po Chapter 1 Commercial practice The branch of the law of contract which relates to the carri goods by sea will be better understood if the student k= something of the general practice of merchants. shipowners. of id bankers who carry on the commerce of the world. For the beziefit. therefore, of those who have not had the advantage of practical experience in such matters it is proposed to examine, in very >zief form, some of the steps which are usually taken by those wish: transport goods from one portion of the globe to another. Iz the course of such examination familiarity with common shippin; 1S. will also be gained. When a manufacturer, exporter, or other person has sold goo2s to a customer overseas and has decided, on the grounds of cost convenience, which shipping line will best carry them for him tc destination. he can obtain from the offices of that line.‘ printers who make it their business to supply them. three or Zour copies of a document known as a bill of lading. Almost all ship'>:ng lines have their own special forms of bills of lading. These serve documents of title to the goods, once they are shipped; (2) a receig : f the goods delivered to the shipowner or carrier; and (3) evidence ¢ contract which has been entered into between the shipper of th and the shipowner. Under modern conditions when a shipment is made by a rezular line, there arc usually agents on each side intervening betweer the shipper and the shipowner.' The shipper frequently emplc's forwarding agent and the shipowner a loading broker. The for agent’s normal duties are to ascertain the date and place of obtain a space allocation if that is required, and fill in the blank s in the printed. g, each one in identical terms, indi the name ef the consigneéspr person to whom the goods are 1 Sce Heskell v Continental Express Ltd (1950) 1 All ER 1033 Scanned with CamScanner2. Commercial practice delivered; a description of the goods, including the Sense eee which have been put on the bales, cases, or bags for t . e rose - identification; stipulations as to the time and place a Dee freight (ie the remuneration payable to the shipowne! a og of the goods), and various other details. The three or four copies (jl 5 practice varies) of the bill of lading thus filled in are known_as.a set. The forwarding agent sends these documents to the loading broker for signature. He also arranges for the goods to be brought alongside, | sie within reach of the ship's tackle, and he makes the customs entry and pays any dues on the cargo. After shipment he collects all the copies of the bill of lading except one, and sends them to the shipper. The remaining copy is handed to the shipowner and forms part of the ship’s papers for the voyage. The ship’s manifest is made up from all , the bills so collected. ‘AU the regular shipping lines operating from the United Kingdom appear to employ a loading broker. His duties are normally as | follows. He advertises the dates of sailings, and he supervises the |} arrangements for loading, though the actual stowage, or packing of the’ goods in the ship's holds, is decided on by the cargo superinten- dent. who is in the direct service of the shipowner. The loading broker wil! also sign the bills of lading and issue them in exchange for the freight. He is paid by way of commission on the freight, and that _ doubtless induces him to carry out his primary function of securing enough cargo to fill the ship. F {twill be realised from this account of their duties that the loading broker and the forwarding agent perform well-defined and separate . functions. Nevertheless, in practice, the same firm is often both the loading broker and the forwarding agent. A firm usually acts as loading broker for only one shipping line and does all that line's business. It is free in respect of other business to act as it will. . The shipper normally insures the goods against marine and. sometimes, war risks, breakage or leakage. The consideration paid by him to.the insurers is a premium, and the document embodying the contract is a policy. He then has the complete set_of shipping i vill of lading, the policy of insurance, and i the details of the goods bought and the price payable). In nearly all cases the documents are attached to a draft or bill of exchange drawn on the consignee’or on a bank named by him? 2 : ‘The transaction is arranged by means of a Bankers’ Commercial Credit. See / 8 generally CM Schmitthol, The Export Trade (7th edn 1980), pp 244-270; HC, ' Gutteridge and M Megrah, The Law of Bankers’ Commercial Credits (7th revised * edn 1984). Scanned with CamScanner ‘ 1 1 9B Kavos oyquTe Ut A -Commercial practice 3 either at sight or at so many days or months. Almost invariably the shipper does one of three things with these documents: .'(1) He may send them direct to the consignee of the goods. This is q most frequently done when the consignee is his agent or employee. : : . (2) He may hand them to his banker with a covering letter asking %-"" the banker to collect from the consignee, or the bank named by the consignee, the amount indicated on the invoice against delivery of the documents. This the banker will do in consideration of a small commission. ay, 3) He may discount the bill of exchange with his banker. ie the ot banker credits him at once with the amount of the bill. less a “ small commission. ° ‘i A . i & The consignee himself may be a merchant, or a factor (a selling ! agent), who wishes to resell the goods: Often he is able to do so before they are landed at their destination. In such a case he makés the documents over by a suitable form ef indorsement or signature on the reverse side of the bill of lading to the new owner of the goods, who becomes an indorsee for value. An indorsement of the bill of lading made with the intention of transferring the ownership of the goods named therein to the indorsee has the effect of actually making such indorsee owner of such goods. An indorsement in blank is merely the signature of the shipper written on the back of the bill of lading. special indorsement is made up of the shipper’s signature and a direction to deliver to a particular person: for example. if 2 bill of lading is in favour of ‘A B & Co or order’ and the goods are bought from them by C D & Co, a suitable special endorsement would be “Deliver to C D & Co or order. (Signed) A B & Co’. . ‘Various forms of contract for the sale of goods to an overseas buyer have become stereotyped by usage, of which the commonest are the following: - (1) A CIF contract.? These letters stand for ‘cost, insurance, and freight’. Here the seller contracts to deliver the goods to the * buyer at the place named by the buyer as their destination, the seller paying the insurance premium and the freight. Some- ~ : times the seller fulfils the contract by buying goods already 3 Sce generally D M Sassoon. C..F. and F.0.B. Contracts (3rd edn 1984) _ (published as British Shipping Laws, vol 5). ae SST + Ne Scanned with CamScanner+ Commercial Practice afloat which are bound for the proper destination, ang ‘ansferring the ownership of them to the buyer. @) An FOB contract * These letters stand for ‘free on board’, Here the seller's obligation i i removal from the wa: Of sale, and for thei st important €xception to this, a hurricane. threatens t intentionally for the benefi the carzo will be j fhe. the master will, Provided that the freight has been paid, deliver the g00ds to the first holder of a bill of ladinz who presents himself and demand: would appear at first sight that the existence of a set of bills involves a great risk of fraud. Ta practice, however, the cases of persons whe have no right to the gocds becoming poss copy of the bill of lading the : delivery of the goods from the cartier, thou, is them. It is will be given by some person or company of high standing, eg a bank, and will cover the Sort cl i ffer by-handing over the in respect of any loss which he may suffe goods aithout the production of take lading, 001 i s deli ‘he quay, s the consignee accepts delivery of the goods on tl . if ea eects that they have suffered any loss or damage covered by if he sus) 4. See generally ibid. Scanned with CamScannerany Carry them, in the interest: Commercial practice 6S the policy of insurance, he calls in the local agent of the insurers and asks him to make an official survey of the parcel and furnish a signed certificate. The consignee may also seck the assistance of an independent surveyor. He may then make his claim against the insurers themselves. The importance of marine insurance to the merchant lies in the fact that by certain clauses in the bill of lading known as exceptions the ship. owner avoids responsibility for a multitude of excepted perils or mishaps which may befall the cargo. If it were not for the risks undertaken by the insurers, the merchant would be faced with the impossibility of trading with anything like a Prospect of gain. A person whose business it is to work out the respective liabilities of the Parties concerned, where average has been incurred, is known as an average adjuster. It may be, however, that for some Teason, such as delay or neglect, thé consignee fails to take delivery. In such a case the master may land and warehouse the goods, or, if that is impracticable, may elect to s of their owner, to some other place. allernative methods frequently employed by shippers of goods in place of the simple process, already noticed, of entering into a contract with a shipowner which is evidenced by a Dill of lading. It often happens that a shipper wishes either (1) to hire a ship for a fixed time; or(2) ‘to hire a ship, or a portion of a ship, for a certain v. or(3) to become for the time being the owner ofa ship, by causing her to be leased to him. We must now glance at The contract entered in any of these three cases is a charter-party. In case (1) it is known as atime charter, (2) as a voyage charter, (3) as a charter by demise. In some instances the shipper who has entered into the charter- party wishes himself to fill the ship with his own goods; in Sees he advertises that he has a certain amount of space and, for a consideration, ships other merchants’ goods; somes he ee charters a ship as a speculation, having no cargo piss ‘Oo ‘ 8 P| 3 her, hoping to make a profit by the demands of others for such sp: as he can offer. Where a ship is used, either by the shipowner or by her charterer. to Scanned with CamScanner1 & Commercial practice f persons under different bills of lading, carry the goods ofa number of p aaa ’ she is said to be employed aieiation of the variations of the term This brings us to a eae freight is often agreed upon, ie “freight’, as commonly used. ods are delivered by the carrier to the ~ freight to be paid before the ie agreed that payment is to be made consignee: for example, it may cacao agrees to pay lump sum on shipment. Again, sometimes a elf to pay a fixed sum for the freight; this means that he binds hims red by the charter-party, prhok voyage or series of voyages ried Pro rata freight is freight respective of the amount of goods carried. Pr if ace which may become payable proportionately to the part of t! he voy. a accomplished or to the part of the cargo delivered. Dead freight i ie ‘ame given to the damages payable, in certain circumstances, by a charterer who has failed to load a full and complete cargo, that is to say 2 cargo which will fill the holds of the ship as far as they can be Ailled with safety; for, except where lump sum freight is agreed upon, the shipowner generally stipulates for the loading of the largest cargo 3e cih cerry. The shipowner’s remuneration for carrying the goods« Devond =heir original destination, where the consignee has failed to €ry or to forward instructions as to the disposal of the ‘ods, is back freight. GaG os) Finalix! acquaintance should be m: Barratry is any act of fraud or viole, ritkout the consent or privity of the |. Both transactions are “ery rare at the present day. 3 The letters DWC stand for dead-weight ACI - This phrase, when it appears ina charter-party without any restrictive explanatory words, means the gross weight of goods of any kind which the ship can carry. Acharier-party generally fixes a number of days, called lay-days, switkin which the ship is to be loaded or discharged, as the case may de. Bemurrage isa sum named in the charter- charterer as liquidated damages for delay. beyond such lay-days, ‘When ‘the lay-days have expired and demurrage has not been provided for, or when the time for loading or discharge is not agreed, or where demurrage is only to be paid for an agreed number of days and a further delay takes place, the shipowner is entitled to damages Scanned with CamScannerCommercial practice 7 for detention; for clearly the earning-power of a ship depends upon her continuous employment with as little delay as possible between voyages. A charter-party sometimes provides that despatch money will be payable to the charterer if he loads or discharges the vessel in a time which is shorter than the number of lay-days. Apart from special customs, working days are all days on which, work is generally done at the particular port in question; weather working days are all working days on which the weather allows of work of the particular kind in question being done; and running days are all days on which a ship might be sailing at sea, that is to say every day in the year. eviation means departure from the prescribed or ordinary route which the ship should follow in fulfilment of a contract of carriage. Jmherent vice is a term applied to goods signifying any fault or characteristic of the goods or their packing which of itself causes them to be damaged or to deteriorate, without any negligence or wrongdoing by anyone. mate’s receipt is a temporary form of receipt given by the mate of a ship for goods which have been received on board. This receipt is subsequently handed to the shipowner—or more usually to the rey ng broker—in exchange for the bills of lading. ilferage is a general term covering thefts of goods at any time during transit, or while lying in a warchouse YSalvage is the remuneration payable to persons outside the Contract of carriage who have saved the ship or cargo from loss or damage. Wharfage is a charge made for receiving goods on a wharf, or for storing them there, or for removing them from the wharf. Scanned with CamScanner/ Chapter 11 Freight Freight is the remuneration payable to the carrier for the carriage of goods by sea. There are different types of freight. Freight can be claimed from certain persons, and it is to certain persons that it is payable. THE DIFFERENT TYPES OF FREIGHT ' When there is no provision to the contrary. freight is payable on the delivery of the goods,? and is calculated on the amount acvually delivered.? Sometimes, however, the parties agree that a lump sum iu freight shall be paid irrespective of the amount of cargo carried.-A. i frequent-provision is that freight is to be paid in advance. In certai cases a pro rata freight is payable. If the consignee does not take_ delivery of the goods, the shipowner may be entitled to a back freight If the charterer does not load:a full cargo, damages for dead frei may be claimed. (1) Freight payable on delivery Payment of freight and delivery of the goods at the port of discharge are, unless otherwise agreed, concurrent conditions. The consignee 1 Foracasewherea tax on freight was payable to the Iraqi authorities at the portsof louding and discharge, séu/Brovigiank A/S and 1:5 Brovig t Transcredit and Oil Tradeanstalt, The Gunda Brovig [1982] 2 Lloyd’s Rep 39, CA. (See the judgment Fe ‘of Lord Denning MR, ibid, at 40-41.) x ¢ Bu 1877) 25 WR 305. wi A Krall « Burnett (1877) one rate of exchange applicable, see Monrovia Tramp Shipping Co v President of India, The Pearl Merchant [1978] 2 Lloyd's Rep ! : QBD (Commercial Court), where freig! : at exchange rate ruling on bill of lading date. 23 Scanned with CamScanner1 244 Freight s are delivered, and must, if quired, pay the freight as the goods are degrees Ht cannot withhold payment until delivery of the whole pi e itisht that acondition precedent of the shipowner’s right to recov aes \ he should have delivered or been ready to deliver the goods. said by Willes CJ, that ‘the true test of the right to freight, is the question whether the service in respect ee the freight was contracted to be paid has been substantially performed; an aeeoee tothe law of England, asa rule, freight is earned by thecarriage and arrival of the gi ready to be delivered to the merchant’? ~A charter-party sometimes provides that the charterer is entitled to ( deduct)a specified amount from the freight for short delivery’? ~Wrrere a period is fixed during which freight is to be paid, the shipowner must be prepared to deliver the goods throughout the whole of that period if he wishes to claim payment. So in Duthie v Hilton™ The bill of lading stipulated that #irei of ship before the delivery of any po accidental fire necessitated the scan rendered commercially useless. Held, that freight was not payable. ight [was] to be paid within 3 days after the arrival rtion of the goods’. arid on the day alter arrival on Itis no defence to a claim for freight to show that the > goods are damaged. Th ull freight if he is ready t ti deliver at the port of destination the goods which were lomed, The charterer or consignee, as the case may be. cannot deduct from the v Sais . (4) Metter » Young (1855) 24 LIQB 217 (revsd on another point, 2: 5° Per Willes CJ in Dakin v Oxley (1864) 10 LT 268 at 270; Aries Tanker Coron v Total Transport Ltd. The “action for it unless it was caused solely by excepted perils. whether \Texcepte y express stipulation or by the operation of the common law. 5 Thus, in Dakin v Oxley® Coal shipped under a charter had, through the negligence of the master, so deteriorated “as not to be worth its freight. The charterer, therefore, abandoned it to the shipowner. : Held, he was nevertheless liable for freight, his remedy for damage to the coal being by i cross-action. . ! _ But freight will not _be payable unless the goods are delivered in uch a condition that they are substantially and in se the same goods as those shipped. Thus, in Asfar v Blundell? 5) is . . \_ASship carrying dates was sunk in the The dates were recovered, but ina state \y ‘which genie them uni. for human food. They-were sold for distilling purposes. Held, no freight was payable because the goods delivered were, for busi “something different from those shipped. Aone ae ; Againyin Montedison SpA v Icroma SpA, The Caspian Sea*® ‘The charterers loaded a cargo of Bachaquero Crude’ which was a type of Venezuelan, ‘oil. When the cargo was delivered, it was found to contain paraffin. The charterers refused to pay the freight. Held, by the Queen's Bench Division, that freight would be payable'if what the shipowner had delivered could in commercial terms bear a description which sensibly and accurately included the words ‘Bachaquero Crude’. The case would be remitted to the arbitrators to decide the point.'! 2¥ Unless the shipowner carries the goods to the destination-agreed ve i ant ight, If the on, he is not en! - 3 Tithe goodéarelos. pn eight is earned, he excepted peril ford the way, no matter how. of . the shipowner a good excuse v e cannot earn freight by virt em. If the ship cannot finish the voyage, the shipowner must forward the goods by some other means ‘or his claim to freight is lost, porspus claim 60. See eee? S& (1864) 10 LT 268. [1896] 1 QB 123. Chorley and Tucker's Leading Cases (8th edn 1962), p 207. 10 [1980] 1 Lloyd's Rep 91. 2. 11 Sce the judgment of Donaldson J, ibid, at 181. Scanned with CamScanner246 Freight ee Thus, in Hunter v Prinsep saat ‘on aright an freight was payable ‘on & i from Honduras to London, freig ecatrayathe . a ad cag aes capure by ee. vessel was recaptured and recommenced the voyage, but owing Cea driven ashore at St Kitts. The wreck and cargo were putup for sal See es of the cargo-owner. After paying claims for salvage, the master , the proceeds of sale for freight. : . a ; Heaton the ship was prevented by excepted perils from completing the voyage, io freight was payable » In that case’? Lord Ellenborough stated the principles relating to the payment of freight as follows: ‘The shipowners undertake that they will carry the goods to the place of destination, unless prevented by the dangers of the seas of other unavoidable casualties; and the freighter undertakes that if the goods be delivered at the place of theit destination, he will pay the stipulated freight but it was only in that event, viz, of their delivery at the place of destination, that he, the freighter, engages to pay anything. If the ship be disabled from completing her voyage. the shipowner may still entitle himself to the whole freight. by forwarcting th but he has no right to any Ieeiph them be dispensed with. or unless the “ shipowner will not forward thi anything.” F But where the shipowner is the cargo-owner from freight is payable. : Thus, in Cargo ex Galam!* \< Prevented solely by the act or default of carrying the goods to their destination, full. The ship was driven ashore at Scilly and the cargo had to be landed and stored there, The charterer wished to alter the port of destination and named Hamburg. But the holders ofa respondentia bond on the cargo, payable at Falmouth, obtainee ay order from the Court for the removal of the cargo to London and its sale there. . Held, that as the shipowner had not abandoned his intention of completing the voyage, ‘but had been prevented from doing so by the order of the Court, occasioned by the i default of the cargo-owner, he was entitled to the freight. s long as delivery of the goods has been made, the shipowner is « still entitled to claim freight even though the vessel’ has been “12 (1808) 10 East 378. « 13. Ibid, at 394, JS) (1863) 33 LIPM & A97. Scanned with CamScanner. The different types of freight 247 overloaded in breach of the Merchant Shippi Line Conventions) Act 1932.15 ee ea ots Load NL Tf the vessel unjustifiably deviates trom the contractual route, the contractual rate of freight is not payable.!® But if the goods are delivered safely, he will be entitled to a reasonable remuneration on a ; quantum meruit basis.'7 . > «~) Similarly, wherea charter-party had been frustrated by the closure 1 of the Suez Canal, a shipowner was entitled to a reasonable U remuneration for bringing the goods safely to their destination via the Cape of Good Hope, but could not claim the contractual rate of freight.® i (2) Lump sum freight Toearn lump sum freight,” either the ship must complete the voyage, or else the cargo must be transhipped, or forwarded by some means other than the ship in which it was originally loaded, and delivered b: the shipowner or his agents at its destination.2° Where the ship fails to complete the voyage and some portion of the cargo is lost, the question arises whether any deduction is to be made from the lump sum agreed on. Thus, in Thomas v Harrowing SS Co* Lump sum freight was payable on delivery of a cargo of props. The exception clase included “perils of the sea’. Near the port of discharge, the vessel was driven ashore'by bad weather and became a total loss. Part of the cargo was washed ashore and was 15. St John Shipping Corpne Joseph Rank Ltd [1957] 1 QB 267,[1956] 3 All ER 683. 16 Joseph Thorley Ltd v Orchis SS Co Ltd [1907] 1 KB 660, CA. 17 Hein SS Co Ltd Tete and Lyle Led [1936] 2 All ER 997, HL. 18 Société Franco Tunisienne d'Armement v Sidermar Spa [1961] 2. QB 278, [1960] 2 All ER 529. This decision was overruled as to the question of frustration by Ocean Tramp Tankers v Sofracht V/O [1964] 2 QB 226, [1964] 1 AER 161, [1963] 2 Lloyd’s Rep 381, CA, but not es the point considered ‘above, so sumably on that point the decision at first instance still stands. 19. {Shell International Petroleum Ltd vSeabridge Shipping Ld, The Metula c1s78) 2 Lloyd's Rep 5, CA, although the freight was nota lump sum freight propery called, it had the characteristics of a lump sum freight in that the freight Was smputed on the intaken quantity and was to be paid on that quantity evse though there was a shortage. (See the judgment ao ae ce ae See pe in Thomas v Harrowing 20 peal La Hake e Darth (1836) 2 Bing NC at 569 et'seq. 1 [I9ISTAC 5: g Scanned with CamScanner248 Freight afterwards collected on the beach by the Trou ses the Fest being lost by perils of the sen Held, the shipowners had performed their Fontract, which was to deliver the cargo so if asthey werenot prevented by'perlsol these ind they were entitled to recover the whole Jump su: i he charter-party stipulated that it should be Payable ‘on ‘unloading and right delivery of the cargo’, master's directions and deposited on the dock Where lump sum freight j the cargo. these words do not of the carzo. shippec cargo which ha: elivered.? ight and true delivery’ of mean right and true delivery of the whole Sly freight becomes due when the been completely Tc ) Advance freight Where advance freight is agreed upon, delivery and must bi Payment does not depend on never delivered, ¢ made even though the ship is lost and the cargo 3. See per Sir EV Williams in The Norway (1865) 13 LT 50 at $2, 4° Ritchie ¢ Atkinson (1808) 10 East 295, 5 Eg in Northern Sates Lid v The Giancarlo Zeta, The Giancarlo Zeta [1966] 2 Llovd's Rep 317 (Exch where the charter-party stated: Tetumable vessel and/or loaded on board,” As to advance freight, see infra 6 Gunnstein A'S & Co K/S v Jensen, Krebs and N felsen, The Alfa Nord [1977] 2 Lloyd’s Rep 434, CA. Scanned with CamScannerThe different types of freight 249 Thus, in De Silvale v Kendall? A vessel was chartered for a voyage from Liverpool to Maranham and back to Liverpool. She arrived at Maranham, and the shipper paid an advance freight of £192. She sailed on her homeward voyage, but was lost by capture. . Held, by the Court pf King’s Bench, that the shipper was not entitled to recover the advance freight? If after advance freight has been paid the voyage is abandoned, no part of the freight can be recovered,/Advance freight must be paid to the shipowner even if the goods are lost (by excepted perils) before payment, where they are lost after the due date of payment; nor is it recoverable if the goods are so lost after payment. Where freight is made payable ‘on final sailing’, the ship must have left the port of departure, with no intention of returning. ~Thus, in Roelandts » Harrison!® ‘The ship was bei vhe dock to the Held, feeight payable on final sailihg’ was not due. The ship must have got clear of the port and be at sea, ready to proceed on the voyage. g towed out to sea when she ran aground ina ship-canal leading from As freight is prima facie payable on delivery of the goods, the burden of making out a case for advance freight is on the shipowier, Where: freight was ‘payable in London’, it was held that the stipulation referred to the place and not to the time of payment. As the vessel was lost on the voyage, no freight became due.'' Sdmetimes there is a proviso that freight is to be paid ‘ship lost or not lost’. This indicates an obligation to pay freight whether the ship is lost or not, provided that the loss is due to an excepted peril.'* Again, it is sometimes stipulated that freight shall be payable at a certain fixed time, or on the happening of a certain event, instead of merely ‘in advance’. : 1 Ke &S aease e advance freight was not De Silvale v Kendall (1815) 4M & S 37, Fora where advance fireig 7 due bul was paid to the shipowners, who acceptedit on the assumption that it was charter hire, and it was held that the freight was recoverable, see io eT (Supplies) Ltd v Metalfa Shipping Co Ltd, The Georgios {1978} 2 Los = Rep 157 QBD (Commercial Court) (See the _ a hee is id, at 202. e cl at + De Silvale v Kendall, supra, at $9. A Ci Ashe ‘Go a a Society v General Steam Navigation Co [1903] il Service Co-ope y 2 KB 756. 10 (1854) 9 Exch 441 q $77) 25 WR 305. Krall ¢ Burnett (1877) 25 so z Greus Indian Peninsular Rly Cov Turnbull (1885) $3 LT 325, we Scanned with CamScanner250 Freight Thus, in Oriental SS Co v Tylor’? One-third of the freight was made payable‘on signing bills of lading’ The'ship and Bree a ore lost before bills of lading had been signed, and the charierers refused to Frata:rncnom for signature, actually holding them back until the ship had sunk, Held, the charterers must pay one-third of the freight charges as damages for breach of contract. . Where advance freight is to be paid ‘within 5 days of the master serine bills of lading’, and the charter-party is frustrated by the vessel and her cargo being lost before the end of the fifth day after the signing of the bills. Of lading, ‘ight i y cause there is no ner could have sued in the normal course of of the fifth day 2+ ause in a bill of lading stated that fr. SY: from advances of cash which It is often agreed shall be made by a charterer to meet the current expenses of the ship, and which are usually deducted from the freight ifit becomes payable, The latter are simply a loan to the shipowner, and can be recovered in any case. An advance payment will be” construed by the Court ‘either as advance freight or as a loan according to the intention of the parties as expressed in the documents.!® If the charter-party shows that it was the int that the charterer making the advances should almost conclusive that the advan Thus, in Hicks vShield!? ention of the parties insure them, that is ces are to be on account of freight. It was agreed that ‘cash for ship’s disbursements to be advanced to the extent of £300 free of interest. but subject to insurance. und £2 10s per cent commission Held, the payment constituted advance freight. Lord Campbell said: “This mention of insurance seems to me to stamp the transaction indelibly asa payment on account of freight, and not a mere loan: for if the advance was to be insured, it must be an advance of freight which is insurable whereas a loan is not’ 3 [1893] 2 QB 518. . " Cae Naviera General SA v Kerametal Lid. The Lorna 1 {1983) 1 Lloyd's Rep 373, CA. (See the judgment of Sir John Donaldson, ibid, at 37 2) ea 15 Seald-Sweet Sales Inc v Finnlines (Meriventi Oy), aa se Forest [1975] 2 Lloy: Rep 92, District Court, Eastern District of New York. : 16 Allison t Bristol Marine Insurance Co (1876) 1 App Cas 209 at 229. 17° (1857) 7 E & B 633. Scanned with CamScannera fne different types of freight 251 (4) Pro rata freight Sometimes pro rata freight is payable, ie a payment proportionate to the part of the voyage accomplished or to the part of the cargo delivered. Where the facts warrant an inference that delivery at an inter- mediate port is to be accepted as part performance of the contract, the law implies a promise to pay pro rata freight in proportion to the part of the voyage completed.'® To raise such an implied promise to pay pro rata freight the merchant must have the option of having his goods conveyed to the port of destination. He must exercise a real choice. Thus, a promise to pay pro rata freight will not be implied merely from acceptance of the goods at an intermediate port where the master insisted on leaving them,'® or. from acceptance of the proceeds of sale where the master has exercised his discretion to sell the cargo in the interests of the catgo-owners.?° It follows that pro rata freight is payable only if the shipowner was | able and willing to carry the cargo to its destination. Thus, in Vlierboom v Chapman! \e44 Rice was to be delivered at Rotterdam. During the voyage, some was jettisoned and the rest had to be sold at Mauritius. Held, that as the shipowner could not have delivered at Rotterdam, no fresh agreement for the payment of pro rata freight could be inferred. Again, in St Enoch Shipping Co'Ltd v Phosphate Mining Co® 1 ‘Avvessel was on a voyage from Tampa to Hamburg. On 3 August 1914, she was warned by the Admiralty to go to an English port. Next day war broke out and it was impossible for her to go to Hamburg, She therefore discharged the cargo at Runcorn where the shipowners claimed pro rata freight. Held, no freight was payable since the voyage had not been completed, and no new contract to take delivery at Runcorn instead of at Hamburg could be implied. Sometimes the cargo-owner expressly asks for delivery to be made at an intermediate port, and then freight is payable. 18 Hill v Wilson (1879) 4 CPD 329. 19 Metcalfe v Britannia Ironworks Co (1877) 2 QBD 423. : 20 Hunter v Prinsep (1808) 10 East 378. 1 (1844) 13 LJ Exch 384. 2 [1916] 2KB 624. Scanned with CamScannerATeight Thus, ; , . hus, in Christy » Row? Coal . shipped anserous tg haa (OF HEmbUrE. Owing to the Presence of a French an oe ediate port pee, oftheargonsectcageoner shad Sclver: tan leave th © was delivered there, butt 2 Held, there ROT The catgo-owner refuse Hee NeSsel Was then °F refused to pay freight ordered substi ae mmaeTeeMeNt to accept del e intery clivered th Perl f the contract, and full freight was pa Mediate port as a vable on the goods (S) Back f reight Normal delivery Paeented by some cause Revo ch failure on the part 0 © Master may and Owners by landing it, best. The shipowner may then charge the freight’ to cover the expenses thus incurre - Thus, in-Cargo ex Argos* cargo-owners with ‘back d in their interest. Aihippet had loaded a cargo of petroleum on board a vessel bound from London to Le lavre. When she reached Le Havre. the Port authorities instructed the master to take her out of the harbour because there w: large quantities of munitions in the Port. The: woul (ied to land the cargo at neighbouring ports, but eventually decided that it Would be best 10 go back 0 London, ay Held. the shipowner was entitled to back freight s ince, in all the circumstances, the Master had dealt with the cargo for the benefit of the shipper as seemed best to him. (6) ‘Dead freight Where a charterer has failed to fulfil his contract to Provide a full Cargo, the shipowner has a good cause of action against him for “dead freight’, ie damages.’ 3. (1808) 1 Taunt 300, 5 se Meteo Hee f iv 128. For a case where the ¢ Fleming (1871) LR 2Se & Div 128, For ace 5 oericrate ee eld to ba allowed ose off the amount of overpayment fat aed ft ipowners i aim for demurrage, sce Bed i i shipowners’ increased claim Be, Hee ee a The Jonian Skipper [1977] 2 Lloyd's Rep 273, QBD ido +. (Commercial Court). Scanned with CamScannerThe different types of freight 253 Or aclaim for damages for breac! load at the shipowner is under a duty, where the charters tale 7 ‘ad a full and complete cargo, to minimise the damage by obtainin: other Cargo, provided he acts rea: i doing. It follows that he must also have implied libert, charter voyage by th Period of time reasonabl upied in taking in that substituted cargo’® The claim for dead freight being y to delay the Y and necessarily occ! BY WHOM FREIGHT IS PAYABLE The shipowner can claim freight from the following persons: (1) the shipper of the goods; (2) the consignee or indorsee of the bill of lading; (3) a seller who stops the goods in transit: (4) the charterer, * (1) The shipper of the good The liability to pay freight reserved in a bill of ladin, the shipper of the goods, unless he was m made this clear at the time. By shipping goods, the shipper impliedly agcees to pay the freight on them. He can be relieved of this obligation: g is primarily on erely acting as agent and (1) by the shipowner giving credit to the consignee. Thus, if the master for his own convenience takes a bi consignee who was willing to pay c: discharged ;? or (2) by delivery ofa bill of lading indorsed with a clause freeing the shipper from liability, the shipowner or his agent knowing, at the time, of the existence of such a clause’ Il of exchange froma ‘ash, the-shipper—is The Bills of Lading Act 185% s 2, expressly preserves the shipowner's right to claim freight from the original shipper, so that the shipowner can elect to sue the holder of the bill of lading or the shipper.® Wallems Rederij AiS v WH Muller & Co, Batavia [1927] 2 KB 99. Strong v Hart (1827) 6 B & C 160. See Watkins v Rymill (1883) 10 QBD 178. See Appendix C, post. woud Scanned with CamScanner“ 254 Freight (2) The consignee or indorsee of the bill of lading The bill of lading usually contains a clause making delivery conditional on the consignee or his assigns paying freight. The master of the ship is entitled to refuse delivery unless the freight is paid. The mere delivery of goods does not impose a legal liability to pay the freight on them,'© but is evidence of an implied promise to do so.) A custom of the trade, and even former transactions of the same parties, * are also admissible as evidence of an implied contract. The Bill of Lading Act 1855, s 1,'? imposes on all consignees or indorsces of a bill of lading. to whom the property in goods passes, the liability to pay freight. Where the goods have been shipped on a chartered ship, the bills of lading often include a clause stating ‘freight and all other conditions as per charter’. But this clause will not incorporate provisions which are inconsistent with the bill of lading or which do not affect the consignee’s right to take delivery)? Thus the bill of lading specifics an amount to be paid as freight, this cannot be altered by & general reference to. the cha: hes in the clause set out above, (3) A seller who gtops the, goods in transit ‘A seller who stops in transit! is liable to pay freight on the cai being delivered to the buyer; if the seller refuses. he is liable in damages to the shipowner for the amount of the freight.) But he does not, by stopping in transit, become a party to the contract of affreightment. (4) The charterer In the case of a charter-party, the charterer is primarily liable for freight,’® and the fact that he has sublet the services of the ship to 10. Sanders v Vanceller (1843) 4 QB 260. . M1 Cock v Taylor (1811) 13 East 399; see also per Parke B, in Maller v Young (1855) 25 LIQB 94 at 96. 12. See Appendia C. post. 13. See Hogarth Skipping Co Ltd ¢ Blyth, Greene, Jourdain & Co Ltd (1917] 2 KB 534. 14° See pp 113-115, ante. 15 Booth SS Co Ltd v Cargo Fleet Iron Co Ltd [1916] 2 KB 570. 16 Fora case where the shipowners were unable to recover freight from the charterers and alleged that the brokers had negligently mis-stated the financial standing and reliability of the charterers and the shipowners claimed damages {rom the br oker s see Markappa Inc v NW’ Spratt & Son Ltd, The Arta [1983] 2 Lloyd’s Rep 405, QBD (Commercial Court). Scanned with CamScanner