SALES OF GOODS VIA SEA

SUBMITTED BY

PURVI (B-15)

BHARATI VIDYAPEETH DEEMED UNIVERSITY

NEW LAW COLLEGE, PUNE

B.A. LL.B., IV YEAR, DIV-B

 MARITIME LAW
DECLARATION

This is to declare that the Research Report titled as — Sales of goods via sea is bonafide work
submitted at New law College, Pune is an outcome of my work and is undertaken by me. I, further
declare that present work is bona fide one and outcome of my own efforts, this research report or any
part thereof, has not been submitted in part or full to this or any other university for any degree or
diploma or any similar title.

PURVI

Roll No. B-15

B.A. LL.B., IV YEAR, DIV-B

BHARATI VIDYAPEETH DEEMED UNIVERSITY,

NEW LAW COLLEGE, PUNE

13/02/2023
 TABLE OF CONTENT

INTRODUCTION PAGE NO. 3

LITERATURE REVIEW PAGE NO. 3
HYPOTHESIS PAGE NO. 4
STATEMENT OF RESEARCH PAGE NO. 4
PROBLEM
CONCLUSION PAGE NO. 8
REFERENCES PAGE NO. 11
1. Introduction

Trade has always been the one of the significant businesses all across the world. Even during
barter system, trading prevailed. The east India company which ruled India for almost 200
years established their reign through trade only. The most important part of trade is delivery
of goods. For the delivery of goods, a medium of transportation is needed and sea is one of
the oldest and most used route for delivery of goods.

Delivery of goods is crucial part of sales and carriers have the most important duty to deliver
the goods safely through the sea route, it is also a significant issue in carriage of goods via
sea route. In India, delivery of goods is goverened under the Bill of Lading Act, Carriages of
Goods by Sea Act and the Multimodal Transportation of Goods Act, and Maritime Insurance
Act that talks about the laws related to contract.

2. Literature review

A contract of carriage may be defined as an agreement that is concluded between a carrier

and a shipper for the carriage of goods by sea, in which a carrier, against the payment of
freight, undertakes to deliver goods from one port to another. [1] The Carriages of Goods is
also seen as one of the most significant legs of transportation in today’s world and an urgent
reform is needed for countries that are lagging these laws. [2} This may be because of the
constructiveness and relative economics of maritime transport that significantly affects
international trades and generates new trends that trend in with the international trade flow. [3]
Furthermore, there are obligations under the contract of Carriages of Goods by Sea which
state that discharged by parties with respect to the receipt, loading handling stowage,
carriage, care, unloading or delivery of the goods, and who acts directly and indirectly, under
the carriers’ supervision of request or control.[4] carriage of goods by sea Act,1925 provides
for shipping of goods from one port in india to other port in india or outside india.

The Indian Carriages of Goods by Seas Act, 1925 defines carrier as the owner or the
charterer who enters into a contract of carriages with a shipper. When goods are in transit
i.e., they are being transported from one place to another, the risk of damage to goods is
always there, specially when goods are being shipped via sea route, and here, in case of
damage it becomes difficult to determine the extent the liability of a person. The carriage of
goods by Sea Act, 1925 provides for conduct of parties. The liabilities and duties of carrier
are provided under this act, and the exercise of due diligence is must by the carrier.
Negligence by carrier makes the carrier liable for compensation to the owner of the goods.

Every contract of sales of goods has foremost clause to deliver the goods, and breach of this
incurres liabilities to the party breaching it. There are namely 3 types of contracts drafted for
delivery of goods via sea route known as international sales, those are (1) free on board
contract (2) cost, insurance, and freight contract (3) Ex ship contract.

To bring carriage of goods be sea into motion, a bill of lading is issued under bill of lading
act, 1856 A bill of lading is a contract issued by a transport company to a shipper that spells
out the quantity, type, and destination of the goods being shipped. It serves as a receipt of
the shipment and can help prevent the theft of goods being transported. [5] The ship master
acts as an agent of the ship owner and signs the Bill Of Lading. It is upto the claimant on
whose name the bill of lading is to be issues i.e., charter, sub-charter, ship owner or the
agent.

3. Hypothesis

(i) What obligations should be imposed on the carriers regarding limitations, exceptions
duties, burden of proof and Bill of Lading that will benefit the Indian Carriages of Goods by
Sea Act 1925?.

(ii) Do the current laws of India provide sufficient provisions to protect the rights of the cargo
owners?
4. Statement of Research Problem

4.1 History of Carriages of Goods by Sea in India:

Shipping and Seaborne trade is the oldest form of International Commercial trade in India.
India is considered to be one of the foremost maritime countries in the world. [5] In the ancient
times, oceans were freely used for transactions arising out of International trade. The history
of Carriages of Goods by Sea in India can be traced back to the Vedic period where the text
of Manu elucidated the Rules related to maritime transport, and Kautilya’s Arthasastra dealt
with shipping and related matters. There were various texts in ancient India, which
formulated various codes. The code of Macassar and Malacca are the two important texts
related to maritime law wherein, its provisions were borrowed from Indian texts.

The Indian Carriages of Goods by Seas Act, 1925 defines carrier as the owner or the
charterer who enters into a contract of carriages with a shipper. When goods are in transit
i.e., they are being transported from one place to another, the risk of damage to goods is
always there, specially when goods are being shipped via sea route, and here, in case of
damage it becomes difficult to determine the extent the liability of a person. The carriage of
goods by Sea Act, 1925 provides for conduct of parties. The liabilities and duties of carrier
are provided under this act, and the exercise of due diligence is must by the carrier.
Negligence by carrier makes the carrier liable for compensation to the owner of the goods.
The carrier's failure to comply with these obligations raises the concept of liability and the
carrier would be liable for damages. With the rapid progress of globalization, the increasing
demand for the supply of goods on the world market and international economic integration,
the demand for transport has assumed ever greater proportions. In the contract of carriage,
moving goods from one place to another requires an appropriate means of transportation.
Goods are transported from one place to another in by four basic modes of transport viz, by
air, by sea, land and rail.

4.2 Person entitled as carrier under the Indian law

The ship-owner and the charterer were to have a contract between them in order to form a
charter party, carrier, and cargo interest to form a Bill of Lading. The carrier can be clearly
identified by a contract as being the ship-owner or the charterer. [6] However, in some
situations, the ‘carrier’ can either be the charterer, ship-owner, or sub charterer. It is all
related to the circumstances and commercial position of the vessel. [7] Article 1 (a) of the
Indian Carriages of Goods by Seas Act, 1925 defines carrier as the owner or the charterer
who enters into a contract of carriages with a shipper.[8]

4.3 The Basis of the Carrier Liability

To discover the basis of the carrier’s liability and burden of proof in cargo transportation in
accordance with limitations and exceptions duties and responsibilities of the carrier as his
main duty is to issue Bill of Lading, and exercise due diligence to keep the ship sea-worthy
and care for the goods without deviating the agreed route under The Hague Visby Rules and
Common Law.

4.4 Obligations for Due diligence to provide a seaworthy vessel and care of cargo.

Due diligence according to the Cambridge Dictionary is defined as ‘action that is considered
reasonable for people to be expected to take in order to keep themselves or others and their
property safe’. The concept of due diligence has been interpreted as being roughly equivalent
to the Common Law duty of reasonable care, by the courts, but there was speculation as to
whether due diligence was derived from the US Harter Act of 1893.[8]

4.5 Obligation to issue Bills of Lading

It is a non- delegable duty to carry and keep the cargo of the carrier. It can be understood that
the carrier may not know the precision of whether the cargo is packed in containers or in
packages as told by the shipper, however if the precision of the information is not correct, the
carrier would be held liable as he is the one to issue the Bill of Lading. [9] Under the Indian
Carriages of Goods by Sea Act 1925 Article 1(b) the contract of carriages only applies to
contracts that covers the bills of lading or any other similar document of title. Such
documents must relate to the carriages of goods by sea or if it is issued and is in accordance
to the charter party from the time where the similar documents of title or Bill of Lading
governs the relation between a carrier and a holder. There is very less approach towards the
rights of the cargo owner in India as the Indian law recognises the right of cargo owners to
hold possession (lien) for the due amounts, under the charter and under the Bill of Lading, [10]
as The Hague Rules are unclear in providing the provisions to differentiate the carriers, which
makes it hard for the cargo owners to know who the actual carrier is, in situations where he
needs to claim or sue them for his goods that are lost or damaged.
4.6 allocation of burden of proof

The concept of burden of proof is to determine an answer arising between two parties as to
who needs to prove what? In regards to the cargo liability claims, the carrier is obliged to
prove himself having fulfilled his duty under the situation acquitting his liability or not.
Regarding the allocation of burden of proof, The Hague- Visby rules that has been ratified by
the English Law is subjected to considerable uncertainties as, what is to be proved is
determined by the nature of exception invoked. The first requirement of the cargo owner to
prove his claim in ascertaining his case is that the loss or damage he suffered while the cargo
was in the custody of the carrier. The period of responsibility under the Indian Carriages of
Goods by Sea Act is from the time of shipment to the time of discharge (port to port)
similarly, in The Hague- Visby rules, responsibility of the carrier is (tackle to tackle). The
cargo owner often finds it easy to shift the burden of proof to the carrier by showing a clean
Bill of Lading that was issued by the carrier at the time of shipment as a prima facie evidence
that the goods were in a good condition and thus, he discharges his initial burden by showing
that the conditions of the goods has changed when it arrived (discharged).

4.7 Deviation

Under the Indian Carriages of Goods by Sea the carrier has a right to escape liability for
reasonable deviation which is stated under article IV (4). This deviation is stated to be
effective and justified under the Common Law and any unjustifiable deviation is considered
to be a fundamental breach of contract which is regarded serious in nature. Even the slightest
unjustified deviation shall lead to permission of election for the cargo owner and the charterer
as this has been the traditional view. Also, he can either treat the breach as a repudiation or
waive the breach that it may result to restriction for the action of damage.

4.8 The Multi Modal Transportation of Goods Act, 1993

The Multi Modal Transportation of goods Act, 1993209 was enacted to regulate business of
multi modal transactions and allocate the responsibilities and obligations to the multi modal
transport operators. Till the time the goods are in the possession of the operator, he will be
held liable for such goods. Moreover, he will be also liable for delay in the delivery of the
consignment and consequential loss for causing such delay if such delay or loss occurs whilst
he is in charge of the consignment. However, the Multi modal transportation operator can
exempt his liability if he can prove that the loss, damage or delay in delivery has caused
because of him or his agents or servant’s negligence.

5. conclusion

This study has successfully identified the fact that Indian Maritime Law seems to be
developing from different angles, be it an amendment or the adoption of the Indian Carriage
of Goods by Sea Act 1925. Have a good method of identification in all legal Procedures and
knowing directly who the carrier is facilitates the flourishing of trade in each country.

A significant result was achieved by minimizing adhesion and maximizing wearer immunity.
But India still has a long way to go to meet International Standards. The Hague Rules,
enacted back in 1924, were not developed with technology in mind, and today, with so much
advanced technology and modernization, The Hague 1924 rules are not considered relevant
and modern in the practice of today's shipping industry. To meet international standards in
commerce, Indian law must take the lead in adopting international conventions and must
comply with the modernization of technology currently used in navigation. Over time, EDI
has become so widespread that international countries such as Canada, Spain and the United
States are reluctant to trade internationally with India as these rules are controversial and are
subjectively seen as obsolete by large , equal rights in India as in other countries that have
adopted international conventions. Currently, 25 countries are parties to the Rotterdam Rules,
including the United States, India's third largest trading partner 214.

However, steps have been taken across the country to improve the situation of carriers and to
strengthen legal provisions related to the Carriage of Goods by Sea Act. Indian Minister of
Shipping Nitin Gadkari said: “New off-road ports will emerge in Vadhavan near Dahan in
Maharashtra, Colachal near Kanyakumari in Tamil Nadu and Sagar Island in West Bengal
with investments of Rs 20,157 crore community only after the late 1950s when it was deemed
necessary to change the rules. Although India adopted a number of provisions the Hague-
Visby Rules of after the passage of the Carriage of Goods Act in 1925, India did not ratified
all provisions of other Conventions such as the Hamburg Rules, Rotterdam Rules and Hague
Rules. Visby expressly ratified several provisions of all q regulates its conventions. There is
no strict enforcement of these provisions in the Indian Maritime Act . Whenever a dispute
arises, the national laws of India such as the Indian Penal Code, the Indian Contract Act, the
Evidence Act, the Code of Civil Procedure and the Code of Criminal Procedure apply. etc.
Most of the international conventions and treaties are unaffected by national dominance. Law
Indian. The Hague-Visby Rules are one of the most important rules in the international
maritime scenario, which is why the characteristics of these rules attract most of the countries
in the world.

On the other hand, the Rotterdam Rules and the Hamburg Rules are well-formulated rules,
but most of the countries have ratified the rules but not fully adopted them. Thus, the fully
realized character of the Hague-Visby Rules surpasses the Rotterdam and Hamburg Rules in
many respects. Shipping is one of the most important industries in India. Thus, the different
provisions in this directive ensure a better relationship between customers and cargo owners.
These rules play an important role in exonerating cargo owners in the event of loss or damage
not caused by them. While these Terms and Conditions set out different rights for carriers,
the rights of carriers in other countries are not similar and slightly different from those in
India. The reason for this is the refusal to fully accept these terms and conditions as part of
the onboarding process. As noted above, the Hamburg Rules, adopted by England, contained
a variety of rights and immunities, as well as provisions on the allocation of the burden of
proof. These rules contain several important provisions for the benefit of carriers and cargo
owners.

On the other hand, the Rotterdam Rules are a set of newly developed rules that have been
adopted by many countries including the United States. But India has yet to ratify the
Rotterdam Rules and has also refused to establish trade security and harmonization of a
universal maritime regime. However, the ratification of the rules is not that urgent at present
as India is among the top 20 seafaring countries in the world without the ratification of these
rules, but in the future efforts should be made to ratify the rules in an emergency manner, to
raise awareness and develop the infrastructure for free and uninterrupted trade. In summary,
this work does not see many gaps in the area of carrier liability in the sea freight contract and
therefore offers further suggestions for improvement with regard to English law and other
selected jurisdictions. Therefore, the study argues that the carrier's duty and responsibility to
use the exceptions to provide sufficient rights to cargo owners that do not harm customers
recommends Indian Carriages of Goods by Sea to take a more proactive approach to the
contract of carriage of cargo by sea, thereby strengthening the principle of carrier liability in
Indian jurisdictions and courts not being restricted and constrained to interpret the law.

6. References

1. Oner, D. (2019) The relation between contract of carriage by sea and Bill of lading -
contracts and commercial law - Turkey, The Relation Between Contract Of Carriage
By Sea And Bill Of Lading - Contracts and Commercial Law - Turkey. Erdem & Erdem
Law. Available at:
https://www.mondaq.com/turkey/contracts-and-commercial-law/849028/the-relation-
between-contract-of-carriage-by-sea-and-bill-of-lading (Accessed: February 14, 2023).

2. Carrier's liability in carriages of goods by sea in India (no date) Legal Service India -
Law, Lawyers and Legal Resources. Available at:
https://www.legalserviceindia.com/legal/article-2487-carrier-s-liability-in-carriages-of-
goods-by-sea-in-india.html (Accessed: February 14, 2023).

3. Carriage of Goods (no date) Encyclopædia Britannica. Encyclopædia Britannica, inc.

Available at: https://www.britannica.com/topic/carriage-of-goods (Accessed: February
14, 2023).

4. Tarver, E. (2023) Bill of lading: Meaning, types, example, and purpose, Investopedia.
Investopedia. Available at: https://www.investopedia.com/terms/b/billoflading.asp
(Accessed: February 14, 2023).

5. Carrier's liability in carriages of goods by sea in India (no date) Legal Service India -
Law, Lawyers and Legal Resources. Available at:
https://www.legalserviceindia.com/legal/article-2487-carrier-s-liability-in-carriages-of-
goods-by-sea-in-india.html (Accessed: February 14, 2023).
6. Carriage of Goods (no date) Encyclopædia Britannica. Encyclopædia Britannica, inc.
Available at: https://www.britannica.com/topic/carriage-of-goods (Accessed: February
14, 2023).

7. ibid

8. ‘It shall not be lawful for any vessel transporting merchandise or property from or between
the ports of the United States of America and foreign ports, her owner, master, agent or
manger, to insert in any Bill of Lading or shipping document any convenant or
agreement whereby the obligations of the owner of said vessel to exercise due diligence
[to] properly equip, man, provision, and outfit said vessel and to make said vessel
seaworthy and capable of performing her intended voyage, or whereby the obligation of
the master, officers, agents, or servants to carefully handle and stow her cargo to care
for and properly deliver same, shall in any wise be lessened, weakened or avoided’.

9. Dr Zhen Jing, ‘Carriages of Goods by Sea The Hague-Visby Rules’ [2015] p.2

10. Carrier's liability in carriages of goods by sea in India (no date) Legal Service India -
Law, Lawyers and Legal Resources. Available at:
https://www.legalserviceindia.com/legal/article-2487-carrier-s-liability-in-carriages-of-
goods-by-sea-in-india.html (Accessed: February 14, 2023).