Shipping law

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Table Of Contents
◦ Vessel Types
◦ International Sale of Contract
◦ Accounting concepts in maritime shipping
◦ Implied Obligations in a Contract of Affreightment
◦ Charterparties
◦ Voyage Charterparty
◦ Bill of Lading
 Bill of Lading History
 Functions of a Bill of Lading
 As a Receipt of Goods
 Receipt as to Quantity
 Receipt as to Condition
 Receipt as to Leading Marks
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Table Of Contents
 As evidence of the Contract of Carriage
 As Document of Title
 Function in Contract of Sale
 Function in Financing Contract of Sale
 Liability in Tort
 Third party reliance on bill of lading terms
 Bailment on terms
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Table Of Contents
 Presentation of a Bill of Lading
 Problems in presentation
 Short form bill of lading
 The Waybill
 Bill of Lading under Charterparties
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Types of Vessels
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Liners :
• These are vessels that ply on a regular scheduled service between groups of ports.
• Liner services offer cargo space to all shippers who require them.
• They sail on scheduled dates, irrespective of whether they are full or not.
Tramps
• The tramp pr general trader , as she is often called , does not operate on a fixed
sailing schedule , but merely trades in all parts of the world in search of cargo,
primarily bulk cargo
• Such cargoes include coal, grain, timber, sugar, ores, fertilizers etc.,
• The tramp companies are much smaller than their liner cargo counterparts, and
their business demands an intimate knowledge of market conditions.
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Bulk Carrier
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Crude Oil Tanker
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Livestock Carrier
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LNG Carrier
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Car Carrier
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Container Ship
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International Sale Contract
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Purchaser Seller
Cargoprice
Jordan
Australia

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Purchaser
Confirming Bank
Letter of Credit
Documents
International Sales Contract
Seller
Opening Bank
Hamburg Dubai

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Buyer/Importer
Issuing Bank Advising/Confirming Bank
Beneficiary/Exporter
Request for a
Letter of Credit
Request to Advise
and Possibly Confirm
Letter of Credit
Advise of Letter
of Credit
Purchase and Sale Agreement
2
1
3
4
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Letter of
Credit
Cycle

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FOB Contract
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Carrier
Seller
Purchaser
Is the
Shipper
Charterparty Bill of Lading Waybill

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CIF Contract
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Carrier
Seller
Is the
Shipper
Purchaser
Charterparty Bill of Lading Waybill

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International Chamber of Commerce Terms (INCOTERMS)
◦ CIF (Transfer of Risk)
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Loading
on Board
Before Loading After Loading
Purchaser
Under CIF
Port of
Loadng
Ownership
Risk
Time Line
CIF
Seller Under
CIF
Risk
Delivery at
Port of
Discharge

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◦ FOB (Transfer of Risk)
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Loading
on Board
Before Loading After Loading
Purchaser
Under FOB
Port of
Loadng
Ownership
Risk
Time Line
FOB
Seller Under
FOB
Risk
Delivery at
Port of
Discharge
Ownership

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◦ FOB or CIF (Transfer of Risk)
Order Bill of Lading (no consignee mentioned)
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Loading
on Board
Before Loading After LoadingPort of
Loadng
Ownership
Time Line
Seller Under
FOB
Risk
Delivery at
Port of
Discharge

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Accounting Concepts
FOB Shipping
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Seller
Purchaser
Delivery
Port
Shipping
Port
Shipping Contract

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Accounting Concepts
FOB Shipping
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Purchaser
Shipping Contract

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Accounting Concepts
FOB Shipping
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Purchaser
Accounts
Point of Delivery
to Purchaser
CreditDebit
Cargo
Assets
Delivery Port

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Accounting Concepts
FOB Shipping
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Point of Loading
Purchaser
CreditDebit
Cargo
Assets
Loading Port
Seller
Accounts

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Accounting Concepts
FOB Shipping
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Seller
Purchaser
Delivery
Port
Shipping
Port
Gap of Ownership between Buyer and Seller
Who owns
the cargo in
the Sea Trip

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Accounting Concepts
FOB Destination
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Point of Loading
Purchaser
CreditDebit
Cargo
Assets
Loading Port
Seller
Accounts

Incoterm 2010
Export customs
declaration
Carriage to port of
export
Unloading of truck
in port of export
Loading on vessel
in port of export
Carriage (Sea/Air)
to port of import
Insurance
Unloading in port of
import
Loading on truck in
port of import
Carriage to place of
destination
Import customs
clearance
Import taxes
EXW Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer
FCA Seller Seller Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer
FAS Seller Seller Seller Buyer Buyer Buyer Buyer Buyer Buyer Buyer Buyer
FOB Seller Seller Seller Seller Buyer Buyer Buyer Buyer Buyer Buyer Buyer
CPT Seller Seller Seller Seller Seller Buyer Buyer Buyer Buyer Buyer Buyer
CFR(CNF) Seller Seller Seller Seller Seller Buyer Buyer Buyer Buyer Buyer Buyer
CIF Seller Seller Seller Seller Seller Seller Buyer Buyer Buyer Buyer Buyer
CIP Seller Seller Seller Seller Seller Seller Buyer/Seller Buyer/Seller Buyer Buyer Buyer
DAT Seller Seller Seller Seller Seller Seller Seller Buyer Buyer Buyer Buyer
DAP Seller Seller Seller Seller Seller Seller Seller Seller Seller Buyer Buyer
DDP Seller Seller Seller Seller Seller Seller Seller Seller Seller Seller
Seller/Not including
VAT/FAT

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Implied Obligations in a
Contract of Affreightment
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At common law the obligation to provide a seaworthy vessel is absolute and in
the event of breach he will be liable .
Its and undertaking not merely that they should do their best to make the ship
fit but that the ship should really be fit.
Should be reasonably fit/not perfect ship.
Exclusions
◦ Nelson Line v Nelson (1908) (exception of any damage which is capable of being
covered by the insurance) was held not to be effective in excluding liability for damage
to cargo resulting from unseaworthiness.
◦ The Irbensky Proliv (2005 ) a bill of lading contained a provision excluding liability for
loss or damage of any kind arising or resulting from :unseaworthiness ( whether or
not due diligence shall have been exercised by the carrier, his servants or agents or
others to make the vessel seaworthy) was upheld by the court.
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The Undertaking as to Seaworthiness 1/4

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When a contract is subject to Hague/Visby rules: The absolute obligation at common
law will be replaced by a duty to exercise due diligence to make the ship seaworthy.
◦Many modern standard charter forms adopted the Hague rules formula with the requirement
to seaworthiness
◦The Baltime form excludes liability of the shipowner for loss or damage to cargo unless such
loss has been caused by want of due diligence on the part of the Owners or their manager in
making the vessel seaworthy and fitted for the voyage.
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Nature of the Obligation
◦ Incidence of the obligation
 The vessel must be suitably manned and equipped to meet the ordinary perils likely to be
encountered.
 It must also be cargoworthy in the sense that’s its in a fit state to receive the specified cargo.
◦ Obligation is discharged if the vessel is seaworthy at the time of sailing
◦ Should accident happen after sailing rendering the vessel unseaworthy the vessel owner
will be liable as insurer.

Manning : vessel master
• It’s a common but very strong belief that the person in charge of the vessel is the
captain.
• Captain: This terms is simply a naval rank.
• The correct term to be used is the Master
• Master duties and responsibilities

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Burden of Proof
◦ Burden of proof on the party alleging it
 In many cases inferences may be drawn by the court.
 ex: presence of seawater in the hold will be normally
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Effect of Breach
◦ is a condition resulting in a breach of contract
◦ is a warranty resulting in damages
◦ The ship owner obligation to provide a seaworthy vessel was classified by courts as
intermediate
◦ Obligation by the court of appeal
◦ A charterer should only be allowed to repudiate his obligations under the charterparty
where the breach deprived him of substantially the whole benefit which it was intended
that he should obtain from the contract.
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• Whenever no time is specified for a particular obligation there is an implied
obligation to complete the performance within a reasonable time.
• Obligation is not objective but depending on what could be reasonably expected of
the shipowner under the actual circumstances.
• Effect of Breach
◦ To recover compensation
◦ Repudiate the contract
Obligation of Reasonable Disptach
Obligation of Reasonable Dispatch

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Definition: Deviation is an intentional and unreasonable change in the geographic
route of the voyage as contracted.
Justifiable deviations
At common law
Under the Hague and Hague/Visby Rules
Liberty Clauses
The effect of Breach
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Obligation Not to Deviate from the Agreed Route 1/4

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◦ At common law
 To Save Human Life or to communicate with a vessel in distress in case lives may be in danger
◦ To avoid danger to the ship or cargo
 Ex. When a vessel puts to a port for repairs to damage sustained on the voyage
 In Kish v Taylor. In Kish v Taylor 33 the vessel had been excessively overloaded. This is a classic
instance of unseaworthiness which amounted to a breach of contract. In the circumstances the
master was obliged to deviate. The court held the deviation justifiable even though it was the direct
result of the act of the master who had created the danger and therefore could be regarded as
intentional. Atkinson J said that the shipʹs master should not be put in the position of having to
decide on the merits of the situation. He has to be allowed to deviate in order to save the venture.
The rationale of Kish v Taylor therefore is that the existence of the peril is looked at and not the
cause of the peril.
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◦ At common law
 Where the deviation is made necessary by some fault on the part of the charterer:
 In case of dangerous good loaded by the charterer without the knowledge of the shipowner
 Under the Hague/Visby rules
 Art IV rule 4 of the rules provides two further heads:
 1- deviation in saving or attempting to save property at sea
 2- Any reasonable deviation

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Liberty Clause:
◦ Most standards charter forms include a clause giving the master a liberty to deviate for a specified
 Reasons. Ex. Clause 3 of the Gencon form:
“The vessel has the liberty to call at any port or ports in any order, for any purpose, to sail without pilots, to tow and/or assist vessels
in all situations and also to deviate for the purpose of saving life and/or property”
 Since such conditions are applied mostly for the benefit of shipowners the courts apply the principle of contra proferentem
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The period Covered by the warranty
The nature of the risks covered
The nature of undertaking - remedies available for breach
The scope of the undertaking
The safe port/safe berth relationship
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Obligation to Nominate a Safe Seaport 1/4

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Definition of a safe port:
◦ A port will not be safe unless , in the relevant period of time, the particular ship can reach
it, use it, and return from it without , in the absence of any some abnormal occurrence,
being exposed to danger which cannot be avoided by good navigation and seamanship
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The Period Covered by the warranty:
◦ The ‘relevant period of time’ mentioned in the definition covers the entire period from the
moment of entry to the time departure.
◦ Extension of period: in case risks encountered in the approaches to a port as for ex: ice in
the Elbe preventing safe access to Hamburg.
 Manchester was held an unsafe port for the ship involved in a case where after discharge of the
cargo the masts of the vessel were too high to pass under bridges on ship canal linking the port
with the sea.
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The nature of the risks covered:
◦ Whether or not a port ‘is safe’ is a question of fact depending on the circumstances of each
individual case.
◦ A port may be safe for one type of vessel but not for another for example :
Where the draught of 250,000 ton tanker is too deep to allow it access to many ports
which are otherwise perfectly safe for normal vessel.
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Meaning of Dangerous goods
◦ No definition is provided by common law .
Merchant Shipping Act 1894:
◦ aquafortis, vitriol, naphtha, benzine, gunpowder, lucifer-matches, nitro-glycerine,
petroleum , any explosive within the meaning of the Explosive Act 1875 and any good of
dangerous nature.
• Some danger is not in the inherent nature but in the surrounding circumstances. Such as
grain shipped in bulk if it gets overheated in transit.
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Obligation Not to Ship Dangerous Goods 1/2

Meaning of Dangerous goods under Art IV rule 6:
◦ Goods of an inflammable, explosive or dangerous nature to the shipment whereof the
carrier, master or agent of the carrier has not consented with knowledge of their nature
and character, may at any time before discharge be landed at any place, or destroyed or
rendered innocuous by the carrier without compensation and the shipper of such goods
shall be liable for all damages and expenses directly or indirectly arising out of or resulting
from such shipment. If any such goods shipped with such knowledge and consent shall
become a danger to the ship or cargo, they may in like manner be landed at any place, or
destroyed or rendered innocuous by the carrier without liability on the part of the carrier
except to general average, if any.
Obligation Not to Ship Dangerous Goods 2/2

• Frustration occurs whenever the law recognizes that without default of either party
a contractual obligation has become incapable of being performed because the
circumstances in which the performance is called for would render it a thing
radically different from that which was undertaken by the contract.
Frustration of Contract
Party A Party BPerformance of obligation

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Voyage Charterparty
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Time Charterparty
Charterparties

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Maritime Shipping Contract
Full Load Vessel Capacity Partial Load Vessel Capacity
Bill Of LadingCharter Party
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Charter Party
Owner
Charterer
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Charter Party
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Shipping
Port
Delivery
Port

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Charterparty
Subject to demand
and Supply 1. Standard Forms ( Ship owner and Charterer
represented )
1. United Kingdom Chamber of Shipping
2. The Baltic International Maritime Conference
3. Japanese Shipping Exchange
4. Voyage Charter Party
5. Time Charter Party
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Introductory
Clauses
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Laytime Clauses Other ClausesFreight ClausesCargo Clauses
Voyage Charterparty

Introductory
Clauses
Contracting Parties
The vessel
Idenitfy:
The agreed Voyage
Serious Concern to Charterer
Cargo
Capacity
Dead
Weight
Capacity
Voyage Charter Party

Description of
the type and
quantity
Such as :
14000 MT of
Rice
Wheat and/or Maize
and/or Rye
Introductory
Clauses

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Freight Clauses
Shipping
Port
Delivery
Port
Unit of
measurement
of Freight
On Discharge
On
Loading
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Freight Clauses
Lump Sum Basis
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Shipping
Port
Delivery
Port

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 Burden of Proof
 Burden of proof on the party alleging it
 In many cases it may be inferences drawn by the court.
 ex: presence of seawater in the hold will be normally treated by courts as prima facie evidence of unseaworthiness
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The Bill of Lading Contract
◦ Definition
 A legal document between the shipper of a particular good and the carrier detailing the type,
quantity and destination of the good being carried. The bill of lading also serves as a receipt of
shipment when the good is delivered to the predetermined destination. This document must
accompany the shipped goods, no matter the form of transportation, and must be signed by an
authorized representative
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The Bill of Lading Contract
◦ Originated in 14th century as non negotiable receipt issued by shipowner for cargo
received to a merchant who did not intend to travel with his goods.
◦ The liability of the carrier was strict one subject to the Common Law exceptions such as :
 Acts of God
 Public enemies
 Inherent Vice
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The Bill of Lading History
◦ Carriers were trying to exempt themselves even when loss resulting from their own
negligence in the care of cargo
◦ The resultant combined resistance from shippers, bankers and underwriter led to the
production in some countries of Model Bills of lading to cover
◦ Discussions held by same groups from major maritime nations led to the drafting of a set
of rules by the Maritime Law Committee of the International law Association at a meeting
held in Hague in 1921 which were incorporated into an international convention in Brussels
on 25 August 1924 signed by major trading nations.
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The Bill of Lading History
◦ Major maritime nations introduced legislations to give effect to Hague Rule which in the
case of the United Kingdom took the form of the Carriage of Goods By Sea Act 1924.
◦ Dissatisfation grew at the limited nature of the protection afforded to cargo owners by the
Hague Rules which led to the issuance of Hague/Visby Rule in 1968
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Functions of a Bill of Lading
As a Receipt of Goods:
◦ Art III Rule 3 of Hague/Visby Rules entitles the shipper to demand the issue of a bill of
lading containing certain specified information:
 (a) The leading marks necessary for identification of the goods as the same are furnished in writing
by the shipper before the loading of such goods starts, provided such marks are stamped or
otherwise shown clearly upon the goods if uncovered, or on the cases or coverings in which such
goods are contained, in such a manner as should ordinarily remain legible until the end of the
voyage.
 (b) Either the number of packages or pieces, or the quantity, or weight, as the case may be, as
furnished in writing by the shipper.
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 (c) The apparent order and condition of the goods.
 Provided that no carrier, master or agent of the carrier shall be bound to state or show in the bill of
lading any marks, number, quantity or weight which he has reasonable ground for suspecting not
accurately to represent the goods actually received, or which he has had no reasonable means of
checking.
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 The above rule is a prima facie evidence of the receipt by the carrier of the goods as so described
but conclusive evidence against him once the bill has been transferred to a third party acting in
good faith.
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Receipt of Goods
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Receipt
By Carrier
Shipper
Evidence Prima
Facie
Third part
Evidence
Conclusive
Indorsed

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As Receipt of Goods
◦ As to Quantity
◦ Under common law shipowner could escape liability even toward a bona fide transferee of
the bill if he could establish that the goods were not in fact shipped. (Grant v Norway
1851)
◦ The effects of the above were circumvented in Art III Rule 4 of the Hague/Visby Rules
which provide that statements as to quantity in a bill of lading are conclusive evidence in
favour of the consignee or indorsee who takes the bill of lading in good faith.
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As Receipt of Goods
◦ As to Condition:
 By reasonable Inspection
 Containerized shipping has limited the value of inspection as its limited to outward appearance of
the container or other packaging and not to the goods inside.
 Shipper: in need of clean bill of lading for banking purposes.
 Carriers can avoid unqualifying statements in a B/L even where inspection reveals the cargo to be
damaged if its condition is adequately described in the bill.
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As Receipt of Goods
• As to Leading Marks:
 Shipowner will not be estopped at common law from denying that the good were shipped under the
marks as described in the bill of lading.
 In Parsons V New Zealand Shipping Co : Shipment of frozen carcasses.
 Quantity 622x leading mark. On delivery 507 bore the mark remaining 101 carried 522
 Trial Judge: All carcasses were of equal quality and value an that the sellers ha merely attache the
marks for their own bookkeeping purposes.
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As a Receipt of Goods
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Owner
Charterer
and
Shipper
Master
Charter Party
IssuanceReceipt
Bill Of
lading

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As Evidence of Contract of Carriage
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As far as the shipper is concerned
these terms printed on the reverse
side of The Bill of Lading don’t
constitute the contract of carriage
itself but merely provide evidence of
it.
The contract is normally concluded
long before the bill is issued and
the terms are inferred from the
carrier’s sailing announcements
and from any negotiations with
loading brokers before the goods
are shipped.
Should the goods b lost or
damaged before a bill of
lading is issued the shipper
will not be deprived of a
remedy for a breach of
contract
B/L Issuance
Contract Concluded Before

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As a Document of Title :
◦ A bill will only operate as a document of title if its drafted as an ‘order bill’ ( a bill under
which the carrier agrees to deliver the goods at their destination to a named consignee or
to his ‘order or assigns’)
◦ Function in contract of sale :
 Must be transferrable on its face
 The goods must be in transit at the time of indorsement
 The bill must be initiated by a person with good title
 The indorsement must be accompanied by an intention to transfer the ownership in the goods
covered by it.
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transferrable on
its face
goods must be in
transit at the time
of indorsement
The bill must be
initiated by a
person with
good title
The indorsement
must be accompanied
by an intention to
transfer the
ownership in the
goods covered by it
.
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Bill of Lading Function in a Contract of Sale

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Functions of a Bill of Lading:
As a Document of Title :
◦ Function in financing contract of sale :
 Letters of Credit
◦ Function in Carriage contract
 The holder of the bill controls the goods during transit
 A lawful holder of the bill has title to sue under the contract of carriage as if he had been an original
party to it.
 The holder is entitled to delivery of the cargo at the port of discharge on presentation of the bill of
lading
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Bill of lading and third parties
◦ Liability in Tort
 Where a claim for loss or damage is based on the negligence of the carrier or his servants an
alternative to the contractual remedy might be to sue the party responsible for the loss in tort
 Advantages: The sub-contractor might be financially sound
 The bill of lading holder may be attracted by a right of recovery in tort free from exceptions an
limitations of liability provisions contained in a bill of lading.
 In majority of the above cases there will be no contractual relationship between the claimant an the
actual tortfeasor with the result that the doctrine of the privity of contract would normally prevent
the tortfeasor from invoking any of the defences available under the contract of carriage.
◦ A bill of lading holder can sue the negligent party , his agent or servant in tort.
 In Margarine Union v Cambay Prince (1969 the bill of lading holder case was rejected as he was not
the owner of the cargo when the damage occurred.
 The decision was severely criticized
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Shipowner
Agent or Servant
Sue in Tort
Before or after being owner

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Shipowner
Agent or Servant
Sue in tort

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◦ Third Party Reliance on Bill of Lading terms
 By a brief glance at the printed terms of the bill of lading the shipper will be alerted to the fact that
the carrier in many cases will reserve the right to delegate performance of the carriage itself to a
subcontractor although the contractual carrier will normally retain primary responsibility for due
performance of the contractual obligations involved.
 In these circumstances it would be reasonable to expect that the carriage would be undertaken on
the agreed terms including exceptions and limitation of liability provisions irrespective of the
identity of the party who actually performed the contract
 The above result is often defeated by the intervention of the doctrine of privity of contract .
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◦ Third party reliance on Bill of Lading terms
 Bailment on terms (The Pioneer Container case 1994)
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Shipowner
Sub carrier
Sought a writ in rem in Hong Kong
Jurisdicctionin
Taiwan
Bailor
Bailee
Sub
Bailee

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Presentation of a Bill of Lading
◦ Main Characteristic: Delivery has to be made against the surrender of documents
 It protects the holder of the B/L in the cargo shipped.
 It discharges the carrier from any other obligation under the contract of carriage
 The carrier problem: B/L are normally issued in sets of from three to six originals and that delivery
of cargo can be required against the presentation of a single original from such a set.
 In order to protect the carrier there is frequently a provision in the bill that ‘ one being
accomplished , the others to stand void ’.
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◦ Main Characteristic:
 Delivery has to be made against the surrender of documents
 The carrier is protected if he makes delivery against a single un-indorsed original B/L or
alternatively against a single validly indorsed bill.
 Carrier is liable if he makes delivery against a forged document though he is unlikely to be able to
detect it.
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◦ Problems in Presentation
 Because of the speed up on transport operation because of containerization it happens that the
cargo will arrive before the B/L., this entail:
 The charterer may face liability for demurrage
 While the shipowner may run the risk of losing the next charter.
 If the carrier is reasonably sure of the identity of the receiver he may run the risk of delivery without
presentation of the bill of lading.
 In case of mis-delivery he will lose the entire protection afforded to him by the contract of carriage
together with the Hague exceptions and limitations of liability and the P&I Club Protection.
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◦ Short form Bill of Lading
 B/L without the terms and conditions of carriage (the rights, responsibilities and liabilities of the
carrier and the shipper) printed on its back. Otherwise, in size, it is no different from the long form
B/L. The shipper and the carrier are bound by the conditions of carriage (governed generally by the
older Hague rules or by the more recent Hague-Visby Rules) whether printed on the B/L or not.
◦ The Waybill
 The waybill differs from the bill of lading in that while it acts as receipt and provides evidence of
the contract of carriage, it lacks the third characteristic in that it does not constitute a negotiable
document of title. So its not acceptable in L/C or where the consignee might wish to sell the goods
in transit.
 Presentation does not apply. The consignee has merely to identify himself at the port of discharge.
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Bill of Lading Issued Under Charterparty
Bill of lading issued to charterer
◦ Where bills of lading are issued for cargo shipped by the charterer they operate as receipts
for the goods shipped and as a potential document of title , but do not constitute evidence
of the contract of carriage. The relationship between shipowner and charterer is governed
solely by the terms of the charterparty unless the latter contains provision that its terms
can be modified or superseded by the subsequent issue of a bill.
◦ Neither the Hague nor Hague/Visby rules are applicable to a bill of lading in the hands of a
charterer since such bill does not regulate the relations between the carrier and the holder
as required by art 1(b).
◦ Many standard charter forms solve this problem by incorporating either the Hague or the
Hague/Visby rules into the charterparty.
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President of India v Metcalfe
• Charterer bound by the arbitration clause
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Carrier
Charterer
Thirdparty
Shipper
B/L
No arbitration Clause
Indorsement of B/L

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Bill of lading issued to a third party shipper:
◦ Who is the carrier :
 The carrier is rarely identified in the bill of lading which may be issued in the name of the
shipowner , the charterer , a sub charterer or the agent of any of them.
 In normal circumstances the shipowner would be regarded as the carrier despite the existence of
the charterparty, he remains responsible for the management of the ship and the master signs any
bills which are issued as his agent.
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◦ Who is the carrier :
◦ The right of the charterer to issue such bills is dependent on an express term in the
charter normally drafted to the following effect:
 The master (although appointed by owners) shall be under the orders and direction of charterers as
regards employment of the vessel, agency or other arrangements. Bill[s] of lading are to be signed
as charterers or their agents may direct, without prejudice to this charter... charterers hereby
indemnify owners against all consequences or liabilities that may arise from the master, charterers
or their agents signing bills of lading or other documents, or from the master otherwise complying
with charterers' or their agents' orders...
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◦ Any bill presented by the charterer and signed by the master under the authority of such a
clause will be binding on the shipowner. He will be regarded as carrier for the Purposes of
the resultant contract of carriage.
Charterer as carrier :
◦ Even where the contract of carriage is governed by the Hague/Visby rules it is possible for
the carrier to be either the shipowner or the charterer.
◦ The charterparty might itself provide that the master is authorized to sign bills as agents
on behalf of the charterers.
◦ Also the charterer shall be regarded as the carrier where he contracts as principle
negotiating the contract of carriage in his own name and issuing his bills of lading,
◦ Demise clause:
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◦ What are the terms of the contract:
 The B/L provide prima facie evidence of the terms of the contract of carriage though such evidence
may be rebuttted by proof of other terms specifically agreed by shipper and carrier.
 Normally third party will not be affected by the by the terms of the Charterparty
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◦ Bill of Lading issued to Charterers:
 Where the shipper of the goods is also charterer of the vessel, the master will still issue a bill of
lading . In such circumstances the bill of lading will merely operate as a receipt of goods shipped
but will not provide evidence of the contract of carriage. The terms of the contract of carriage are
found in the charterparty
 Should the charterer subsequently indorse the bill of lading to a bona fide purchaser for value ,
then the bill will become conclusive evidence of the contract of carriage so far as the indorsee is
concerned.
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Bill of Lading issued to Charterers:
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Master
Shipper and
Charterer
Purchaser
B/L indorsed to Purchaser
B/L becomes Conclusive Evidence

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Point of Discharge
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Master duties and responsibilities
• He is the owner’s personal representative
• He bears the ultimate responsibility for the safe navigation of the vessel
and for the efficient loading, stowage and discharge of cargo.
• He has the power to act as a lawyer, doctor or even to bury people.
• He has the authority to arrest members of the crew or passengers.
• If the ship is imperilled in any way , the Master may call upon all
persons on board to give assistance.
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References
Charterparties
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