On Charter-Main clauses
The following will be discussed in the subsequent sections:
- On Hire Survey and Delivery
- Laytime
- Port Operations
- Speed, Consumption Calculation
- Costs, Demurrage and Despatch
- Bill of Lading and Mate’s Receipt
An overview of some clauses are given below:
Lien a valuable and effective method of enabling the injured party to make the vessel available as a “security” for his claim. A maritime lien is a claim against a ship or other maritime property which can be enforced by the seizure of the property in question. The lien exists independent of the possession of the object over which it is claimed, but is attached to it in the sense that it is unaffected by the change of the ownership. It is therefore called by legal-buffs, a right “in rem”, i.e. a right which is enforceable in this case against the “thing itself”, as opposed to a right “in personam”, i.e. a right against a particular person, say, the ship owner.
Bill of Lading – Once the cargo is taken on board the ship, the Bill of Lading is issued to the shipper. Even though this is to be used as a “receipt” for the goods that were shipped, subsequently this was substituted for an informal receipt called, the “mate’s receipt”. The “mate’s receipt” was exchanged later on, for the “bill of lading”. Disputes between ship owner and cargo owner arise over the question whether the goods have been delivered short, or, have been damaged during carriage. On this, the statements about the goods appearing in the bill of lading become very important. Without having to go into these complications, the functions of a bill of lading could be summed-up as:
- A receipt of the goods either received before shipment or shipped on board. The goods are received by a carrier or a freight forwarder. The bill of lading states the “quantity and apparent order and condition of the goods when received” into the carrier’s care and is normally printed with the wording, “received in good order and condition unless otherwise stated. If this statement requires to be contradicted, appropriate remarks are ought to be made on the body of the bill of lading. Any shortage or damage to the goods occurring before their being accepted by the carrier, should therefore be stated on the body of the bill of lading. In case there are no adverse observations (say, a defective condition or quantity) on the body of the bill of lading, as regards the goods received by the carrier, the consignee is entitled to reasonably expect to receive his goods in good order or condition. Therefore, any loss or damage found on delivery will be inferred to be caused by the carrier’s negligence, unless the carrier can succeed in proving that such loss or damage is attributable to one of the “excepted perils”(i.e. Act of God etc.) mentioned in the “contract of carriage”. In case a mate’s receipt is issued, the description of the goods in the bill of lading as related to the quantity / condition of the goods is replicated from the description of the goods in the mate’s receipt. Therefore, it is of importance to note that the mate’s receipt states the actual quantity/condition of the goods at the time of the loading.;
- An evidence of the “existence and terms of a contract”, between the shipper and carrier. A contract of carriage may also exist without issuance of a bill of lading. A bill of lading is not a true contract, since it is usually signed by one of the parties. The terms and conditions on which goods are accepted for shipment, comprise the terms of the contract of carriage, between the shipper and the carrier, except when the shipper is also a charterer. Under these conditions, three instances may arise as follows:-
- Where there is no charter party. In these cases the ship owner is the legal carrier and its own bill of lading is issued to the shipper, containing the company’s terms and conditions of carriage of goods;
- Where there is a charter party, and the charterer is also the shipper. Then the charterer is the shipper of his own goods. The contract of carriage in this case is contained in the charter party. If the charter party requires the ship to issue a bill of lading on shipment of the cargo, it tantamounts to the charterer issuing to himself, a bill of lading. Therefore the bill of lading serves only as a receipt for the goods shipped and as a document of title, in case the charterer/shipper decides to sell the cargo by endorsement and transfer of the bill of lading; and,
- Where there is a charter party, but the charterer is not the shipper, e.g where a carrier is time-chartering a vessel and operates the vessel in his own liner services. The contract of hire between the carrier and ship owner is contained in the time charter party. The contract of carriage between the carrier and the shipper is proven by the bill of lading as issued to the shipper
Before a ship’s master is required to issue “original bills of lading”, the following need to be checked meticulously:-
- The goods have actually been “shipped”, as ought to have been stated in the ship’s copy of any “mate’s receipt” issued to the shipper;
- The date of the concerned shipment as stated, in correct, with reference to the, mate’s receipt or the Standard Shipping Note;
- Unless it is true, the bill of lading is not to be marked as “freight pre-paid”
- In case there were some “observations” in the mate’s receipt, the same ought to be mentioned in the bill of lading
- Necessary reference is made to the applicable charter party, assuming that there is one
- The conditions in the charter party and that on the bill of lading, ought not to contradict with each other.
A document of title, signifying that the holder has the “legal right to possession” of the goods it describes. “Title”, in the context of carriage of goods, implies the right to “possession”, as different from the right to “ownership”. Possession of an original bill of lading is equivalent in law to the “right to possession of the goods” as described in the bill. Therefore, the original bill of lading being a “bearer document”, is evidence enough of the fact that its holder is the rightful possessor of the goods. Therefore, once this original bill of lading is produced at the discharge port, it will enable the holder of the said bill of lading to obtain the delivery of the goods.
Some complications that may arise due to Bills of lading, may now be discussed in brief, as follows:-
Just in case a shipper offers defective (i.e. cargo which is not in “apparent good order and condition”) goods for shipment as that which is in printed terms on most bills of lading, it is the master’s duty to, reject the goods in consultation with an independent cargo-surveyor as may be necessary, or, accept the said goods for carriage on the pre-condition that he would issue a bill of lading with some “observations”(i.e. regarding the deficiency) endorsed on the said bill of lading. As the agent of the carrier, the master is well-entitled to endorse this. It may be prudent of the master to consult the correspondent of the owner’s P & I club before endorsing adverse observations with respect to which he may be apprehensive, since, certain remarks, may not be appropriate for protecting the carrier against claims by third-parties or which may be detrimental for the shipper’s interests.
An interesting example as quoted in the book, “The Shipmaster’s Business Companion” by Malcolm Maclachlan, is quoted as follows. Say, a ship is required to transport typically rusty steel, even though the master is well-entitled to record this adverse observation on the bill of lading. However, to simply endorse the bill of lading by mentioning the adjective, “rusty”, is not recommended by the P & I club, since, not only, this may not be adequate to protect the interests of the carrier, it may have questionable consequences for the shipper when he presents the bill of lading to his bank and seeks payment for the carriage of the goods. In fact, the P & I clubs do advise to refrain from making endorsements such as “superficially-rusty” or “badly rusted”. In such cases, it is always worthwhile to seek the advice of the P & I Club.
Laydays {different from “laytime”} – a period of specified days during which the ship owners must present the vessel for loading
Mate’s receipt – a receipt, issued by the cargo-carrying ship’s Chief Mate/ship’s agent on behalf of the Chief Mate, for the goods received on board. This may be found in most shipping trade such as for general cargo/dry bulk/tanker. In liner trade, such as, container and Ro-Ro shipping, by a modern document called the “Standard Shipping Note” (a shipping document popularly used for the UK Liner Trades, in support of a consignment of goods, from their manufacturing point, say a factory, to the place of loading, say an inland container depot. It gives the details of the exporter, status of the customs-clearance, carrier’s booking number, consignee, freight forwarder, carriers involved, ship, port of discharge, number and type of packages, description of the goods, special stowage requirements, gross weight, cubic measurement of goods, container ID number, seal number etc. etc. It provides the receiving parties with clear and accurate details of how the goods should be handled along with, the necessary customs procedures to be followed. This Note is not to be issued, in case the consignment is categorised to be “hazardous”, in which cases, the “Dangerous Goods/Marine Pollutant Note” needs to be provided by the shipper). It is the document on which the information entered on the bill of lading is based. The information contained in, therefore, in this receipt and the bill of lading, should match with precision. Moreover, the information in the receipt should be compiled from the “ship’s tally” and ought to clearly mention the factual quantity and condition of the goods as received on board. For this purpose, and if so justifiably warranted, the receipt may necessarily be endorsed with observations such as “weakened drums”, “disfigured bags” etc. etc..In case the “shipper’s” and “ship’s” tally deviate from each other, the receipt ought to mention the lower figure, indicating the degree of the mismatch. The receipt is not a document of title of the goods that are shipped, and, such a title cannot be established on the basis of any “endorsement” on it.