By Capt. A. K. Bansal
Under Contract of AFFREIGHTMENT, shipowner gives to charterer, use of whole or part of cargo-carrying capacity of his ship for a specified voyage or voyages or for specified time, but at a price. Rights and obligations of owner and charterer depend on terms of the agreement. Laws and rules laid down by statutes to regulate rights of parties cannot be contravened by express stipulations in such a contract. Implied warranty is that the ship is seaworthy and shall proceed with reasonable despatch. Certain common clauses in such contracts have come before courts. Their decisions are usually treated as rules of law in shipping contracts. Some rules are common Law. For instance, carrier is absolutely responsible for safe delivery of goods carried, unless prevented by Act of God. Each separate consignment or parcel of goods shipped is covered by a B/L.
When a whole cargo is agreed to be carried, terms are set out in a C/P, signed by or on behalf of both shipowner and shipper or charterer. But rules of law govern relations of ship owner charterer or shipper independent of any express contract. Such terms of carriage, rights of parties whether expressed or not, must be governed in accordance with prevailing Law. Shipper must not ship goods dangerous to the ship, or to other goods, unless ship owner has notice and opportunity to observe their dangerous character. Obligation of ship owner is to deliver the goods safely at destination. Shipper must be prepared, without notice from ship owner, to take delivery of his goods with reasonable dispatch on arrival, ready to discharge at usual discharging place and must pay agreed freight before claiming delivery.
Ship has lien for freight payable. on goods carried, Ship owner is not liable for loss or damage caused by act of God or enemies, without his actual fault or privity. Even so there is a limit on such liability. terms of the B/L for damage and loss of every kind, whether arising from unseaworthiness or any other cause whatsoever. Goods are usually carried at shipper’s risk, and if he desires protection he must obtain it by insurance. Owners, agents and masters loading in USA are forbidden by Harter Act 1893, to insert any clause in B/L exempting shipowner’s liability for negligence of his servants. But if all reasonable care has been exercised by shipowner to make the ship seaworthy and fit for the voyage, he is not liable for loss caused by negligence of master or crew, or by perils of the sea or other causes set forth in the act.
Difficulty to construe terms of B/L for excepted perils, often expressed in obscure and inexact language, has given rise to much litigation. B/L sometimes contains a clause about shipowner’s lien. Even though ship has a lien for freight, if shipowner needs a lien for demurrage or other charges, he must expressly provide for it. Lien is waived by delivery of goods. Owner may preserve his lien by landing the goods in a warehouse. Charter-party C/P for a voyage is a formal agreement made between charterers and owner by which it is agreed that the ship shall load at a named place and being so loaded shall proceed with all possible dispatch either to a specified place or to a place to be named at a specified time, and there deliver the cargo to charterers or their assigns.
C/P clauses provide for freight to be paid, manner and time of payment, lay days allowed for loading and discharging, and for demurrage to be paid if ship is detained beyond lay days. There is usually a clause requiring cargo to be brought to and taken from alongside at shipper’s risk and expense and that master shall sign B/L for cargo shipped at the same rate of freight as is payable under C/P. Under a cesser clause, charterer’s liability under C/P ceases on shipment and ship owner takes a lien on the cargo for freight, dead freight and demurrage. This is an outline of ordinary voyage C/P contract. Terms of a B/L, pertaining to the voyage, place of delivery of cargo, exceptions and excepted perils, liability of shipowner and his lien applies equally to other charter- parties.
Cargo owner is entitled under the contract of AFFREIGHTMENT, to ordinary service of the ship and crew for safe carriage of cargo to destination. Shipowner is bound to pay all ordinary expenses incurred for the voyage and to bear all losses arising from damage to the ship by accidents A B/L is a negotiable receipt of cargo and gives property title to its holder. It is common to stipulate that ship owner is not be liable for any loss arising from negligence of his servants. It is common to stipulate that ship owner shall not be responsible for loss arising even from unseaworthiness provided due care has been taken by him and his agents and servants to make her seaworthy at commencement of the voyage.
There is no rule of law which prevents shipowner from exempting himself from liability by A safe carriage of cargo to destination Demurrage is a fixed sum per day or per hour agreed to be paid by charterer for excess time used in loading or discharging over lay days allowed in C/P. Number of days during which a ship may be kept on demurrage at the agreed rate, may also be fixed by C/P. When a claim is for detention and not demurrage, actual loss is recoverable, which may be more or less than agreed rate of demurrage. C/P usually provides that Sundays and holidays are excepted in counting lay days. But unless expressly stipulated this exception does not apply to computation of period of detention, once lay days have expired.
Principle is “Once on demurrage, always on demurrage!” Dead freight is the amount of freight lost to shipowner, claimable from charterer if a full and complete cargo is not loaded in accordance with C/P. Cesser clause is commonly used because charterers may not be personally interested in cargo shipped. They maybe just agents or may have chartered the ship to make a profit on B/L freight. Under this clause, when charterers have shipped full cargo, they have fulfilled their obligations and ship owner takes lien on cargo for payment of freight, demurrage or dead freight. Cesser of liability is co-extensive only with lien given to ship owner. Thus charterers are released only from those liabilities, for which ship owner has lien. If shippers are not charterers, they are only liable for B/ L freight, unless B/L expressly reserves it.
If total freight payable under B/L is less than chartered freight, difference is payable to ship owner before ship sails. Difficulty sometimes arises that even though ample lien is given by the C/P, terms of B/L may be insufficient to preserve the same extensive lien as against holder of B/L. Master should guard against this by refusing to sign bills of lading which do not preserve ship owner’s lien for chartered freight. But he can be put into difficulty if C/P requires him to sign B/ L as presented. See Kruger v. Moel Tryvan, 1907 A. C. 272. Time C/P is a contract for a specified term for employment on lawful voyages within certain limits. Port where ship is to be delivered/re-delivered, is named. Freight payable is known as hire. Owner always pays wages of Master and crew, and charterer provide fuel, pays port charges etc.
Hire may be payable weekly fortnightly or monthly but always in advance. Provision is made for suspension of hire if the ship becomes disabled. Master, though servant of owner, is required to obey orders of charterers regarding employment of the ship. Charterers agree to indemnify owners from all liability to which they may be exposed by master signing B/L or otherwise complying with orders of charterers. Contract is made subject to exceptions similar to those in B/L’s and voyage C/P but clauses can vary considerably. Under time C/P ship owner continues to be in possession of his ship but part of her control is under directions and for profit of charterers, within agreed limits. Master remains responsible for safety and proper navigation of the ship.
Thus holder of a B/L signed by master in normal course, may hold the owner responsible for due performance of B/L, if he has no knowledge of terms of time C/P, even though by signing such B/L’s Master was acting as agent of Charterers and not ship owner. Where possession of a ship is given to a hirer, who appoints his own master and crew, it is known as bare boat charter or demise charter and different considerations apply even though the ship is still let under a C/P. Certain rights and obligations arise out of relationship of shipowner and cargo-owner in circumstances of extraordinary peril or urgency in the course of a voyage, which, though not strictly contractual, are well established and recognized in law. When the ship is carrying cargo, master represents owners of both ship and cargo to some extent.
In cases of emergency Master may incur expense or make sacrifices when necessary, without waiting for authority or instructions, of shipowner and even cargo- owner. Ship and cargo may be in peril, and it may be necessary for safety of both to put into port of refuge for repair and/or to warehouse, and later re-ship the cargo. In such cases while cost of repairing the ship, will be for benefit of ship owner, other expenses such as warehousing the cargo may be for benefit of cargo-owner. Some expenses such as port charges incurred in order to enter the port of refuge, are for common benefit for safety of ship and cargo. Again, in a storm at sea, it may be necessary for safety of ship and cargo to cut away a mast or to jettison part of cargo. In such cases master acts for shipowner and cargo-owner, to avoid common danger.
Sacrifices made and extraordinary expenses incurred for common safety are called GA sacrifices. Expenses etc. are made good to who has made the sacrifice or incurred the expense. This is GA contribution, which is recoverable from owners of the property saved in proportion to its value. Each contributes according to the benefit received. This is Law of GA. But cargo owner is entitled under the contract of AFFREIGHTMENT to ordinary service of the ship and crew for safe carriage of cargo to destination. Shipowner is bound to pay all ordinary expenses incurred for the voyage and to bear all losses arising from damage to the ship by accidents. It is only when extraordinary expense has been incurred or an extraordinary sacrifice has been voluntarily made from a peril common to both ship and cargo, that ship owner can recover proportional expense from cargo owner. Shipper must be prepared, without notice from ship owner, to take delivery of his goods with reasonable dispatch on arrival, ready to discharge at usual discharging place and must pay agreed freight before claiming delivery “Once on demurrage, always on demurrage”