The Law of Contracts and the Shipping of Goods - Coursework Example

Commercial Law ment of Facts English law houses a number of jurisdictions and on different items surrounding day-to-day associations between different individuals in different activities. In the English law, there stands, the law of torts, the law of persons and fundamental concepts, the negotiations, law of property and the commercial law among others that governs how people relate commercially during business. Law of sale of goods governs this problem, which is under the law of contracts. The law of contracts and the shipping of goods differ in different countries based on the contract and the origin of the goods and their destination. The amendment of the Hague rules applies much to the contracts involving the carriage of goods by sea. This applies when issuing the bill of lading or a specific adoption of these rules for the contract1. The signing of the bill of lading indicates a contract and between the shipper and the ship owner. Its functions include acting as a receipt for the transaction. This is so as per the jurisdiction of the English law. Butt J in the case of the Stettin (1889) 14 PD 142 where the plaintiff shipped 57 barrels of seed oil aboard steamship Stettin in London2. He delivered the goods to the consignee without the production of the bill of lading. There was an attempt to prove that the ship owner could deliver goods to a consignee without insisting on the production of the bill of lading. In this case, the judge ruled and categorically affirmed that as per the English law, and the mode of conducting business in the English way, “a ship owner is not entitled to deliver goods to the consignee without the production of the bill of lading.” He therefore ruled that the ship owner must take responsibility of delivering the goods without the production of any of the two consisted parts of the bill of lading. This therefore establishes the bill of lading as a sign of agreement between parties. Reasonable excuse may look at aspects of time or even damage since a bill of lading is a piece of paper that is liable to damage3. Issues This may apply where the bill delays and reaches the consignee after the arrival of goods. Unless specifically indicated in the contract as Lord Denning explained. He stated, “It is perfectly clear that a ship owner who delivers without the production of a bill of lading does so at his peril. The contract is to deliver on the bill of lading to the person entitled under the bill of lading. The shipping company did not deliver the goods to any such person. They are therefore liable for breach of contract unless there is a term in the bill of lading protecting them. They are therefore liable in conversion unless likewise so protected.” These were his words in the ruling Sze Hai Tong Bank Ltd v Rambler Cycle Co Ltd [1959] AC 576, PC4. In this part of commercial law, the technicality lies in identifying the person liable to the damage. A contract of carriage is “a contract in which a carrier, against the payment of freight, undertakes to carry goods from one place to another. The contract shall provide for carriage by sea and may provide for carriage by other modes of transport in addition to sea carriage.” This therefore places the contract between the parties with the sealing from the bill of lading. In the Rotterdam Act, the contract between parties exists between the consignor, the carrier for this matter and the consignee, the buyer of the goods. The ship owner comes in as the performing party. The carrier is the person that engages the shipper into contract of carriage while the performing party is the person besides the carrier that undertakes to perform the carrier’s obligations of carrying the goods in respect of the contract between him and the carrier receipted in the bill of lading5. For the Bernadette case, the carrier was under obligation to deliver the goods in good condition to the buyer in spite of the performing party’s effect on the goods. As long as the goods are still under the carrier’s responsibility then he is liable for any damage for the goods. If he (Bernadette) has not yet paid for the goods, I would ask him to rescind the contract, avoid receiving the damaged goods and withhold making payment for the goods6. If he receives the goods, he will have accepted them in their condition. If he had already paid for the goods, he then has to sue the carrier (Arthur) for damages that he suffered for the goods. Discussion It is therefore Arthur’s (carrier) obligation to seek compensation from the performing party (the ship owner) for misrepresentation. This is so because the ship owner is poor management of his maintenance obligations. The bill of lading does also not limit liability. If the ship owner had this covered under insurance, he then has to seek compensation for the goods damaged. This would have been otherwise if it so indicated on the bill of lading that the performing party received the goods in that order. David should ask the sellers for a price allowance since the market price of the goods affected by the time the goods took to reach their destination. In the case below, the buyer though acted besides the court and bought the goods from an intermediary that ended up affecting their whole case7. In this case, the plaintiff (Cehave) bought citrus pulp pellets from the defendant. Part of the terms of the contract was that shipment was to occur when the goods were in good condition. The delivery of the goods was in consignments and by the time the goods arrived, the market price had dropped and some of the goods damaged. The plaintiff rejected the whole cargo and claimed for a recovery of the price. The court ruled in favor of the sellers. In the case of David, the resale profits lost and the loss in value of the goods should be recoverable. In the Hamburg Rules, the loss calculated from the time of discharge the goods by the consignor8. Gosse Millerd v Canadian Govt Merchant Marine Ltd [1929] AC. Facts gathered on this case were that the defendant carried boxes of tinplates from Swansea on the Canadian Highlander to Vancouver. On arrival, part of the cargo had damages caused by fresh water that the judge found had entered when the ship was at a port of call while it was raining. While discharging other cargo, while the ship cover was open, rainwater accessed the goods. During the dry dock period, careless moving and replacement of tarpaulins, led to the damage on the products. The judge awarded damages to the appellants due to poor handling of their goods by the ship operators10. It identifies two major items to look at during with such cases of calculating the losses incurred. These are the time at which the goods are to be valued, and the method of calculating the value. It explains further in relation to the Hague/Visby rule, which carries that the total amount of the value recoverable to calculate by reference to the value of the goods at the time, and place at which the discharge of goods from the ship in accordance with the contract. The value of the goods is considers according to the commodity exchange price or the value of the market price or the price of related commodities would be considered9. TETLEY summarizes this price by as they arrive at the market value. Besides this aspect, the goods that damaged when the workers on the ship were putting off a fire will require compensation as damages. The carrier remains liable until the delivery of goods to the consignee or until his gives notice of their arrival. It would be reasonable if David had cancelled the contract before initiation of the carriage if he would have been privy to the market prices. This is why the issue of the maritime insurance certificate to him so as he can seek compensation forms the insurance company for the damaged goods10. “The life blood of international commerce” that is how the letters of credit have been described consistently in the business transactions in the world today. This is evidenced by their wide spread usage that amounts to more than one trillion in US dollars per year. “A letter of credit is a complex, practical instrument whose governing principles have developed overtime as a result of customary practice. This method of payment is very complex based on the various contracts involved and the parties that are to be engaged in it. The nature of the documentary compliance is a major factor to consider during the application of this legal item. The fact is that it relates to loaning means that the cost of operating using this item is also higher than the normal methods of payment. This is due to the established fee that banks charge to offer this kind of service11. UCP 600 developed in 2007 with an aim of reducing the discrepancy documentary problem that the previous UCP 400 and UCP 500 had failed to address clearly. The major areas of concern include the invoice’s description of the goods under question, the issue of transport documents and their validity and the standards used to examine the documents availed. These are just asset of private rules that the contracting parties choose to incorporate into their contract but are not law. The use of these laws is technical in the sense in which they are to effect based on the documentations involved and the standards to use to certify them. Conclusion and Recommendation The involvement of more than one party and one bank in this creates most of the difficulty in handling these items. The exporter is obligated to satisfy that the terms in the letter are achievable in terms of performance such as timely shipping and provision of the documents involved. He is also supposed to deliver the requirements for data contents to enable compliance. According to this case scenario, Arthur asked to deliver the items before the passing of fifteen days after the issuance of the bill of lading for the carriage of the crude oil. The date of issuance was earlier than the actual take of the transaction. The signing of the contract between Arthur and Frank was on 15 January 2014. The items were loaded on the ship on 15 February the same year yet the incorporation of the charter was on 4 June 2013. He delayed to deliver the documents requested by the bank and in that case, I would advise the bank not grant the request unless both parties agreed on new terms. This affects the documents and thus makes it tricky for the bank to engage in such a contract. According to the UCP 2007 rules, the documentations are so important and it is important that the bank gets communication early enough12. Among these documents, the invoice is the most important of them all. This base on the number of individuals that it serves that is the customs that verifies the legitimate nature of the transaction, the logistics company, the insurance company that caters for the risk on the goods and including the bank that is to provide financial facilitation for the transaction. The development of the Uniforms Customs and Practices aims at harmonizing the transactions of international platforms so that countries and individuals can engage in business freely. Bibliography Collyer, G, The Origins of the UCP 600 Revision, (Coastline Solutions, 2006) Viewed 31 August 2006, http://www.coastlinesolutions.com/news.htm DArcy, L, Schmitthoffs Export Trade: The Law and Practice of International Trade, 10th Edn, (Sweet & Maxwell, 2000) pp 45-54. Dennis Keenan, Smith and Keenan’s English Law 9th Edition, (English Language Book Society, 1990) pp 651-658 ICC Uniform Customs and Practice for Documentary Credits: 2007 Revision, ICC Services, Paris. International Chamber of Commerce, Uniform Customs and Practice for Documentary Credits, (ICC Publishing, 2003), pp 14-16 Kingman-Brundage, J, The Fundamentals of Trade Finance, (John Wiley & Sons, 1986) pp.72-78 Klein, C., Letter of Credit Law Developments, (Jenner & Block LLP, 2006) pp 12-18 Kreitman, R., UCP 600: Recent Progress, (Mantissa Support, 2006) Viewed 19 September 2006, http://www.mantissa.co.uk/Support/nextucp3a.htm Lachmi Singh, The Law of Carriage of Goods by Sea (Bloomsbury, 2012) pp 46-50 Martin Dockray, Cases and Materials on the Carriage of Goods by Sea (Cavendish Publishing 2013) pp 72-85 Martin Kurer, Warranties and Disclaimers: Limitations of Liability in Consumer Relations, (Wolters Kluwer Law and Business, 2002) pp 74-86. Robert Force, Faith Davis Admiralty and Maritime Law, (Beard Books, 2005) pp 67-90 The Hamburg Rules: A Choice for the EEC? (International Colloquium Held, 1994) Theron Metcalf, Digests of the Decisions of the Courts of Common Law and Admiralty, Yvonne Baatz, The Rotterdam Rules: A Practical Annotation, (CRC Press, 2008) pp 287-291 Read More