Cargo disputes
Cargo Disputes: Lesson 1-Overview
When a party ships goods by sea, there are two main contracts that will be involved: (1) the underlying sale contract; and (2) the contract of carriage to transport the goods from A to B. Either the buyer or the seller will organise the contract of carriage, but the carrier might end up in a dispute with either of those parties, so both buyer and seller want to be able to have privity of contract with the carrier. The following diagram shows how that happens.
The diagram also shows what happens at the financial level. A buyer thousands of miles away from a seller doesn't want to run the risk of non-delivery of the goods (or documents representing title to the goods), so they frequently use banks as intermediaries who give cross-undertaking to each other, which makes the process more secure (although not always!).
Because this diagram has lots of moving parts, we recommend you download the dynamic PowerPoint presentation below as well as look at this static diagram. It talks you through each stage.
overview powerpoint (dynamic)
overview powerpoint
(Static)
Lesson 10 - The identity of the carrier
The buyer needs to know who the contractual carrier is, so they know who to sue if the cargo is damaged, short or delayed; is it the charterer or the shipowner? Money turns on this because pursuing the wrong defendant may mean that the claim is time barred against the right defendant. The answer to who is the carrier depends on three scenarios outlined below.
Demise/
bareboat Charters:
If the charterparty is a demise charterparty…
...then the charterer is likely the “carrier” as the original owner isn’t crewing or controlling the vessel
"General" Ships:
If the charterer is using the vessel as a general ship (and their role is limited to providing a full cargo and freight to owners) and the charterparty includes a “cesser” clause…
Then the owner is likely the carrier
*A cesser clause is a voyage charter party clause stating that “charterers' liability will cease on shipment of cargo and payment of freight, deadfreight and demurrage."
Everything Else:
In other scenarios, where there is no demise charter and/or the vessel is not being used as a general ship with a cesser clause in the charterparty…
Then the carrier is they who are identified on the face of the bill of lading (The Starsin).