, the bills of lading in this case were owners' bills."
o "The plaintiffs have no claim against the first defendant."
o Exception to the principle, if the contract was made with the charterers alone!!

6 2) Wrt principal place of business: "True it is that the day-to-day management of the vessel was conducted by Turbata under the management agreement, but the third defendant points out that the managers were always answerable, and subject, to the control and direction of the German officers of the company."
o The question is from which city the business was "independently controlled or managed" or managed "without any further control"
o "although in practice Turbata had a free hand in the day-to-day management of the vessel from Hong Kong, all that it did was subject to the control of the directors in
Hamburg."
Dillon LJ (with whom Nicholls LJ agreed)
- 1) "The only claim suggested by the plaintiffs against the subcharterers is a claim in contract on the footing that the subcharterers were parties to the bills of lading contract; i.e. that the bills were charterers' bills and not owners' bills and the subcharterers were the carriers under the bills. The plaintiffs accept that if they have no such claim in contract against the subcharterers on the bills, they can have no claim in tort against the subcharterers."
- 2) "The question whether the subcharterers were parties to the bills is a question of the true construction of the bills in the light of the surrounding circumstances."3) "The key words in the bills are the words 'for Master' against which the stamp and signature of St. John Agencies have been placed. Unless the words 'for Master' can be rejected as surplusage or repugnant to the references to the subcharterers in the heading of the bills, these bills must, on the English authorities analysed by Leggatt L.J., be held to be owners' bills signed for the master so as to bind his employers, the owners"
o "Therefore, in my judgment, the bills are, by English law, owners' bills, the plaintiffs have no claim in the English courts against the subcharterers, and the owners cannot be brought before the English court under Article 6 of the Convention."

The Hector [1998] 2 Lloyd's Rep 287
Notes
- Cf The Rewia
- Overall: signing a B/L "for the master" is strong but not conclusive evidence in favour of it being a shipowner's B/L
o "for the master" -> for the master of the ship -> an employee of the shipowner who runs the ship

General rule was departed from here -> the charterers were expressly identified by name as the carriers in the B/L + "carrier" is a critical term

I think "carrier" is the person who issues the B/L -> so if someone is expressly identified as carrier that's strong evidence that he was a party to the contract
- Because a B/L is a negotiable instrument that can be relied on by third parties -> important for the parties to the contract to be determined as a matter of construction! (would be unfair to the third party otherwise)
7

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