Section 5 Flashcards
Classification of carriers.
- Common Carriers, are ready to carry goods or passengers within their trading area. Under common law, with some exceptions, they are strictly held liable for any loss or damage to what they carry.
The exceptions:
- Acts of God.
- Any inherent vice in the goods.
- Negligence of the cargo owner.
- Jettison to preserve the maritime adventure.
Exceptions will not apply if:
- Carrier’s neligence
- Un-seaworthy vessel at the start of the voyage.
- Any unjustifiable deviation.
- Private Carriers, are carriers whom are not classified as common carriers. They state their special terms of contract, thus contracting out most of their common law obligations. The special terms of carriage must be reasonable and clearly stated. If they are not, the carrier will be placed in the same position as a common carrier. A private carrier is only liable for any damage as a result through his negligence.
- Non-vessel Owning Carriers (NVOCs), are similar to freight forwarders as their contract with ship owners are to ‘buy’ a volume of cargo space on the ships at a lower rate then ‘sell’ to other shippers at a profit. The NVOC is issued bills of lading by the Master or his agent and they issue bills of lading to their customers.
Contents of Bill of Lading.
- Details of the Shipper
- Details of the Consignee
- Notify Party
- Ports of Loading and Discharge
- Weight and Quantity
- Party signing the Bill
- The reverse side of the Bill will contain the terms and conditions.
COGSA and the 4 rules.
The Carriage of Goods by Sea Act (COGSA)
- The Hague Rules
- The Hague-Visby Rules
- The Hamburg Rules
- The Rotterdam Rules
The Hague Rules
The Hague Rules sought to create a standardized framework for regulating the responsibilities and liabilities of carriers, shippers, and consignees involved in international ocean shipping.
Paramount Clause limits the carrier’s liability for loss or damage to cargo to £100 per package or unit, unless a higher value is declared by the shipper.
Due Diligence emphasized that carriers must exercise due diligence in ensuring the seaworthiness of their vessels and that they must properly care for and handle cargo.
Exceptions outline specific exceptions under which carriers would not be held liable for loss or damage to cargo, including perils of the sea, inherent vice, and acts of war.
Notice of Loss has to be provided by the Carriers to the consignee / shipper when the cargo is lossed or damages.
The Hague-Visby Rules
The Hague-Visby Rules is built upon the foundation laid by the Hague Rules. These rules aimed to modernize and update the Hague Rules to address new challenges.
Increased Liability Limits for carriers to 666.67
Special Drawing Rights (SDRs) per package or unit, or 2 SDRs per kilogram of gross weight of the goods, whichever is higher.
Mandatory Application the Hague-Visby Rules were automatically made applicable to contracts for the carriage of goods by sea, unless otherwise excluded.
Carrier’s Right to Defend granted to the carriers if they can prove they took all necessary measures to avoid the loss or damage to cargo.
The Hamburg Rule
The Hamburg Rules is an alternative to the Hague-Visby Rules. The new rules aimed to provide fewer defences for carriers to limit their liability and a heavier burden of proof to demonstrate that they are not liable for loss or damage. This rule was
focused on protecting the interests of shippers and ensuring fair treatment.
Increased Liability Limits the carrier’s liability was enhanced to 835 Special Drawing Rights (SDR) per package or 2.5 SDR per kilogram of gross weight, whichever is higher. It was envisaged that higher liability will bring greater responsibility on carriers for the safe transportation of goods.
Notice of Loss or Damage has extended the time for giving notice of loss or damage to the carrier to seven days from the time of delivery, as compared to the three-day notice period under the Hague-Visby Rules. This provision provides more time for shippers to discover and report any issues with their goods.
Paramount Clause isn’t incorporated under Hamburg rules. These Rules applied only to the sea leg of the journey, and not to inland carriage.
The Rotterdam Rule
The Rotterdam Rules includes door-to-door and multimodal transport where the sea leg is a significant part of the journey.
Carrier’s Liability for loss or damage to goods was hiked to 875 Special Drawing Rights (SDR) per package or 3 SDR per kilogram of gross weight, whichever is higher. This higher liability was aimed at greater protection for cargo interests.
Electronic Transport Documents makes to handling documentation easier and was meant to streamline administrative processes in international trade.
Negligence Standard means that the
carrier will be held liable for loss or damage caused by its own negligence, fault, or that of its servants or agents.
Notice of Loss or Damage has been extended to a 60-day period. This provided much more flexibility to shippers compared to previous conventions.
Paramount Clause are allowed to be incorporate by the carrier in the contract of carriage. This extends the application of the Rules to the entire transportation journey.
Ratification and Adoption this rule was not widely ratified by many countries, including Australia.
What is the purpose of letter of credit? (Slide 24)
A Letter of Credit is a contractual commitment by the foreign buyer’s bank to pay once the exporter presents the documentation proof for the delivery of goods. This is designed to protect both exporters and importers.
Functions of a Bill of Lading.
- It is a receipt of goods. An evidence that the goods described in the document have been received by the carrier in good condition and quantity.
Information to be included in the receipt are:
- Date of loading
- Identification marks
- Package quantity and measurements
- Condition of packaging
- Ostensible condition of the goods
- It is an evidence of contract which legally binds the shipper and the carrier. It outlines the terms and conditions of the shipment, including the agreed-upon freight charges, the destination, and the delivery timeline. Therefore, it is a key document that establish the rights and responsibilities of both parties.
- It is a document of title of goods or known as a title of ownership. This means that whoever possesses the original bill of lading has a legal right to claim the goods. This feature facilitates the transfer of ownership during the course of the goods’ journey.
Types of B/Ls.
- Order Bill of Lading, is negotiable and can be transferred to another party.
- Straight Bill of Lading, is non-negotiable and non-transferrable.
- Bearer Bill of Lading, whoever holds the physical document is entitled to claim the goods.
- Received for Shipment Bill of Lading is issued to the shippper when he delivers goods before the ship is ready to load.
- Shipped Bill of Lading / Onboard Bill, is issued when the goods have been received onboard.
- Charterer’s Bill of Lading, the charterer issues the B/L to the shipper.
- Through Bill of Lading, is issued when separate stages are performed by different carriers.
- Combined Transport Bill of Lading, covers the whole of the transport of the goods.
- Split Bills of Lading, is used when the shipper asks to discharge cargo in multiple parts.
Difference between clean and claused.
A clean bill of lading is issued when the goods have been received in good condition without any defects or damage while a claused bill of lading contains remarks or
notes regarding the condition of the goods, such as damage or shortages.
Advantages and disadvantages of electronic B/L.
Advantages:
- Efficiency and Speed, can be generated, transmitted, and received faster. This reduces delays and expedits cargo movements.
- Cost Savings, this eliminates the need for physical paper, printing, postage, and storage costs and can lead to significant cost savings.
- Reduced Errors, able to help reduce errors in data entry.
- Accessibility, able to be accessed from anywhere with an internet connection, making it easier for multiple accesses and sharing of the document.
- Environmental Benefits, this contributes to environmental sustainability by reducing the
carbon footprint associated with the printing and transportation of physical documents.
- Improved Tracking, tracking features allow shippers and consignees to monitor the status and location of their shipments in real-time.
- Enhanced Security, digital signatures and encryption can be used to secure eBOLs, reducing the risk of fraud or
unauthorized alterations.
Disadvantages:
- Legal Recognition, as regulations on eBOLs varies between countries, not fully accepting eBOLs may lead to legal disputes.
- Cybersecurity Risks, eBOLs are prone to cybersecurity threats, such as hacking and data breaches.
- Digital Divide, not allparties involved may be tech-savvy. This can creates a divide and limittations.
- Dependency on Technology, if there’s a technical failure or power outage, that could disrupt the shipping process.
- Transition Costs, the transitional phase may require an initial investment in technology and training, which can be a barrier for some, especially smaller companies.
- Interoperability, different parties in the supply chain may use different systems or formats, which can lead to compatibility issues andconfusion.
- Authentication Challenges, ensuring the authenticity of electronic signatures and documents can be
challenging, and disputes over the validity of eBOLs may arise.
