Friday, January 28, 2011

CHAPTER V. COMPARISON OF THE FRENCH
AND AMERICAN DECLARATIONS.
DÉCLARATION DES DROITS DE
L'HOMME ET DU CITOYEN.
AMERICAN BILLS OF RIGHTS.
ART. I. Les homes naissent et demeurent
libres et égaux en droits. Les distinctions
sociales ne peuvent être fondées que sur
l'utilité commune.
2. Le but de toute association politique est
la conservation des droits naturels et
imprescriptibles de l'homme. Ces droits
sont la liberté, la propriété, la sûreté et la
résistance à l'oppression.
VIRGINIA, I. That all men are by nature
equally free and independent, and have
certain inherent rights, of which, when they
enter into a state of society, they cannot, by
any compact, deprive or divest their
posterity; namely, the enjoyment of life and
liberty, with the means of acquiring and
possessing property, and pursuing and
obtaining happiness and safety.
VIRGINIA, IV. That no man, or set of men,
are entitled to exclusive or separate
emoluments or privileges from the
community, but in consideration of public
services.
MASSACHUSETTS, Preamble to the
Constitution. The end of the institution,
maintenance, and administration of
government is to secure the existence of the
bodypolitic, to protect it, and to furnish the
individuals who compose it with the power
of enjoying, in safety and tranquillity, their
natural rights and the blessings of life.
MARYLAND, IV. The doctrine of
nonresistance, against arbitrary power and
oppression, is absurd, slavish and destructive
of the good and happiness of mankind.
3. Le principe de toute souveraineté réside
essentiellement dans la nation. Nul corps,
nul individu ne peut exercer d'autorité qui
n'en émane expréssement.
VIRGINIA, II. That all power is vested in,
and consequently derived from, the people;
that magistrates are their trustees and
servants, and at all times amenable to them.
4. La liberté consiste à pouvoir faire tout
ce qui ne nuit pas à autrui; aussi
l'exercise des droits naturels de chaque
homme n'a de bornes que celles qui
MASSACHUSETTS, Preamble. The
bodypolitic is formed by a voluntary
association of individuals; it is a social
compact by which the whole people
assurent aux autres membres de la société
la jouissance de ces mêmes droits. Ces
bornes ne peuvent étre déterminées que
par la loi.
covenants with each citizen and each citizen
with the whole people that all shall be
governed by certain laws for the common
good.
MASSACHUSETTS, X. Each individual of
the society has a right to be protected by it in
the enjoyment of his life, liberty, and
property, according to standing laws.
5. La loi n'a le droit de défendre que les
actions nuisibles à la société. Tout ce qui
n'est pas défendu par la loi ne peut être
empêtre contraint à faire ce qu'elle
n'ordonne pas.
MASSACHUSETTS, XI. Every subject of
the commonwealth ought to find a certain
remedy, by having recourse to the laws, for
all injuries or wrongs which he may receive
in his person, property, or character.
NORTH CAROLINA XIII. That every
freeman, restrained of his liberty, is entitled
to a remedy, to inquire into the lawfulness
thereof, and to remove the same, if unlawful;
and that such remedy ought not to be denied
or delayed.
VIRGINIA, VII. That all power of
suspending laws, or the execution of laws, by
any authority, without consent of the
representatives of the people, is injurious to
their rights, and ought not to be exercised.1
MARYLAND, V. That the right in the
people to participate in the Legislature, is the
best security of liberty, and the foundation of
all free government.
6. La loi est l'expression de la volonté
générale. Tous les citoyens ont le droit de
concourir personnellement ou par leurs
représentants à sa formation. Elle doitêtre
la même pour tous, soit qu'elle protège,
soit qu'elle punisse. Tous les citoyens
étant égaux à ses yeux, sont également
admissibles à toutes dignités, places et
emplois publics, selon leur capacité, et
sans autre distinction que celle de leurs
vertus et leurs talents.
MASSACHUSETTS, IX. All elections ought
to be free;2 and all the inhabitants of this
commonwealth, having such qualifications as
they shall establish by their frame of
government, have an equal right to elect
officers, and to be elected, for public
employments.
NEW HAMPSHIRE, XII. Nor are the
inhabitants of this State controllable by any
other laws than those to which they or their
representative body have given their consent.
7. Nul homme ne peut être accusé, arrêté,
ni détenu que dans les cas déterminés par
la loi et selon les formes qu'elle a
MASSACHUSETTS, XII. No subject shall
be held to answer for any crimes or no
offence until the same is fully and plainly,
prescrites. Ceux qui sollicitent, expédient,
exécutent ou font exécuter des ordres
arbitraires, doivent être punis; mais tout
citoyen appelé ou saisi en vertu de la loi
doit obéir à l'instant; il se rend coupable
par sa résistance.
substantially and formally, described to him;
or be compelled to accuse, or furnish
evidence against himself; and every subject
shall have a right to produce all proofs that
may be favorable to him; to meet the
witnesses against him face to face, and to be
fully heard in his defence by himself, or his
counsel at his election. And no subject shall
be arrested, imprisoned, despoiled, or
deprived of his property, immunities, or
privileges, put out of the protection of the
law, exiled or deprived of his life, liberty, or
estate, but by the judgment of his peers, or
the law of the land.3
VIRGINIA, X. That general warrants,
whereby an officer or messenger may be
commanded to search suspected places
without evidence of a fact committed, or to
seize any person or persons not named, or
whose offence is not particularly described
and supported by evidence, are grievous and
oppressive, and ought not to be granted.
NEW HAMPSHIRE, XVIII. All penalties
ought to be proportioned to the nature of the
offence.4
8. La loi ne doit établir que des peines
strictement nécessaires et nul ne peut être
puni qu'en vertu d'une loi établie et
promulguée antérieurement au délit et
légalement appliquée. MARYLAND, XIV. That sanguinary laws
ought to be avoided, as far as is consistent
with the safety of the State; and no law, to
inflict cruel and unusual pains and penalties,
ought to be made in any case, or at any time
hereafter.5
MARYLAND, XV. That retrospective laws,
punishing facts committed before the
existence of such laws, and by them only
declared criminal, are oppressive, unjust, and
incompatible with liberty; wherefore no ex
post facto law ought to be made.
9. Tout hommeétant présumé innocent Cf. above, MASSACHUSETTS, XII; further
jusqu' à ce qu'il ait été déclaré coupable,
s'il est jugé indispensable de l'arrêter,
toute rigueur qui ne serait pas nécessaire
pour s'assurer de sa personne doit être
sévèrement réprimée par la loi.
MASSACHUSETTS, XIV. Every subject
has a right to be secure from all unreasonable
searches and seizures of his person, his
houses, his papers, and all his possessions.
MASSACHUSETTS, XXVI. No magistrate
or court of law shall demand excessive bail
or sureties, impose excessive fines6…
10. Nul doit étre inquiété pour ses
opinions, même religieuses, pourvu que
leur manifestation ne trouble pas l'ordre
public établi par la loi.
NEW HAMPSHIRE, V. Every individual
has a natural and unalienable right to worship
GOD according to the dictates of his own
conscience, and reason; and no subject shall
be hurt, molested or restrained in his person,
liberty or estate for worshipping GOD, in the
manner and season most agreeable to the
dictates of his own conscience, or for his
religious profession, sentiments or
persuasion; provided he doth not disturb the
public peace, or disturb others, in their
religious worship.
VIRGINIA, XII. That the freedom of the
press is one of the great bulwarks of liberty,
and can never be restrained but by despotic
governments.
11. La libre communication des pensées et
des opinions est un des droits les plus
précieux de l'homme; tout citoyen peut
donc parler, écrire, imprimer librement
sauf à répondre de l'abus de cette liberté
dans les cas determinés par la loi. PENNSYLVANIA, XII. That the people
have a right to freedom of speech, and of
writing, and publishing their sentiments.
12. La garantie des droits de l'homme et
du citoyen nécessité une force publique.
Cette force est donc instituée pour
l'avantage de tous, et non pour l'utilité
particulière de ceux auxquels elle est
confiée.
PENNSYLVANIA, V. That government is,
or ought to be, instituted for the common
benefit, protection and security of the people,
nation or community; and not for the
particular emolument or advantage of any
single man, family, or sett of men, who are a
part only of that community.
13. Pour l'entretien de la force publique et
pour les dépenses d'administration, une
contribution commune est indispensable;
elle doit ére également répartie entre tous
les citoyens en raison de leurs facultés.
MASSACHUSETTS, X. Each individual of
the society has a right to be protected by it in
the enjoyment of his life, liberty, and
property, according to standing laws. He is
obliged, consequently, to contribute his share
to the expense of this protection; to give his
personal service, or an equivalent, when
necessary.
14. Tous les citoyens ont le droit de
constater, par eux mêmes ou par leur
représentants, la nécessité de la
contribution publique, de la consentir
librement, d' en suivre l'emploi, et d'en
déterminer la qualité, l'assiette, le
MASSACHUSETTS, XXIII. No subsidy,
charge, tax, impost, or duties, ought to be
established, fixed, laid or levied, under any
pretext whatsoever, without the consent of
the people, or their representatives in the
legislature.
recouvrement et la durée.
15. La société a le droit de demander See above, VIRGINIA, II; further
compte à tout agent public de son
administration. MASSACHUSETTS V. All power residing
originally in the people, and being derived
from them, the several magistrates and
officers of government vested with authority,
whether legislative, executive, or judicial, are
the substitutes and agents, and are at all times
accountable to them.
NEW HAMPSHIRE, III. When men enter
into a state of society, they surrender up
some of their natural rights to that society, in
order to insure the protection of others; and
without such an equivalent, the surrender is
void.
16. Toute société, dans laquelle la
garantie des droits n'est pas assurée, ni la
séparation des pouvoirs déterminée, n'a
point de constitution.
MASSACHUSETTS, XXX. In the
government of this commonwealth, the
legislative department shall never exercise
the executive and judicial powers, or either
of them; the executive shall never exercise
the legislative and judicial powers, or either
of them; the judicial shall never exercise the
legislative and executive powers, or either of
them; to the end it may be a government of
laws, and not of men.
17. La propriété étant un droit inviolable
et sacré, nul ne peut en être privé, si ce
n'est lors que la nécessité publique,
légalement constatée, l'exige évidemment,
et sous la condition d'une juste et
préalable indemnité.
MASSACHUSETTS, X…. But no part of the
property of any individual can, with justice,
be taken from him, or applied to public uses,
without his own consent, or that of the
representative body of the people…. And
whenever the public exigencies require that
the property of any individual should be
appropriated to public uses, he shall receive a
reasonable compensation therefor.
VERMONT, II. That private property ought
to be subservient to public uses, when
necessity requires it; nevertheless, whenever
any particular man's property is taken for the
use of the public, the owner ought to receive
an equivalent in money.
reference:
Georg Jellinek, The Declaration of the Rights of Man
and of Citizens: A Contribution to Modern Constitutional
History (1895)

CHAPTER IV. VIRGINIA'S BILL OF RIGHTS AND
THOSE OF THE OTHER NORTH AMERICAN
STATES.
THE Congress of the colonies, which were already resolved upon separation from the
mother country, while sitting in Philadelphia issued on May 15, 1776, an appeal to its
constituents to give themselves constitutions. Of the thirteen states that originally made
up the Union, eleven had responded to this appeal before the outbreak of the French
Revolution. Two retained the colonial charters that had been granted them by the English
crown, and invested these documents with the character of constitutions, namely,
Connecticut the charter of 1662, and Rhode Island that of 1663, so that these charters are
the oldest written constitutions in the modern sense.1
Of the other states Virginia was the first to enact a constitution in the convention which
met at Williamsburg from May 6 to June 29, 1776. It was prefaced with a formal "bill of
rights",2 which had been adopted by the convention on the twelfth of June. The author of
this document was George Mason, although Madison exercised a decided influence upon
the form that was finally adopted.3 This declaration of Virginia's served as a pattern for
all the others, even for that of the Congress of the United States, which was issued three
weeks later, and, as is well known, was drawn up by Jefferson, a citizen of Virginia. In
the other declarations there were many stipulations formulated somewhat differently, and
also many new particulars were added.4
Express declarations of rights had been formulated after Virginia's before 1789 in the
constitutions of
• Pennsylvania of September 28, 1776,
• Maryland of November 11, 1776,
• North Carolina of December 18, 1776,
• Vermont of July 8, 1777,5
• Massachusetts of March 2, 1780,
• New Hampshire of October 31, 1783, (in force June 2, 1784.)
In the oldest constitutions of New Jersey, South Carolina, New York and Georgia special
bills of rights are wanting, although they contain many provisions which belong in that
category.6 The French translation of the American Constitutions of 1778 includes a
déclaration expositive des droits by Delaware that is lacking in Poore's collection.7
(The translator has reprinted this declaration in an article in the American Historical
Review, of July, 1898, entitled "The Delaware Bill of Rights of 1776".)
In the following section the separate articles of the French Declaration are placed in
comparison with the corresponding articles from the American declarations. Among the
latter, however, I have sought out only those that most nearly approach the form of
expression in the French text. But it must be once more strongly emphasized that the
fundamental ideas of the American declarations generally duplicate each other, so that
the same stipulation reappears in different form in the greater number of the bills of
rights.
We shall leave out the introduction with which the Constituent Assembly prefaced its
declaration, and begin at once with the enumeration of the rights themselves. But even
the introduction, in which the National Assembly "en présence et sous les auspices de
l'Être suprême" solemnly proclaims the recognition and declaration of the rights of man
and of citizens, and also sets forth the significance of the same, is inspired by the
declaration of Congress and by those of many of the individual states with which the
Americans sought to justify their separation from the mother country.
reference:
Georg Jellinek, The Declaration of the Rights of Man
and of Citizens: A Contribution to Modern Constitutional
History (1895)

CHAPTER III. THE BILLS OF RIGHTS OF THE
INDIVIDUAL STATES OF THE NORTH
AMERICAN UNION WERE ITS MODELS.
THE conception of a declaration of rights had found expression in France even before the
assembling of the States General. It had already appeared in a number of cahiers. The
cahier of the Bailliage of Nemours is well worth noting, as it contained a chapter entitled
"On the Necessity of a Declaration of the Rights of Man and of Citizens",1 and sketched a
plan of such a declaration with thirty articles. Among other plans that in the cahier des
tiers état of the city of Paris has some interest.2
In the National Assembly, however, it was Lafayette who on July 11, 1789, made the
motion to enact a declaration of rights in connection with the constitution, and he
therewith laid before the assembly a plan of such a declaration.3
It is the prevailing opinion that Lafayette was inspired to make this motion by the North
American Declaration of Independence.4 And this instrument is further declared to have
been the model that the Constituent Assembly had in mind in framing its declaration. The
sharp, pointed style and the practical character of the American document are cited by
many as in praiseworthy contrast to the confusing verbosity and dogmatic theory of the
French Declaration.5 Others bring forward, as a more fitting object of comparison, the
first amendments to the constitution of the United States,6 and even imagine that the latter
exerted some influence upon the French Declaration, in spite of the fact that they did not
come into existence until after August 26, 1789. This error has arisen from the French
Declaration of 1789 having been embodied word for word in the Constitution of
September 3, 1791, and so to one not familiar with French constitutional history, and
before whom only the texts of the constitutions themselves are lying, it seems to bear a
later date.
By practically all those, however, who look further back than the French Declaration it is
asserted that the Declaration of Independence of the United States on July 4, 1776,
contains the first exposition of a series of rights of man.7
Yet the American Declaration of Independence contains only a single paragraph that
resembles a declaration of rights. It reads as follows:
"We hold these truths to be self-evident, that all men are created equal, that they are
endowed by their Creator with certain unalienable Rights, that among these are Life,
Liberty and the pursuit of Happiness; That to secure these rights, Governments are
instituted among Men, deriving their just powers from the consent of the governed; That
whenever any Form of Government becomes destructive of these ends, it is the Right of
the People to alter or to abolish it, and to institute new Government, laying its foundation
on such principles and organizing its powers in such form, as to them shall seem most
likely to effect their Safety and Happiness."
This sentence is so general in its content that it is difficult to read into it, or deduct from
it, a whole system of rights. It is therefore, at the very start, improbable that it served as
the model for the French Declaration.
This conjecture becomes a certainty through Lafayette's own statement. In a place in his
Memoirs, that has as yet been completely overlooked, Lafayette mentions the model that
he had in mind when making his motion in the Constituent Assembly.8 He very
pertinently points out that the Congress of the newly formed Confederation of North
American free states was then in no position to set up, for the separate colonies, which
had already become sovereign states, rules of right which would have binding force. He
brings out the fact that in the Declaration of Independence there are asserted only the
principles of the sovereignty of the people and the right to change the form of
government. Other rights are included solely by implication from the enumeration of the
violations of right, which justified the separation from the mother country.
The constitutions of the separate states, however, were preceded by declarations of rights,
which were binding upon the people's representatives. The first state to set forth a
declaration of rights properly so called was Virginia.9
The declarations of Virginia and of the other individual American states were the sources
of Lafayette's proposition. They influenced not only Lafayette, but all who sought to
bring about a declaration of rights. Even the above-mentioned cahiers were affected by
them.
The new constitutions of the separate American states were well known at that time in
France. As early as 1778 a French translation of them, dedicated to Franklin, had
appeared in Switzerland.10 Another was published in 1783 at Benjamin Franklin's own
instigation.11 Their influence upon the constitutional legislation of the French Revolution
is by no means sufficiently recognized. In Europe until quite recently only the Federal
constitution was known, not the constitutions of the individual states, which are assuming
a very prominent place in modern constitutional history. This must be evident from the
fact, which is even yet unrecognized by some distinguished historians and teachers of
public law, that the individual American states had the first written constitutions. In
England and France the importance of the American state constitutions has begun to be
appreciated,12 but in Germany they have remained as yet almost unnoticed. For a long
time, to be sure, the text of the older constitutions in their entirety were only with
difficulty accessible in Europe. But through the edition, prepared by order of the United
States Senate,13 containing all the American constitutions since the very earliest period,
one is now in a position to become acquainted with these exceptionally important
documents.
The French Declaration of Rights is for the most part copied from the American
declarations or "bills of rights".14 All drafts of the French Declaration, from those of the
cahiers to the twenty-one proposals before the National Assembly, vary more or less
from the original, either in conciseness or in breadth, in cleverness or in awkwardness of
expression. But so far as substantial additions are concerned they present only doctrinaire
statements of a purely theoretical nature or elaborations, which belong to the realm of
political metaphysics. To enter upon them here is unnecessary. Let us confine ourselves
to the completed work, the Declaration as it was finally determined after long debate in
the sessions from the twentieth to the twenty-sixth of August.
reference:
Georg Jellinek, The Declaration of the Rights of Man
and of Citizens: A Contribution to Modern Constitutional
History (1895)

CHAPTER II. ROUSSEAU'S CONTRAT SOCIAL
WAS NOT THE SOURCE OF THIS DECLARATION.
IN his History of Political Science—the most comprehensive work of that kind which
France possesses— Paul Janet, after a thorough presentation of the Contrat Social,
discusses the influence which this work of Rousseau's exercised upon the Revolution.
The idea of the declaration of rights is to be traced back to Rousseau's teachings. What
else is the declaration itself than the formulation of the state contract according to
Rousseau's ideas? And what are the several rights but the stipulations and specifications
of that contract?1
It is hard to understand how an authority upon the Contrat Social could make such a
statement though in accord with popular opinion.
The social contract has only one stipulation, namely, the complete transference to the
community of all the individual's rights.2 The individual does not retain one particle of
his rights from the moment he enters the state.3 Everything that he receives of the nature
of right he gets from the volonté générale, which is the sole judge of its own limits, and
ought not to be, and cannot be, restricted by the law of any power. Even property belongs
to the individual only by virtue of state concession. The social contract makes the state
the master of the goods of its members,4 and the latter remain in possession only as the
trustees of public property.5 Civil liberty consists simply of what is left to the individual
after taking his duties as a citizen into account.6 These duties can only be imposed by
law, and according to the social contract the laws must be the same for all citizens. This
is the only restriction upon the sovereign power,7 but it is a restriction which follows
from the very nature of that power, and it carries in itself its own guarantees.8.
The conception of an original right, which man brings with him into society and which
appears as a restriction upon the rights of the sovereign, is specifically rejected by
Rousseau. There is no fundamental law which can be binding upon the whole people, not
even the social contract itself.9
The Declaration of Rights, however, would draw dividing lines between the state and the
individual, which the lawmaker should ever keep before his eyes as the limits that have
been set him once and for all by "the natural, inalienable and sacred rights of man."10
The principles of the Contrat Social are accordingly at enmity with every declaration of
rights. For from these principles there ensues not the right of the individual, but the
omnipotence of the common will, unrestricted by law. Taine comprehended better than
Janet the consequences of the Contrat Social.11
The Declaration of August 26, 1789, originated in opposition to the Contrat Social. The
ideas of the latter work exercised, indeed, a certain influence upon the style of some
clauses of the Declaration, but the conception of the Declaration itself must have come
from some other source.
reference:
Georg Jellinek, The Declaration of the Rights of Man
and of Citizens: A Contribution to Modern Constitutional
History (1895)

CHAPTER I. THE FRENCH DECLARATION OF
RIGHTS OF AUGUST 26, 1789, AND ITS
SIGNIFICANCE.
THE declaration of "the rights of man and of citizens" by the French Constituent
Assembly on August 26, 1789, is one of the most significant events of the French
Revolution. It has been criticised from different points of view with directly opposing
results. The political scientist and the historian, thoroughly appreciating its importance,
have repeatedly come to the conclusion that the Declaration had no small part in the
anarchy with which France was visited soon after the storming of the Bastille. They point
to its abstract phrases as ambiguous and therefore dangerous, and as void of all political
reality and practical statesmanship. Its empty pathos, they say, confused the mind,
disturbed calm judgment, aroused passions, and stifled the sense of duty,—for of duty
there is not a word.1 Others, on the contrary, and especially Frenchmen, have exalted it as
a revelation in the world's history, as a catechism of the "principles of 1789" which form
the eternal foundation of the state's structure, and they have glorified it as the most
precious gift that France has given to mankind.
Less regarded than its historical and political significance is the importance of this
document in the history of law, an importance which continues even to the present day.
Whatever may be the value or worthlessness of its general phrases, it is under the
influence of this document that the conception of the public rights of the individual has
developed in the positive law of the states of the European continent. Until it appeared
public law literature recognized the rights of heads of states, the privileges of class, and
the privileges of individuals or special corporations, but the general rights of subjects
were to be found essentially only in the form of duties on the part of the state, not in the
form of definite legal claims of the individual. The Declaration of the Rights of Man for
the first time originated in all its vigor in positive law the conception, which until then
had been known only to natural law, of the personal rights of the members of the state
over against the state as a whole. This was next seen in the first French constitution of
September 3, 1791, which set forth, upon the basis of a preceding declaration of rights, a
list of droits naturels et civils as rights that were guaranteed by the constitution.2
Together with the right of suffrage, the "droits garantis par la constitution", which were
enumerated for the last time in the constitution of November 4, 1848,3 form to-day the
basis of French theory and practice respecting the personal public rights of the
individual.4 And under the influence of the French declaration there have been introduced
into almost all of the constitutions of the other Continental states similar enumerations of
rights, whose separate phrases and formulas, however, are more or less adapted to the
particular conditions of their respective states, and therefore frequently exhibit wide
differences in content.
In Germany most of the constitutions of the period prior to 1848 contained a section upon
the rights of subjects, and in the year 1848 the National Constitutional Convention at
Frankfort adopted "the fundamental rights of the German people", which were published
on December 27, 1848, as Federal law. In spite of a resolution of the Bund of August 23,
1851, declaring these rights null and void, they are of lasting importance, because many
of their specifications are to-day incorporated almost word for word in the existing
Federal law.5 These enumerations of rights appear in greater numbers in the European
constitutions of the period after 1848. Thus, first of all, in the Prussian constitution of
January 31, 1850, and in Austria's "Fundamental Law of the State" of December 21,
1867, on the general rights of the state's citizens. And more recently they have been
incorporated in the constitutions of the new states in the Balkan peninsula.
A noteworthy exception to this are the constitutions of the North German Confederation
of July 26, 1867, and of the German Empire of April 16, 1871, which lack entirely any
paragraph on fundamental rights. The constitution of the Empire, however, could the
better dispense with such a declaration as it was already contained in most of the
constitutions of the individual states, and, as above stated, a series of Federal laws has
enacted the most important principles of the Frankfort fundamental rights. Besides, with
the provisions of the Federal constitution as to amendments, it was not necessary to make
any special place for them in that instrument, as the Reichstag, to whose especial care the
guardianship of the fundamental rights must be entrusted, has no difficult forms to
observe in amending the constitution.6 As a matter of fact the public rights of the
individual are much greater in the German Empire than in most of the states where the
fundamental rights are specifically set forth in the constitution. This may be seen, for
example, by a glance at the legislation and the judicial and administrative practice in
Austria.
But whatever may be one's opinion to-day upon the formulation of abstract principles,
which only become vitalized through the process of detailed legislation, as affecting the
legal position of the individual in the state, the fact that the recognition of such principles
is historically bound up with that first declaration of rights makes it an important task of
constitutional history to ascertain the origin of the French Declaration of Rights of 1789.
The achievement of this task is of great importance both in explaining the development of
the modern state and in understanding the position which this state assures to the
individual. Thus far in the works on public law various precursors of the declaration of
the Constituent Assembly, from Magna Charta to the American Declaration of
Independence, have been enumerated and arranged in regular sequence, yet any thorough
investigation of the sources from which the French drew is not to be found.
It is the prevailing opinion that the teachings of the Contrat Social gave the impulse to
the Declaration, and that its prototype was the Declaration of Independence of the
thirteen United States of North America. Let us first of all inquire into the correctness of
these assumptions.
reference:
Georg Jellinek, The Declaration of the Rights of Man
and of Citizens: A Contribution to Modern Constitutional
History (1895)

Thursday, January 27, 2011

What is a letter of credit and how can an exporter use it when exporting?

A letter of credit (L/C) is an arrangement whereby a bank (the issuing or opening bank) guarantees on behalf of its customers (the applicant or importer) to make payment to the beneficiary (or exporter) upon presentation of documents specified in the credit, under specified terms and conditions. The financial transaction may be further secured by the intervention of another bank. The intervening bank informs the exporter of the issue of the L/C and may add its confirmation to it, thereby guaranteeing the payment against the risk of default of the issuing bank.

The L/C is a very precise document, usually created by following an international standard form model. It contains a brief description of the goods, a listing of documents required to obtain payment, the shipping date, and the expiration date after which the payment will no longer be made. The L/C guarantees the exporter will be paid only after fulfilling certain terms and conditions. Upon the fulfillment of all the conditions set down in the L/C, the exporter can submit appropriate shipping documents to the bank to collect payment. The following documents are required to be submitted in order to obtain payment according to the L/C (however, there are no specific rules on what an L/C most often should require):

· Commercial invoice

· Bill of lading (B/L) or another multi-modal transport document proving that the goods have been embarked for transport, sometimes also evidencing that the freight has been pre-paid

· Insurance document

· Certificate of origin

· Inspection certificate showing conformity to quality, quantity, packaging requirements

· Packing list

If the exporter has a long-standing relationship with the foreign buyer, cash advance may be the easiest form of payment. If this is not the case, the letter of credit can act as the easiest way of getting paid while, at the same time, protecting the exporters interests. The most commonly used forms of L/C are:

Irrevocable Documentary L/C This form of L/C cannot be canceled or modified without agreement of all parties involved. Payment is guaranteed by the bank provided that the exporter fulfills all the terms and conditions laid down in the contract, including the presentation of the required documents.

Revocable L/C. This form offers fewer guarantees but is more flexible as it can be canceled or modified at any time without the knowledge of beneficiary. A few exporters accept these L/Cs.

Revolving L/C. This form is often used in repeated trade transactions with the same client. The funds used for the same or a similar transaction will again be available in the future, usually under the same terms without having to issue a new L/C.

Although a letter of credit is used most frequently in the process of payment, there could be several problems in employing this method.
reference:

TRADE
SECRETS

The Export Answer Book
for Small and Medium-Sized Exporters
in the Sultanate of Oman

What are the general liability clauses governing shipping claims and the
different cases in handling loss of cargo by the shippers/carriers?

Export shipments are usually insured against loss, damage, and delay beyond the control of the insured in transit by cargo insurance. For international shipments, the carrier's liability is frequently limited by international agreements and the coverage is substantially dfferent from domestic coverage. Arrangements for cargo insurance may be made by either the buyer or the seller, depending on the terms of sale. Exporters are advised to consult with international insurance carriers or freight forwarders for more information.

Damaging weather conditions, rough handling by carriers, and other common hazards to cargo make marine insurance important protection for exporters. If the terms of sale make the firm responsible for insurance, it should either obtain its own policy or insure cargo under a freight forwarder's policy for a fee. If the terms of sale make the foreign buyer responsible, the exporter should not assume (or even take the buyer's word) that adequate insurance has been obtained. If the buyer neglects to obtain coverage or obtains too little, damage to the cargo may cause a major financial loss to the exporter.

Shipments by sea/ air/ road are covered by marine cargo insurance.

Although sellers and buyers can agree to different components, coverage is usually placed at 110 percent of the CIF (cost, insurance, freight) or CIP (carriage and insurance paid to) value.

Insurance Documents

Insurance documents also constitute evidence of a contract with a third party, namely the insurance company and therefore must be distinguished from the commercial documents.

The two main insurance documents are:

· Insurance certificate or cover note

· Insurance policy

Insurance certificate:

While lacking the legal status of an insurance policy, insurance certificates serve to acknowledge that insurance cover has been obtained. The insurance certificate is issued to the assured by the insurer in advance of the policy, as the preparation of the policy takes time, particularly if there is more than one underwriter.

Insurance policy:

A marine insurance policy is a document which embodies the contract of insurance. General terms and conditions of the policy are included in small print on the document.

TRADE
SECRETS

The Export Answer Book
for Small and Medium-Sized Exporters
in the Sultanate of Oman

What happens if the buyer disagrees with the delivery of goods?

Generally, the exporter is likely to face two types of disputes with the buyer: either the buyer refuses to pay (to prevent this case a letter of credit should always be used) or the buyer protests regarding the quality of the goods. To prevent this case, the exporter should look for a certificate of quality before shipping the goods.

It must be emphasized that once the goods have been shipped and the appropriate documents are given to the bank under the letter of credit L/C, the payment will be made. In any international sale the exporter should make sure the proper documentation is complete which allows the claiming of the payment at the issuing bank without any problems.

In most cases of disagreement, it will be for the buyer to sue for reimbursement. In this respect, it is recommended that the contract provides for either a jurisdiction clause or an arbitration clause. The party may agree that in case of dispute, the case will be brought to a court in the country of the buyer or the exporter.

If the parties agree that the dispute shall not be solved by a national court of justice they will provide for an arbitration procedure. International arbitration is recognized in most countries, although small exporters should be aware that the costs of such arbitration procedures can sometimes be high. As opposed to court proceedings, arbitration provides an economic and expedient settlement of commercial disputes with the added benefit of privacy. The arbitrator is usually an expert in the subject matter of the dispute.

Arbitration can be arranged by the parties involved in the dispute on ad-hoc basis or according to the rules of an arbitral institution. Standard arbitration clauses are available at the ICC and at the London Court of International Arbitration (LCIA).

Once an arbitration award has been received, the decision must be enforced in a country where the condemned party has assets.
reference:

TRADE
SECRETS

The Export Answer Book
for Small and Medium-Sized Exporters
in the Sultanate of Oman

What does the exporter have to check before delivering the goods to the carrier?

The exporter who has entered into an international sales contract is required to deliver the goods to the buyer. The entity to whom the exporter will have to deliver the goods will vary with the Incoterms (1990) used in the contract. If it is an FOB contract (a common one for exporters) the seller delivers the goods should ensure the following:

· That a proper license has been obtained for exporting the foods.

· If the buyer requires quality control inspection of the goods shipped by an independent firm, then the exporter should contract with certifying companies. These companies will test and check the goods and deliver a certificate of quality.

· That the exporter has prepared appropriate commercial invoices representing the quantity and the price of the goods. It is recommended that clear and simple invoices should be used in a language which is understood by national authorities of the buyer.

The United Nations have been working on standard commercial invoices which are available at the ITC headquarters in Geneva, Switzerland. The International Chamber of Commerce in Paris, France has also prepared standard commercial invoices.

The exporter should ensure that all documents are identical in terms of signatures, terms, quantity, and price. If there are differences, an exporter may face problems with in-country and foreign authorities as well as with banks.
reference:

TRADE
SECRETS

The Export Answer Book
for Small and Medium-Sized Exporters
in the Sultanate of Oman

What are the documents involved in the transportation of goods?

Airway bill or air consignment note: This document is a receipt issued by an airline or its agent for the carriage of goods. Foods are delivered to the consignee after he or she is able to identify himself or herself as the party named in the airway bill. It is therefore desirable to consign the goods in favor of the foreign correspondent bank as it will enable the exporter to retain control over the goods until the payment is made and documents are accepted for payment.

Bill of lading (B/L). The B/L itself is not the actual contract between the owner of the goods and the carrier, although it does provide evidence of the contract. It is a receipt for goods shipped on board a vessel (for marine B/Ls) and is a document of the title to the goods which are the subject of the contract between the buyer and the seller. There are two types: a straight bill of lading which is non-negotiable and the negotiable / shipper’s order bill of lading which can be bough or sold or traded while goods are in transit and is used for letter-or-credit transactions. The customer usually needs a copy as proof of ownership to take possession of the goods.

Bill of exchange: This requires the buyer to pay the value of the exported goods to the seller. The document does not provide any security of payment but it is often used together with a letter of credit. This document is prepared and signed by the exporter.

Mate Receipt: This document is issued by the chief of the vessel after the cargo is loaded. This document contains the name of the shipper, place of receipt, and other related details. Sea freight is calculated as per weight or volume, whichever is higher.

Combined Transport Document: This document allows goods to be moved from dry ports to the destination.
reference:

TRADE
SECRETS

The Export Answer Book
for Small and Medium-Sized Exporters
in the Sultanate of Oman

What are common problems with Incoterms?

Many exporters forget that;

· All Incoterms must specify a place (port of shipment, port of destination etc.);

· Some Incoterms (notably FOB, CFR and CIF) are reserved for sea or inland waterway transport only. They should not be used for air, road or rail transport (the equivalent terms for these modes of transportation are FCA, CPT and CIP);

· Even for sea transport FOB may be inappropriate. If the shipment is containerized, the Incoterm to use is FCA;

· “C” terms specify the place / port of destination. This does not mean that delivery takes place there. Because C terms refer to shipment contracts, the seller discharges his duty to deliver at the place / port of shipment.
reference:

TRADE
SECRETS

The Export Answer Book
for Small and Medium-Sized Exporters
in the Sultanate of Oman

What are Incoterms?

Incoterms (International commercial terms) are shorthand expressions (such as EXW, FCA, CIF) which are internationally standardized and tell the buyer and seller what is included in the sales price regarding the transport costs, transfer of risks. Customs clearance and insurance. There is, however, one important are which is not governed by Incoterms 1990, and that is the transfer of property of goods.

Incoterms have been developed by the International Chamber of Commerce (ICC), The current valid version was published in 1990 and should be explicitly quoted as such in the contract (include the words:”Incoterms 1990”). There are 13 Incoterms in the 1990 version. The ICC is working on a new version which should be published in the year 2000, at the soonest.

Incoterms 1990 are used for the bulk of international trade in the world. However a parallel system of terms of delivery (using similar abbreviations to FOB, CIF etc.) Is used in the US. This American system does not give the same meaning to these abbreviations as Incoterms. It is for this reason that the exporters should specify the words Incoterms 1990 in referring to terms of delivery.

The 13 Incoterms currently in use are:

“E” – Terms

EXW – Ex Works: the seller makes the goods available at his premises.

“F” – Terms

FCA – Free Carrier: the seller hands over the goods, cleared for export, into the custody of the first carrier (named by the buyer) at the named place. This term is suitable for all modes of transport, including carriage by air, rail, road, and containerized / multi – modal transport.

FAS – Free Alongside ship: the seller must place the goods alongside the ship at the named port. The buyer must clear the goods for export. Suitable for maritime transport only.

FOB – Free On Board: the seller must load the goods on board the ship nominated by the buyer, cost and risk being divided at ship’s rail. The seller must clear the goods for export. Maritime transport only.

“C” – Terms

CFR – Cost and Freight: seller must pay the costs and freight to bring the goods to the port of destination. However, risk is transferred to the buyer once the goods have crossed the ship’s rail. Maritime transport only.

CIF – Cost, Insurance and Freight: exactly the same as CFR except that the seller must in addition procure and pay for insurance for the buyer. Maritime transport only.

CPT – Carriage Paid To: the general / containerized / multi modal equivalent of CFR. The seller pays for carriage to the named point of destination, but risk passes when the goods are handed over the first carrier.

CIP – Carriage and Insurance Paid To: the containerized transport / multi modal equivalent of CIF. Seller pays for carriage and insurance to the named destination point, but risk passes when the goods are handed over the first carrier.

“D” – Terms

DAF – Delivered At Frontier: the seller makes the goods available, cleared for export, at the named place on the frontier. Suitable for rail / road transport.

DES – Delivered EX Ship: the seller makes the goods available to the buyer on board the ship at the port of destination, uncleared for import.

DEQ – Delivered Ex Quay: one step further than DES – the goods must be unloaded into the quay at the port of destination, and import clearance must be obtained by the seller.

DDU – Delivered Duty Unpaid: the seller must deliver the goods all the way to a named place in the country of destination. However, the buyer must clear the goods for import and pay the necessary duties.

DDP – Delivered Duty Paid: maximum obligation for the seller – seller pays for costs, charges, and official formalities up to destination.
reference:

TRADE
SECRETS

The Export Answer Book
for Small and Medium-Sized Exporters
in the Sultanate of Oman

What are the essential elements of an export contract?

It is difficult to provide a comprehensive standard contract form which is applicable to all export agreements; however, it is important to be aware of certain minimum general requirements or general conditions in the export contract which will help the exporter and importer in developing an export contract. These conditions can serve as the basic elements of an export contract.

Name and addresses of the parties

Product, standards, and specifications: The export contract should explicitly state the product name including any technical names; sizes, if any, in which the product is to be supplied; national or international standards and specifications; specific buyer requirements; and sample specifications.

Quantity: The quantity should be clearly stated both in figures and words, specifying whether it is in terms of number, weight, or volume. If the quantity refers to goods by weight or by measurement, the nature of the same should be specified.

Total value of the contract: The total value of the contract should be put in both words and figures specifying the currency along with the name of the country.

Terms of delivery: Terms of delivery (under Incoterms 1990) should be put in both words and figures specifying the currency along with the name of the country.

Period of delivery/shipment, etc.: The place of dispatch and delivery should be clearly specified. The time for delivery should be also specified, either as stating from, 1) the date of the contract, 2) the date of notification of the issue of an irrevocable confirmed letter of credit, or 3) the date of receipt of the notice issuing the import license by the seller.

Inspection: Although a number of goods are now subject to pre-shipment inspection by designated agencies, foreign buyers may still stipulate their own conditions and manner of inspection by any other agency. Therefore, the parties must clearly state the nature, manner, aspects, and agency for inspection of goods which are different from those articulated under the quality control and pre-shipment inspection rules.

Packaging, labeling and marking: The packaging, labeling and marking requirements are normally quite different in case of export consignments and should be clearly stated in the contract.

Terms of payment – amount, mode & currency: While quoting different payment terms the exporter should specify whether the prices are based on a current rate of exchange of the Omani Riyal on the basis of another currency (e.g., US dollar). Fluctuations in the rate of exchange should be addressed as well.

Discounts and commissions: The contract should specify the amount of discount or commission to be paid and by whom (i.e. by the exporter or by the importer). The basis of calculation of commission and rate of the same may also be clearly stipulated. Discount or commission rates may or may not be included in the export price to be agreed to by the exporter and importer.

Licences and permits: Obtaining import licences in the buyer’s country may be more difficult in some countries than others. Parties to the contract should therefore clearly state whether the export transaction will require any export or import licenses and whose responsibility and expense it will be to obtain them.

Insurance: A contract should explicitly provide for insurance of goods against loss, damage, or destruction during voyage. The contract should cover the extent of insurance risk and its incidence.

Documentary requirements: Documents required for international trade transactions can be divided into four broad categories:

· Documents required for exportation and subsequent importation of goods

· Documents needed by the buyer for taking delivery of the goods

· Documents relating to payment

· Special documents depending upon the nature of goods and conditions of sale (e.g., certain engineering goods may involve documents relating to assembly, repair, and maintenance)

Common export documents include the bill of exchange; commercial invoice or any other kind of invoice; bill of lading or air way bill; insurance policy; and letter of credit.

Force majeure or excuse for non-performance of contract: Parties should include certain provisions in the contract defining the circumstances which would relieve them of their liability for non-performance of the contract. Such provisions are called “force majeure” and are intended to identify the relief which may be available to either party to the contract in the event of supervening circumstances occurring after the conclusion of the contract.

Guarantee: The length of the period of guarantee should be fixed.

Remedies: In the event of different defaults of contractual obligations by any of the parties, it is always advisable to include in the sale or purchase contracts certain specific remedies. These remedies should reflect the mandatory provisions of applicable law to the contract.

Arbitration: The contract should include an arbitration clause for amicable and quick settlement of disputes or differences that may arise between the parties.

Applicable law: The contract should state the law of the country which is to govern the contract.

Delay in delivery: The contract should define the damages due to the buyer from the seller in the event of late delivery owing to reasons other than force majeure.
reference:

TRADE
SECRETS

The Export Answer Book
for Small and Medium-Sized Exporters
in the Sultanate of Oman

IMPLIED OBLIGATION IN A CONTRACT OF AFFREIGHTMENT

Implied obligations in a contract

of affreightment 2

In addition to the express clauses agreed by the parties, every contract of affreightment is

negotiated against a background of custom and commercial usage from which a series of

obligations are implied which are automatically incorporated into the contract in the absence

of agreement to the contrary. Since such obligations are derived from a common source in

the law merchant, a similar result follows at common law irrespective of whether the terms

of the contract are enshrined in a charterparty or evidenced by a bill of lading. There is, however,

one important proviso. In contracts of carriage which are governed by the Hague or

Hague/Visby Rules the scope and application of some of these implied obligations have been

modified while the ability of the parties to exclude their operation by mutual agreement has

been considerably restricted. In the following pages each of these implied obligations will

be considered separately and a final section will be devoted to the effect of frustration on a

contract of affreightment.

2.1 The undertaking as to seaworthiness

In every contract of affreightment there is an implied obligation to provide a seaworthy

vessel ‘fit to meet and undergo the perils of the sea and other incidental risks to which of

necessity she must be exposed in the course of a voyage’.1 In the majority of charterparties this

implied undertaking is reinforced by an express term to the same effect, such as the requirement

in the preamble to the NYPE form that the vessel be ‘tight, staunch, strong and in every

way fitted for the service’. The obligation covers not only the physical state of the vessel but

also the competence and adequacy of the crew, the sufficiency of fuel and other supplies, and

the facilities necessary and appropriate for the carriage of the cargo.

2.1.1 Nature of the obligation

At common law the obligation of the owner to provide a seaworthy ship is absolute and, in

the event of breach, he will be liable irrespective of fault. It amounts to an undertaking ‘not

merely that they should do their best to make the ship fit, but that the ship should really be

fit’.2 On the other hand, the owner is not under a duty to provide a perfect ship but merely

1 Field J in Kopitoff v Wilson (1876) 1 QBD 377 at p 380.

2 Lord Blackburn in Steel v State Line Steamship Co (1877) 3 App Cas 72 at p 86.

CHAPTER 2 IMPLIED OBLIGATIONS IN A CONTRACT OF AFFREIGHTMENT

one which is reasonably fit for the purpose intended. The standard required ‘is not an

accident-free ship, nor an obligation to provide ship or gear which might withstand all conceivable

hazards. In the last analysis the obligation, although absolute, means nothing more

or less than the duty to furnish a ship and equipment reasonably suitable for the intended

use or service.’3 The test would appear to be objective in that ‘the vessel must have that degree

of fitness which an ordinary careful and prudent owner would require his vessel to have at

the commencement of her voyage having regard to all the possible circumstances of it’.4 The

standard required will therefore be variable depending on the nature of the voyage, the type

of cargo to be carried and the likely dangers to be encountered en route. This common law

obligation can, however, be excluded by an appropriate clause in the contract of affreightment,

although the courts are inclined to treat such clauses in the same way as all exceptions

and apply a restrictive interpretation to them. Thus in Nelson Line v Nelson5 a clause exempting

the shipowner from liability for any damage to goods ‘which is capable of being covered

by insurance’ was held not to be effective in excluding liability for damage to cargo resulting

from unseaworthiness.6 To be effective any such clause must be expressed in clear and unambiguous

language. A rare example of a clause satisfying this test is to be found in The Irbenskiy

Proliv7 where a bill of lading contained a provision excluding liability for loss or damage of

any kind ‘arising or resulting from: unseaworthiness (whether or not due diligence shall have

been exercised by the carrier, his servants or agents or others to make the vessel seaworthy).’

The trial judge, in holding the clause sufficiently widely drafted to exclude all liability for

unseaworthiness, rejected the claimant’s argument that it was repugnant to the main object

of the contract by reducing the contract to a mere declaration of intent.8

Where the contract of affreightment is governed by the Hague or Hague/Visby Rules, the

absolute obligation at common law is replaced by a duty to exercise due diligence to make

the ship seaworthy.9 Accordingly, while the carrier will no longer be strictly liable in the

absence of any fault, he will be liable not only for his own negligence but also for the negligence

of any party, even including an independent contractor, to whom he has delegated

responsibility for making the vessel seaworthy.10 This reduction in liability is, however,

accompanied by a provision invalidating any attempt by the carrier further to reduce or

exclude his responsibility under the rules to provide a seaworthy ship.11

Many modern standard charter forms have now adopted the Hague Rules formula with

regard to the requirement of seaworthiness. Thus the NYPE charter, by the use of a ‘clause

paramount’, expressly incorporates into the charterparty the provisions of the US Carriage of

Goods by Sea Act 1936, while the Baltime form excludes the liability of the shipowner for loss

or damage to cargo unless such ‘loss has been caused by want of due diligence on the part

of the Owners or their Manager in making the vessel seaworthy and fitted for the voyage’.12

3 District Judge Kilkenny in President of India v West Coast Steamship Co [1963] 2 Lloyd’s Rep 278 at p 281.

4 Channell J in McFadden v Blue Star Line [1905] 1 KB 697 at p 706 quoting with approval a passage from an

early edition of Carver on Carriage by Sea.

5 [1908] AC 16.

6 See also Ingram v Services Maritime [1914] 1 KB 541; The Rossetti [1972] 2 Lloyd’s Rep 116.

7 [2005] 1 Lloyd’s Rep 383.

8 The bill of lading in this case was not subject to either the Hague or Hague/Visby Rules.

9 See Art III rule 1.

10 The Muncaster Castle [1961] AC 807. For further treatment, see infra at pp 188–90.

11 See Art III rule 8.

12 See clause 13. See The Gundulic [1981] 2 Lloyd’s Rep 418.

2.1 THE UNDERTAKING AS TO SEAWORTHINESS

In both of these cases it would appear that the common law absolute obligation to provide

a seaworthy ship has been replaced by a duty to exercise due diligence.

2.1.2 Incidence of obligation

The requirement for the shipowner to provide a seaworthy vessel comprises a twofold obligation.

On the one hand, the vessel must be suitably manned and equipped to meet the ordinary

perils likely to be encountered while performing the services required of it, while at the same

time it must be cargoworthy in the sense that it is in a fit state to receive the specified cargo.

So far as the first aspect of the seaworthiness concept is concerned, the implied undertaking

at common law covers not only the physical condition of the vessel and its equipment,

but also extends to the competence of the crew and the adequacy of stores and documentation.

13 Thus a vessel will clearly be unseaworthy where it has defective engines14 or a defective

compass,15 or where deck cargo is stowed in such a way as to render the vessel unstable.16 But

the shipowner will be equally in breach where he employs an incompetent engineer or other

officer,17 where inadequate bunkers are taken on board for the voyage,18 or even where the

documentation for the voyage is inadequate.19 Once these legal requirements are satisfied,

however, the implied undertaking does not extend to cover such matters as recommended

manning levels and conditions of employment formulated by extra-legal organisations such

as trade unions.20

In the case of a voyage charter the obligation to provide a seaworthy vessel in the above

sense attaches at the time of sailing on the charter voyage. It is immaterial that defects exist

rendering the vessel unseaworthy during the preliminary voyage to the loading port, or even

during the loading operation, provided that they can be rectified by the time of sailing.21

Similarly the obligation is discharged if the vessel is seaworthy at the time of sailing, irrespective

of what happens afterwards either during the voyage or at an intermediate port. ‘The

warranty . . . is a warranty only as to the condition of a vessel at a particular time, namely, the

time of sailing; it is not a continuing warranty in the sense of a warranty that she shall continue

fit during the voyage. If anything happens whereby the goods are damaged during the

13 The position is identical under the Hague and Hague/Visby Rules, see Art III rule 1. The US view is expressed

in the following terms in The Framlington Court [1934] AMC 272 at p 277: ‘Seaworthiness is a relative term

depending for its application upon the type of vessel and the character of the voyage. The general rule is

that the ship must be staunch and strong and well equipped for the intended voyage. And she must also be

provided with a crew, adequate in number and competent for the voyage with reference to its length and other

particulars, and have a competent and skilled master of sound judgment and discretion.’

14 Hong Kong Fir Shipping Co v Kawasaki [1962] 2 QB 26; The Amstelslot [1963] 2 Lloyd’s Rep 223.

15 Paterson Steamships Ltd v Robin Hood Mills (1937) 58 LlLR 33.

16 Kish v Taylor [1912] AC 604; The Friso [1980] 1 Lloyd’s Rep 469.

17 The Makedonia [1962] 1 Lloyd’s Rep 316; Hong Kong Fir Shipping Co v Kawasaki [1962] 2 QB 26; The Farrandoc

[1967] 2 Lloyd’s Rep 276; Heinrich C Horn v Cia de Navegacion Fruco [1969] AMC 1495.

18 McIver v Tate Steamers [1903] 1 KB 362; Northumbrian Shipping Co v Timm [1939] AC 397.

19 The Madeleine [1967] 2 Lloyd’s Rep 224. See also Golden Fleece Maritime Inc v St Shipping & Transport Corp

[2008] 2 Lloyd’s Rep 119.

20 See The Derby [1985] 2 Lloyd’s Rep 325, where a vessel was delayed in port for 21 days by a strike of stevedores

resulting from failure of the vessel to comply with manning levels, rates of pay and conditions of

employment of the crew as recommended by the International Transport Workers Federation. See also The

Silver Constellation [2008] 2 Lloyd’s Rep 440.

21 Cf. Stanton v Richardson (1875) LR 9 CP 390.

CHAPTER 2 IMPLIED OBLIGATIONS IN A CONTRACT OF AFFREIGHTMENT

voyage, the shipowner is liable because he is an insurer, except in the event of the damage

happening from some cause in respect of which he is protected by the exceptions . . .’22 It

follows that, in the case of a consecutive voyage charter, the obligation arises at the beginning

of each voyage undertaken in performance of the charter.23 Again, in the case where a voyage

charter is divided into stages by agreement between the parties, there will be a duty to make

the vessel seaworthy at the commencement of each stage of the voyage.24 The position is,

however, different in respect of the time charter where the obligation attaches only at the time

of delivery of the vessel under the charterparty. In this case the initial seaworthiness undertaking

is normally supplemented by some form of maintenance clause under which the

shipowner is required to ‘keep the vessel in a thoroughly efficient state in hull, machinery and

equipment for and during the service’.25 But this express undertaking to maintain the vessel

throughout the charter is entirely distinct from any obligation as to seaworthiness.

The second aspect of the common law undertaking as to seaworthiness relates to the

cargoworthiness of the vessel. The shipowner is under an obligation to ensure that his ship is

in a fit state to receive the contractual cargo. This requirement would not be satisfied where

the vessel’s holds needed fumigating or cleaning before being in a fit state to receive cargo,26

where frozen meat was to be shipped and there was a defect in the vessel’s refrigeration

plant,27 or where the pumps were inadequate to drain surplus water from the cargo.28 In each

case the implied undertaking as to cargoworthiness is operative as from the commencement

of loading. ‘The warranty is that, at the time the goods are put on board, she is fit to receive

them and encounter the ordinary perils that are likely to arise during the loading stage; but

. . . there is no continuing warranty after the goods are once on board that the ship shall

continue fit to hold the goods during that stage and until she is ready to go to sea, notwithstanding

any accident that may happen to her in the meantime.’29 So in McFadden v Blue

Star Line,30 after cargo had been safely loaded, the ship’s engineer opened a sluice door on a

watertight bulkhead and on closing it, failed to secure it properly with the result that water

percolated through and damaged the claimant’s cargo. It was held that, since the defective

closure of the sluice door occurred after the cargo had been loaded, it did not constitute a

breach of the cargoworthiness undertaking.

It has already been noted that many modern charter forms expressly include the provisions

of either the Hague or Hague/Visby Rules and this practice may affect the operation

of the implied seaworthiness obligation. Thus in the case of Adamastos Shipping Co v Anglo-

Saxon Petroleum31 the voyage charter involved included a clause paramount incorporating the

22 Channell J in McFadden v Blue Star Line [1905] 1 KB 697 at p 703.

23 See Adamastos Shipping v Anglo-Saxon Petroleum [1958] 1 Lloyd’s Rep 73.

24 The Vortigern [1899] P 140.

25 NYPE 93 form, clause 6.

26 Tattersall v National Steamship Co (1884) 12 QBD 297; The Tres Flores [1973] 2 Lloyd’s Rep 247.

27 Cargo per Maori King v Hughes [1895] 2 QB 550.

28 Stanton v Richardson (1874) 9 CP 390.

29 Channell J in McFadden v Blue Star Line [1905] 1 KB at p 704. Cf. the position under the Hague and Hague/

Visby Rules where the Privy Council has held that the obligation to exercise due diligence to provide a seaworthy

ship under Art III rule 1 covers ‘the period from at least the beginning of the loading until the vessel

starts on her voyage’. Maxine Footwear Co Ltd v Canadian Government Merchant Marine [1959] AC 589 at p 603.

See infra at p 187.

30 [1905] 1 KB 697.

31 [1958] 1 Lloyd’s Rep 73.

2.1 THE UNDERTAKING AS TO SEAWORTHINESS

provisions of the US Carriage of Goods by Sea Act 1936 which were treated by the court as if

written verbatim into the charter. In these circumstances a majority of the House of Lords was

prepared to give full effect to the provisions of the Hague Rules in respect of all voyages under

the charter irrespective of whether they were to or from ports in the United States, or whether

they were in ballast or with cargo. Some writers have been prepared to go further by suggesting

that, as the seaworthiness provisions of the Hague Rules32 are applicable ‘before and at

the beginning of the voyage’, the obligation to exercise due diligence to provide a seaworthy

ship would arise in respect of each voyage under the time charter.33 A note of caution has,

however, been sounded by Mustill J in The Hermosa34 where he pointed out that ‘there are in

most time charters express terms as regards initial seaworthiness and subsequent maintenance

which are not easily reconciled with the scheme of the Hague Rules, which create an obligation

as to due diligence attaching voyage by voyage. It cannot be taken for granted that the

interpretation adopted in [the Adamastos case] in relation to voyage charters applies in all

respects to time charters incorporating the Hague Rules.’

2.1.3 Burden of proof

The burden of proof of unseaworthiness will rest on the party alleging it, although in many

cases he may be assisted by inferences drawn by the court. Thus the presence of seawater in

the hold will normally be treated by the courts as prima facie evidence of unseaworthiness.

Having established breach of this undertaking, however, it will then be incumbent on the

claimant to establish that the unseaworthiness caused the loss of which he complains.35 In

the case of International Packers v Ocean Steamship Co36 a cargo of tinned meat shipped from

Brisbane for Glasgow was damaged by seawater during the voyage as the result of tarpaulins

being stripped from the hatch covers during a storm. On hearing that the vessel was equipped

with locking bars designed to secure the hatches, the trial judge held that the loss was caused

not by the unseaworthiness of the vessel but by the negligence of the crew in failing to make

use of the equipment provided. Similarly, the cargo owner will fail to discharge the burden

of proof if it is clear that the damage resulted from bad stowage rather than from any

unfitness of the vessel to receive the contract cargo.37

2.1.4 Effect of breach

Having established a breach, the next question is to decide what remedies are available to the

charterer. Are the courts prepared to apply the traditional classification of terms into conditions

or warranties and treat the obligation to provide a seaworthy ship as either a condition,

any breach of which would entitle the charterer to repudiate his obligations under the

contract, or as a warranty, sounding only in damages? In the event the courts have taken the

view that neither of these alternatives is appropriate. The shipowner’s obligation to provide a

32 See Art III rule 1.

33 See Wilford, 34.14. Cf. obligation in context of a contract of affreightment: The Kriti Rex [1996] 2 Lloyd’s

Rep 171.

34 [1980] 1 Lloyd’s Rep 638 at p 647.

35 See The Europa [1908] P 84.

36 [1955] 2 Lloyd’s Rep 218.

37 The Thorsa [1916] P 257; Elder Dempster v Paterson, Zochonis & Co [1924] AC 522.

CHAPTER 2 IMPLIED OBLIGATIONS IN A CONTRACT OF AFFREIGHTMENT

seaworthy vessel was classified as an innominate or intermediate term by the Court of Appeal

in Hong Kong Fir Shipping Co v Kawasaki.38 In refusing to categorise the term once and for all

as either a condition or a warranty, Diplock LJ pointed out that such an undertaking ‘can be

broken by the presence of trivial defects easily and rapidly remediable as well as by defects

which must inevitably result in a total loss of the vessel’.39 As the results of a breach could be

so variable it would be as unreasonable to permit a party to repudiate a charter because a few

rivets were missing as it would be to prevent him from doing so in the event of the defects

in the vessel being irremediable.40 Thus, while objectively a compass defect was a serious

matter, it would be illogical to permit the rejection of a 24-month charterparty if the defect

could be repaired by a compass adjuster within a matter of hours. While damages would

always be available for breach of the undertaking, a charterer should only be allowed to

repudiate his obligations under the charterparty where the breach deprived him ‘of substantially

the whole benefit which it was intended that he should obtain from the contract’.41

Everything would depend on the effects of the breach in each individual case and, in the view

of Diplock LJ, the test as to whether a party had been deprived of substantially the whole

benefit of the contract should be the same whether it resulted from breach of contract by the

charterer or from the operation of the doctrine of frustration.42

What remedies are then available to the charterer in the event of a breach of this intermediate

obligation by the shipowner? A distinction has to be drawn between the situation

where the breach is discovered before performance of the charterparty has commenced and

the position where the breach only comes to light after the vessel has sailed. In the former

case the charterer will be able to treat his obligations under the contract as discharged if the

breach deprives him of substantially the whole benefit of the contract and it is a breach which

cannot be rectified within such time as would prevent the object of the contract from being

frustrated. Thus in the case of Stanton v Richardson,43 where the pumping equipment on the

chartered vessel was inadequate to deal with the surplus water from a cargo of wet sugar, the

charterer was held entitled to repudiate the contract when it was established that new pumps

could not be installed within a reasonable time. On the other hand, if the effects of the breach

are less severe, the charterer will be restricted to his remedy in damages. In this respect it must

be remembered that the permissible time allowance in which to remedy the defect will

vary as between a voyage and a time charter. While a relatively brief delay may be sufficient

to frustrate the object of the former, the Court of Appeal held in the Hong Kong Fir case that

the absence of a vessel for five months undergoing repairs was insufficient to frustrate the

objects of a 24-month time charterparty.

The provisions of the time charter itself may, however, provide the charterer with an opportunity

for escape if the shipowner cannot make good the defect before the cancelling date,

even though the breach would not otherwise have entitled the charterer to repudiate. Thus

under clause 22 of the Baltime form the charterer is entitled to cancel the charterparty unless

the vessel is delivered to him by a specified date, ‘she being in every way fitted for ordinary

38 [1962] 2 QB 26. The US courts take a similar view: see Aaby v States Marine Corp (The Tento) [1950] AMC 947.

39 [1962] 2 QB at p 71.

40 See Bunge Corp v Tradax Export [1981] 1 WLR 711.

41 [1962] 2 QB at p 69.

42 For an example of a court applying an identical test to a situation which involved both a breach of the

seaworthiness undertaking and an alleged frustrating event, see The Hermosa [1982] 1 Lloyd’s Rep 570.

43 (1875) LR 9 CP 390. See also Snia v Susuki (1924) 18 LlLR 333.

2.2 OBLIGATION OF REASONABLE DISPATCH

cargo service’. The charterer in The Madeleine44 was able to take advantage of this clause when

the shipowner was unable to produce the required deratisation certificate by the cancelling

date. In the words of Roskill J, ‘there was here an express warranty of seaworthiness and unless

the ship was timeously delivered in a seaworthy condition, including the necessary certificate

from the port health authority, the charterers had the right to cancel’.45 Such right to cancel is

not, however, dependent on any breach of obligation by the shipowners.

Where the unseaworthy state of the vessel is not discovered until after it has set sail, mere

acceptance of the vessel does not amount to a waiver of the charterer’s right to damages.46 Nor

does it necessarily amount to a waiver of the right to repudiate the charter provided that

the breach, when discovered, is sufficiently fundamental. This is particularly true of the time

charter47 though, in the case of the voyage charter, if the breach is not apparent before the

vessel sails, for all practical purposes the charterer may have little opportunity to discover it

before the vessel arrives at its destination and performance of the contract is complete.

2.2 Obligation of reasonable dispatch

A second undertaking inherent in every contract of carriage requires the shipowner or

carrier to perform his contractual obligations with reasonable dispatch. Whenever no time is

specified for a particular obligation there is an implied obligation to complete the performance

within a reasonable time. Thus in a voyage charter there is an implied undertaking that

the vessel will proceed on the voyage, load and discharge at the time agreed or within a reasonable

time. Likewise in a time charter, the master is expected to prosecute each voyage with

the ‘utmost dispatch’.48 Performance of this obligation is judged, not on a strictly objective

basis, but in relation to what can reasonably be expected from the shipowner under the actual

circumstances existing at the time of performance. ‘When the language of the contract does

not expressly, or by necessary implication, fix any time for the performance of a contractual

obligation, the law implied that it shall be performed within a reasonable time. The rule is of

general application, and is not confined to contracts for the carriage of goods by sea. In the

case of other contracts the condition of reasonable time has been frequently interpreted; and

has invariably been held to mean that the party upon whom it is incumbent duly fulfils his

obligations notwithstanding protracted delay, so long as such delay is attributable to causes

beyond his control, and he has neither acted negligently nor unreasonably.’49

2.2.1 Effect of breach

As with the seaworthiness undertaking the obligation to exercise reasonable dispatch appears

to fall into the category of innominate or intermediate terms. Accordingly, the remedy available

in any particular case will be dependent on the effects of the relevant breach. While the

44 [1967] 2 Lloyd’s Rep 224.

45 Ibid at p 241. For a more detailed account of the effects of a cancellation clause, see infra at pp 66–7.

46 The Democritos [1975] 1 Lloyd’s Rep 386 at p 397.

47 Cf. Hong Kong Fir Shipping Co v Kawasaki [1962] 2 QB 26.

48 See Baltime, clause 9; NYPE 46, clause 8.

49 Lord Watson in Hick v Raymond [1893] AC 22 at p 32. For a modern example in the context of a contract of

affreightment, see The Kriti Rex [1996] 2 Lloyd’s Rep 171.

CHAPTER 2 IMPLIED OBLIGATIONS IN A CONTRACT OF AFFREIGHTMENT

injured party will always be able to recover compensation in the form of damages for any

unreasonable delay, he will only be able to repudiate the contract if the delay is so prolonged

as to frustrate its object. In Freeman v Taylor50 a vessel had been chartered to take her cargo to

Cape Town and, after discharging it, to proceed with all convenient speed to Bombay in order

to load the charterer’s cargo of cotton. After discharging at the Cape, however, the master

for his own account took on board a cargo of mules and cattle for carriage to Mauritius en

route to Bombay. As the result of this diversion, the vessel was some six or seven weeks late

in arriving in Bombay and the court held the delay sufficiently long to frustrate the object of

the charter. In cases where the delay is not so prolonged, however, the injured party will be

restricted to a claim for damages.51 Even such a claim may be barred if the particular delay is

covered by an excepted peril.52

2.3 Obligation not to deviate from the agreed route

The owner of a vessel, whether operating a liner service or under charter, impliedly undertakes

that his vessel, while performing its obligations under the contract of carriage, will not

deviate from the contract voyage. Deviation has been defined as ‘an intentional and unreasonable

change in the geographic route of the voyage as contracted’.53 In order to determine

whether such a deviation has occurred it is first necessary to ascertain the precise route envisaged

by the contract of affreightment. A few standard charter forms make express provision

for the route to be followed54 but, in the absence of such provision, the presumption is that

the proper route is the direct geographical route between the ports of loading and discharge.

This presumption can, however, be rebutted by the shipowner adducing evidence as to the

customary route in the trade, or even as to the route previously followed by the particular

shipping line involved.55 So in Reardon Smith Line v Black Sea and Baltic General Insurance56 a

vessel chartered to proceed from a Black Sea port ‘to Sparrow Point’ in the United States,

departed from the direct geographical route to bunker in Constanza, where cheap supplies

of oil fuel were available. On proof that vessels engaged in that trade invariably put into

Constanza and that 25 per cent of ocean-going oil-burning vessels passing through the

Bosphorus followed a similar practice, the House of Lords held that there had been no deviation

from the normal route. The relevant law was neatly summarised by Lord Porter:

‘It is the duty of a ship, at any rate when sailing upon an ocean voyage from one port to another,

to take the usual route between those two ports. If no evidence be given, that route is presumed

to be the direct geographical route but it may be modified in many cases, for navigational or

50 (1831) 8 Bing 124.

51 MacAndrew v Chapple (1866) LR 1 CP 643.

52 Barker v MacAndrew (1865) 18 CB (NS) 759.

53 Tetley p 1812. While English courts have restricted the concept of deviation to geographic deviations, US

courts have extended it to other departures from the terms of the contract which materially increase the risks

to cargo such as unauthorised deck carriage (Jones v Flying Clipper (1954) 116 Fed Supp 386) or over-carriage

(The Silver Cypress [1944] AMC 895).

54 For example, Austral, clause 2; Austwheat, clause 2.

55 Frenkel v MacAndrews [1929] AC 545.

56 [1939] AC 562.

2.3 OBLIGATION NOT TO DEVIATE FROM THE AGREED ROUTE

other reasons, and evidence may always be given to show what the usual route is, unless a

specific route be prescribed by the charterparty or bill of lading.’57

To constitute an unjustifiable deviation the departure from the contractual voyage must be

the result of a deliberate act on the part of the owner or the ship’s officers. Consequently,

there will be no breach of this implied undertaking if the vessel is blown off course during a

storm, or is set on a wrong course as the result of the illness of its navigation officer or reliance

on a defective compass.58

2.3.1 Justifiable deviations

(I) At common law

A departure from the proper route is permissible at common law in the following

circumstances:

1. To save human life or to communicate with a vessel in distress in case lives may be in

danger.

‘Deviation for the purpose of saving life is protected and involves neither forfeiture of insurance

nor liability to the goods’ owner in respect of loss which would otherwise be within the

exceptions of “perils of the seas”. And, as a necessary consequence of the foregoing, deviation

for the purposes of communicating with a ship in distress is allowable, inasmuch as the

state of the vessel in distress may involve danger to life. On the other hand, deviation for the

sole purpose of saving property is not thus privileged, but entails all the usual consequences

of deviation.’59

In the case from which this quotation is drawn, the vessel, having deviated to answer a

distress call, could easily have taken off the crew from the stricken ship, but decided to take

the latter in tow in order to earn salvage. While the vessel was engaged in this operation it

was driven ashore in a gale with the loss of her cargo. The deviation in order to salve the

ship was held not to be justified and the shipowners were held liable for loss of cargo

despite the fact that such loss was covered by the exception of perils of the sea in the

charterparty. The position would have been otherwise had the weather been such that it

had been necessary to take the disabled ship in tow in order to save the lives of the crew.

2. To avoid danger to the ship or cargo. The master is under an obligation to exercise

reasonable care and skill in ensuring the success of the joint enterprise and accordingly is

entitled to deviate from the proper course in order to ensure the safety of the vessel and

its cargo. Indeed, in the majority of cases, he will be under a duty to take such action.60

The risks may arise from natural causes such as storms, ice or fog, or they may involve

political factors such as the outbreak of war or the fear of capture by hostile forces.61 In

either case, however, the danger must be of a reasonably permanent nature, since a master

57 Ibid at p 584.

58 Rio Tinto Co v Seed Shipping Co (1926) 24 LlLR 316.

59 Cockburn CJ in Scaramanga v Stamp (1880) 5 CPD 295 at p 304.

60 See Notara v Henderson (1870) LR 5 QB 346.

61 The Teutonia (1872) LR 4 PC 171.

CHAPTER 2 IMPLIED OBLIGATIONS IN A CONTRACT OF AFFREIGHTMENT

would not be justified in substituting a substantially different voyage in order to avoid a

risk arising from a merely temporary obstruction such as a shortage of tugs or a neap tide.62

One of the most frequently encountered examples of this type of justifiable deviation

is the vessel which, for safety reasons, has to put into port for repairs to damage sustained

on the voyage.63 Nor is it apparently material that the damage has resulted from the initial

unseaworthiness of the vessel. Thus in Kish v Taylor64 a vessel had been chartered to load a

full and complete cargo of timber at two ports in the Gulf of Mexico for carriage to western

Europe. On the charterer failing to provide a full cargo, the master procured further

timber from other shippers, some of which he loaded on deck in such a way as to render

the vessel unseaworthy. Heavy squalls were encountered during the voyage which caused

the deck cargo to shift and endanger the safety of the vessel. Accordingly the master put

into Halifax for the necessary repairs before proceeding to Liverpool where he discharged

the cargo. When the shipowner sought to exercise the contractual lien for dead freight and

demurrage, the cargo owner contended that the right to rely on the lien had been forfeited

as the result of what was alleged to be an unjustifiable deviation to Halifax. The House of

Lords rejected this argument and held the deviation to be justified even though it resulted

from initial unseaworthiness. In their view justification was to be sought in the existence of

a danger and not in its cause. Lord Atkinson indicated the policy considerations involved:

‘It is the presence of the peril and not its cause which determines the character of the

deviation, or must the master of the ship be left in this dilemma that, whenever, by his own

culpable act or a breach of contract by his owner, he finds his ship in a perilous position,

he must continue on his voyage at all hazards, or only seek safety under the penalty of

forfeiting the contract of affreightment?’

In such a dilemma the master must clearly be given the benefit of the doubt, since:

‘Nothing could, it would appear to me, tend more to increase the dangers to which life and

property are exposed at sea than to hold that the law of England obliged the master of a

merchant ship to choose between such alternatives.’65

It would appear that a deviation may be justified although the risk to be avoided affects

only the ship and not the cargo.66 On the other hand, in the reverse situation, the position

is far from clear. There is authority for suggesting that where continuation of the voyage

would result in substantial damage to the cargo, the master might be under a duty to

deviate to protect the interests of the cargo owners,67 but it is doubtful whether such an

obligation arises where the apprehended damage is slight or only affects part of the cargo.

While the master is expected to take into account the interests of both ship and cargo, ‘I

am not prepared to hold that the instant it becomes clear that by going on some mischief

62 Hand v Baynes (1839) 4 Wharton 204.

63 Phelps, James & Co v Hill [1891] 1 QB 605.

64 [1912] AC 604. US courts have held deviation not to be justified where the shipowner was aware of the unseaworthy

condition of the vessel before it sailed: The Louise [1945] AMC 363.

65 [1912] AC at pp 618–19. Compensation in the form of damages would of course be available for any loss

(including delay) resulting from the initial unseaworthiness.

66 The Teutonia (1872) LR 4 PC 171.

67 The Rona (No 2) (1884) 51 LT 28.

2.3 OBLIGATION NOT TO DEVIATE FROM THE AGREED ROUTE

will be done to some portion of the cargo that it becomes the duty of the captain to go

back, and perhaps put all concerned to a very enormous expense . . .’68 Presumably the

decision as to whether a deviation is justified in such circumstances will depend upon a

comparison between the gravity of the danger and the inconvenience and expense of taking

avoiding action.

3. Where the deviation is made necessary by some default on the part of the charterer.

Thus it may be justifiable to put into port to discharge dangerous cargo which has been

loaded by the charterer without the knowledge of the shipowner. Again, a master may be

permitted to deviate to obtain more cargo in a situation where the charterer has breached

his contractual obligation to load a full cargo.69

(II) Under the Hague and Hague/Visby Rules

In addition to the types of justification recognised at common law, Art IV rule 4 of the

Hague/Visby Rules70 provides two further heads: ‘deviation in saving or attempting to save . . .

property at sea’, and ‘any reasonable deviation’. The interpretation of these provisions is discussed

elsewhere,71 but it is relevant to note at this point that courts in the United Kingdom

have given an extremely restricted interpretation to the term ‘reasonable deviation’ with the

result that there are few reported cases in which the concept has been successfully invoked.

2.3.2 Liberty clauses

Most standard charter forms include a clause giving the master a liberty to deviate for

specified reasons. A good example is provided by clause 3 of the Gencon form:

‘The vessel has liberty to call at any port or ports in any order, for any purpose, to sail without

pilots, to tow and/or assist vessels in all situations, and also to deviate for the purpose of saving

life and/or property.’

Clauses in other charters specify a variety of reasons for which deviation is permissible,

including for bunkering purposes,72 for adjusting compasses or radio equipment,73 or for

landing and embarking crew members.74 If such clauses were applied literally, they would

have far-reaching effects, but, as they are inserted predominantly for the shipowner’s benefit,

the courts apply the principle of contra proferentem and where possible give them an extremely

restricted interpretation. Thus in the case of Glynn v Margetson75 a cargo of oranges was loaded

in Malaga on a vessel bound for Liverpool on a bill of lading which gave the owner ‘liberty

to proceed to and stay at any port or ports in any rotation’. Despite the breadth of this clause,

68 Sir John Hannen in The Rona (1884) 51 LT 28 at p 30. See also Cockburn CJ in Notara v Henderson (1870)

LR 5 QB 346 at p 354.

69 Wallems v Muller [1927] 2 KB 99. Problems would, however, arise in this situation if cargo owned by third

parties was already on board.

70 The Hague Rules are identical on this point.

71 See infra, pp 208–9.

72 Polcoalvoy, clause 26; Cf. Shellvoy 6, clause 31 requiring prior permission of charterers.

73 Grainvoy, clause 20.

74 Polcoalvoy, clause 26.

75 [1893] AC 351.

CHAPTER 2 IMPLIED OBLIGATIONS IN A CONTRACT OF AFFREIGHTMENT

it was held not to protect the shipowner when the vessel called at ports not on the geographical

route to Liverpool with the result that the oranges arrived at their destination in a

damaged state. In a case involving a similar clause, Lord Esher expressed the view that such

a term ‘has always been interpreted to mean that the ship may call at such ports as would

naturally and usually be ports of call on the voyage named. If the stipulation were only that

she might call at any ports, the invariable construction has been that she would only be

entitled to call at such ports in the geographical order; and therefore the words “in any order”

are frequently added; but in any case it appears to me that the ports must be ports substantially

on the course of the voyage.’76

Such principles of interpretation are ultimately at the mercy of a skilled draftsman and can

be defeated by the use of appropriate words. Thus clause 13 of the Nubaltwood form gives

the shipowner a liberty to call ‘at any port or ports whatsoever in any order in or out of the

route or in a contrary direction to or beyond the port of destination . . .’ Clauses of this type

have been given full effect by the courts which have described them as conferring on the ship

a liberty to go where she pleased, subject only to the restriction that the essential purpose of

the voyage must not be frustrated.77

A further problem arises in the not infrequent case where the standard charterparty form

expressly incorporates the Hague or Hague/Visby Rules.78 As these regimes prescribe the

minimum protection for the cargo owner which is incapable of being reduced by agreement

between the parties,79 to what extent are such liberty clauses affected by the requirement in

Art IV rule 4 that a deviation, other than to save life or property, has to be reasonable? The

US courts have taken a strict view in such circumstances, holding that liberty clauses in the

charter only take effect to the extent that the deviation is reasonable.80 English courts, on

the other hand, regard the express liberty clause as defining the scope of the contractual

voyage rather than as a provision seeking to excuse the shipowner should he depart from it.

On this view there is no conflict between such a clause and Art IV rule 4 of the Hague/Visby

Rules. In the words of Hodson LJ, ‘the object of the Rules is to define not the scope of the contract

of service, but the terms on which that service is to be performed’.81 Presumably the same

result would follow where a bill of lading, issued under a charterparty, included a provision

expressly incorporating a liberty clause in the charter.

2.3.3 The effect of breach

At common law any unjustifiable deviation from the proper route has been traditionally

regarded as a fundamental breach of the contract of affreightment.

‘The true view is that the departure from the voyage contracted to be made is a breach by the

shipowner of his contract, a breach of such a serious character that, however slight the deviation,

76 Leduc v Ward (1888) QBD 475 at p 482.

77 Branson J in Connolly Shaw v Nordenfjeldske SS Co (1934) 50 TLR 418. See also Hadji Ali Akbar v Anglo-Arabian

SS Co (1906) 11 Com Cas 219; Frenkel v MacAndrews [1929] AC 545.

78 For example, Polcoalvoy, clause 28; Nuvoy 84, clause 43.

79 Article III rule 8.

80 The Nancy Lykes 706 F2d 80 (1983).

81 Renton v Palmyra Trading Corp [1956] 1 QB 462 at p 510. (Hodson LJ was referring to an identical provision

in the Hague Rules.) See also Foreman & Ellams v Federal SN Co [1928] 2 KB 424; Stag Line v Foscolo Mango

[1932] AC 328.

2.3 OBLIGATION NOT TO DEVIATE FROM THE AGREED ROUTE

the other party to the contract is entitled to treat it as going to the root of the contract, and to

declare himself as no longer bound by any of the contract terms.’82

A fundamental breach was traditionally distinguished from a condition by the fact that, on a

breach of the former, the innocent party was entitled to repudiate his obligations under the

contract and sue for damages at large irrespective of any exceptions or limitation of liability

provisions in the contract of carriage.

The importance attached to the breach stems from the fact that, in earlier marine insurance

practice in Great Britain and the United States, cover under a cargo insurance policy was

lost in the event of deviation. The strict liability imposed on the shipowner was therefore

designed to afford protection to the cargo owner. Under present insurance practice, however,

such a policy will normally include a ‘held covered’ clause under which cover can be extended

in the event of deviation in return for the payment of an additional premium. This change in

procedure, together with the practice of incorporating widely drafted liberty clauses into the

contract of carriage, has greatly reduced the practical importance of the deviation concept.

There is now some doubt as to whether the strict view of the concept of deviation, operating

as a rule of law, can survive the combined effect of the strictures of members of the

House of Lords in the two cases of Suisse Atlantique83 and Photo Production v Securicor.84 In their

opinion, the doctrine of fundamental breach, conceived as a substantive rule of law, had been

a judicial aberration initially designed to protect the consumer against the effects of exclusion

clauses. Such protection is no longer required after the Unfair Contract Terms Act 1977. So

far as the commercial world is concerned, a reversion to a strict application of the construction

approach would leave them free to negotiate their own contracts and allocate risks as

they see fit.

What effect will these judgments have on the traditional approach to the concept of

deviation?85 On the one hand, Lord Wilberforce in Photo Production v Securicor extended a

possible lifeline to retaining the concept of deviation as a rule of law when he remarked that

‘it may be preferable that [the deviation cases] should be considered as a body of authority

sui generis with special rules derived from historical and commercial reasons’.86 The alternative

view would be that deviation, as one facet of the wider doctrine of fundamental breach,

survives not as a rule of law, but as a sub-species of construction. This was the approach

adopted by the Court of Appeal in The Antares,87 where Lloyd LJ was of the opinion that deviation

cases ‘should now be assimilated into the ordinary law of contract’. Such an approach

would require the courts to take into consideration the entire terms of the contract, including

both exceptions and liberty clauses, with a view to discovering whether, on their true

82 Lord Atkin in Hain SS Co v Tate & Lyle (1936) 41 Com Cas 350 at p 354. See also Carver 9.043 ff; Gaskell

6.51 ff.

83 [1967] 1 AC 361.

84 [1980] AC 827. The strict view was reaffirmed in the United States in The Nancy Lykes 706 F 2d 80 (1983). See

also Nemeth v General Steamship Corp [1983] AMC 885. Judge LJ in The Kapitan Petko Voivoda [2003] 2 Lloyd’s

Rep 1 at p 16 refers to it as a ‘moribund if not defunct principle’.

85 In this respect it is important to note that contracts of carriage by sea will not normally be subject to the

provisions of the Unfair Contract Terms Act (see Schedule 1) and so their terms will rarely be required to

conform to the standard of reasonableness imposed by that statute.

86 [1980] AC 827 at p 845. An approach still left open by Longmore LJ in The Kapitan Petko Voivoda [2003]

2 Lloyd’s Rep 1, at p 10.

87 [1987] 1 Lloyd’s Rep 424 at p 430. See Mills, C P, ‘The Future of Deviation in the Law of Carriage of Goods’

[1983] LMCQ 587 at p 596.

CHAPTER 2 IMPLIED OBLIGATIONS IN A CONTRACT OF AFFREIGHTMENT

construction, it was clear that the parties intended them to apply to the new situation, i.e.

the substituted voyage.88 With such formidable weapons at the disposal of the court it is

doubtful whether there is any need to retain the rule of law approach to the problem raised

by deviation. In the words of a modern writer, ‘All the common law methods of control are

retained and these are strengthened by the requirement of reasonableness. The rules of construction

still weigh very heavily against the proferens. A competent judge should find little

difficulty in ousting an unwelcome exemption clause.’89

What then is the effect of deviation on the contract of carriage? The traditional view is

that, in the event of an unjustified deviation, however slight, the charterer or cargo owner is

permitted an election. He is entitled either to treat the breach as a repudiation of the contract

of carriage or to waive the breach with the result that he will be restricted to an action for

damages. A similar approach would presumably be adopted by a court which found that, as

a matter of construction, the terms of the contract of carriage were not intended to be applicable

to the substituted voyage. The following account of the traditional view must, however,

be treated with some reserve until the full implications of the decision in Photo Production v

Securicor become evident.

(I) Effect of treating the contract as repudiated

If the injured party elects to treat the contract as at an end, the shipowner can no longer rely

for protection on the terms of the charterparty or bill of lading. Henceforth his liability will

be equivalent to that of a common carrier in that he will be subject to the strict liability

imposed by the common law. In the event of being sued for loss or damage sustained during

or subsequent to the deviation, he cannot invoke the contractual exceptions or the provisions

for limitation of liability. Only three exceptions are recognised at common law, namely, those

relating to act of God, act of the Queen’s enemies and inherent vice. Even these are not available

as a defence to the shipowner unless he can prove that the relevant loss would have been

sustained irrespective of the deviation. In the majority of cases this is no easy task. In Morrison

v Shaw, Savill90 the exception of King’s enemies was held not to be applicable to a case where

a vessel had been sunk by an enemy submarine after having deviated from her course without

justification. The owner was unable to establish that the loss would have been sustained even

if the vessel had not deviated. In practice the common law exceptions will rarely offer any

protection to the deviating carrier except possibly in the case where damage to cargo results

from inherent vice.91

Deviation was followed by equally drastic consequences even where the contract of carriage

was covered by a bill of lading governed by the Hague Rules. The carrier could not in such an

event rely on the Art IV exceptions as a defence to a cargo claim. ‘The provisions of the Act

import into the agreement compulsorily certain exceptions, but there is nothing in the Act to

show that these exceptions can be relied upon while the vessel is not pursuing the contract

voyage, but is pursuing a voyage, or part of it, which is not covered by the contract at all.’92

This result was the inevitable consequence of the common law approach which apparently

88 See Kerr LJ in George Mitchell v Finney Lock Seeds [1983] 1 All ER 108 at p 123. See also the New Zealand case

of The Pembroke [1995] 2 Lloyd’s Rep 290.

89 Mills [1983] LMCQ at p 595. See also Gaskell 6.73 ff.

90 [1916] 2 KB 783.

91 See Internationale Guano v MacAndrew [1909] 2 KB 360.

92 Greer LJ in Foscolo Mango v Stag Line [1931] 2 KB 48 at p 69.

2.3 OBLIGATION NOT TO DEVIATE FROM THE AGREED ROUTE

regarded the provisions of the Hague Rules, when applicable, as little more than compulsory

terms of the contract of carriage. Doubts have, however, been expressed as to whether deviation

would deprive the carrier of his right to limit liability under Art IV rule 5, or invoke the

time bar under Art III rule 6, of the Hague Rules, since both provisions are expressly made

applicable ‘in any event’. In recent decisions involving unauthorised deck carriage the Court

of Appeal has taken the view that the decisive factor in such cases is not the seriousness

or otherwise of the breach, but a straightforward construction of the relevant provisions.93

Adopting this approach, they held that the words ‘in any event’ meant what they said. ‘They

are unlimited in scope and I can see no reason for giving them any other than their natural

meaning.’94 The carriers were accordingly entitled to rely on the respective Hague Rules

defences irrespective of the seriousness of the breaches involved.95 The introduction in the

United Kingdom of the Hague/Visby Rules has reinforced this approach since their provisions

are expressly given ‘the force of law’.96 If they are to be effective as rules of law then presumably

they will survive any repudiation of contractual obligations by the parties concerned.97

In the event of the charterer treating the deviation as a repudiation of the contract of

carriage, to what extent can the shipowner rely on exceptions in the charterparty or bill of

lading in respect of losses occurring before the deviation? Alternatively, can he sue for demurrage

or dead freight incurred at the port of loading? The traditional view relating to breaches

of condition in general was expressed by Lord Sumner: ‘Though a party may exercise his right

to treat the contract as at an end, as regards obligations de futuro, it remains alive for the

purpose of vindicating rights already acquired under it on either side.’98 Opinions are divided

as to whether a similar rule applies in the case of fundamental breach,99 but there seems no

reason in principle why deviation should affect accrued rights, and this is the standpoint

adopted by US courts.100

One final point relates to the effect of deviation on the shipowner’s right to recover freight.

There still appears to be some doubt on this point. While it is clear that there will be no right

to recover the charter freight once the deviation has been accepted as a repudiation of the

contract of carriage,101 there seems no reason why, in appropriate circumstances where the

cargo safely reaches its destination, the shipowner should not be entitled to reasonable

freight on a quantum meruit basis.102

93 See The Kapitan Petko Voivoda [2003] 2 Lloyd’s Rep 1 (limitation of liability); The Antares [1987] 1 Lloyd’s

Rep 424 (time bar).

94 Longmore LJ in The Kapitan Petko Voivoda at p 18 quoting Tuckey LJ in The Happy Ranger [2002] 2 Lloyd’s

Rep 357 at p 364.

95 Cf. the opposite view adopted by the US courts. See Jones v Flying Clipper (1954) 116 Fed Supp 386;

Encyclopaedia Britannica v Hong Kong Producer [1969] 2 Lloyd’s Rep 536.

96 Carriage of Goods by Sea Act 1971, s 1(2). For the effects of the change of wording, see The Morviken [1983]

1 Lloyd’s Rep 1. See infra at pp 184–5.

97 This was the view taken by the Court of Appeal in The Antares [1987] 1 Lloyd’s Rep 424 in respect of the

Hague/Visby time limit.

98 Hirji Mulji v Cheong Yue SS Co [1926] AC 497 at p 511. See also Lord Maugham in Hain SS Co v Tate & Lyle

(1936) 41 Com Cas 350 at p 371.

99 See, to the contrary, Pickford J in Internationale Guano v MacAndrew [1909] 2 KB 360; Scrutton p 259. Cf.

Colinvaux, RP, Carver’s Carriage by Sea, 13th edn, 1982, para 1200.

100 See The Poznan (1922) 276 Fed Rep 418. See also Cooke 12.34 ff; Gaskell 6.58 ff.

101 See Collins LJ in Thorley v Orchis SS Co [1907] 1 KB 660 at p 667.

102 See Lord Wright in Hain SS Co v Tate & Lyle [1936] 41 Com Cas 350 at pp 368–9.

CHAPTER 2 IMPLIED OBLIGATIONS IN A CONTRACT OF AFFREIGHTMENT

(II) Effect of waiving the breach

Despite deviation constituting a fundamental breach of contract, the cargo owner may elect

to ignore it and treat the contract as still subsisting since ‘however fundamental is the condition

it may still be waived by the goods owner’.103 The adoption of such a course of action is

hardly surprising in the substantial number of cases where deviation results in little or no loss

to the cargo owner. In the event of such affirmation, all the terms of the contract continue to

apply including the exceptions and the provisions relating to the limitation of liability.

Similarly, the shipowner is entitled to claim freight and general average contributions, the

cargo owner being restricted to a remedy of damages for any loss attributable to the deviation

and not covered by an exception.

A good example of the options open to the cargo owner is provided by the facts of the case

of Hain SS Co v Tate & Lyle.104 A vessel had been chartered to proceed to the West Indies and

load a cargo of sugar at two ports in Cuba and one port in San Domingo to be nominated

by the charterer. The charterer made the required nominations but, owing to a failure of

communication by the owner’s agents, the master was not informed of the nominated port

in San Domingo. Consequently, when the relevant cargoes had been loaded at the two Cuban

ports, the master proceeded to Queenstown for orders. Shipowners and charterers quickly

discovered the mistake, whereupon the master was ordered back to San Domingo to load the

remaining cargo. On subsequently leaving the latter port, however, the vessel ran aground

and part of the cargo was lost, the remainder being transhipped on another vessel for completion

of the voyage to the United Kingdom. Shortly before the vessel arrived at its destination

the bills of lading covering the cargo of sugar were endorsed to Tate & Lyle who took

delivery of the cargo in ignorance of the deviation.

The court had little doubt that the deviation constituted a fundamental breach of contract

entitling the cargo owners to treat the contract as repudiated. So far as the charterers were

concerned, however, with full knowledge of the facts they had elected to waive the breach by

ordering the vessel back to San Domingo. As the aggrieved party, ‘the cargo owner can elect

to treat the contract as subsisting; and if he does this with full knowledge of his rights he must

in accordance with the general law of contract be held bound’.105 In these circumstances the

shipowners, in the event of any claim being made by the charterers, would be entitled to rely

for protection on the charter exception of perils of the sea. The position with regard to the

bill of lading holders was, however, entirely different. There could be no waiver without

knowledge of the breach and, on the principle enunciated in Leduc v Ward,106 the bill of lading

holders were not bound by any waiver on the part of the charterers. Consequently, the

shipowners were unable to rely on the bill of lading exceptions as a defence to any cargo

claim brought by the consignees.

The burden of proving waiver will always rest with the deviating shipowner, and as it

will rarely be in the interest of the consignee to waive the breach once the cargo has

103 Lord Wright in Hain SS Co v Tate & Lyle [1936] 2 All ER 597 at p 608.

104 [1936] 2 All ER 597.

105 Ibid Lord Atkin at p 601.

106 (1888) 20 QBD 475; see infra pp 130–2.

2.4 THE OBLIGATION TO NOMINATE A SAFE PORT

reached its destination, ‘A waiver to be operative so that a party’s claim is estopped, must be

unequivocal, definite, clear, cogent and complete.’107 In this respect there appears to be some

doubt as to whether mere reference of a dispute to arbitration in accordance with a clause in

the charterparty would constitute such a waiver.108 The better view is that it would not.

2.4 The obligation to nominate a safe port

Whenever a charterer has the right to nominate a port, whether under a time or voyage

charter, the question arises as to whether he is under a corresponding obligation to nominate

a safe port. The right to nominate may take one of two distinct forms. On the one hand the

charterer may be given the right to nominate from a range of ports listed in the charter, e.g.

Sydney/Melbourne/Brisbane. In this case no implied warranty of safety will arise on nomination

since the owner, having agreed to the port being identified in the charter, may reasonably

be assumed to have accepted any risk as to its safety.109 Alternatively the charterer may be

given the right to nominate from a number of unnamed ports within a specific range, e.g.

Ghana/Nigeria.110 Here a distinction has to be drawn between a time charter and a voyage

charter. In the case of a time charter, where the owner has placed the commercial use of his

vessel at the disposal of the charterer, a warranty as to the safety of any nominated port will

invariably be implied. In the opinion of Donaldson J in The Evaggelos Th,111 ‘I should make

this implication because common sense and business efficacy require it in cases in which the

shipowner surrenders to the charterer the right to choose where his ship shall go and because

I think that this is in accordance with the weight of authority.’

The position with regard to the voyage charter is, however, less straightforward. In the

absence of clear authority, recent cases have suggested that, where a voyage charterer has

the right to nominate from a range of unnamed ports, the implication of such a warranty is

not automatic but depends on the specific terms of the particular charter and on whether the

implication is necessary to give business efficacy to the contract.112

In the majority of charters the need for such an implied obligation is obviated by the

presence of an express term to the same effect. An example of such a term is provided by

clause 2 of the Baltime 1939 form which provides:

‘The vessel shall be employed in lawful trades for the carriage of lawful merchandise only

between safe ports or places where the vessel can safely lie always afloat.’

What then constitutes a safe port for the purpose of such warranties? The case law would

suggest that the basic concept of a safe port remains the same irrespective of whether it relates

107 Slesser LJ in McCormick v National Motor Insurance (1934) 40 Com Cas 76 at p 93.

108 See US Shipping Board v Bunge y Born (1924) 41 TLR 73 at pp 74–5.

109 See Cooke 5.35 ff.

110 See Cooke 5.37 ff.

111 [1971] 2 Lloyd’s Rep 200 at p 204.

112 See Thomas J in The Aegean Sea [1998] 2 Lloyd’s Rep 39 at p 68; Mediterranean Salvage & Towage Ltd v Seamar

Trading [2008] 2 Lloyd’s Rep 628, per Sir Anthony Clarke MR at para 21 ff.

CHAPTER 2 IMPLIED OBLIGATIONS IN A CONTRACT OF AFFREIGHTMENT

to an express or implied warranty or to a time or voyage charter. The classic definition was

provided by Sellers LJ in The Eastern City:113

‘a port will not be safe unless, in the relevant period of time, the particular ship can reach it, use

it and return from it without, in the absence of some abnormal occurrence, being exposed to

danger which cannot be avoided by good navigation and seamanship.’

2.4.1 The period covered by the warranty

The ‘relevant period of time’ mentioned in the definition clearly covers the entire period

during which the vessel is using the port from the moment of entry to the time of departure.

In certain circumstances the coverage may be extended to incorporate risks encountered in

the approaches to a port, as, for example, ice in the Elbe preventing safe access to the port of

Hamburg,114 while in exceptional cases it may even cover dangers encountered on the open

sea, such as the risk of submarine activity around British ports during wartime.115 Conversely,

when the loading or discharging operation has been completed, the vessel must be able to

leave the port in safety. So Manchester was held an ‘unsafe’ port for the ship involved in a case

where, after discharge of the cargo, the masts of a vessel were too high to pass under bridges

on the ship canal linking the port with the sea.116 It is essential, however, that the danger must

be linked with the use of the nominated port since, in the words of Devlin J in Grace v General

SN Co,117 ‘It is obvious in point of fact that the more remote it is from the port, the less likely

it is to interfere with the safety of the voyage. The charterer does not guarantee that the most

direct route or any particular route to the port is safe, but the voyage which he orders must

be one which an ordinarily prudent and skilful master can find a way of making in safety.’

Nevertheless, the majority of cases are concerned with the safety of the vessel while in the

port itself where a similar variety is evident in the range of risks encompassed by the warranty.

The most frequently encountered danger in an unsafe port is the risk of physical damage to

the vessel. This may arise from an insufficient depth of water118 or from the presence of ice or

periodic silting119 which hinders access to the port. Alternatively an exposed or rocky anchorage

may render a port unsafe, particularly one which is liable to the onset of unpredictable

gales or other bad weather.120 On the other hand, the risks may have a political origin, as for

example in the event of the imposition of a blockade or the outbreak of hostilities.121 Finally,

there are the organisational risks arising from faulty administration by the port authorities.122

113 [1958] 2 Lloyd’s Rep 127 at p 131. For an alternative US definition, see Bond Smith J in 49 Tulane LR 861:

‘A safe port is a place where a chartered vessel may enter, load or discharge, and leave without legal restraint

and at which the vessel will encounter no perils greater than those of the sea. Whether a port is safe is a fact

to be determined in each case having regard to the vessel concerned.’

114 Grace v General SN Co [1950] 2 KB 383. See also The M/V Naiad [1978] AMC 2049.

115 Palace Shipping Co v Gans SS Line [1916] 1 KB 138. See also The Saga Cob [1992] 2 Lloyd’s Rep 545 (vessel

attacked by Eritrean guerillas while anchored four miles off port).

116 Limerick v Stott [1921] 2 KB 613.

117 [1950] 2 KB at p 391.

118 The Alhambra (1881) 6 PD 68; Reynolds v Tomlinson [1896] 1 QB 586.

119 The Hermine [1979] 1 Lloyd’s Rep 212.

120 The Eastern City [1958] 2 Lloyd’s Rep 127.

121 The Evia (No 2) [1982] 2 Lloyd’s Rep 307; The Teutonia (1872) LR 4 PC 171.

122 See The Marinicki [2003] 2 Lloyd’s Rep 655 (no proper system in place to investigate reports of underwater

obstructions and to find and remove them). See also Independent Petroleum Group v Seacarriers [2008]

1 Lloyd’s Rep 72.

2.4 THE OBLIGATION TO NOMINATE A SAFE PORT

These may range from the lack of adequate safety equipment such as marker buoys, warning

lights and radar, to the absence of suitable weather reports123 or the provision of unsafe

berths.124

2.4.2 The nature of the risks covered

Whether or not a port is ‘safe’ is a question of fact depending on the circumstances of each

individual case.125 Regard must be paid to the type of vessel involved, the work to be done

and the conditions pertaining in the port at the relevant time. Thus a port may be safe for one

type of vessel but not for another as, for example, where the draught of a 250,000 ton tanker

is too deep to allow it access to many ports which are otherwise perfectly safe for normal vessels.

It must also be remembered that some risk is attached to the use of any port and a port

will not be rendered unsafe by the presence of risks which can be avoided by good navigation

and competent seamanship. Accordingly, a port is not necessarily unsafe because it is liable

to the occasional storm even though vessels may be required to leave it in the event of bad

weather.126 On such occasions, however, adequate weather forecasts must be available and the

organisation of the port must be such as to enable a competent master to take the necessary

avoiding action. Thus, in the case of The Khian Sea,127 the Court of Appeal held a port unsafe

when, although the master obtained adequate warning of an approaching storm, he was

prevented from leaving his berth by the presence of two other vessels anchored close by. Lord

Denning MR took the opportunity of enumerating the requirements which had to be satisfied

in such circumstances under the safe port warranty. ‘First there must be an adequate weather

forecasting system. Second, there must be an adequate availability of pilots and tugs.128

Thirdly, there must be adequate sea room to manoeuvre. And fourthly, there must be an

adequate system for ensuring that sea room and room for manoeuvre is always available.’129

It is not every hazard, however, which will render a port unsafe. Where the obstruction is

only of a temporary nature as, for example, when caused by high winds, neap tides or silting,

the master is expected to wait a reasonable time until the danger has disappeared or been

removed. Only where the resultant delay is ‘inordinate’, i.e. such as to frustrate the object of

the charterparty, will it constitute a breach of the safe port warranty. Thus a port on the

Mississippi was not unsafe because the departure of a vessel had been delayed for some

21 days as the result of fog and the periodic silting of the river downstream. In the words

of Roskill LJ,130 ‘a shipowner cannot throw up a charterparty merely because there has been

. . . “commercially unacceptable delay”, that is to say, delay exceeding a reasonable time.

The delay in such a case must, before he can rescind and treat the charterer’s conduct as a

repudiation of the charterer’s obligation to load, be such as will frustrate the adventure.’ He

added that ‘if you substitute any other test than frustration, you use a yardstick which is

123 The Dagmar [1968] 2 Lloyd’s Rep 563.

124 Reardon Smith Line v Australian Wheat Board [1956] AC 266.

125 See Morris LJ in Compania Naviera Maropan v Bowaters [1955] 2 QB at p 105.

126 See The Heinrich Horn [1971] AMC 362.

127 [1979] 1 Lloyd’s Rep 545.

128 See The Universal Monarch [1988] 2 Lloyd’s Rep 483.

129 The Khian Sea at p 547.

130 The Hermine [1979] 1 Lloyd’s Rep 212 at p 218.

CHAPTER 2 IMPLIED OBLIGATIONS IN A CONTRACT OF AFFREIGHTMENT

extremely difficult to apply in any given case. How do you judge whether a particular delay is

commercially acceptable?’

The position may, however, be different where the characteristics of the port, giving rise to

the temporary hazard, existed at the time of its nomination and the shipowner is not seeking

to rescind the contract but merely to claim damages for detention. Thus in the recent case of

Independent Petroleum Group v Seacarriers131 the Count had been detained for 4 days in leaving

the port of Beira by a vessel which had run aground on a sandbank and was obstructing the

main channel. Arbitrators had found that marker buoys were out of position as a result of

shifting sands and that there was no adequate system of monitoring the channel. Although

the Count had suffered no physical damage and no question of frustration was raised by

the delay, Toulson J nevertheless held Beira to be an unsafe port and awarded damages for

detention. In his opinion the reasoning in The Hermine was no bar to a finding by arbitrators

that the characteristics of a port, existing at the time of nomination, were such as to create

a continuing risk of danger to vessels, thus rendering it prospectively unsafe. He sought

support for this approach from the words of Lord Roskill, when commenting on his leading

judgment in The Hermine, in the later case of The Evia (No 2).132 In his view the main concern

of the Court of Appeal in The Hermine was as to ‘whether there was a breach of the promise

which had arisen on nomination because much later there was temporary delay of a nonfrustrating

kind.’

On their respective facts, it is difficult to reconcile the two decisions. In both cases the

claimants were seeking damages for detention and in both cases their claims relied substantially

on characteristics which were endemic to the respective ports, namely, periodic silting

and shifting sandbanks. Yet in one case the port was found safe while in the other, which

involved a shorter period of delay, it was held unsafe. Perhaps the crucial point which distinguishes

the two cases is the fact that in the Independent Petroleum Group v Seacarriers the port

authorities in Beira were found at fault in failing adequately to monitor the safety of the main

navigational channel. It was a continuing breach of duty from the time of nomination of

the port.

2.4.3 The nature of the undertaking – remedies available for breach

There is little authority as to whether the safe port undertaking constitutes a condition or a

warranty. In view of the fact that breach of a term which is technically classified as a condition

entitles the innocent party to repudiate all further obligations under the contract, it is unlikely

that the parties to a time charter envisage the term as constituting more than a warranty

sounding in damages. The position may well be different in the case of a voyage charter, but

everything would turn on the wording of the particular contract.

What does, however, appear clear is that a shipowner can refuse a nomination if he is

aware that the port is inherently unsafe.133 Indeed, if he ignores the obvious danger and proceeds

to enter the nominated port, his conduct may well amount to a novus actus interveniens

131 [2008] 1 Lloyd’s Rep 72.

132 [1982] 2 Lloyd’s Rep 307 at p 319.

133 But if a shipowner with full knowledge of the danger unequivocally accepts a nomination, he cannot subsequently

repudiate his election although he may retain his right to claim damages for breach of contract:

The Kanchenjunga [1990] 1 Lloyd’s Rep 391.

2.4 THE OBLIGATION TO NOMINATE A SAFE PORT

which prevents him from recovering compensation for any damage subsequently suffered

by his vessel. The existence of the safe port warranty ‘does not mean that a master can enter

ports that are obviously unsafe and then charge the charterers with damage done’.134 On the

other hand, the courts recognise that, in such a situation, the master is in a dilemma and will

often give him the benefit of the doubt where the choice lies between a loss of freight or a

scratch to the paintwork.135

In the majority of cases the master, on receiving the nomination, will be unaware of the

potential danger and, in any event, is entitled to presume that the charterer is fulfilling his

obligation by nominating a safe port. Consequently, by sailing to the nominated port the

master is not regarded as having waived any breach by the charterer. ‘It does not lie in the

mouth of the promisor to say that a promisee has no right to assume that a promise has been

faithfully carried out and should make his own enquiries to see whether it has or not. If everything

done under contract has to be scrutinised and tested by the other party before he can

safely act upon it, many transactions may be seriously held up – in doubtful cases, perhaps

indefinitely.’136 Consequently, when, on arrival at the port, the master discovers the potential

hazard, he is still entitled to refuse to enter. Whether or not the charterer is then entitled

to make an alternative nomination is uncertain, although he will certainly be liable to compensate

for any loss of time involved. The cases suggest that such alternative nomination is

possible in the case of a time charter where the vessel has been chartered for a specified period

of time during which the owner has undertaken to carry out the charterer’s instructions. The

position is different with regard to a voyage charter, since here the agreement is to charter the

ship for a voyage between specified ports. Even where a charterer is given the right to nominate

the ports, the cases suggest that, once nominated, the ports are to be treated as if they

had been specified in the original charter.137 No substitutions may therefore be permitted, in

which case the safe port undertaking may be regarded as a condition precedent entitling the

shipowner to repudiate further performance of the charterparty in the event of its breach. In

practice, however, there may be specific provision for such an eventuality in the contract, or

it may be covered by the proviso ‘or as near as she can safely get’.138

Any claims for breach of the safe port undertaking will be limited by the rules of causation

and remoteness of damage. They may take one, or more, of three possible forms:

1. Normally it will consist of a claim for physical damage to the vessel.

2. Alternatively, where no physical damage has been suffered, the shipowner may seek to

recover the cost of avoiding the danger by, for example, engaging tugs or lightening the

vessel where the draught is too great.

3. In cases where the vessel is trapped in a port by a temporary obstruction such as, for example,

silting or the outbreak of hostilities, there may be a claim for damages for detention

provided the cause of delay is such as to render the port unsafe. Otherwise no remedy

will be available unless the delay is so prolonged as to frustrate the object of the contract.

In such circumstances the charterer will not be allowed to avoid liability by pleading

frustration, since his breach renders the frustration self-induced.

134 Per Devlin J in The Stork [1955] 2 QB at p 77.

135 See American President Lines v USA [1968] AMC 830.

136 Devlin J in Compania Naviera Maropan v Bowaters [1955] 2 QB 68 at p 77.

137 See infra p 62.

138 See infra pp 63–4.

CHAPTER 2 IMPLIED OBLIGATIONS IN A CONTRACT OF AFFREIGHTMENT

2.4.4 The scope of the undertaking

A final question, which has provoked some debate in recent years, relates to the precise scope

of the undertaking given by the charterer. One point is, however, clear. The undertaking refers

to the safety of the port at the time it is to be used, rather than to its safety at the time of nomination.

Thus a port may be unsafe at the time of its nomination in January, because of the

presence of ice which will have disappeared by the time of its intended use in the following

June. Conversely, a port may be safe at the time of its nomination in June, but will be blocked

by ice when used in the following January.

Beyond this point of agreement, however, there was, prior to the decision in The Evia

(No 2)139 a divergence of opinion as to the nature of this undertaking. On one view it

imposed on the charterer a strict contractual liability for all loss suffered by the shipowner

resulting from unsafe conditions in the port, irrespective of whether such conditions were

foreseeable at the time of nomination. In essence, this would amount to a continuing

guarantee of the safety of the port during the period it was to be used, subject of course to the

normal rules of causation and remoteness of damage outlined above. Such an approach was

justified on the grounds that it was in line with the express wording of the time charter clauses

requiring the vessel to be employed only between good and safe ports, and also because it

resulted in an equitable allocation of risk – the shipowner undertaking for a specified period

to comply with the charterer’s orders in return for a guarantee from the charterer to use the

vessel only between safe ports.140 The contrary view favoured an obligation which was ‘limited

to a warranty that the nominated port of discharge is safe at the time of nomination and may

be expected to remain safe from the moment of a vessel’s arrival until her departure’.141 This

approach would link the undertaking to the inherent characteristics of the port at the time of

nomination and would involve an objective test to be applied irrespective of the knowledge

of the charterer. In brief, such an obligation would relate to the prospective safety of the port

at the time of nomination and would not extend to ‘abnormal occurrences’ which were not

within the reasonable expectations of the parties at that time.

This difference of opinion was finally resolved by the House of Lords in The Evia (No 2).142

In this case The Evia had been chartered on a Baltime form which included an express undertaking

that she be employed ‘only between good and safe ports’. In March 1980 she was

ordered by the charterers to load a cargo in Cuba for carriage to Basrah at a time when there

was no reason to believe that Basrah was unsafe, or was likely to become so in the foreseeable

future. The Evia arrived in the Shatt al Arab on 1 July but, owing to congestion, had to

wait until 20 August before a berth was available in Basrah. Discharge was not completed

until 22 September, the very day on which navigation on the Shatt al Arab ceased due to

the outbreak of the Iran–Iraq war. The Evia being indefinitely trapped, the umpire in the subsequent

arbitration held that the charterparty was frustrated as from 4 October. Being thus

deprived of any further payments of hire, the shipowner appealed on the ground that any

frustration was self-induced since it had resulted from a breach of the express undertaking to

139 [1982] 2 Lloyd’s Rep 307.

140 For a summary of the case law to this effect, see the judgment of Mustill J in The Mary Lou [1981] 2 Lloyd’s

Rep 272.

141 Donaldson J in The Evaggelos Th [1971] 2 Lloyd’s Rep 200 at p 205. See also Sir Owen Dixon CJ in Reardon

Smith Line v Australian Wheat Board [1954] 2 Lloyd’s Rep 44.

142 [1982] 2 Lloyd’s Rep 307.

2.4 THE OBLIGATION TO NOMINATE A SAFE PORT

nominate a safe port. In rejecting the appeal, the Lords were unanimously of the view that

the warranty did not amount to a continuing guarantee of the port’s safety but referred only

to the prospective safety of the port at the time of nomination. In the words of Lord Diplock,

‘It is with the prospective safety of the port at the time when the vessel will be there for

the loading or unloading operation that the contractual promise is concerned, and the contractual

promise itself is given at the time when the charterer gives the order to the master or

other agent of the shipowner to proceed to the loading or unloading port.’143

In rejecting the ‘continuing guarantee’ approach, the Lords affirmed that the charterer

would be liable for the prevailing characteristics of the port irrespective of whether they were

known to him. On the other hand, he would not have to accept responsibility for such ‘unexpected

and abnormal’ events as the outbreak of the Iran–Iraq war. ‘I cannot think that if . . .

some unexpected or abnormal event thereafter occurs which creates conditions of unsafety

where conditions of safety had previously existed . . . that contractual promise extends to

making the charterers liable for any resulting loss or damage, physical or financial. So to hold

would make the charterer the insurer of such unexpected and abnormal risks which in my

view, should properly fall upon the ship’s insurers.’144

If the correct test to be applied in the future is to be based on the prospective safety of the

port at the time of nomination, this cannot be the end of the story. What happens if the port

becomes actually or prospectively unsafe to the knowledge of the charterer while the vessel is

sailing towards it, or even after it has berthed within the port? In the view of their Lordships,

the solution to this problem is to place on the time charterer a secondary obligation, in such

circumstances, to cancel the original nomination and order the ship out of the danger. Where

the vessel is already inside the port, as in The Evia case itself, such an obligation will only arise

where it is still possible for the vessel to leave.145

The decision in The Evia clearly caught the market by surprise – in particular the rejection

of the continuing guarantee formula as a ‘heresy’ by Lord Diplock,146 in favour of a more complicated

test based on a combination of primary and secondary obligations. As regards the

new ‘secondary obligation’ concept two points require further clarification. First, how diligent

is the charterer required to be in discovering any subsequent unexpected threat to the safety

of the nominated port? Is the obligation to take avoiding action absolute, or based on due

diligence, or on the actual knowledge of the charterer? Secondly, there is some uncertainty as

to whether a secondary obligation can arise in the case of a voyage charter. Once the voyage

charterer has exercised his right to nominate a port, the normal understanding is that no subsequent

variation is permissible.147 Their Lordships in The Evia refused to commit themselves

on this point.

The two subsequent illustrations of the operation of Lord Roskill’s secondary obligation

have provided no elucidation on either problem. The facts in The Lucille148 were practically

identical with those in The Evia except for the fact that the vessel in the former case was

prevented by congestion from entering Basrah until 20 September, i.e. two days before the

outbreak of the Iran–Iraq war. By that time the court found that Basrah was no longer

143 Ibid at p 310. See Lord Roskill at p 315 to the same effect.

144 Lord Roskill at p 315.

145 Ibid at p 320 per Lord Roskill.

146 Ibid at p 310.

147 See infra at p 62.

148 [1983] 1 Lloyd’s Rep 387. See also The Concordia Fjord [1984] 1 Lloyd’s Rep 385.

CHAPTER 2 IMPLIED OBLIGATIONS IN A CONTRACT OF AFFREIGHTMENT

prospectively safe and that consequently the charterer should have ordered the ship to escape

while there was still an opportunity to do so. In failing to take such action, as a result of

which the vessel was indefinitely trapped in Basrah, the charterer was in breach of his safe

port undertaking.

2.4.5 The safe port/safe berth relationship

Whether a port is named in the charter, or to be nominated by the charterer, it is presumed

that such charterer will also have the right to nominate a berth or berths within that port. In

many cases the charter will expressly require the charterer to nominate only safe berths, e.g.

1/2 safe berths Southampton. In the absence of such express provision, whether or not the

right to nominate is accompanied by an obligation to nominate a safe berth will depend on

a number of factors. Where the right to nominate arises at a port expressly warranted safe by

the charterer, such warranty extends to cover the berth with the result that the charterer is

under an implied obligation to nominate a safe berth.149

Where, however, the right to nominate occurs at a port not warranted safe by the charterer,

the Court of Appeal has recently held that in such a case there is no implied obligation to

nominate a safe berth. In Mediterranean Salvage & Towage Ltd v Seamar Trading150 a vessel had

been chartered for a voyage from Chekka in Lebanon to Algiers with a cargo of cement in

bulk. The charter contained no express warranties as to the safety of either the port or the

berth. The charterers nominated a berth for loading at Chekka at which the vessel was

severely damaged as the result of its hull being penetrated by a hidden underwater projection.

In response to a claim for damages for breach of an implied warranty as to the safety of the

berth, the Court of Appeal held that the existence of such a warranty depended on the construction

of the terms of the charter as a whole. The burden of proof rested on the owners and

they had failed to cite a single case in which a warranty had been implied in similar circumstances.

‘The question is simply whether the charterers agreed to take the risk of unsafety at

the berth from hidden dangers and the answer is no.’151

Finally is the reverse case, where the charterer is required to nominate a safe berth at a

named port which is not itself expressly warranted as being safe. Here the nomination of the

berth raises no implication as to the safety of the port. The practical effects of this distinction

are illustrated by the facts of The APJ Priti152 where a charterer had the right to nominate 1/2

safe berths at Bandar Khomeini, a port named in the charter but not itself warranted as safe.

The vessel was severely damaged by a missile while in transit to the port. The Court of Appeal

held that damages were not recoverable since the approach voyage did not fall within the safe

berth warranty and there was no warranty, express or implied, relating to the safety of the

port. In the words of Bingham LJ, ‘I do not accept that the vessel’s passage to and from a nominated

berth should be treated as including any part of the voyage to and from the port. It

would only include movement within the port to and from a nominated berth.’153

149 Cooke 5.42.

150 [2008] 2 Lloyd’s Rep 628.

151 Ibid at para 45 per Sir Anthony Clarke MR.

152 [1987] 2 Lloyd’s Rep 37.

153 Ibid at p 42.

2.5 THE OBLIGATION NOT TO SHIP DANGEROUS GOODS

2.5 The obligation not to ship dangerous goods

At common law the shipper impliedly undertakes not to ship dangerous goods without first

notifying the carrier of their particular characteristics. A similar obligation arises irrespective

of whether the goods are shipped under a contract of affreightment governed by a bill of

lading or a charterparty although, in the latter case, the implied undertaking will often be

reinforced by an express clause in the charterparty itself.154 No requirement of notification

will, however, arise where the carriers, or members of their crew, knew or ought reasonably

to have been aware of the dangerous nature of the cargo.

2.5.1 Meaning of dangerous goods

No definition of dangerous goods is provided by the common law and two alternative

approaches to the concept are possible. On the one hand, a traditional view might be to

regard dangerous goods as a category the extent of which is to be developed by precedent

or statutory regulation. Certainly a number of substances such as explosives and radioactive

materials are inherently unsafe, and it would not be difficult to compile a substantial list on

this basis. Such an attempt is to be found in s 446 of the Merchant Shipping Act 1894 which

refers to ‘aquafortis, vitriol, naphtha, benzine, gunpowder, lucifer-matches, nitro-glycerine, petroleum,

any explosive within the meaning of the Explosives Act 1875, and any other goods of

a dangerous nature’.155 The most recent example of such a ‘list’ is provided by regulation 1(2)

of the Merchant Shipping (Dangerous Goods and Marine Pollutants) Regulations 1997

which defines ‘dangerous goods’ by reference as any ‘goods classified in the Blue Book, the

IMDG Code or any other IMO publication specified below as dangerous for carriage by sea . . .’

Such an approach, however, constitutes only half the story since the courts have defined

the concept in far wider terms to embrace cases in which the danger is to be found in the

surrounding circumstances rather than in the inherent nature of the goods themselves. Thus,

while it may be thought inaccurate to categorise grain as an inherently dangerous cargo,

a hazardous situation might well arise if grain shipped in bulk is allowed to overheat in transit.

Similarly, liquids which are otherwise safe may nevertheless create problems if permitted

to leak from their containers and damage other cargo.156 In these circumstances the danger

lies rather in the overall situation than in the particular category of goods involved. In

approaching such cases it is important, in the opinion of Mustill J, ‘to find a general test

which will permit the identification of those cargoes whose shipment is a breach of contract

in the absence of a specific warning as to their characteristics. In my view, it is essential when

looking for such a test to remember that we are here concerned, not with the labelling in

the abstract of goods as “dangerous” or “safe” but with the distribution of risk for the consequences

of a dangerous situation arising during the voyage. The character of the goods does,

of course, play an important part in creating such a situation. But it is not the only factor.

Equally important are the knowledge of the shipowner as to the characteristics of the goods,

154 See Baltime form clause 2.

155 The final phrase is presumably to be construed eiusdem generis with what has gone before.

156 See Sellers J in Ministry of Food v Lamport & Holt [1952] 2 Lloyd’s Rep 371 at p 382. The goods may be

dangerous even though they constitute no risk to the vessel itself. See The Giannis NK [1998] 1 Lloyd’s

Rep 337.

CHAPTER 2 IMPLIED OBLIGATIONS IN A CONTRACT OF AFFREIGHTMENT

and the care with which he carries them in the light of that knowledge.’157 In the case at issue,

the vessel had been damaged by an explosion caused by the ignition of a mixture of air and

methane gas emitted by a cargo of coal after loading. While it was impossible to categorise

coal as either an inherently dangerous or safe cargo, it was common knowledge that it had

a propensity to emit methane gas which might result in an explosion in the appropriate

circumstances. The trial judge took the view that, ‘In such a case, I consider that it is not

correct to start with an implied warranty as to the shipment of dangerous goods and try to

force the facts within it; but rather to read the contract and the facts together and ask whether,

on the true construction of the contract, the risks involved in this particular shipment were

risks which the [shipowners] contracted to bear.’158

The concept has also been extended to cases in which the goods themselves were in no way

physically dangerous. So in Mitchell, Cotts v Steel159 the shippers were aware that the cargo

could not be discharged at Piraeus without the permission of the British Government and

were held liable for the resulting delay when such consent was not forthcoming. In the view

of Atkin J the loading of unlawful cargo which may involve the vessel in the risk of seizure or

delay ‘is precisely analogous to the shipment of a dangerous cargo which might cause the

destruction of the ship’.160

2.5.2 Nature of liability

Where goods are shipped without notice of their dangerous qualities the shipper will be

liable for any damage resulting either to the vessel or to any other cargo on board.161 The

orthodox view is that such liability is strict and in no way dependent on the knowledge available

to the shipper as to the nature of the goods. This view stems from the majority decision

in Brass v Maitland162 where a consignment of ‘bleaching powder’ containing chloride of lime

had been shipped in casks. During the voyage the chloride of lime corroded the casks and

damaged other cargo in the hold. The majority of the court took the view that the shipper

would be liable even though he was unaware of the dangerous nature of the goods, having

shipped the casks immediately after receiving delivery from a third party, without any intermediate

inspection. In the absence of knowledge on either side, the majority dealt with the

issue purely as a question of allocation of risk. ‘It seems much more just and expedient that,

although they were ignorant of the dangerous qualities of the goods, or the insufficiency of

the packing, the loss occasioned by the dangerous quality of the goods and the insufficient

packing should be cast upon the shippers than upon the shipowners.’163

On the other hand, there was a strong dissenting judgment from Crompton J who felt that

there was no authority to support an absolute obligation on the part of the shipper. ‘It seems

very difficult that the shipper can be liable for not communicating what he does not know

. . . I entertain great doubt whether either the duty or the warranty extends beyond the cases

157 The Athanasia Comninos [1990] 1 Lloyd’s Rep 277 at p 282. See also Westchester Fire Ins Co v Buffalo Salvage

Co [1941] AMC 1601.

158 [1990] 1 Lloyd’s Rep 277 at p 283.

159 [1916] 2 KB 610. See also, the shipment of contraband cargo: The Donald [1920] P 56.

160 [1916] 2 KB at p 614.

161 Great Northern Rly Co v LEP Transport [1922] 2 KB 742; Micada v Texim [1968] 2 Lloyd’s Rep 742.

162 (1856) 26 LJQB 49.

163 Ibid at p 54, per Lord Campbell.

2.5 THE OBLIGATION NOT TO SHIP DANGEROUS GOODS

where the shipper has knowledge, or means of knowledge, of the dangerous nature of the

goods when shipped or where he has been guilty of some negligence as shipper, as by shipping

without communicating danger, which he had the means of knowing and ought to have

communicated.’164 There has been little further authority on this point in the intervening

years. Opinions still differ,165 but in obiter dicta in The Athanasia Comninos, Mustill J supported

the strict liability approach.166 This approach was confirmed in the later case of The Giannis

NK where the House of Lords expressed the view obiter that both limbs of the common law

undertaking were absolute.167

The distinction may not be of great practical importance since the issue will only arise on

the rare occasion when neither shipper nor shipowner knows, or ought reasonably to be

aware, of the dangerous nature of the goods. If the shipowner is aware of the nature of the

cargo or reasonable means of knowledge are available to him, then the shipper will be under

no obligation to give notice. Thus in Brass v Maitland where the cargo had been described as

‘bleaching powder’ the shipper was eventually held not liable since the shipowner ought to

have known that the powder contained chloride of lime. Similarly, it might be argued that

owners of vessels designed for the carriage in bulk of grain or coal ought to be aware of the

propensities of the goods in such conditions even though the goods themselves may not be

inherently dangerous.168

In essence, the object of the obligation imposed on the shipper to give notice is to provide

the carrier with the opportunity either to refuse to carry the goods or to take the necessary

precautions to protect his vessel and any other cargo on board. Once notice has been given,

then, at common law, the shipper’s obligation has been discharged and if the carrier subsequently

consents to carry the cargo, the shipper will not be liable for any resulting damage.169

The only exception to this rule is where the shipper, in shipping dangerous goods, is in breach

of a term of the charterparty. In such a case, even though the carrier accepts the cargo with full

knowledge, the shipper will normally be liable for any damage caused by it.170 Nor will the

shipper be liable, even in the absence of notice, if the carrier knew, or ought reasonably to

have been aware of, the hazardous nature of the cargo.171 Presumably in the latter case, the

carrier is treated as if his decision to carry the goods had been made in full knowledge of the

risks involved. In the rare situation where the means of knowledge are available to neither

party, there may be much to be said for Lord Campbell’s view of treating the issue purely as

a question of allocation of risk.

2.5.3 Liability under the Hague/Visby Rules

Express provision for the carriage of dangerous goods is to be found in Art IV rule 6 of the

Hague/Visby Rules:172

164 Ibid at p 57. A similar view was taken by a US court in Sucrest Corp v M/V Jennifer [1978] AMC 2520.

165 See Fletcher Moulton LJ in Bamfield v Goole Transport Co [1910] 2 KB 94 at p 110. Cf. Atkin J in Mitchell, Cotts

v Steel [1916] 2 KB 610 at p 614.

166 The Athanasia Comninos [1990] 1 Lloyd’s Rep 277 at p 282.

167 [1998] 1 Lloyd’s Rep 337 at pp 344–5 per Lord Lloyd.

168 The Athanasia Comninos [1990] 1 Lloyd’s Rep 277; The Atlantic Duchess [1957] 2 Lloyd’s Rep 55.

169 See Cooke 6.50 ff (i.e. 6.51).

170 Chandris v Isbrandtsen-Moller [1951] 1 KB 240.

171 Brass v Maitland (1856) 26 LJQB 49.

172 The provision is identical in Art IV rule 6 of the Hague Rules.

CHAPTER 2 IMPLIED OBLIGATIONS IN A CONTRACT OF AFFREIGHTMENT

‘Goods of an inflammable, explosive or dangerous nature to the shipment whereof the carrier,

master or agent of the carrier, has not consented, with knowledge of their nature and character,

may at any time before discharge be landed at any place or destroyed or rendered innocuous by

the carrier without compensation, and the shipper of such goods shall be liable for all damages

and expenses directly or indirectly arising out of or resulting from such shipment.

If any such goods shipped with such knowledge and consent shall become a danger to the

ship or cargo, they may in like manner be landed at any place or destroyed or rendered innocuous

by the carrier without liability on the part of the carrier except to general average, if any.’

It will be noted that this section makes provision for two separate and distinct contingencies.

In the first situation the carrier’s consent to the shipment of the cargo has been obtained in

ignorance of its inflammable, explosive or dangerous nature. In such an event the carrier is

not only entitled to land, destroy or render the goods innocuous without paying compensation

but he is also able to hold the shipper liable for all damages and expenses arising from

such shipment. The second provision covers the alternative situation where cargo initially

shipped with the knowledge and consent of the carrier, subsequently becomes a danger

to ship or cargo. In such an event the carrier is entitled to take similar action to avoid the

danger as in the first case, without liability to the shipper except possibly by way of general

average. On this occasion, however, the shipper will not be liable for the damage and

expenses involved.173

After some doubt as to the exact nature and scope of this provision, the situation has been

greatly clarified by the decision of the House of Lords in The Giannis NK.174 A cargo of groundnut

extraction meal pellets had been shipped in Dakar for carriage to the Dominican Republic

under a bill of lading incorporating the Hague Rules. On arrival at the port of discharge the

cargo was found to be infested with Khapra beetle, although the infection had not spread to

a cargo of wheat in an adjacent hold. The reaction of the health authorities in the Dominican

Republic and in neighbouring US ports was such that the shipowner had little alternative but

to jettison both cargoes at sea. He then commenced proceedings against the shippers of the

groundnut cargo under Art IV rule 6 of the Hague Rules for damages for delay and other costs,

together with an indemnity to cover any claims by the owners of the cargo of wheat.

The House of Lords, having accepted the finding of the trial judge that the infestation of

Khapra beetle had originated with the shipment of the groundnut cargo, established two

important markers with regard to the interpretation of Art IV rule 6:

1. The expression ‘goods of a dangerous nature’ should be given a broad interpretation and

not be restricted eiusdem generis to goods of an ‘inflammable’ or ‘explosive’ nature. Nor

should its application be confined to goods which are liable to cause direct physical damage

to the vessel or other cargo. ‘What made the cargo dangerous [in this case] was the fact

that the shipment and voyage was to countries where the imposition of a quarantine and

an order for the dumping of the entire cargo was to be expected. In that sense the Khaprainfested

cargo posed a physical danger to the other cargo.’175

173 Provided that he is not in breach of a term of the contract not to ship dangerous goods: Chandris v Isbrandtsen-

Moller [1951] 1 KB 240.

174 [1998] 1 Lloyd’s Rep 337. See Gaskell 15.38 ff.

175 Lord Steyn at p 346.

2.5 THE OBLIGATION NOT TO SHIP DANGEROUS GOODS

2. Liability under Art IV rule 6 was strict. In reaching this decision the Court declined to

adopt the view taken by US courts that there should be no liability without fault.176 The

US interpretation was based on the alleged overriding effect of Art IV rule 3 of the Hague

Rules which provides that:

‘The shipper shall not be responsible for loss or damage sustained by the carrier or the ship

arising or resulting from any cause without the act, fault or neglect of the shipper, his agents

or his servants.’

In the view of the US courts, the word ‘act’ in this context must be read as connoting a

positive intentional act on the shipper’s part if it is to be reconciled with the alternative

requirement of ‘fault or neglect’. The majority of members of the House of Lords, however,

reached a different conclusion and, while declining to comment on the US interpretation

of the word ‘act’,177 held that Art IV rule 6 was an independent provision in no way subject

to Art IV rule 3. In the words of Lord Lloyd, ‘Art IV rule 6 is a free-standing provision

dealing with a specific subject-matter. It is neither expressly, nor by implication, subject

to Art IV rule 3. It imposes strict liability on shippers in relation to the shipment of dangerous

goods irrespective of fault or neglect on their part.’178

The broad interpretation recommended by their Lordships to be given to the expression

‘goods of a dangerous nature’ would still appear to require, as a minimum, the presence

of some indirect physical danger to the vessel or other cargo on board. This at least was the

view taken by Tomlinson J in Bunge v ADM Do Brasil Ltda179 in holding that consequential

loss arising from the loading of a quantity of rats along with a cargo of soyabean meal pellets

was not recoverable under Article IV rule 6 because the presence of the rats did not pose any

threat of direct or indirect physical damage to the vessel or its cargo. After reviewing the judgments

in The Giannis NK, he took the view that it was ‘most unlikely that the word “dangerous”

can be intended, when used in Article IV rule 6 of the Hague Rules, to bear a meaning

going beyond physical danger’ (para 25). He was also of the opinion that the same meaning

attached to the word ‘dangerous’ in the corresponding term implied by the common law.180

2.5.4 Statutory regulation

The position at common law has been reinforced by a series of statutes designed to control

the shipment of certain categories of goods. In the main they seek to establish codes of procedure

for the marking, packing and stowage of goods, the provisions of which are enforced

by fines and other penalties. One of the earliest examples of such legislation is provided by

s 446 of the Merchant Shipping Act 1894 which requires shippers of a specified list of goods

176 See Serrano v US Lines Co [1965] AMC 1038 (SDNY 1965); The Stylianos Restis [1974] AMC 2343 (SDNY

1972).

177 Only Lord Cooke supported the more pragmatic approach of the Court of Appeal that the word ‘act’ in

Art IV rule 3 would be triggered by the mere act of shipment itself, irrespective of any specific intent.

178 Lord Cooke objected to the term ‘free-standing provision’, and preferred to justify his decision that Art IV rule

6 was not subject to Art IV rule 3 on the basis of the maxim generalia specialibus non derogant.

179 [2009] 2 Lloyd’s Rep 175.

180 See supra at pp 33–4.

CHAPTER 2 IMPLIED OBLIGATIONS IN A CONTRACT OF AFFREIGHTMENT

to provide the master or shipowner with notice of their characteristics before shipment and

also to indicate clearly on the outside of any package or container the nature of such goods.

On failure to take such action the shipper is liable to a penalty of £100 for each offence.

Should unmarked goods be loaded without the required notice being given to the carrier,

s 448 further provides that, on discovery, the master or owner may have such goods thrown

overboard without incurring any civil or criminal liability.

More recent legislation has taken the form of regulations issued by the Secretary of State

for Trade and Industry under the authority of s 85 of the Merchant Shipping Act 1995 which

are designed to implement the provisions of succeeding international conventions for the

safety of life at sea. The current set of Merchant Shipping (Dangerous Goods and Marine

Pollutants) Regulations 1997181 give effect to the provisions of the 1974 SOLAS Convention

and its 1978 Protocol as amended. After defining ‘dangerous goods’ as those classified in the

IMDG Code and other specified IMO publications, the regulations proceed to formulate a

detailed code for their documentation, marking, packaging and stowing. More specialised

codes also exist for the carriage of bulk cargoes such as grain, meat and oil.182

2.6 The effect of frustration

In concluding the present chapter devoted to implied terms, it may not be inappropriate to

make reference to the effect of frustration on a contract of affreightment. In the words of Lord

Radcliffe, ‘frustration occurs whenever the law recognises that without default of either party,

a contractual obligation has become incapable of being performed because the circumstances

in which performance is called for would render it a thing radically different from that which

was undertaken by the contract. Non haec in foedera veni. It was not this that I promised to

do.’183 In its origins in the mid-nineteenth century the doctrine of frustration was justified on

the basis of a term to be implied in order to give effect to the presumed intention of the

parties, although in more recent years it has come to be treated more as a question of construction

of the terms of the contract. It has pertinently been remarked that the implied term

theory has never been acted on by the court as a ground of decision, but is merely cited as a

theoretical explanation.184 The more generally accepted view is that of Lord Wright that ‘the

court decides the issue and decides it ex post facto on the actual circumstances of the case. The

data for decision are on the one hand the terms and construction of the contract, read in

the light of the then existing circumstances, and on the other hand the events which have

occurred. It is the court which has to decide what is the true position between the parties.’185

In its operation the doctrine is potentially applicable to all forms of contracts of carriage by

sea, although in practice the decided cases refer almost exclusively to charterparty disputes.

181 SI 1997/2357 Effective as from 1 November 1997.

182 For fuller treatment, see Colinvaux RP, Carver’s Carriage by Sea, 13th edn, 1982, paras 1114–35.

183 Davis Contractors v Fareham UDC [1956] AC 696 at p 728. See Cheshire and Fifoot, Chapter 20; Treitel,

Chapter 19.

184 Lord Wright in Denny, Mott & Dickson v Fraser [1944] AC 265 at p 276. ‘The theory of the implied term has

now been discarded by everyone, or nearly everyone, for the simple reason that it does not represent the

truth’: Lord Denning MR in The Eugenia [1964] 2 QB 226 at p 238.

185 Denny, Mott & Dickson v Fraser [1944] AC at p 274.

2.6 THE EFFECT OF FRUSTRATION

2.6.1 Types of frustration

In the context of shipping contracts, frustration can take a variety of forms ranging from

impossibility of performance or supervening illegality to inordinate delay. The decision on

frustration in each case appears to be a mixed question of fact and law. While in the ultimate

analysis the decision as to whether or not a contract is frustrated is a question of law,186 this

decision has to be taken after an assessment of the relevant facts. Thus ‘while the application

of the doctrine of frustration is a matter of law, the assessment of a period of delay sufficient

to constitute frustration is a question of fact’.187 The distinction is particularly important

in cases where a court is considering an appeal from an arbitration award, since courts will

generally not disturb an arbitrator’s decision on a point of fact. In the most recent ruling on

this issue, Lord Roskill expressed the view that ‘For the future I think that in those cases which

are otherwise suitable for appeal,188 the courts should only interfere with the conclusion on

issues such as those which arise in cases of frustration expressed by arbitrators in reasoned

awards either if they are shown to have gone wrong in law and not to have applied the right

legal test or if, while purporting to apply the right legal test, they have reached a conclusion

which no reasonable person could, on the facts which they have found, have reached.’189

(I) Impossibility of performance

The most obvious example of this type of frustration occurs when a chartered ship is either

actually lost or becomes a constructive total loss.190 Indeed, in some time charters191 there is

an express clause providing that in such an event hire paid in advance, but not earned,

is returnable. In the converse situation, however, destruction of the cargo intended to be

shipped by a charterer will rarely result in frustration of the contract of affreightment. The

reason is that a charterer is normally regarded as being under an absolute obligation to

procure a cargo192 and the only occasion on which he may be excused is where the contract

is construed as constituting an agreement to load a specific cargo and the cargo, without any

fault on the part of the charterer, has been destroyed before loading has commenced.193 A

similar result may follow where a vessel is chartered to ship a specific commodity, the export

of which is subsequently prohibited by government decree.194

(II) Supervening illegality

A contract will also be frustrated when a subsequent change in the law renders further

performance illegal. The implication is that parties contract on the assumption that they will

be able legally to perform their obligations, with the result that when this assumption proves

to be false, they will be discharged from further performance. It would appear to be immaterial

whether such illegality results from a change in English law or from a change in the law

186 Tsakiroglou v Noblee Thorl [1962] AC 93.

187 Devlin J in Universal Cargo Carriers v Citati [1957] 1 Lloyd’s Rep 174.

188 For requirements for appeal from arbitration award, see infra at pp 339–43.

189 The Nema [1981] 2 Lloyd’s Rep 239 at p 254.

190 See Blane Steamships v Minister of Transport [1951] 2 Lloyd’s Rep 155; Asphalt International v Enterprise 667 F

2d 261 (1982).

191 For example, NYPE 93 clause 20.

192 See infra pp 69–72.

193 See Aaby’s Rederi v LEP Transport (1948) 81 LlLR 465.

194 See Société Co-opérative Suisse v La Plata (1947) 80 LlLR 530. Cf. The Zuiho Maru [1977] 2 Lloyd’s Rep 552.

CHAPTER 2 IMPLIED OBLIGATIONS IN A CONTRACT OF AFFREIGHTMENT

of a foreign country in which performance is to take place.195 Frustration will also occur where

the outbreak of war renders further performance of the contract illegal. Such a situation may

arise when a vessel is owned or chartered by a person who subsequently becomes an enemy

alien, or where performance of the contract involves dealings with parties resident in

enemy occupied territory.196 In such circumstances the supervening illegality has the effect of

automatically discharging the contract irrespective of its terms or the presumed intentions

of the parties.

(III) Delay

Where performance of the contract is delayed due to the occurrence of some event or change

of circumstances, the contract may be frustrated if the resulting delay is likely to be so prolonged

as to defeat the object of the parties in entering the contract of affreightment. Whether

or not this test is satisfied will depend upon the facts of the particular case, but in general it

is likely that a shorter delay will be sufficient to frustrate a voyage charterparty than would be

required to discharge a time charter. In Jackson v Union Marine Ins197 the shipowner contracted

to pick up a cargo at Newport with all possible dispatch, ‘dangers and accidents of navigation

excepted’. When the ship ran aground in Caernarvon Bay en route for Newport, and suffered

damage which would take six months to repair, all further liability under the contract was

discharged despite the exception clause. In the opinion of the court the parties had not

intended this clause to cover such a fundamental alteration in the nature of the contract.198

It would appear to be immaterial whether the relevant event occurs before performance

has commenced or after the contract has been partly executed, providing that its effect is to

frustrate the intention of the parties in entering the contract.199 The frustrating event may

take a variety of forms as, for example, the length of time required to complete repairs after a

collision,200 detention by a foreign government,201 or persistent strikes.202

From a survey of the decided cases the most frequent cause of delay results from the

requisitioning of ships during an emergency or the trapping of vessels on the outbreak of

hostilities. In the former case the decision as to whether to claim frustration may well hinge

on the compensation being offered by the Government during the period of requisition.

Should the amount of compensation exceed the hire rate under a time charter, then it is likely

that the owner will allege frustration, whereas the position will be reversed should a lower

rate be offered.203 In Tamplin SS Co v Anglo-Mexican Petroleum Products Co204 a tanker had

been chartered for a period of five years to carry oil as the charterers should direct. When the

195 Ralli v Compania Naviera Sota y Aznar [1920] 2 KB 287; Société Co-opérative Suisse v La Plata (1947) 80

LlLR 530.

196 See Fibrosa v Fairbairn Lawson [1943] AC 32.

197 (1874) LR 10 CP 125.

198 See Bramwell B at p 141.

199 Embiricos v Reid [1914] 3 KB 45.

200 The Hermosa [1980] 1 Lloyd’s Rep 638.

201 Scottish Navigation v Souter [1917] 1 KB 222; Tatem v Gamboa [1939] 1 KB 132.

202 The Nema [1981] 2 Lloyd’s Rep 239; The Penelope [1928] P 180. These cases appear somewhat exceptional

in that, as strikes are potentially capable of being settled overnight, courts are reluctant to hold contracts

frustrated in such circumstances.

203 As to whether the charterer is, in any event, entitled to such compensation, see Scrutton p 23.

204 [1916] 2 AC 397.

2.6 THE EFFECT OF FRUSTRATION

charterparty had still three years to run the tanker was requisitioned by the Admiralty, whereupon

the owners claimed that the contract was discharged. The charterers, however, were still

willing to pay freight and they argued that the basis of the contract had not disappeared since

no definite commercial adventure had been contemplated. This view was upheld on appeal

by a majority of the Lords, who were possibly influenced by the fact that the owners were no

doubt attempting to avoid the contract in order to obtain a higher degree of compensation

from the Admiralty. As was later pointed out by Lord Finlay,205 the principles of law enunciated

by the majority and the dissentients were identical, the only divergence appearing in

their respective application of those principles to the facts of the particular case.206 A contrast

is to be found in the case of Bank Line v Capel207 where the claimants had chartered a vessel

for 12 months from the time when she should have been delivered to them, but, before that

time arrived, the steamer was requisitioned by the Government. On these facts, the Lords held

that the charter had been frustrated, even though the steamer had been released after only

three months, for otherwise ‘the whole character of the adventure would be changed’.208 Lord

Sumner pointed out that the early release of the ship was immaterial since, at the time when

the requisitioning took place, it was envisaged that its duration would be indefinite.

Other examples of delay resulting in frustration are to be found in the numerous cases

where, through no fault on the part of owner or charterer, vessels have been trapped on an

unexpected outbreak of hostilities.209 A spate of such litigation resulted from the closure of

the Shatt al Arab in 1980 on the outbreak of war between Iran and Iraq.210

Whether an intervening event involves such delay as to frustrate the commercial object of

the venture must obviously be decided on the facts of each individual case. As regards time

charters, the decision will invariably be reached on the basis of a comparison between the

period of interruption or delay and the overall length of the charterparty. The test is an objective

one and must be applied without the benefit of hindsight. In the words of Bailhache J,

‘the parties must have the right to claim that the charterparty is determined by frustration as

soon as the event upon which the claim is based happens. The question will then be what

estimate would a reasonable man of business take of the probable length of withdrawal of

the vessel from such service with such materials as are before him, including, of course, the

cause of the withdrawal and it will be immaterial whether his anticipation is justified or

falsified by the event.’211 Thus in Bank Line v Capel212 it was immaterial that by the time the

issue came for trial, it was clear that the requisition had lasted for a mere three months. The

decision as to frustration had to be taken on the basis of information available at the time

the requisition commenced. ‘Rights ought not to be left in suspense or to hang on the chances

of subsequent events. The contract binds or it does not bind, and the law ought to be that the

parties can gather their fate then and there. What happens afterwards may assist in showing

205 In Bank Line v Capel [1919] AC 435 at p 443.

206 For a similar decision see Port Line v Ben Line [1958] 1 Lloyd’s Rep 290, where a vessel under a 30-month

charter was requisitioned with 10 months of the charter still to run. The court refused to hold the charter

frustrated in view of the fact that it was estimated that the requisition might last for not more than three to

four months.

207 [1919] AC 435.

208 Lord Finlay at ibid p 442.

209 See Court Line v Dant (1939) 44 Com Cas 345.

210 See The Evia (No 2) [1982] 2 Lloyd’s Rep 307; The Wenjiang [1982] 1 Lloyd’s Rep 128.

211 Anglo-Northern Trading Co v Emlyn Jones [1917] 2 KB 78 at p 84.

212 [1919] AC 435.

CHAPTER 2 IMPLIED OBLIGATIONS IN A CONTRACT OF AFFREIGHTMENT

what the probabilities really were if they had been reasonably forecasted, but when the causes

of frustration have operated so long or under such circumstances, as to raise a presumption

of inordinate delay, the time has arrived at which the fate of the contract falls to be decided.’213

2.6.2 Factors to be taken into consideration

The burden of proving frustration will fall on the party alleging it. He must satisfy the court

that the intervening event has rendered performance of the contract either impossible or

radically different from that envisaged at the time of its formation. In reaching a conclusion

on the basis of the evidence submitted, there are a number of factors which the court is

required to take into consideration.

(I) Frustration of the commercial object

In order to establish frustration it is necessary to prove that performance has been rendered

either impossible or so radically different that it would be unjust to hold the parties bound

to the terms of the contract.214 ‘It is not hardship or inconvenience or material loss itself

which calls the principle of frustration into play. There must be as well such a change in the

significance of the obligation that the thing undertaken would, if performed, be a different

thing from that contracted for.’215 Thus in Tsakiroglou v Noblee Thorl216 sellers had agreed to

sell a quantity of Sudanese groundnuts c.i.f. Hamburg. Shortly after the conclusion of the

contract, the outbreak of hostilities in Egypt resulted in the closure of the Suez Canal to

navigation. The only option open to the seller was to ship the groundnuts via the Cape of

Good Hope at substantially enhanced freight rates and he accordingly pleaded frustration.

The Lords rejected this contention on the ground that shipment via the Cape, while being

more expensive ‘was not commercially or fundamentally different’ from shipment by the

intended route. Similar decisions were reached in cases where vessels had been voyage chartered,

217 and time chartered for a trip.218 In such circumstances it would appear that frustration

is only likely to arise either where a specific route has been indicated which has subsequently

been rendered impossible,219 or where the vessel is carrying perishable cargo which is unlikely

to survive the alternative route.

(II) Express provision in the contract

In its origins the doctrine of frustration envisaged the occurrence of some unexpected event

which radically transformed the contractual obligations. By implication if the particular

event was foreseeable and no provision for it had been included in the contract, then it was

presumed that the parties had intended to create an absolute obligation. Later cases have

suggested that such an assumption is fallacious and that the doctrine will only be excluded

213 Lord Sumner at ibid p 454.

214 Per Lord Denning MR in The Eugenia [1963] 2 Lloyd’s Rep 381 at p 390.

215 Lord Radcliffe in Davis Contractors v Fareham UDC [1956] AC 696 at p 729. Frustration will accordingly

not result from unexpected fluctuations in market rates of hire or the cost of bunkers: Occidental v Skibs A/S

Avanti [1976] 1 Lloyd’s Rep 293 at p 325; nor from an unexpected and unjustified temporary detention of a

chartered vessel by port authorities: Edwinton v Tsavliriss Russ: The Sea Angel [2007] 2 Lloyd’s Rep 517.

216 [1962] AC 93.

217 The Captain George K [1970] 2 Lloyd’s Rep 21.

218 The Eugenia [1963] 2 Lloyd’s Rep 381.

219 Cf. The Massalia [1960] 1 Lloyd’s Rep 594 overruled in The Eugenia.

2.6 THE EFFECT OF FRUSTRATION

where provision is made to cover the event in the express terms of the contract.220 So in Tatem

v Gamboa,221 where a vessel which had been chartered to evacuate refugees from Spain during

the Civil War was seized by the Nationalists, the contract was held frustrated even though

such an outcome must have been foreseeable from the outset.222

Even where express provision is made in the contract to cover a particular event, such a

term is normally subjected to strict interpretation by the courts. The attitude adopted is not

dissimilar to the contra proferentem approach applied when construing clauses seeking to

exclude liability for fundamental breach.223 Thus in Jackson v Union Marine Ins224 the contract

was held frustrated when the vessel ran aground even though the charter included a provision

excepting ‘dangers and accidents of navigation’. In the opinion of the court the parties had

not intended this clause to cover such a fundamental alteration in the nature of the contract.

Again, in Bank Line v Capel225 the House of Lords was prepared to hold that an express

provision in the charter granting the charterer, but not the owner, the option of cancelling

should the ship ‘be commandeered by Government during this charter’ did not prevent the

shipowner from successfully pleading frustration when the vessel was subsequently requisitioned

in wartime. In the view of Lord Haldane, ‘what is clear is that, where people enter into

a contract which is dependent for the possibility of its performance on the continued availability

of the subject matter, and that availability comes to an unforeseen end by reason of

circumstances over which its owner had no control, the owner is not bound unless it is quite

plain that he has contracted to be so’.226 In his Lordship’s opinion no such contractual intention

existed in this case.

(III) Self-induced frustration

Where the event which is alleged to have interfered with performance arises from the act

or election of one party, such a person cannot rely on his own default to excuse him from liability

under the contract. So in Maritime National Fish v Ocean Trawlers,227 the defendants had

chartered a fishing trawler with knowledge that it could only be operated with an otter trawl,

and that the use of such trawls was prohibited without a licence from the Newfoundland

government. The defendants, who operated four other vessels equipped with otter trawls,

eventually applied for five licences. When only three licences were granted, the defendants

allocated them to their other vessels and claimed that this particular charter was frustrated

since it was illegal to operate a trawler without a licence. The Privy Council rejected this argument

on the ground that any frustration was self-induced having resulted from a deliberate

election on the part of the defendant.

The burden of proving that frustration is self-induced lies on the party who makes the

allegation,228 and there appears to be some uncertainty as to the precise extent of the concept.

On the one hand, it seems clear that a party cannot invoke frustration where the situation

220 See Bangladesh Export Import Co v Sucden Kerry [1995] 2 Lloyd’s Rep 1; The Safeer [1994] 1 Lloyd’s Rep 637.

221 (1938) 61 LlLR 149.

222 See also The Eugenia [1963] 2 Lloyd’s Rep 381.

223 See Suisse Atlantique v Rotterdamsche [1967] 1 AC 361.

224 (1874) LR 10 CP 125.

225 [1919] AC 435.

226 Ibid at p 445. See also Viscount Simon in Fibrosa v Fairbairn Lawson [1943] AC 32 at p 40.

227 [1935] AC 524. See also The Super Servant Two [1990] 1 Lloyd’s Rep 1.

228 Constantine v Imperial Smelting Corp [1942] AC 154.

CHAPTER 2 IMPLIED OBLIGATIONS IN A CONTRACT OF AFFREIGHTMENT

has been created by a breach of contract on his part. Thus where further performance of a

charterparty has been rendered impossible as the result of breach of the safe port warranty,229

or the seaworthiness obligation,230 the defence is not available to the defaulter. The same may

be true where the supervening event results from negligent conduct, as, for example, where

the vessel is seriously damaged as the result of a negligent act on the part of the owner or

a member of the crew.231 It has been pointed out, however, that self-induced frustration

involves deliberate choice and that in the majority of cases mere negligence may not suffice.

Lord Russell noted that such cases ‘can range from the criminality of the scuttler who opens

the sea-cocks and sinks his ship, to the thoughtlessness of a prima donna who sits in a

draught and loses her voice. I wish to guard against the supposition that every destruction of

corpus for which a contractor can be said, to some extent or in some sense, to be responsible,

necessarily involves that the resultant frustration is self-induced within the meaning of the

phrase.’232

2.6.3 Effect of frustration

The effect of frustration at common law is automatically to discharge the parties from all further

liability under the contract. ‘Frustration brings the contract to an end forthwith, without

more and automatically.’233 The parties are given no option to treat the contract as at an end

for it is discharged by operation of law, irrespective of their volition. A contract has, however,

come into existence which is perfectly valid until the occurrence of the frustrating event. All

rights and obligations which have accrued before that time are unaffected. On the other hand,

the contract ceases to bind from the moment frustration intervenes, and rights which accrue

after that time are unenforceable.234 So freight paid in advance under a contract for the

carriage of goods by sea or a voyage charterparty is irrecoverable even though the entire object

of the contract is subsequently frustrated and the goods are not delivered at their destination.

Conversely, freight payable on the completion of the voyage is not recoverable unless the contract

is performed by the delivery of the cargo to the consignee at the agreed discharge point.

It is believed that a similar rule operated in relation to the payment of hire under a time charter,

prior to the Frustrated Contracts Act 1943.235 Some amelioration of the strict common law

rule resulted from the decision of the House of Lords in Fibrosa v Fairbairn Lawson236 where it

was held that an advance payment was recoverable in circumstances where the entire consideration

provided in return for it had failed. The general view is that this decision in no way

229 The Lucille [1983] 1 Lloyd’s Rep 387.

230 Monarch SS Co v Karlshamns [1949] AC 196; see also The Eugenia [1963] 2 Lloyd’s Rep 381.

231 See Constantine v Imperial Smelting Corp [1942] AC 154. But presumably not where the alleged breach of contract

or negligent act is covered by an exception, e.g. negligence in the navigation or management of the ship

under Art IV rule 2(a) of the Hague/Visby Rules.

232 Constantine v Imperial Smelting Corp [1942] AC at p 179. ‘Mere negligence seems never to have been suggested

as sufficient to constitute “fault” in this connection’, per Lord Wright at p 195. Cf. Bingham LJ in The Super

Servant Two [1990] 1 Lloyd’s Rep 1 at p 10.

233 Lord Sumner in Hirji Mulji v Cheong Yue SS Co [1926] AC 497 at p 505.

234 Some doubt exists as to whether an arbitration clause in a charterparty will survive its frustration. See Heyman

v Darwins [1942] AC 356 at pp 366, 383; Kruse v Questier [1953] 1 QB 669. Cf. Hirji Mulji v Cheong Yue SS

Co [1926] AC 497.

235 See French Marine v Compagnie Napolitaine [1921] 2 AC 494; Civil Service Co-operative Soc v General SN Co

[1903] 2 KB 756.

236 [1943] AC 32.

2.6 THE EFFECT OF FRUSTRATION

affected the well-established mercantile usage that freight payable in advance is irrecoverable,

237 although in such circumstances it would rarely be the case that there had been a total

failure of consideration.

The legislature finally intervened in an attempt to remove the remaining anomalies. The

Frustrated Contracts Act of 1943 provides no definition of a frustrating event but merely seeks

to secure a reasonable apportionment of the loss resulting from frustration. Its provisions are

applicable only to contracts governed by English law and, in the maritime sphere, only to

time charters and charterparties by demise. Contracts for the carriage of goods by sea and voyage

charterparties are still governed by the old common law rules although the risks involved

are invariably covered by insurance. The distinction between time and voyage charters accordingly

becomes increasingly important.

Two fundamental changes were introduced by the Act. Section 1(2) provides that all sums

paid or payable before the frustrating event shall, if paid, be recoverable and, if not paid, shall

cease to be payable. This provision confirms the Fibrosa decision, but extends its operation by

allowing a party to recover sums paid even though there has been only a partial failure of consideration.

The section is, however, subject to a proviso giving the court a discretionary power

to grant compensation, out of the money so paid or payable, for expenses incurred before the

frustrating event. Thus, where a time charter has been frustrated after the payment in advance

of a monthly instalment of hire, such sum is recoverable by the charterer subject to the court’s

discretionary power to deduct an appropriate amount to cover the owner’s running costs

prior to frustration. In no circumstances may the amount recoverable by the owner exceed the

actual expenses incurred, nor may it exceed the amount paid or payable under the contract

before the frustrating event.

Section 1(3) further provides that where, prior to frustration, a valuable benefit has been

conferred on one party by partial performance of the contract, the party conferring the benefit

may recover as compensation such sum as the court considers just in the circumstances. The

amount recoverable must not exceed the value of the benefit conferred, taking into account

any expenses which the benefited party may himself have incurred in performing his side of

the contract and any circumstances connected with the frustration which may have affected

the value of the benefit.238 In the case of frustration of a time charter this provision may

enable the court, in an appropriate case, to order the payment of a sum equivalent to the full

amount of the hire for the actual days on which the charterer had use of the vessel prior to

the frustrating event. Such remedy would, of course, be an alternative to the recovery by the

owner of running costs under s 1(2).

237 See [1943] AC 32, per Lord Wright at p 67, Lord Porter at p 79.

238 For an illustration of the operation of this section, see BP Exploration Co v Hunt [1982] 1 All ER 925.

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Law Lecture, thesis, assignment

Friday, January 28, 2011

Thursday, January 27, 2011

TRADE
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The Export Answer Book
for Small and Medium-Sized Exporters
in the Sultanate of Oman

TRADE
SECRETS

The Export Answer Book
for Small and Medium-Sized Exporters
in the Sultanate of Oman

TRADE
SECRETS

The Export Answer Book
for Small and Medium-Sized Exporters
in the Sultanate of Oman

TRADE
SECRETS

The Export Answer Book
for Small and Medium-Sized Exporters
in the Sultanate of Oman

TRADE
SECRETS

The Export Answer Book
for Small and Medium-Sized Exporters
in the Sultanate of Oman

TRADE
SECRETS

The Export Answer Book
for Small and Medium-Sized Exporters
in the Sultanate of Oman

TRADE
SECRETS

The Export Answer Book
for Small and Medium-Sized Exporters
in the Sultanate of Oman

TRADE
SECRETS

The Export Answer Book
for Small and Medium-Sized Exporters
in the Sultanate of Oman

IMPLIED OBLIGATION IN A CONTRACT OF AFFREIGHTMENT

জনপ্রিয় পোস্টসমূহ

Friday, January 28, 2011

Thursday, January 27, 2011

TRADE SECRETS

The Export Answer Book for Small and Medium-Sized Exporters in the Sultanate of Oman

TRADE SECRETS

The Export Answer Book for Small and Medium-Sized Exporters in the Sultanate of Oman

TRADE SECRETS

The Export Answer Book for Small and Medium-Sized Exporters in the Sultanate of Oman

TRADE SECRETS

The Export Answer Book for Small and Medium-Sized Exporters in the Sultanate of Oman

TRADE SECRETS

The Export Answer Book for Small and Medium-Sized Exporters in the Sultanate of Oman

TRADE SECRETS

The Export Answer Book for Small and Medium-Sized Exporters in the Sultanate of Oman

TRADE SECRETS

The Export Answer Book for Small and Medium-Sized Exporters in the Sultanate of Oman

TRADE SECRETS

The Export Answer Book for Small and Medium-Sized Exporters in the Sultanate of Oman

IMPLIED OBLIGATION IN A CONTRACT OF AFFREIGHTMENT

জনপ্রিয় পোস্টসমূহ

TRADE
SECRETS

The Export Answer Book
for Small and Medium-Sized Exporters
in the Sultanate of Oman

TRADE
SECRETS

The Export Answer Book
for Small and Medium-Sized Exporters
in the Sultanate of Oman

TRADE
SECRETS

The Export Answer Book
for Small and Medium-Sized Exporters
in the Sultanate of Oman

TRADE
SECRETS

The Export Answer Book
for Small and Medium-Sized Exporters
in the Sultanate of Oman

TRADE
SECRETS

The Export Answer Book
for Small and Medium-Sized Exporters
in the Sultanate of Oman

TRADE
SECRETS

The Export Answer Book
for Small and Medium-Sized Exporters
in the Sultanate of Oman

TRADE
SECRETS

The Export Answer Book
for Small and Medium-Sized Exporters
in the Sultanate of Oman

TRADE
SECRETS

The Export Answer Book
for Small and Medium-Sized Exporters
in the Sultanate of Oman