Carriage of Goods by Charterparty
| Author | Edgar Gold/Aldo Chircop/Hugh Kindred |
| Pages | 358-406 |
CHAPTER
8
CARRIAGE
OF
GOODS
BY
CHARTERPARTY
A.
INTRODUCTION
Cargoes
carried
by sea are
governed
by two
separate
and
strikingly dif-
ferent
regimes according
to the
kinds
of
goods involved
and the
type
of
ships
in
which they
are
transported.
For
practical reasons, goods
are
moved across
the
oceans either
in
bulk
or in
packaged
form.
The
type
of
cargo determines
the way in
which
it
will
be
handled; therefore, oil,
ores, grains, timber,
and
other primary products
are
transported
in
bulk, while manufactured products
and
personal goods
are
moved
in
individual protective packages, otherwise known
as
break bulk goods.
Such
packages
are
typically made
up
into units,
for
ease
of
handling
by
forklift
trucks
and
cranes,
by
strapping them together
on
pallets
or
stuffing
them
in 20- or
40-foot
(6- or
12-meter) metal containers.
Very
large
and
unwieldy items, like yachts
and
earth moving
equipment,
may
be
shipped
as
single units with
a
minimum
of
wrapping.
Different
kinds
of
cargoes
not
only demand
different
types
of
ships
but, more importantly
from
a
legal perspective,
different
modes
of
operation.
A
bulk cargo,
as the
name suggests, generally occupies
all
the
carrying space
of the
ship, which, accordingly, will
be
directed
by
the
cargo owner
to
proceed more
or
less directly
to a
selected destina-
tion.
Therefore,
ships
that carry bulk goods tramp
from
port
to
port
around
the
world,
as
cargoes
are
available
and
cargo owners engage
them. Such tramp
ships
do not
sail
to a
schedule
but
carry their car-
358
Carriage
of
Goods
by
Charterparty
359
goes
by
individual agreements with
the
cargo owners
in
contracts
known
as
charterparties. Packaged goods
may be
numerous
but not
individually bulky and,
so,
they need
to be
combined
to
fill
the
holds
of
a
ship.
In
fact,
a
modern container
ship
may
carry several thousand
containers
of
goods belonging
to
hundreds
of
different
owners. Such
multiple ownership
of
cargoes
on the
same
ship
inevitably means
the
vessel must sail
on a
pre-arranged schedule
of
ports
and
timetable.
Equally,
the
shipowner cannot negotiate individual terms
of
carriage
with each cargo owner
but
offers
transportation services
on a set of
standard trading conditions made available
in
advance. Such liner serv-
ice,
as it is
called,
is
recorded
for
each cargo
in a
bill
of
lading
or
simi-
lar
document.
As
the
manner
of
moving goods
by
tramp
ships
or
liner
service
determines
the
kind
of
contractual document under which they
are
carried,
so the
legal regime governing
the
relations between
the
shipowner
and the
cargo owner will
differ.
Charterparties
are
regulat-
ed by the
maritime common
law of
contracts
as to
their validity, inter-
pretation,
and
effect.
In
principle,
therefore,
the
parties have
freedom
to
contract
as
seems fit, overlaid only
by a
multitude
of
standard claus-
es
and
cases interpreting their technical meanings. Bills
of
lading,
on
the
other hand,
are now
governed
by one or
other sets
of
internation-
ally
uniform rules.
As the
maritime common
law
proved
to be an
inad-
equate
regimen
to
balance
the
shipowner's
and
cargo owner's
risks
in
the
estimation
of
most countries,
a set of
rules, known
as the
Hague
Rules,1
was
agreed
in
1924
to
limit
the
freedom
of
contract
in the
liner
trades. Subsequent technological improvements
in
ships
and
their
equipment,
as
well
as the
development
of
cargo-handling methods,
have
necessitated extensive
reform
of the
Hague
Rules,
but no
general
international agreement
on one new set of
rules
has yet
been achieved.
As
a
result, bills
of
lading
are
largely regulated
by
national legislation
that imposes some variant
of the
Hague
Rules.
This division
of
applicable legal regimes
is
not,
in
practice,
so
sim-
ple.
In
particular, goods
are
frequently
carried under
bills
of
lading
on
a
chartered
ship.
Bulk cargoes
of oil are
typically processed this
way so
that
they
may be
sold
in the
market,
often
many times over,
by
negoti-
ation
of the
bills
of
lading while
the
carrying
ship
is
still
at
sea.
Again,
when
a
charterer loads goods
of
another person, that cargo owner will
always need
a
bill
of
lading
or
similar document
as
evidence
of the
transaction.
The
legal
implications
of
issuing
bills
of
lading
for the
car-
1
International Convention
for the
Unification
of
Certain
Rules
of
Law
Relating
to
Bills
of
Lading,
25
August 1924,
120
L.N.T.S.
155
[Hague
Rules].
360
MARITIME
LAW
riage
of
goods
on a
chartered
ship
can
quickly become complex.
It
is
not
easy
to
determine
the
intended contractual relations among three
parties
to two
different
contracts, especially when
the
terms
of the
charterparty
and the
bill
of
lading
are not
aligned
and
complementary.
The
difficulties
are
compounded
by the
multiplicity
of
documents that
may
be
involved, such
as
when bills
of
lading
are
issued
for
goods
being carried
on a
voyage-chartered
ship
that
has
been time-chartered
from
the
charterer
by
demise
or the
shipowner.
Such
is the
difference
in the law
regulating tramp
ships
carrying
goods
in
bulk under
charterparties,
and
liner vessels moving packaged
goods
covered
by
bills
of
lading,
that
this
subject
calls
for
separate
treatment
in
this
and the
following
chapter. Accordingly,
the law
sur-
rounding charterparties
is
explained
in
this
chapter
and the
regulation
of
bills
of
lading
and
similar documents
is
discussed
in
Chapter
9.
There are, however,
a set of
fundamental obligations
in
maritime com-
mon law
that
are
borne
by the
carrier
and
cargo owner
in any
transit
of
goods,
be it
processed under
a
charterparty,
a
bill
of
lading,
or any
other
document.
As
these obligations
reflect
the
commercial elements
of
every ocean transport transaction, they will
be
discussed
first.
B.
MARITIME
COMMON
LAW
PRINCIPLES
OF
CARRIAGE
In the
absence
of
contrary agreement
or
mandatory legislation,
the
par-
ties
to any
contract
for the
carriage
of
goods
by
water will bear
a
num-
ber of
obligations implied
by
Canadian maritime common law,
as
follows:
•
obligations
on the
carrier:
- to
provide
a
seaworthy ship,
- to
care
for
the
cargo,
- not to
deviate
on the
voyage,
and
- to
deliver
the
cargo without delay;
•
obligations
on the
cargo owner:
- not to
ship dangerous goods without appropriate warning,
and
- to pay the
freight
(transport charge);
•
obligations shared
by
carrier
and
cargo owner:
-
general average.
Each
obligation will
be
discussed
in
turn, except
for
general average,
which
is the
subject
of
Chapter
16.
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