Principles of the Carriage of Goods by Sea Principles of the Carriage of Goods by Sea offers students studying this topic as part of their LLM or LLB course an accessible, comprehensive overview of the subject from a leading expert in the field. Writ­ ten specifically with students in mind, concentrating on principles, and tailored to common law coverage, this title presents all the essential topics and is supported by the following useful pedagogy: • Line Diagrams: illustrating the relationships between parties so that this may be understood at a glance; also, where appropriate, time lines • Case Studies: looking at topical matters such as piracy, and problematic areas of law such as reachable on arrival clauses and the carriage of bulk oil by sea • Sample Problem Questions: problem questions and suggestions to help students to prepare for assessment • Annotated Appendices: concise appendix of the most important legislation and international conventions, with useful annotation from the author that explains these and puts them in con­ text Paul Todd is Professor of Commercial and Maritime Law at the University of Southampton. He has been teaching law for almost 40 years, and has written a wide range of publications in international trade law and carriage of goods by sea. This page intentionally left blank Principles of the Carriage of Goods by Sea Paul Todd First published 2016 by Routledge 2 Park Square, Milton Park, Abingdon, Oxon, OX14 4RN and by Routledge 711 Third Avenue, New York, NY 10017 Routledge is an imprint of the Taylor & Francis Group, an Informa business © 2016 Paul Todd The right of Paul Todd to be identified as author of this work has been asserted by him in accordance with sections 77 and 78 of the Copyright, Designs and Patents Act 1988. All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. Trademark notice: Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation without intent to infringe. British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging-in-Publication Data Todd, Paul, 1954– Principles of the carriage of goods by sea / Paul Todd. pages cm Includes bibliographical references and index. 1. Maritime law. I. Title. K1160.T63 2016 343.09'62—dc23 2015016220 ISBN: 978-0-415-74374-7 (hbk) ISBN: 978-0-415-74373-0 (pbk) ISBN: 978-1-315-81349-3 (ebk) Typeset in Joanna by Apex CoVantage, LLC Outline Contents Preface xvii Acknowledgments xix Table of Cases xxi Part 1 Introduction to carriage of goods by sea 1 1 Introduction, bills of lading and charterparties 3 2 Carriage and the general law of contract 22 3 Other legal principles underpinning carriage of goods by sea 45 4 Obligations implied into contracts for the carriage of goods by sea 59 Part 2 Voyage charterparties 83 5 Nature of voyage charterparties 85 6 The approach voyage and the voyage 92 7 Freight 101 8 Loading and discharge (1): introduction and laytime 116 9 Loading and discharge (2): demurrage 131 Part 3 Time charterparties 145 10 Nature of time charterparties 147 11 Period of charter: delivery and redelivery 161 12 Time charterparty hire 179 13 Time charters: employment and indemnity 204 Part 4 Carriage (other than charterparties) 235 14 Introduction: bills of lading and similar documents 237 15 Bill of lading contract terms 248 16 Carriage of Goods by Sea Act 1992 (and related issues) 269 17 Other privity of contract issues 293 18 Hague and Hague-Visby Rules 309 vi | OUTLINE CONTENTS 19 Representations in bills of lading 337 20 The bill of lading as a document of title 347 21 Carriage by sea in the modern world 359 Part 5 Supporting material 371 22 Case studies 373 23 Further reading 390 Appendices 393 Appendix A: Carriage of Goods by Sea Act 1971 (Hague-Visby Rules) 395 Appendix B: Carriage of Goods by Sea Act 1992 405 Appendix C: Hamburg Rules 411 Appendix D: Rotterdam Rules (selected Articles) 423 Index 439 Detailed Contents Preface xvii Acknowledgments xix Table of Cases xxi Part 1 Introduction to carriage of goods by sea 1 1 Introduction, bills of lading and charterparties 3 1.1 Layout of the book 4 1.2 Introduction: distinction between charterparties and bills of lading 4 1.3 Types of charterparty 5 1.4 More on voyage charter terms 6 1.5 More on time charterparty terms 8 1.6 Terms that are common to both types of charterparty 9 1.7 Erosion of the distinction? 10 1.8 Does the distinction matter? 10 1.9 Sub-charterparties 11 1.10 Standard forms 12 1.10.1 Standard form charters: dry cargo 13 1.10.2 Standard form charters: tankers 15 1.11 Charterparties and markets 16 1.12 Following chapters 17 2 Carriage and the general law of contract 22 2.1 Introduction 23 2.2 Contract formation 23 2.3 Terms and their construction 25 2.4 Privity of contract 25 2.5 Market variations and remedies 26 2.6 Conditions, warranties and innominate terms 28 2.6.1 Categories of term, and relevance of seriousness of breach 28 2.6.2 Conditions after Hongkong Fir 30 2.6.3 Effect of repudiation 32 2.7 Anticipatory breach 32 2.8 Affirmation by the innocent party 33 2.9 Damages revisited 35 2.9.1 General principles 35 2.9.2 Mitigation 36 2.9.3 Other limits to damages 37 2.9.4 Penalties 37 2.10 Repudiation and exemption clauses 38 viii | DETAILED CONTENTS 2.11 Construction and serious breaches 39 2.12 Frustration of a contract of carriage 39 2.12.1 Law Reform (Frustrated Contracts) Act 1943 41 2.12.2 Requisition and entrapment 41 2.12.3 Frustration and delay 42 3 Other legal principles underpinning carriage of goods by sea 45 3.1 Introduction 46 3.2 Bailment 46 3.2.1 Principles of bailment 46 3.2.2 Burden of proof 48 3.2.3 Rights of common carriers and bailees for reward 49 3.2.4 Bailment on terms 49 3.3 Tort actions 50 3.4 Law and equity in carriage 50 3.4.1 Introduction 50 3.4.2 Equitable notice doctrine 51 3.4.3 Notice doctrine in maritime commerce 52 3.4.4 Reluctance elsewhere to extend equitable principles 53 3.5 Good faith in carriage of goods by sea 54 3.6 Risk in carriage of goods by sea 56 4 Obligations implied into contracts for the carriage of goods by sea 59 4.1 Introduction 60 4.2 Duty to provide seaworthy vessel 60 4.2.1 Introduction 60 4.2.2 Substance of obligation 61 4.2.3 Cargoworthiness 63 4.2.4 When obligation attaches 64 4.2.5 Stages 65 4.2.6 Fundamental obligation 67 4.2.7 Contracting out of obligation 68 4.2.8 Seaworthiness and causation 68 4.2.9 Seaworthiness paramount 69 4.2.10 Burden of proof 69 4.2.11 Effect of breach 69 4.3 Duties in respect of the cargo 70 4.4 Deviation 71 4.4.1 Duty of shipowner not to deviate 71 4.4.2 Consequences of unjustified deviation 71 4.4.3 Justified deviations 73 4.4.4 Deviation liberty clauses 75 4.5 Obligation to proceed with reasonable despatch 76 4.6 Obligation not to ship dangerous cargo 77 4.6.1 What is dangerous cargo? 77 4.6.2 Arts. III(1) and IV(6) 78 4.6.3 Who bears the risk? 78 DETAILED CONTENTS | ix Part 2 Voyage charterparties 83 5 Nature of voyage charterparties 85 5.1 Introduction 86 5.2 Terms of voyage charterparties 86 5.3 FIO and gross terms 87 5.4 Classification of terms 87 5.5 Consecutive voyage charters 88 5.6 Terms common to the consecutive voyage charterparty 89 5.7 Contracts of affreightment 90 6 The approach voyage and the voyage 92 6.1 Approach voyage: introduction 93 6.2 Cancelling clause 94 6.3 Expected readiness to load 95 6.4 ETA 97 6.5 Present position and other clauses 97 6.6 Reasonable despatch 98 7 Freight 101 7.1 Introduction 102 7.2 Delivered freight 102 7.3 Lumpsum freight, freight pro rata itineris and back freight 105 7.4 Advance freight 106 7.5 The standard forms 107 7.6 Setting off damages against freight 109 7.7 Cargo retention and similar clauses 111 7.8 Deadfreight 112 7.9 Lien and cesser 112 8 Loading and discharge (1): introduction and laytime 116 8.1 Time for loading and discharge: an overview 117 8.2 Stages of a voyage 118 8.3 Commencement of laytime 118 8.4 Traditional allocation of delay risks 119 8.5 Definition of arrived ship 119 8.5.1 The Johanna Oldendorff and precedent 121 8.5.2 The Johanna Oldendorff itself 121 8.6 Validity of notice of readiness (NOR) 123 8.6.1 The problem 123 8.6.2 Inchoate NOR 124 8.7 Breach before NOR 126 8.8 Achieving traditional allocation of risk 128 8.8.1 Late arrival, and earlier tendering of NOR 128 8.8.2 Early arrival, but with exceptions 128 8.9 Laytime and standard forms 129 x | DETAILED CONTENTS 9 Loading and discharge (2): demurrage 131 9.1 Nature of demurrage 132 9.2 Length of time on demurrage 133 9.3 Jupiter clauses 134 9.4 Avoidance of demurrage regime by repudiating 135 9.5 Independent breach? 135 9.6 Different type of loss and/or breach of different obligation 137 9.7 Repudiating the charterparty 138 9.8 Must elect to repudiate 140 9.9 Application to consecutive voyages 140 9.10 Once on demurrage always on demurrage 142 Part 3 Time charterparties 145 10 Nature of time charterparties 147 10.1 Main features of time charters 148 10.2 Use of time and demise charters 149 10.3 Some time charterparty clauses 151 10.4 Trip-time charters 152 10.5 Distinction between time and demise charters 153 10.6 Time charterparties and third parties 154 10.7 Property and tort actions 158 10.8 Test for demise charterparty