Carriage of Goods Sea Act 1991
Carriage of Goods Sea Act 1991 determined the guidelines regarding transmission of good by sea. It gives the rules that govern the shipment of goods on international platform. Amended Hague’s rule, given in Section 7 and Convention on Hamburg’s Rule given in section 12 of the Act also provide some specification on the international shipment of goods. Part 1 of the report shall evaluate the liabilities of carrier. Part 2 of the report shall evaluate the contractual existence between Hochi and William according to the guidelines given in the Contracts for Sale of International goods. Part 2 shall also analyse the concept of Incoterm in the given case.
- What the bill of lading stated?
- Does living animals and explosive good could shipped as cargo?
- Is the carrier liable for the losses? Is there the existence of due diligence on the part of carrier?
- Is there any liability arise for each type of goods or delay of goods?
According to Section 7, Article 1 (Amended Hague’s Rule) of Carriage of Goods by Sea Act, 1991, the bill of lading contains the ‘contract of carriage’ that mention the terms and specification of the goods carried by the ship. The bill of lading needs to be signed by the carrier or his agent to acknowledge the receipt of goods that stated the condition of the goods. Bill of lading consists the information related to the consignor, consignee, carrier, and the carried goods. (Schollenberger, 2020).
Hines Exports Pty Ltd. v Mediterranean Shipping Co SA stated that the bill of lading constructs the evidence of being the existence of contract.
According to Article 1(c) of amended Hague’s Rule, goods include merchandise, wares, and every kind of articles except the live animals and cargo that has to be carried by the deck as mentioned in the contract. The Article 4(6) states that in case where the carrier does not have any knowledge about the nature of the flammable, explosive, or dangerous good, they might be landed before the discharge of goods. In case, these goods has been shipped, they may be landed in the same manner and excluding any liability on carrier’s part (Mo, 2015).
As per the amended Hague’s Rule, a carrier has obligation for risk appearing from the carriage of goods. The carrier also has the duty to deliver the goods at the state as mentioned in bill of lading.
Article (3)(1) states the general obligation of carrier on the part of due diligence and includes the following responsibilities:
- to maintain the ship and make it seaworthy.
- to equip, staff, and supply the shipment in appropriate way.
- to make fit the parts of the ship including the refrigerating and cool chambers, hold, and other relevant parts(Mo, 2015).
The carrier is not liable if the loss or damage has not caused by lack of due diligence on carrier’s part (Kasi, 2021).
Article 4 of the amended Hague’s rule stated the following exceptions where the carrier is not responsible for any fault:
- any act, default or negligence occurred due to the preparation of the ship or navigation.
- fire that does not caused due to carrier’s fault.
- dangers, perils, and accidents of sea or other navigable waters.
- act of God
- act of war
- act of public enemies
- restraint od government or people or seized by any legal norms or rule.
Article 4A established the rule where the carrier is not responsible for delay if the delay is excusable (Kasi, 2021).
Leval & Company Inc. v. Colonial Steamships Ltd., [1961] S.C.R. 221, concluded that the carrier shall not held liable if the damages happened due to perils, or accident of sea.
The bills of lading established the contractual relationship between the Tradewinds and Firebrand Pty Ltd. They both has to perform their part whereas, Firebrand has not disclosed about the explosive cargo to the carrier.
The shipped goods included the explosive goods and live animals in the cargo that are not allowed to ship and excludes the carrier for any liability against the goods.
Amendments to Hague’s rule and Convention on Hamburg’s Rule
As per the above rule, the carrier is responsible on the account of due diligence as he has not maintained the ship seaworthy and the vessel contained the substantial patches. Hence, the carrier shall held liable for the lack of due diligence as the vessel was having patches and got easily affected by the submerged container.
The ship’s captain took every essential steps to make a safe delivery. As per the rule, the carrier is not liable if the agent or master of ship take step or navigate the ship and loss occurred due to that. In this case, the captain navigate the ship to save the cargo and the staff as he navigate the ship when he got the storm warning.
The captain also throw/jettisoned the live sheep and containers having explosive goods. As the captain took the steps to save the ship from sinking, the carrier is not liable. Whereas, the delay occurred due to the primary negligence of carrier of not maintaining the ship shall made the carrier liable for that part.
Conclusion
The above rule and application conclude that the carrier shall not held liable for the live sheep and the explosive container, as these are not included in the definition of good under Hague’s rule. The carrier held liable for remaining of the goods because of the lack of due diligence as he does maintained the ship and the ship got easily affected from submerged container.
- Is rule of CISG apply, when contracting parties are from Vietnam and Melbourne?
- Is any mutual agreement build between Hochi and William or the provision of incoterm applied?
- Is William liable to pay the taxes?
- Is there any fundamental breach exists?
Contracts for International Sale of Goods 1980 (CISG) is a binding agreement between the contracting parties who are the members of CISG. CISG applied in following cases:
- If the parties are from different countries.
- The countries must be the member of the Convention
- Parties should not dealt with exceptions (given in Art. 3 to 5) of the Convention
The convention states the responses that an offeree could respond after an offer:
- as an acceptance;
- as a modified acceptance (modification that shall not alter the terms of a contract);
- as a counter-offer;
- as rejection
- silence(Mo, 2015).
- when the silence reflect the impression that the silence shall refer as acceptance.
- when the offeree told the offeror that his/her silence shall constitute the acceptance.
- when the offeree exercised the dominion over goods.
- in the case of counteroffer, if the offeree sends a late acceptance but within the reasonable time according to the offeror, the court shall consider the good faith of offeror and the silence offeror shall deemed as acceptance.
The international commercial term (Incoterm) stated the arrangements that has to determine for selling and buying the goods internationally. It is important to understand the obligations and risks involved in the commercial contract and act as per these terms.
- place where the goods has to be delivered;
- who shall arrange transportation
- who pays for the insurance
- who shall handle and pay customs and taxes(gov.uk, 2021);
Article 25 of the Convention states the fundamental breach depends on the nature of the breach as fundamental breach are different in civil and common law. The fundamental breach shall rely on the nature of the term breached that shall give the right to the innocent party to terminate the contract (Mo, 2015).
The case raised the issue about the construction of contract between the parties when the contract constitute an Intercom. The case also establishment a clarity between the Sale of Goods Act in Australia and the terms of CISG.
Butler Machine Tool v. Ex-Cell-O Corporation
In the given case, the buyer was not liable to pay the increased cost as the seller accepted the counter offer of the buyer that removed the price variation clause. In the appeal, the Court established that if the counter offer has been accepted by the original offeror through his silence, the terms of initial offer shall not apply.
As both the contracting parties are from member countries and does not constitute exceptions of application of CISG, the guidelines of the convention shall be applicable in the given case. In this case, Ho Chi, citizen of Vietnam made the offer through fax and William made a counter offer against the original offer. William also paid the advance amount without waiting for the acceptance of counter offer. In the given scenario, Ho-Chi does not gave his expressed consent to William, but delivered the goods that constitute his acceptance of counter offer. This removed the liability to pay the taxes from William. Ho Chi send the good on the terms of FOB whereas William made the counter offer to make the goods delivered in DDP. As Ho-Chi delivered the goods that made implied consent, the goods has to be delivered on DDP. Hence, William is not liable to pay the taxes of $15000. The fundamental breach shall arise as Ho-Chi does has not paid the taxes that he has to pay after acknowledging the counter offer.
Conclusion
The above said rules and application conclude that both Ho Chi and William shall rely on the terms of the CISG. The silence of Ho Chi constitute the acceptance that made him liable to pay the taxes as per DDP. Hence, William is not liable to pay the taxes on delivery.
References
Bowden Brothers and Co Ltd v Robert Little (1907) 4 CLR 1364
Butler Machine Tool v Ex-Cell-O Corporation [1979] 1 WLR 401 (CA)
Carriage of Goods Sea Act, 1991
gov.uk, 2021. International trade contracts and incoterms. [Online]
Available at:
https://www.great.gov.uk/advice/prepare-for-export-procedures-and-logistics/international-trade-contracts-and-incoterms/
[Accessed April 2022].
Hines Exports Pty Ltd. v Mediterranean Shipping Co (2001) SASC 311 80 SASR 268
Kasi, A., 2021. Hague/Hague-Visby Rules: Application. The Law of Carriage of Goods by Sea, pp. 247-269.
Leval & Company Inc. v. Colonial Steamships Ltd., [1961] S.C.R. 221
Lookofsky, J., 2017. Understanding the CISG. 5th ed. s.l.:Wolters Kluers.
Mo, J., 2015. International Commercial Law. 6th ed. s.l.:LexisNexis Butterworths.
Schollenberger, D., 2020. Risk of Loss in Shipping under the Hamburg Rules. Denver Journal of International Law & Policy, 10(3), p. 11.
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