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)
Cargo Disputes:
Lesson 3 - What are "Documents of Title"?
When you ship goods on a vessel you normally get given a document to prove they've been shipped and are on the vessel. The most typical is a "bill of lading". There are others too, like delivery orders and seawaybills. These documents have different names because although broadly similar, they confer subtly (and sometimes significantly) different rights to the holder of the document.
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These documents sometimes also perform more important functions than simply proving what was shipped: some of them can be termed "documents of title". This phrase is a term of art, and is subject to much caselaw.
The importance of the term "document of title" is that certain rights inhere in the document itself and that document can be used to pass rights from one person (seller) to another (buyer) and sometimes onwards "down a string" to third parties. The main rights are:
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(1) the ability to transfer title in the goods through the document to the buyer and sometimes a third party;
(2) constructive possession of the cargo (giving the right to demand delivery even if you don't yet own the goods); and
(3) the ability to transfer rights of suit against the carrier from buyer to seller (and sometimes third parties).
These three rights are described by two concepts: "negotiability" and "transferability". Some documents of title are both negotiable and transferable. Some are only negotiable. Confusingly, the words "negotiable" and "transferable" are often mixed up, as well, which doesn't help.
Transferability and negotiability of "documents of title"
Sample "congenbill" bill of lading
To the right is a PDF example of a standard form bill of lading. There are different types of standard form bill of lading. These often have specific names to distinguish them. This one is called a "Congenbill". It is a bill of lading designed for general cargo for use when the shipper is also the charterer and has chartered the vessel using a "GENCON" charter party. In other words, if the charterer has chartered a vessel using a GENCON charterparty and they want a bill of lading covering the goods, the carrier may issue them with a Congenbill bill of lading.
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