Unit 6: Contract of CarriageLH 10

• Meaning and nature of contract of carriage,

• Characteristics of common carrier,
• Difference between common and private carrier,
• Rights, duties and liabilities of common carrier,
• Carriage by land,
• Carriage by Sea (contract of Affreightment:Charter party and bill of
lading) and
• Carriage by air,
• Inco terms 2010: A brief introduction.
Meaning of Contract of Carriage
• Carriage means the act of carrying goods from one place to another. It
is a branch of business. It is the most important activity for the
management and regulation of business properly. It is the factor of
the business which helps to mobilize labour, raw materials, finished
goods, tools and machinery. Modern business is based on the system
of carriage.
• The person or a firm, who carries the goods from one place to
another, is called a carrier. The entrepreneur, who send goods from
one place to another through carrier is called consignor. Thus an
agreement between a carrier and the consignor for the purpose of
carrying goods from one place to another is called the contract of
carriage.
Cont.
• According to 602(1) of MCC, 2074, "A contract relating to
carriage shall be deemed to have been concluded it
provides for the transportation of good from one place to
another."
• A Person or a firm, who, by an expressed or implied
contract, with or without remuneration or fare, carries
goods or passengers, by one place to another by the
means of land or inland waterways is called a carrier.
According to present MCC, 2074, carriage includes only the
act of caring goods from one place to another for money
and it includes only land transport other than marine and
air transport.
Nature of Contract of Carriage
• Carriage may be a person, a firm a company
• It carry goods or passengers
• It may be internal or external
• It would be free and with fare as well
• It incorporate the bill and received as well
• Carrier carry the goods or passengers to the determined destination
or specific persons
• Carrier carry the goods or passenger through various means like air,
rope, land, water etc.
Relevant Law Regarding Carrier
• The Civil Aviation Act, 2015
• The Internal Postal (Insurance) Act, 2019
• The Necessary Service Discharging Act, 2014
• The Nepal Airlines Corporation Act, 2019
• The Railway Act, 2020
• The Shipping Act, 2027
• The Vehicles and Transportation Management Act, 2049
• Muluki Civil Code, 2074
 Importance of Law of carriage
• Carriage plays an important role in the economic development of the country. Whenever,
we buy goods we need to carry them from the place we brought the goods to the place
where we consume. Similarly, when we sell the goods, we have to carry them from the
selling place to the buying place. With the help of carriage, we can make this movement
of goods easily, without carriage, the development of business is impossible. If business is
considered as a human body, carriage should be considered as blood circulation into it. As
to make the body alive, blood circulation is indispensable, to make the business progress,
carriage is equally necessary. Some of the importance is as follows.
• To facilitate the movement of goods between place conveniently had promptly
• To regulate, manage and control business properly.
• To mobile labor, raw materials, finished goods and tools and equipment.
• To manage right and duties of carrier
• To stabilize the market price.
• To make marketing field efficient
• To help in economic development of country.
• To made international trade easier.
 Classification of Carrier
1. from the point of view of reward and fare
Non-gratuitous carrier: The carrier who carries goods or passengers for
payment is non-gratuitous carrier. This means such carrier doesn't provide
carriage service without any fare. (More important to business)
Gratuitous carrier: The carrier who carries the goods or passenger, without any
fare is called gratuitous carrier the owner of the vehicle who gives lift to his keen
and keen is a gratuitous carrier. (Not more important)
2. from the point of view of things to be carried
Carrier of goods: The carrier which carries only goods but no passenger is called
carriage of goods carrier train, trucks, cargo, ships etc are some example of
carrier of goods.
Carrier of passenger: The carrier which carries only passengers it's called carrier
of passenger. This means such carrier does not carry goods car, bus, plane, train
are the examples.
 Cont.
3. From the point of view of means or way
Carriage by land: The carriage service that is provided through land is called
carriage by land. Trucks, bus, train, cars etc are some examples.
Carriage by water: the carriers which provide service through running in the
water are called water carrier ship, boats are the example
Air carrier: The carriers, which provide service by the means of air are called air
carrier planes, helicopters are examples.
4. from the point of view of service:
Private carrier: The carrier who doesn't do the regular business of carrier but
occasionally carries others goods for money are a private carrier.
Public carrier (common carrier): The carrier who does a regular business of
carrying goods and people from one place to another without any
discrimination is public carrier.
Difference between common and private carrier,
Common Carrier Private carrier
Carrying goods of other is regular business of It is not a regular service but sometime and
common carrier. occasionally.

Until and unless carrier should not discriminate to No-one can compel private carrier and can
consignors. discriminate

For the same quantity common carrier can't It can impulse different rate or price while carrying
discriminate in rate. goods.

It should carry goods as usual route i.e the same It has the right to change the transport route
route.
Public carrier should carry only goods not It can carry the goods as well as passengers
passengers, or only passenger not goods. according to its desire.

Public carries is always non-gratuitous in nature. It can be either gratuitous on non-gratuitous in

nature.

Common carrier is always governed by carrier Act. Private carrier is always governed by MCC
 Right of Common Carrier
1. Right to receive remuneration: After providing carriage service, a common
carrier enjoys right to receive remuneration equal to the amount as mentioned in
the contract.
2. Right to service additional fare: A Common carrier has the right to receive
additional fare for the additional service offered by the carrier such as special
care of the goods one the way.
3. Right to refuse carries goods: A Common carrier has to do the regular
business of carrying goods without discrimination but in the following conditions,
common carrier has the right to refuse to carry goods.
• a. If the carrier is fully loaded.
• b. If the nature of goods is different from those which the carrier usually carries.
• c. If the goods to be carried are high risky.
• d. If the goods to be carried are not property packed.
• e. If the consignor denies to pay the charge of the carrier.
• f. If the carrier is not inform from the maternal fact of the goods.
 Cont.
4. Right of compensation: If the consignor doesn't disclose the material fact of the
goods loaded in the carrier and suffers loss, then the carrier has right to claim
compensation for such damages and loss.
5.Right of lien: If the payment is not paid by the consignor, then the carrier has right
to retain the goods until he receives his remuneration.
6. Right to take necessary step: carrying certain goods to a certain place in time is
the duty of common carrier. If the consignor does not agree to receive goods. Then
the carrier may take following steps.
• If the goods are of destroyable in nature, the courier can sell them by giving notice
to the consignor.
• If, possible goods should be stored in a near go down.
• The carriers enjoys for additional fares for store shares, reasonable care of goods
etc.
7. Right to limit liabilities: The carrier has the right to limit his liabilities by entering
into a special contract with the consignor as regards to the carrying of non-scheduled
goods. Like, it may be agreed between the parties that carrier will not responsible for
any loss or damage arising from unexpected and unavailable emergencies.
 Duties of a Common Carrier

1. To carry goods without discrimination: Unless the vehicle is fully

loaded, the carrier has the duty of carrying goods without any
discrimination. He\She has to accept the goods form all people in the
carrier.
2. To carry the goods through customary route: A common should
carry goods through usual route or customary route. He \she Show not
change his\her route getting attractive remuneration, from the people.
3. To carry goods to the concerned place and deliver them to the
concerned person within a specified time: It is the most important
duty of a common carrier to carry goods to the concerned place and
deliver those goods to the concerned person and within a specified
time. If no time is specified in the contract, then also he\she has to
deliver the goods to the concerned person within a reasonable time.
 Cont.

4. To take proper care of goods: It is the most important duty of a carrier to

take proper care of goods carried, so that they maybe safety delivered to
the consignee in time but If the goods get loss of damaged due to
unexpected and unavoidable contingencies. The carrier will not be held
liable for such loss.
5. To follow the instruction of the consignor: The consignor may give some
instructions to the carrier as regards to the delivery of goods to the
consignee. Thus, the carrier should follow the instruction of the consignor.
6. To inform the consignor about the goods to be gold in transit: If the
goods carried by the carrier are of perishable in nature and they are likely
to be perished at the transit, the carrier should communicate it to the
consignor and get his consent to sell them in transit. If it is impossible to
communicate, he can do so as well.
 Liabilities of Common Carrier
The MCC, 2074 have mentioned the liabilities of carrier as follows.
1. To carry goods to said person & place: It is the first liability of a common carrier,
whenever he receives goods for transportation, he has to carry them to the mentioned
place and deliver the goods safety to the said person.
2. To deliver the goods within a specified time: If the date of delivery is mentioned, the
carrier has to deliver the goods to the consignee within a prescribed time. Otherwise, in
a reasonable time.
3. The first carrier becomes liable: If there are two or more carriers to carry goods and
if the goods are lost or damaged in transit, the first carrier becomes liable for such loss.
4. Carrier to become liable: If due to negligence or careless of the carriers, the goods
are lost or damaged in the transit, the carrier is liable to compensate to the owner of
the goods in a way mentioned in the contract. If not, he shall compensate in any of the
following ways:
• By reimbursement of transported goods if consented by the owner.
• By paying the current market price of the goods if no consent is obtained from the owner.
• By paying reasonable price of the goods if the current market price cannot be determined.
 Cont.
5. To Pay Compensation: If goods are lost or damaged or if they do not reach their
destination in proper condition, the courier itself shall be liable for such loss. But if the
amount of goods transported is not clearly declared by the owner if the compensation
payable by the courier for any loss or damage is not clearly mentioned in the contract
the courier will not be liable for the sum more than 10000 Rs.
Conditions at which the carrier needs not to be liable to following goods:
• Gold, silver, diamond, Jewelry goods.
• Negotiable instruments (documents, certificate)
• Currency, bank notes, portal stamps.
• Petroleum products and inflammable materials.
• Meat, fish, fresh fruits and vegetables.
• Poison, insecticide, pesticides
• Handicrafts
• Goods made up of breakable glass.
• Wild & domestic animals.
• Electronic goods like TV, Radio etc.
• Goods which are not clearly declared by owner.
 Contract of Affreightment
Carriage of goods by sea refers to the act of carrying people, goods and
animals through sea routes by hiring Ship in order to transfer those
goods from one place to another. When goods are to be dispatched
through the sea routes, the consignor should enter into a contract with
the ship owner. This contract is called contract of Affreightment. Thus
like in other contract, in this contract there are also two party's
consignors and shipper. The consideration which is paid for the carriage
service is called freight. A contract of affreightment may be of two
types, namely charter party and bill of lading.
1. Charter party: A charter party is a contract of affreightment in a
written from for hiring an entire ship or a major portion for the purpose
of carrying goods from one post to another post through sea routes. The
consignor who charters the ship is called charter and ship owner is
called the carrier.
Charter party can be classified into two types.
a. Time charter : If the ship its chartered for a definite period of time, it is called time
charter. Under time charter, the shipper can use the ship for a definite period of time.
In this condition, no matter how many times of voyage. He makes within such time.
b. Voyage charter: If the ship is reserved, for a particular voyage, then it is called
voyage charter. Under voyage charter, time is ignored and the ship is reserved till the
completion of voyage from one destination to another. Both of the above charter can
be made either under demise or without demise.
Charter under demise: Under this, the charter party lies the entire ship or lease or
demise either for a particular period of time or for particular voyage . He pays the
requisite carriage to the shipping company and takes the ship in his own responsibility.
Charter without demise: under this, the charter party or charterer hires the entire or
part of a ship for a particular period of time or for particular voyage, but without
demise. Under this, the charterer cannot take the ship in his own responsibility, but
the ship will be run by the shipping company and its own responsibility.
Certain terms and condition that are necessary to be mentioned in the
contract of Charter party. They are;
• Name address and nationality of charterer.
• Name address and nationality of ship owner.
• Name and class of ship according to shipping register.
• Nationality, Weight of carrying capacity of the ship according to shipping register.
• Description about the nature of charter, time or voyage, demise or without
demise.
• Destination of places
• Liability of charter and ship owner
• Weight, quantity of goods.
• Payment procedure for the concerned party.
• Conditions of branch of contract and other compensation.
2. Bill of Lading:
• Bill of lading also refers to a contract between chartered an shipper, where, in
consideration of freight paid by charters the shipper promises to carry goods of
charger to said place through sea routes but under bill of lading, the charter
doesn't reserve a major space of the ship to keep his goods but agrees to keep
the goods with that of the other charter. Thus the contract of bill of lading is
generally made when the consignor has to dispatch small quantities of goods
through ship.
• Specially, bill of lading refers to the receipt which the shipping company goes to
the consignor, after the goods being loaded in the ship for carriage. Thus, this
receipt is the evidence of the receipt of goods by the shipping company. The Bill
of lading is made triplicate. Two copies of the bill will be given to the charterer
and one copy is retained by the shipping company. Of the two copies received
by the charter, he retains one copies received by the charter, he retains one
copy with his self for future deference and sends another copy to the consignee
to enable him to take delay of goods from the shipping company.
The bill of lading includes the following terms
and conditions.
• Name of ship, consignor, and shipper.
• Amount of freight
• Date of receiving and delivery time.
• Conditions of goods as per quantity and weight
• Special conditions if mentioned.
All the terms and conditions should follow by both parties on
behalf of shipping company, it will be signed by caption.
Difference between Charter party and Bill of lading:
Charter party Bill of loading

Charter party is a formal document from contract is created It is an evidence of receipt of goods by the shipping
between charterer and shipper for carrying goods through company; It is Issued by the shipping co to the shipper and
sea routes. refers the contract between them.

It is made when the charter has to dispatch huge quantity of It is made generally when the consignor has to dispatch
goods. small quantity of goods.

Under charter party the shipping co-carrier's goods of a Under bill of lading the shipping co-carriers goods of many
single charter at a time and ship is reserved for particular consignor at a time and shop is not subjected either voyage
time or voyage. or time charter.

It is made either demise or without demise. Bill of lading can never be made under demise.

It is not a document of title. It is a document of title.

It is not negotiable and cannot be endorsed. It is semi-negotiable and can be endorsed.

Charter party needs to be stamped with a ticket of high Bill of lading also need to be stamped but of comparatively
price. of law price.
 Document Relating to Carriage by Air
Carriage of goods by air is an act of carrying goods and people through air by means
of planes, helicopters etc. It is the fastest and most costly means of carriage. There are
some important documents relating to the carriage by air. They are.
1. Passenger ticket: Passenger ticket is a document which is regarded as the contract
between carrier and passenger. Every people traveling by plane should buy a ticket by
paying its fare. It contains the following things.
• Name and address of the airway company.
• Name and address of the Aero plane.
• Name and address of the passengers.
• Date of issue and departures.
• Company liability such as insurance of passengers.
• Reporting time and date.
2. Luggage ticket: The ticket that is issued by the carrier to a passenger with a
permission to carry goods by air is called language ticket and is regarded as a
document of contract it is made in duplicate one far the passenger and another for
the carrier the large and not-portable goods are delivered to the carriers. The ticket
acts as an evidence of receipt of goods by the carrier.
Luggage ticket has contains the following matters:
• No of baggage and weight
• Place of departure and arrival
• Ticket No.
• Date and place of luggage taken
• Particulars of delivery of goods to the receiver.
• Price of goods as stated by passengers.
• Liabilities of the carriers.
3. Air way bill: When goods are sent to the air carrier for the purpose of carriage,
the carrier issues the bill to the consigner. The bill is called Air Way bill or Air
consignment note. It acts as an evidence of receipt of goods by the carrier. The
Air way bill is made in triplicate. One copy is with the consignor, another copy is
with the carrier and the last copy with the consignee or receiver of the goods.
This document is regarded as a contract between the carrier and the consignor.
The Following particulars show be contained in the
air way bill.
• The place and date of issue of bill.
• The place and departure and arrival.
• Name and address of the consignor.
• Name and address of the carrier.
• Name and address of the consignee.
• Weight, quantity and dimension of goods.
• Apparent condition of goods.
• Agreed carrying route, period and stopping places.
4. Liability of the Air carrier:

The air carrier should be responsible to compensate

the passengers or consignor in the following
conditions:
• If the passenger get injured or die while traveling by
place.
• If the goods booked by it get lost, damaged or
perished in its custody.
• If the passengers or consignors suffers from loss
because of unnecessary delay in flight.
Inco terms 2010: A brief introduction.
 Inco terms 2010: A brief introduction.
• This rules generally referred 'Incoterm'. (International Commercial Terms) are
issued by International Chamber of Commerce. There are 11 internationally
recognized Incoterms each one of the three letter abbreviation.
• The main objective of this rules is provide a set of international rules for the
interpretation of the most commonly used trade terms in foreign trade.
• The scope of this rules is limited to matter relating to rights and obligations of
the parties to the contract of sale with respect to the delivery of goods sold.
Followings are the Rules of Incoterms;
1. EX Works (EXW) : The seller delivers when it places the goods at the disposal
of the buyer at the seller's premises.
2. Free Carrier (FCA): The seller delivers the goods to the carrier of another
person nominated by the buyer at a seller's premises.
3. Free Alongside Ship(FAS): The seller delivers when the goods are placed
alongside the vessel/container nominated by the buyer named port of shipment.
 Cont.
4. Free on Board (FOB): The seller delivers when the goods on
board the vessel/container nominated by the buyer at the
named port of shipment.
5. Cost & Freight (CFR): The seller delivers when the goods on
board the vessel/container or procure the goods already so
delivered.
6. Cost, Insurance & Freight (CIF): The seller delivers when on
board the vessel/container or procure the goods already so
delivered. It means the risk and loos of the damage goods
passed to the buyer but the seller should contract for insurance
to cover goods during carriage.
7. Carriage Paid To (CPT): Seller delivers the goods to the buyer
at the agreed place and seller can make a separate contract for
carriage payment as per the distance of agreed place.
 Cont.
8. Carriage & insurance Paid To (CIP): Seller delivers the goods to the buyer at
the agreed place and seller can make a separate contract for carriage payment
as per the distance of agreed place. But the seller should contract for insurance
to cover goods during carriage.
9. Delivered at Terminal (DAT): Seller delivers the goods to the buyer at the
agreed terminal. Here terminal includes any place, container, road or air or
railway terminal.
10. Delivered at Place (DAP): Seller delivers when the goods are placed at the
disposal of the buyer destination, the seller bears all risk when the goods is not
get at destination.
11. Delivered Duty Paid (DDP): Seller delivers when the goods are placed at the
disposal of the buyer destination, the seller bears all risk during the goods is not
get the destination.