TOPIC 1: UN CONVENTION ON CONTRACTS
FOR INTERNATIONAL SALE OF GOODS (CISG
1980)
Applicability of CISG: Place of business
(Art.1)
Art 1(a) - “This Convention applies to
contracts of sale of goods between parties
whose places of business are in different
States:
when the States are Contracting States; or”
ICC Court of Arbitration - PARIS
- ICA is an institution for the resolution of
international commercial disputes.
- ICA is part of the ICC.
- Court comprises more than 100 members
from about 90 countries.
- ICC HQ is in Paris, France.
- Court was founded in 1923 under
leadership of the ICC's first president
Étienne Clémentel, a former French Minister
of Finance.
- Members of the ICC Court are appointed
by the ICC World Council on the proposal of
the local ICC 'national committee' or group
or of the President of the Court in the seller's country was of no relevance in
jurisdictions where there is no this respect.
national committee or group, with
- In view of the fundamental character of
alternate members appointed by the
the breach by the seller the buyer was
World Council upon proposal of the
entitled to avoid the contract - Art 49(1)
President of the Court.
- The seller was not entitled to remedy by
supplying substitute goods in accordance
SCAFFOLD FITTINGS CASE with Art 48(1) since sole arbitrator opined
that the seller's right to cure after the date
F:- An Austrian buyer and a Chinese
for delivery is dependent on the consent of
seller entered into a contract for the
the buyer.
purchase of scaffold fittings. After
delivery of the goods the buyer Art. 1(1)(a)
discovered serious defects and
COMPUTER PRODUCTS CASE
declared the contract avoided. The
buyer claimed damages suffered F:- A Spanish, an Argentine and a U.S. co
because it had been able to resell only concluded a contract with a British co for
part of the goods at a lower price. the sale of computer products to be
distributed throughout Latin America. A few
H:- The sole arbitrator held that the
months later, a new company was
contract was governed by CISG, since
established as a result of the merger of the
the parties had their places of
British company and a Canadian one, the
business in two different Contracting
buyers were notified that the contract
States - Art. 1(1)(a)
would be terminated in 90 days.
-The fact that the buyer had
- Alleging breach of the original agreement,
conducted part of the negotiations
the buyers filed a suit against the sellers.
through its liaison office situated in
H:- Court denied that CISG was applicable,
basing its reasoning on several arguments:
1. Court stated that the contract had been
concluded between parties not all of whom
were situated in Contracting States - Art
1(1)(a)
- Furthermore, Court recalled that the US
had ratified CISG with the declaration that it
would not be bound by its Art. 1(1)(b) (Art.
95 CISG); consequently, the Convention is
applicable solely when all the parties to the
contract are from Contracting States.
- Court could not find any precedent
allowing the application of CISG when a
subsequent party to the contract is situated
in a Contracting State.
Art.1(1)(b)
- when the rules of private international law
lead to the application of the law of a
Contracting State.
PRIME START LTD v MAHER FOREST
PRODUCTS LTD
F:- A British Virgin Islands corporation (P)
and US corporation (D) entered into a
contract for the sale of wooden contract were all from Contracting States.
products to be resold to P’s client in
MASONVILLE PLASTICS (B.C) LTD v KURTZ
Russia.
GMBH
- P also concluded a contract with
F:- A British Columbian manufacturer
another US corporation (Co-D) which
entered into a contract with an Austrian
would provide services related to
subsidiary of a German seller for the sale of
quality control of the goods.
a pre-expander and a block mould to be
- P brought an action against both US financed by a lease contract.
corporations alleging non-conformity
- After installation of the equipment,
of goods and failure to inspect
although the buyer had received assurances
according to parties’ agreement.
that the equipment would produce EPS
H:- As to the applicable law, the Court products compatible with Canadian testing
rejected the P’s argument that the requirements, the buyer found several flaws
CISG applied to the merits of the in the blocks produced by means of the
dispute. Not only were the conditions seller’s equipment.
set forth by Art. 1(1)(a) CISG not
H:- As to the applicable law, the Court
satisfied, since neither the British
rejected the seller’s argument that the
Virgin Islands nor the United Kingdom
buyer had implicitly agreed to the
are Contracting States, but also
application of German law. Court opined
application of the CISG by virtue of
that the mere fact that the seller’s
international private law rules had to
confirmation of order stated that delivery
be excluded, since the USA made a
was to be carried out according to “General
reservation to Art. 1(1)(b) pursuant to
Terms of Delivery of the [seller]” did not
Art. 95.
mean that a choice-of-law clause in favor of
- As a result, the Convention could German law had been agreed upon by the
have applied only if the parties to the buyer.
- Instead, the law having the closest
relationship with the contract was the law
of Ontario, Toronto being the place where
the equipment had been installed and put
into operation.
- British (UK), Germany and Canada –
(application of Art 1 (1) (b).
Part II: Formation of the Contract (Art 14 to
24)
Offer
Art 14(1) - Criteria of an offer:
“A proposal for concluding a contract
addressed to one or more specific persons
constitutes an offer if it is sufficiently
definite and indicates the intention of the
Offeror to be bound in case of acceptance.”
Art 15(1) - When offer becomes effective,
prior withdrawal:
“It becomes effective when it reaches the
offeree.”
Art 16(1) - Revocability of Offer
“Until a contract is concluded, it may be
revoked if the revocation reaches the
offeree before he has dispatched an
acceptance.”
Art 17(2) - Termination of Offer:
Rejection of Offer Followed by
Acceptance.
“An offer (even if it is irrevocable) is
terminated when a rejection reaches
the Offeror.”
Acceptance
Art 18 - Criteria, time & manner for
assent:
“A statement or other conduct of the
offeree indicating assent to an offer is
an acceptance.”
It “becomes effective at the moment
it reaches the Offeror. An acceptance
is not effective if it does not reach the
Offeror within the time fixed, or
within a reasonable time.”
Art 18(3) - If by virtue of the offer, the
offeree may indicate assent by
performing an act, the acceptance is
effective at the moment the act is
performed.
Art 18(2) - an acceptance is not effective ‘if
the indication of assent does not reach the
Offeror within the time he had fixed….’
The offeror’s statement fixing the time for
acceptance may be ambiguous if it states a
period of time (e.g., 15 days) for acceptance
and does not specify when the period starts
to run or does not deal with the effect of
holidays.
Art 20 - Interpretation of Offeror’s Time
Limits for Acceptance
Art 20(1) - A period of time for acceptance
fixed by the offeror in a telegram or a letter
begins to run from the moment the
telegram is handed in for dispatch or from
the date shown on the letter or, if no such
date is shown, from the date shown on the
envelope.
Art 20(2) - A late acceptance is nevertheless
effective as an acceptance if without delay
the offeror orally informs the offeree that
he considers his offer as having lapsed or
dispatches a notice to that effect.
Art 22 - Withdrawal of Acceptance
An acceptance may be withdrawn if the
withdrawal reaches the Offeror before or at
the same time the acceptance would have
been effective.
Art 19 - Acceptance with modifications
A reply to an offer which purports to be an
acceptance but contains additions,
limitations or other modifications is a
rejection of the offer and constitutes a
counter-offer.
Illustration
- Buyer sent to seller a purchase order for
certain production machinery. The back of
the form stated that seller would be
responsible for all damages incl
consequential damages which resulting
from defects in the machinery.
- In response, seller delivered to buyer its
sales order (or acknowledgement) form that
purported to accept buyer’s offer.
- On the back of the form, it stated that
seller agreed to repair/replace any
machinery that proved to be defective, but
disclaimed liability for shutdown losses,
damage to materials, loss of good will
or any other consequential damages.
- The machinery was then delivered to
buyer and shortly thereafter defects
caused a shutdown of buyer’s
assembly plant causing serious
consequential damages. Will
consequential damages be included in
buyer’s measure of damages?
- However, a reply to an offer which
purports to be an acceptance but
contains additional or different terms
which do not materially alter the
terms of the offer constitutes an
acceptance, unless the offeror,
without undue delay, objects orally to
the discrepancy or dispatches a notice
to that effect. If he does not so object,
the terms of the contract are the
terms of the offer with the
modifications contained in the
acceptance.
- Additional/different terms relating,
among other things, to the price,
payment, quality and quantity of the
goods, place and time of delivery,
extent of one party’s liability to the
other or the settlement of disputes are
considered to alter the terms of the offer
materially.
Art 24 - When communication ‘dispatches’
& ‘reaches’ the addressee
An offer, declaration of acceptance or any
other indication of intention “reaches” the
addressee:
= when it is made orally to him or
= delivered by any other means to him
personally, to his place of business or
mailing address or
= if he does not have a place of business or
mailing address, to his habitual residence.
= no provision directly addresses when a
communication is “dispatched.”
Art 30 - Obligation of Seller
General Obligation: Seller must deliver the
goods, hand over any docs relating to them
& transfer the property in the goods, as
required by the contract and this
Convention.
Art 31 - Place of Delivery
- If the contract of sale involves carriage of
the goods—in handing the goods over to the
first carrier for transmission to the buyer.
- Seller has duly performed its duty of
delivery when the goods are handed over to
the first carrier.
- If several subsequent carriers are involved,
handing over to the first carrier constitutes
delivery.
Art 33 - Time of Delivery
The seller must deliver the goods:
(a) if a date is fixed by or determinable from
the contract, on that date;
(b) if a period of time is fixed by or
determinable from the contract, at any time
within that period unless circumstances
indicate that the buyer is to choose a date;
or
(c) in any other case, within a reasonable
time after the conclusion of the contract
Art 34 - Handing over of Docs
- If the seller is bound to hand over docs
relating to the goods, he must hand them
over at the time and place and in the
form required by the contract.
- If the seller has handed over docs
before that time, he may, up to that
time, cure any lack of conformity in
the docs, if the exercise of this right
does not cause the buyer
unreasonable inconvenience or
unreasonable expense.
- However, the buyer retains any right
to claim damages as provided for in
this Convention.
Art 35 - Conformity of the Goods
- Seller must deliver goods which are
of the quantity, quality & description
required by the contract and which
are contained or packaged in the
manner required by the contract.
Art 35(2) - Except where the parties
have agreed otherwise, the goods do
not conform with the contract unless
they:
(a) are fit for the purposes for which
goods of the same description would
ordinarily be used
(b) are fit for any particular purpose
expressly/impliedly made known to the
seller at the time of the conclusion of the
contract, except where the circumstances
show that the buyer did not rely, or that it
was unreasonable for him to rely, on the
seller’s skill and judgement
(c) possess the qualities of goods which the
seller has held out to the buyer as a sample
or model
(d) are contained or packaged in the
manner usual for such goods or, where
there is no such manner, in a manner
adequate to preserve and protect the
goods.
Art 35(3) - Seller is not liable under subpara
(a) to (d) of the preceding para for any lack
of conformity of the goods if, at the time of
the conclusion of the contract, the buyer
knew or could not have been unaware of
such lack of conformity.
Art 45 - Buyer’s Remedies
If the seller fails to perform any of his
obligations under the Contract or this
Convention, the buyer may:
(a) exercise the rights provided in Art 46 to
52; (Requiring performance; Avoidance;
reduction of price)
(b) claim damages as provided in Art 74 to
77.
Art 45(2) - Buyer is not deprived of any right
he may have to claim damages by exercising
his right to other remedies.
Art 53 - Obligation of Buyer
- Buyer must pay the price for the goods and
take delivery of them as required by the
contract and this Convention.
Two main obligation of the Buyer:
I. Pay the price for the goods
II. Take delivery of the goods
Payment of the Price
- An international sale contract normally
specifies not only the precise amount to be
paid, but also the exact time and place of
payment.
- In a letter of credit transaction, buyer must
make payment upon the presentation of
documents demonstrating that conforming
goods have been shipped.
- If the contract is silent as to the
place of payment, Art 57(1) of the
default rule of CISG is that payment is
to be made at the seller’s place of
business.
Art 61 - Seller’s Remedies
If the buyer fails to perform any of his
obligations under the Contract or this
Convention, the seller may:
(a) Require SP of buyer - Art 62
(b) Avoidance - Art 64
(c) Damages
TOPIC 2: REGISTRATION OF SHIPS
Art 2&4 UNCROS - every ship must be
registered in a particular National
legislation.
- There are the closed and open
registers that exist all around the
world, based on the level of state
protection and Regulation.
- There must be a “genuine link”
between the ship and the State in
which it is registered.
- One of the major reasons for the
registration of ships is for the determination
of admiralty jurisdiction.
- A fundamental principle of international
maritime law: jurisdiction over a vessel on
the high seas resides exclusively with the
state to which the vessels belong.
- All vessels using the high seas must
possess a national character.
- Possessing a national character is only
made possible by reason of registration.
Flags of Convenience
- refers to registering a ship in a sovereign
state different from that of the ship's
owners.
- Ships registered under flags of
convenience can often reduce operating
costs or avoid the regulations of the owner's
country. To do so, a vessel owner will find a
nation with an open registry, or a nation
that allows registration of vessels owned by
foreign entities.
- A ship operates under the laws of its flag
state, so vessel owners often register in
other nations to take advantages of reduced
regulation, lower administrative fees, and
greater numbers of friendly ports.
Ships
S.2 MSO on ‘Vessel’ - any ship or boat or
any other description of “vessel” used in
navigation.
S.2 MSO on ‘Ship’ - includes every
description of “vessel” used in navigation
not propelled by oars.
What is a Vessel?
STEEDMAN v SCOFFIELD
F:- P was riding a jet ski in the vicinity of
Brighton Pier when he was involved in a
collision with a speed boat. The collision was
caused by the negligence of the 1st D while
acting as servant/agent of the 2nd D.
- D contended that the law states that “no
action shall be maintainable to enforce any
claim against a vessel or her owners in
respect or loss to another vessel or damages
for personal injuries suffered by any person
on board her caused by the fault of the
former vessel….”
I: whether a jet ski considered a vessel
for the purpose of navigation?
H: No.
THE GAS FLOAT WHITTON
H: A boat-shaped gas float, moored in
tidal waters to give light, was held not
to be a ship for the purpose of
salvage.
Lord Hersell: “It was not constructed
for the purpose of being navigated. It
was in truth, a lighted buoy or beacon.
The suggestion that the gas stored in
the float can be regarded as cargo
carried by it is more ingenious than
sound.”
Registration of Ships in Malaysia
- 2 types of vessels registration in
Malaysia:
1. Traditional registration (TSR)
2. International registration (MISR)
- The ship registry is administered by
the Marine Department of Malaysia
by 5 ports of registry:
I. Port Klang
II. Pulau Pinang
III. Kota Kinabalu
IV. Kuching
V. Labuan
1. The TSR
PART IIA OF MSO - Ownership of a ship
registered on the TSR is restricted to:
(a) Malaysian citizen
(b) Malaysian-incorporated corporations
where:
(i) The principal office of the corporation is
in Malaysia
(ii) The management of the corporation is
carried out mainly in Malaysia
(iii) The majority (currently 51%) of directors
are Malaysian citizens and the majority of
the shareholding of the corporation
(including voting shares) are held by
Malaysians free from any trust or obligation
in favour of non-Malaysians.
2. The MISR
-Seeks to attract individuals & foreign
shipping companies to register ships
through Labuan without the need to comply
with the Malaysian majority shareholding
requirement. Ships registered under MISR
will carry a Malaysian flag and are
considered as Malaysian ships.
Part IIC of the MSO - Specific requirements
for registering a ship or vessel under the
MISR.
What is a Malaysian ship?
- S.2(a) has the meaning given to it in Part
IIA (registry)
S.11: The qualification of a Malaysian ship:
- Malaysian citizen
- Corporations which satisfy following
requirements:
- Incorporated in Malaysia
- Principal Office in Malaysia
- Management mainly carried out in
Malaysia
- Majority share of the ship
- Any conditions set by the Minister
S.59(2): Only ship registered in Malaysia is
entitled to fly Malaysian national ensign.
- No other ship other than a
Malaysian ship may engage in
domestic shipping & a person not
qualified to own a Malaysia ship as
provided in S.11 cannot charter or
otherwise engage any Malaysia ship
for domestic shipping except under
and in accordance with such
conditions as the Minister may direct
or prescribe.
S.65KA: Liability on contravening the
prohibition on domestic shipping.
S.61&65: Guilty for hoisting Malaysian
flag when not a registered Malaysian
ship.
S.62: Concealing ship to be of
Malaysian registration is guilty of an
offence.
S.58A: Terminable certificate of
registry for small ships.
S.12: Obligations to register the ship
S.12(3): Consequences of not
registering ship
S.12(4): Not recognized as a
Malaysian ship
Effect of Registration
THE BINETA
H:- Registration of ships has dual effect
- It gives an entitlement to all the privileges,
but an owner cannot, by failing to register,
evade duties cast on such vessels.
- Apart from the public matters, registration
is also important as proof of title.
- The ship was sold by the seller to buyer
who did not pay the purchase price even
though he registered him as the new owner.
The seller managed to sell the vessel to a 3P
who successfully sought a court declaration
that he was the rightful owner.
- 2-fold of ship registration:
1. Public Law
Deals with administrative and regulatory
matters
Reasons for registration under Public law:
- Granting of nationality and the right to fly
the national flag.
- Right for naval and political protection
- Right of the flag state to utilizes the ship’s
services in war situations
2. Private Law
Specifically touches on proprietary interests.
Functions:
- Providing prima facie evidence of the title
and ownership
- Protecting the title and the ownership
rights
- Preservation of priorities between
individuals holding security interests over
the ship, such as mortgages.
Formalities for Registering the Ship
S.16 – Application for the registration of
Malaysian ship
S.17 – Survey and measurement of ship
S.18 – Marking of ships
S.19 – Rules as to name of Malaysian ships
S.20 – Entry of particulars in Register Book
S.21 – Evidence on first registry
S.22 – Certificate of registry
S.23 – Documents to be retained by
Registrar
S.24 – Port of registry
Sale of Ships
A ship is a chattel and it is also
considered as part of goods.
S.4 SOGA - A contract of sale of goods
is a contract whereby the seller
transfers or agrees to transfer the
property in goods to the buyer for a
price. There may be a contract of sale
between one part-owner and
another.
2nd Hand Ship Procedure
-Formation of contract:
1. Negotiation Stage
When deposit to be paid – 10% in
security
Fundamental term = condition
Breach = forfeiture of deposit
THE RANGER
2. Inspection Stage
- Made by Buyer
- Inspection when vessel is dry docked
Classification Society
- Functions as “Puspakom” of the ships.
- Produces license of fitness.
- Normally appointed by a Seller.
MORNING WATCH
F:- A ship known as the ‘Morning Watch’
had been issued a class certificate by D,
Lloyds Register of Shipping, despite the fact
that it had a variety of defects which
rendered it unseaworthy.
- The ship was purchased by P in reliance on
the class certificate. Upon discovering the
problems with the vessel, Buyer sought to
recover his losses from Lloyd’s Register,
arguing that it was foreseeable and
reasonable that he had relied on the class
certificate.
I: Whether Lloyd’s Register owed any duty
of care to a subsequent purchaser of a ship
for which it issued a certificate, to make
sure that the certificate reflected the true
state of the ship.
H: Court determined that no r/s of proximity
sufficient to form the basis of a duty of care
in negligence existed between Lloyd’s and a
3P purchaser such as C.
- Court appeared to be heavily influenced by
consideration of the public purpose of the
Lloyd’s register, noting that “the primary
purpose of the classification system is…to
enhance the safety of life and property at
sea, rather than to protect the economic
interests of those involved…in shipping”.
- To impose liability in negligence on Lloyd’s
would undermine their ability to perform
this important function.
NICHALAUS
- Cannot have 2 conflicting views
3. Conclusion Stage
- Passing of risk when property is passed.
SEATH & CO v MOORE
H: The risk of loss might pass before delivery,
but the ownership would not pass until
delivery was made.
Shipbuilding Contracts
- Parties should aim to reach
agreement on each of the main
commercial issues before formal
contractual documentation is
prepared (possibly by the Buyer and
Builder entering into a non-binding
form of letter of intent).
- Standard Form are AWES and SAJ
SAJ = Shipbuilders’ Association of
Japan
AWES = Association of European
Shipbuilders and Ship Repairers
Specification
- Address spares and equipment to be
provided with the ship.
- In addition to technical issues, other
matters that are likely to affect the
specification are as follows:
I. intended use of the ship (i.e.
commercial or non-commercial)
II. trading patterns.
III. classification required and
Classification Society appointed.
IV. choice of flag and flag state requirements
Contract Price
- most commercial arrangements the price
agreed will be fixed & the Builder will bear
the risk of any increased costs of
construction.
- Builder may seek provision for the price to
be varied in certain circumstances, which
might include:
Changes to take account of variation in the
cost of core construction materials.
Changes to take account of variations to
exchange rates. This may particularly be the
case for European or Far Eastern yards
which quote prices in US Dollars but whose
expenses are likely to be incurred in local
currency.
NORTH SHIPPING CO LTD v HYUNDAI
CONSTRUCTION & CO LTD & ANOR
F:- A letter of guarantee was jointly and
severally provided by three Greek
individuals to the Korean shipbuilders to
guarantee payment by a Liberian
ship-owner for the construction of a ship.
- The letter stated that the guarantors
would “irrevocably guarantee the payment
in accordance with the terms of the
shipbuilding contract all sums due or
become due by the ship-owner to the
shipyard.
- Under the terms of the shipbuilding
contract, the shipbuilders could cancel the
contract, retain money already paid and to
claim for damages in the event of a default
in the payment of the second installment.
- There was such a default & the
shipbuilders cancelled the contract in
accordance with the shipbuilding contract.
- On appeal to the HOL, the guarantors
contended that the effect of the
cancellation of the contract by the
shipbuilders destroyed their rights to
recover under the second installment
payment and replaced it with a remedy in
damages.
- HOL was not persuaded and held that the
notice of cancellation of the contract by the
shipbuilders did not affect the ship-owner’s
liability for payment of the second
installment as it was a liability arising
before the rescission.
- Hence, the guarantors remained
liable to pay the second installment
under the guarantee for the
ship-owners’ default in payment that
installment.
Payment
- In most cases the first installment of
the purchase price will be payable
before construction starts.
- Subsequent installments will then
become due following completion of
particular stages of construction with
a final installment due on delivery.
- Shipbuilding contract will, almost
without exception, include a
liquidated damages provision setting
out the agreed damages payable to
the Buyer as a result of any delay in
delivery of the ship or as a result of its
failure to comply with certain aspects
of the specification.
- The inclusion of such a clause is
generally to be recommended and
has advantages for both parties as it means
that:
- Buyer will not be required to prove its loss
in order to claim the liquidated damages
referred to; and
- the Builder will not be liable for unlimited
losses which it will not be able to quantify or
insure against.
Risk & Title
Title to the completed ship should obviously
pass to Buyer upon completion and
payment of the delivery installment.
RE BLYTH SHIPBUILDING & DRY DOCKS CO
LTD
Bearing in mind the hybrid nature of a
shipbuilding contract, even if the ship is
uncompleted, the property in it (but not the
materials which have not been appropriated
to her) may, in some circumstances, pass to
the buyer, if the parties have clearly
stipulated it in the contract.
Ship’s Class
- A Classification Society acceptable to the
Buyer should be utilised and the exact class
notation required should be clearly set out
as part of the specification.
- Builder normally covers the costs of the
Classification Society during construction.
Remedies of Builder
If the buyer cannot fulfil the payment, the
builder may:
- exercise his possessory lien
- resell as a result, exercising his lien
- exercise a common law right of stoppage
in transit
- sue for the price
Refusal to accept delivery will entitle the
shipbuilders to claim for the usual damages
& retention of all the progress payments
and deposit under the shipbuilding contract.
THE DIANA PROSPERITY
F:- A Japanese tanker company planned to
build 50 tankers of 80,000 tons each, to be
delivered from 1975, & to obtain financing
for the construction, it granted time charter
for the first vessel to the D Co. The vessel
was sub-chartered to the P Co.
- The relevant charter contained the
following clause: “. . . to be built by
Osaka Shipbuilding Co. Ltd. and
known as Hull no. 354 until named
and shall have a deadweight of about
87,600 tons.”
- The vessel was actually constructed
in another yard at Oshima and not in
Osaka as the shipbuilders could not
handle vessels above 45,000 tonnes.
The Oshima yard was 50% owned by
the Osaka shipbuilders.
- The vessel Diana Prosperity was due
to be delivered on Apr. 1, 1976, but
the P Co refused to accept delivery on
the ground that the vessel they had
chartered had been built by a
different co.
H: Mocatta J decided that the plaintiff
company and the tanker owners were
not entitled to refuse delivery.
Lord Denning: “… the description
"built by the Osaka CO. Hull No. 354"
could not be regarded as a strict
condition precedent which was to be
exactly fulfilled and it was sufficient
that the vessel to be delivered would be in
substance the vessel described in the
charters.”
COA upheld the decision.
Remedies of Buyer
1. Seek SP (S.57 SOGA)
BEHNKE v BEDE SHIPPING CO, LTD
F:- It was a sale of a very old ship, but
refitted with new boilers and an engine to
comply with German regulations. The sale
was confirmed with a telegraphic
acceptance by the sellers’ brokers. The
sellers tried to sell the vessel to other
interested parties, but their revocation
came after acceptance. The seller refused to
provide instructions regarding the payment
of deposit and repudiated the contract with
the buyer.
- German buyers brought an action against
the sellers, seeking a court declaration that
there was a binding contract & a Court
order for SP of the contract.
H:- The contract was enforceable and Court
ordered a SP.
2. Sue for Non-Delivery - A BOL that the shipping carrier has
to sign off on saying that when the
TOPIC 3: CARRIAGE OF GOODS BY SEA
packages were loaded they were in
Bill of Lading - A legal doc b/w the shipper of good condition.
goods & the carrier detailing the type,
- If the packages are damaged or the
quantity and destination of the goods being
cargo is marred in some way they will
carried.
need issue a Foul BOL
- Serves as a receipt of shipment when the
III. Ocean BOL
goods are delivered at the predetermined
destination. - allows the shipper to transport the
cargo overseas, nationally or
Characteristics:
internationally.
I. Receipt
IV. Through BOL
II. Evidence of contract of carriage
- Allows for the shipping carrier to
III. DOT pass the cargo through several
different modes of transportation
Types of Bill of Lading
and/or several different distribution
I. Straight BOL centers.
- Typically used when shipping to a - This BOL needs to include an Inland
customer BOL and/or an Ocean BOL depending
- For shipping items that have already been on its final destination.
paid for V. Combined Transport BOL
II. Clean BOL
- Involves a minimum of two different
modes of transport, land or ocean.
- The modes of transportation can be
anything from freight boat to air.
VI. Claused BOL
- Issued if cargo is damaged/ there are
missing quantities
Is BOL a negotiable instrument?
-It possesses some of the characteristics of
negotiable instrument.
- It is a DOT & it can be transferred by
endorsement & delivery.
- But it is not a true negotiable instrument
because:
1. It is not included in the definition of the
term negotiable instrument as given in the
Negotiable Instruments Act.
2. The transferee of a BOL gets only the
rights of the transferor of the instrument. If
the title of the transferor is defective, the
transferee gets a defective title.
In the case of a negotiable instrument a
BFPV without notice of defect, becomes a
holder in due course and gets a good title in
cases where the title of the transferor is
defective.
Malaysian Contract of Carriage of Goods by
Sea Act 1950
Definition & Characteristics of COGSA
- A contract of carriage of goods by sea is a
contract under which the carrier, against
payment of freight, undertakes to carry by
sea the goods contracted for shipment by
the shipper from one port to another.
The parties to the contract
Charter Party - Ship-owner, Charterer
BOL - Carrier, Shipper
Responsibilities of Carrier
1. To provide a ship & make it seaworthy.
Art 3(1)HR - The carrier shall, before and at
the beginning of the voyage, exercise due
diligence to make the ship seaworthy,
properly man, equip and supply the ship and
to make the holds, refrigerating and cool
chambers and all other parts of the ship in
which goods are carried, fit and safe for
their reception, carriage and preservation.
2. Responsibility to cargo
Art 3(2)HR - The carrier shall properly
and carefully load, handle, stow, carry,
keep, care for and discharge the
goods carried.
3. Without unreasonable deviation
The carrier shall carry the goods to
the port of discharge on the agreed or
customary or geographically direct
route.
Any deviation in saving or attempting
to save life/property at sea or any
reasonable deviation shall not be
deemed to be an act deviating from
the provisions of the preceding
paragraph.
4. To reasonable dispatch
Delay in delivery occurs when the
goods have not been delivered at the
designated port of discharge within
the time expressly agreed upon.
5. Liability to compensate damage
During the period the carrier is in
charge of the goods, the carrier shall
be liable for the loss of or damage to
the goods, except as otherwise
provided for in this Section.
- Where loss/damage/delay in delivery has
occurred from causes from which the
carrier/his servant/agent is not entitled to
discharge from liability, together with
another cause, the carrier shall be liable
only to the extent that the
loss,damage/delay in delivery is attributable
to the causes from which the carrier is not
entitled to dicharge from liability
- However, the carrier shall bear the
burden of proof with respect to the
loss,damage/delay in delivery resulting from
the other cause.
Basic Rights of Carrier
1. The right of claims for freight, dead
freight, demurrage & other charges.
- Advance freight/Freight prepaid
- Freight to collect/Freight payable at
destination
2. Lien on cargo
If the freight, contribution in general
average, demurrage to be paid to the carrier
and other necessary charges paid by the
carrier on behalf of the owner of the goods
as well as other charges to be paid to the
carrier have not been paid in full, nor has
appropriate security been given, the carrier
may have a lien, to a reasonable extent, on
the goods.
3. Immunities
Art 4(2) HR - The carrier shall not be liable
for the loss of or damage to the goods
occurred during the period of carrier’s
responsibility arising or resulting from any of
the following causes:
1. Fault of the Master, crew members, pilot
or servant of the carrier in the
navigation/management of the ship.
2. Fire, unless caused by the actual fault of
the carrier.
3. Force majeure and perils, dangers and
accidents of the sea or other navigable
waters.
4. War or armed conflict.
5. Act of the government or competent
authorities, quarantine restrictions or
seizure under legal process
6. Strikes, stoppages or restraint of labour
7. Saving or attempting to save life or
property at sea
8. Act of the shipper, owner of the
goods or their agents
9. Nature or inherent vice of the
goods
10. Inadequacy of packing or
insufficiency or illegibility of marks
11. Latent defect of the ship not
discoverable by due diligence
12. Any other causes arising without
the fault of the carrier/his
servant/agent.
Basic Responsibilities of Shipper
1. Obligation to provide the agreed
and properly packaged goods.
- Shipper shall have the goods
properly packed & shall guarantee the
accuracy of the description, mark,
number of packages or pieces, weight
or quantity of the goods at the time of
shipment and Shall indemnity the
carrier against any loss resulting from
inadequacy of packing or inaccuracies in the
above mentioned info.
2. Obligation to export goods in time for the
formalities required.
- Shipper shall be liable for any damage to
the interest of the carrier resulting from the
inadequacy or inaccuracy or delay in
delivery of such docs.
3. The obligation to pay the freight and
other charges
- The shipper shall pay the freight to the
carrier as agreed.
- Shipper & Carrier may reach an agreement
that the freight shall be paid by the
consignee. However, such an agreement
shall be noted in the transport docs.
Cancellation of the Contract of Carriage of
Goods by Sea
1. Either the carrier or the shipper may
request the cancellation of the contract and
neither shall be liable to the other if, due to
force majeure or other causes not
attributable to the fault of the carrier or the
shipper, the contract could not be
performed prior to the ship's sailing from its
port of loading.
2. If the freight has already been paid, it
shall be refunded to the shipper & if the
goods have already been loaded on board,
the loading/discharge expenses shall be
borne by the shipper.
3. If BOL has been already issued it shall be
returned by shipper to carrier.
4. If due to force majeure/any other cause
not attributable to the fault of carrier or
shipper the ship could not discharge its
goods at the port of destination as provided
for in the contract of carriage, unless the
contract provides otherwise, the Master
shall be entitled to discharge the goods at
the safe port/place near the port of
destination and the contract of carriage
shall be deemed to have been fulfilled.
5. In deciding the discharge of the goods the
Master shall inform the shipper or the
consignee into consideration.