Rights and Obligation of Parties Under the Contract of Carriage of Goods by Sea
Chapter One
Preamble of the Study
Man has always been by his nature an interactive and interdependent being, and trade has been one of those means by which he interacts and shows his interdependency. He engages in the exchange of goods and services for a valuable consideration.
The concept of international trade is not new to man, only that here, this form of exchange seems to resonate on a much broader platform involving a complex web of structures and processes which makes this sort of transaction possible and one of this structure is the carriage of goods by sea, thus it is important to point out that, this form of transportation of goods is not only vital to international trade, but it also forms an integral part of it, that the absence it would make international trade very difficult to undertake.
Though our focus is the rights and obligations of parties under the carriage of goods by sea, full appreciation of this rights and duties will not be attained, if some attention is not given to highlight the nature of this form of transaction.
CHAPTER TWO
THE RIGHTS AND DUTIES OF PARTIES UNDER THE CONTRACT OF CARRIAGE OF GOODS BY SEA
THE RIGHTS AND RESPONSIBILITIES OF THE CARRIER
Before the inception of the Hague Rules in 1924, bills of lading were largely governed by common law and the express and implied terms of the contract of carriage. At common law, we see that the liability of the shipowner is always strict and was under an obligation to deliver the goods received by him in the same condition as they were when shipped.
In his article, we see an authority also agrees with this when he pointed out that traditionally at common law the liability of the carrier was strict, and that the only way he could escape liability for loss or damage to the goods was only if the cause of loss or damage was done by the king’s enemies. Other exceptions were:
- an act of God or
- inherent vice in the goods themselves.
- the negligence of the owner of the goods, etc.
Apart from express contract or statute, the carriers absolute responsibility was akin to that of a bailee, his liability as an insurer arises, binding him to answer for the goods delivered to him by the shipper at all cost, save the exceptions mentioned above.
Ironically, the common law strict liability to the shipper was defeated by the carrier’s insertion of exemption clauses into the bill of lading. What was usually the case, was the attendant abuse of such clauses to the detriment of the shippers. The carriers because of their high negotiating power, often insert terms and conditions which were not in the shipper’s favour. The terms and conditions were usually incorporated in the bills of lading, which became more difficult and ambiguous to the extent that carriers were not responsible for anything apart from collecting their freight.
Thus, the inception of the Hague Rule was a means aimed at curbing the lacuna evident at common law. In elaborating on the history of the Hague Rule, we see that the rule was a follow up of the Harter Act of 1893 in America, which imposed certain regulatory measures on the carrier and forbade the inclusion of certain types of exemption clauses relieving him from liability. This brought some levels of sanity and afforded merchants protection. This itself gave rise to other Acts and laws in countries like Australia, New Zealand and Canada.
Due to the differences in the laws there was dissatisfaction, brought by numerous interpretations of maritime law in different jurisdictions. This led to the desire to have a uniform legislation concerning carriage of goods. Thus a code of rules were drawn up and was subsequently adopted and signed in Brussels on August 25, 1924, which was hence known as the Hague Rules.
As already seen, the Rules grant certain rights and immunities to the parties which can not be deprived. According to Onyeakagbu A. Ikedinma, the rules not only define the circumstances where a carrier could avoid liability, but also provide that any clause or contract purporting to relieve a carrier of his liability under the rules are void and of no effect. On the other hand, a carrier may increase his liability but cannot reduce same.
CHAPTER THREE
DUTIES OF THE SHIPPER
At common law, the duties of the shipper was broad, compared to that of the statute. This itself, does not limit his responsibilities to the carrier albeit the fact that the statute did not expressly state it.
- Duty to engage in lawful trade.
- Duty to tender cargo.
- Duty to pay freight
- Duty to supply information.
- Duty as to dangerous goods
DUTY TO ENGAGE IN LAWFUL TRADE
In all contracts, including those regulated by statute and those that are in common law, it is trite that such contract should not be illegal or concluded on a base course, for such would under no remedy to the parties involved. The contract of carriage is not an exception to this rule. Here, if the terms are illegal at the on set, regardless of whether the parties were aware of the laws or not. Even if on the other hand both parties are aware of the illegality or in pari delicto, the contract is unenforceable.
However, in some instances a party can desire remedy from the court if he was not aware of the illegality, in instances like this, the court would grant remedy under the Quantum merit
DUTY TO TENDER CARGO
It is a primary duty of a shipper to tender goods to the carrier at the time and place, supplying the number as well as the quantity of goods (cargo) as appointed by the contract if he fails to do so, he incurs a liability in damages for breach of contract. In some cases, he may have to pay full freight despite not having delivered the quantity of goods contracted to be shipped.
CHAPTER FOUR
THE ROLE OF AGENTS IN THE CONTRACT OF CARRIAGE OF GOODS BY SEA
Having fully espoused on the nature of carriage of goods by sea, it is important however to reiterate that generally, international trade involves many different agreements and transactions, and carriage of goods involves no less the same. Chuah in his book, rightly pointed out that international transactions are highly complex and are often situated in a country foreign to the trader. Thus it would be a hereculean task for a trader (if not impossible)* to handle and manage all these transactions without employing specialist agents.
When applying it to contract of carriage, we see the need for agents by parties to this transaction cannot be over emphasized. But before discussing their relevance to the parties, we quickly seek to highlight some definitions given by some authorities.
CHAPTER FIVE
SUMMARY, RECOMMENDATIONS AND CONCLUSION
SUMMARY
From the foregoing chapters, we have been able to examine what constitute a carriage of goods contract and the obligations of parties in that contract.
In chapter one, we were able to distinguish between the contract of carriage from everyday contract and enunciate what constitute the nature of contract of carriage of goods by sea.
In chapters two and three, we were able to highlight the duties, the rights as well as the liabilities of parties, imposed by the act as well as the precedence laid down by common law.
Again in chapter four, we focused our attention on the importance of the agents whose role in this form of transaction can not be undermined.
The importance of the Carriage of Goods by Sea especially to parties involved in such agreement will continue to play a very important role in international sales transactions.
However, though its importance cannot be over emphasized, its also pertinent to point out some of the inherent flaws in the Hague Rule or the Carriage of Goods by Sea Act.
For example the rule does not afford protection to servants or agents of the carrier, when the issue of liability occurs. In most instances the carrier has to insert such terms of protection to auxiliary persons into the bill of lading, to cover any liability that may occur from the acts or omission from these persons. This however has been solved by the Hague – Visby Rule by virtue of Article IV (2) – (4) which protects the servants and agents of the carrier by paying the maximum liability which the Act stipulates.
Onyeakagbu A.I., draws our minds to an important fact, here he states that the developments of technological advancement in the shipping industry has rendered some of the concepts contained in the Rules anachronistic, as it could no longer meet the needs of time.
This position is true when considering the nature of this form of transaction. The system is one which engenders change, and such is seen in their practices and procedures. With constant change in the system, what we see is a different approach to issues and inevitability conflicts on different views by parties involved in such transaction. Thus it could be frustrating if not difficult for parties to get any real remedy because in most cases the Act itself did not foresee this kind of problem.
Then again, there is the issue of value. The Carriage of Goods by Sea Act 2004, is still the same Act adopted in 1926, and the value the Act placed then cannot be said to practical in contemporary times. We see by virtue of Article IV (5), the Act stating that:
…Neither the carrier nor the ship shall in any event be or become liable for any loss or damage to or in connection with goods in an amount exceeding N200 per package or unit or the equivalent of that sum in other currency…
What is actually suffered by some parties especially the shippers is that they are short changed and the real value of the good will not be attained, when there is a breach in the agreement.
All these problems led to a call for a review which saw the emergence of the Hague – Visby Rule and even more progressive by the Hamburg Rules in 1978, which to a large extent address the problems inherent in the Hague Rules and to a large extent struck a balance between the rights of the shippers and carriers, thus both the shipping nations as well as the cargo-owing nations had their interest properly identified and addressed.
RECOMMENDATIONS
The Carriage of Goods Act 2004 as to adopt a more progressive system that takes into consideration the various flaws already inherent in our Carriage of Goods by Sea Act.
Also, consideration should be given to the roles of agents and possibly independent contractors, as shown in the example of the Hague-Visby Rule which took care of this flaw inherent in the Hague Rule by adopting Article IV(2) – (4) as already enunciated in Chapter 4.
The Carriage of Goods by Sea Act 2004, fails to meet the needs of shippers, because of time it was adopted and the change in practice and regulation of the system together with the ever advancing speed of technology, which has made the system more complicated than that envisioned in 1926. Thus as an addendum to the first recommendation, the government through the legislature should adopt the Hamburg rule which to large extend encompasses the various interests of both the carrier as well as the shippers and other auxiliary persons in the carriage of goods by sea contract.
CONCLUSION
In conclusion, one recommends that rather than use the Hague Rule which is disguised as the Carriage of Goods by Sea Act 2004, the government and indeed the legislature should opt to adopt the Hamburg Rules, which is to a large extent move progressive than the Hague Visby Rule, in that it covers a large area which both the Hague and the Hague-Visby failed to consider, and which not only seek to protect the interest of parties, in such transactions, but also to protect our national interest, because to a large extent we are a cargo-owing nation, whose position is more to the side of the shippers.
BIBLIOGRAPHY
BOOKS
- Bradgate, R. Commercial Law, 2nd Edition. London: Butterworths (1995).
- Carver Carriage By Sea, 12th Edition. London: Stevens and Sons (1971).
- Chuah, J.C.T. Law of International Trade. London: Sweet and Maxwell (1998).
- Fridman, G.H.L. the Law of Agency, 7th Edition. London: Butterworths (1996).
- Goode Commercial Law. London: Penguin Books (1982).
- Ivamy, H.E.R. Payne and Ivamy’s Carriage of Goods by Sea, 12th Edition. London: Butterworths (1985).
- Orojo, O. Nigerian Commercial Law and Practice. Ibadan: Spectrum Law Series.
- Schmitthoff, C.M. Schmitthoff’s Export Trade The Law and Practice of International Trade, 9th Edition. London: Stevens and Sons (1990).
- Schmitthoff, C.M. and Sarve P.A.G. Charlesworth’s Mercantile Law, 19th Edition. London: Butterworths.
