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An Essay of Law Advices

Essay by   •  May 13, 2011  •  Essay  •  2,321 Words (10 Pages)  •  2,049 Views

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The followings are four key questions including in this case: 1) Does Todd must pay the fees? 2) Does Todd must accept the documents? 3) What his rights might be against the carrier? 4) Whether he may have a claim against anyone else?

In the first question, the buyer is entitled to be paid (unless the parties agree to the contrary) once the seller has delivered the documents under a CIF contract, and this is true even if the goods never arrive. The second question is related with two sets of obligations under CIF contract, one is relating to documents and the other is relating to the goods. Whilst the buyer may accept the documents he can still reject the goods if they are not as set out in the contract. Similarly accepting the goods does not mean the buyer has to accept the documents. In the third question, carrier's duties should be discussed and according to The Hague Visby Rules there will be a few exclusions to be discussed if the rules can be applied in the case. The question four is in relation to insurance matters if the buyer wants to have a claim against anyone else on the contract of marine insurance he must the follow the appropriate legal procedures.

In this case the seller is Scrutton public limited company, the buyer is Todd, the carrier is Carter public limited company, and there is a third party freight forwarder acting for Scrutton plc as the shipper who has ratification to make decision for his principal.


In this case, the freight forwarder is the shipper because it acts for Scrutton plc to negotiate the terms of carriage and arranges for goods to be shipped. And Carter plc is the carrier because Carter plc is the party agreeing to carry the shipper's goods.

There are two bills of lading that are issued between the carrier and the shipper in this case. The bill of lading has the functions of: evidence of the facts stated; evidence of the terms of the contract of carriage; a document of title. One bill of lading describes the goods as:' 5 containers said to contain wooden garden furniture," and the second bill of lading describes the goods as:' 1000 tons of cement in bags.' The goods were sold under CIF contract, cash against documents. As under the CIF contract the seller is entitled to be paid ( unless the parties agree to the contrary) once he has delivered the documents, and according to the cases Manbre Saccharaine v Saccharine Products 1919 and Gill & Duffus v Berger , even the goods were lost or damaged and even though the sellers had not delivered the goods. So the answer to the first question 'Does Todd must pay the fees?' is Yes, Todd had an obligation to pay for the goods once the documents were presented to him, if the obligation in respect of the documents had been satisfied and so the sellers were entitled to be paid.

As under the CIF contract, there are two separate sets of obligations the first relating to documents the second relating to the goods. In this case, 5 containers wooden garden furniture were washed off from the deck of The ship Bingo and the cement in bags were damaged by sea water when the goods were afloat, according to the case Kwei Tek Choa v British Traders and Shippers , the acceptance of the goods didn't stop the buyer rejecting the documents, if the buyer accepted the documents he was still entitled to succeed on his claim for damages for the breach of contract. So the answer to the question 2 is No, he doesn't have to accept the documents. But I advise him to accept the documents and reject the damaged goods because in order to sue the carrier for negligence, the buyer must either own the goods or has possession of the bill of lading, according to the case Leigh & Sullivan Ltd v Aliakmon Shipping Co Ltd (The Aliakmon) , the buyers could not sue the carrier for negligently stowing coils of steel wire because at the time neither title nor possession to the goods had passed, though the risk had.

The UK introduced the Hague Visby Rules into English law through the Carriage of Goods by Sea Act 1971. English law extends the scope of the Rules slightly stating that they apply if the contract says so even if there is no bill of lading. They also apply (but only if there is a bill of lading) if the port of shipment is in the UK even if the port of discharge is too. In further, all of the '12' members of the EU have adopted Hague Visby including land locked Luxembourg and except Portugal which remains with the Hague Rules. In this case, the goods were sent from Portsmouth, UK to Santander in Spain (one of the '12' members of the EU) by sea between two ports in two different countries and the goods are covered by bills of lading and both bills of lading were issued endorsed with the provisions. So the Hague Visby Rules under the Carriage of Goods by Sea Act 1971 can apply in this case to govern the two bills of lading.

The cargo is described in the first bill of lading as "5 containers said to contain wooden garden furniture", and "Carters explained that they reserved the right to carry goods in containers on deck depending on how much space was available on the ship" and "The bills of lading do not contain such a provision." According to the Hague Visby Rules and the case Svenska Traktos Akt v Maritime Agencies (Southampton) Ltd 1953 , the Hague Rules applies only if the contract made it clear that the goods would be carried on deck and actually were carried on deck that the exception applied. In the case the statement of goods would be carried on deck was not contain in two bills of lading, as a result of the Hague rules applying the exclusion clause was void as it was contrary to ArtIII Rule 8 which forbids excluding liability below that set out in the rules. So, the carrier (Carter plc.) is liable for the goods that were washed off deck in the first bill of lading.

The second bill of lading describes the goods as "1000 tons of cement in bags" and these goods in the Bingo's cargo hold were damaged by sea water for two reasons: the defective seal on the cover over the cargo hold and the air conditioning in the hold had been turned off so that there could be a routine inspection and the crew had forgotten to switch it on again during the voyage.

Due to the defective seal on the cover over the cargo hold may have broken either at the beginning of the voyage or during the voyage. The two situations are in need of a discussion. If the cover was defective at the beginning of the voyage, the carrier is liable because the ship was not made "seaworthy" at the beginning of the voyage and this has caused the water-seeping. Under Article III Rule 1 of the Rules: the carrier



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