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
Cargo disputes occur when cargo gets damaged, lost, or delayed while in transit between ports.
Normally, the person suing is the buyer who has received goods that are damaged, or short-delivered/lost, or delayed. And the buyer will normally (although not always) be trying to sue the carrier under the contract of carriage, as opposed to the seller/shipper under the contract of sale. The carrier is the person with whom the contract of carriage is made, and they are normally in control of the ship.
Accordingly, the key questions that arise in the cargo claim are:
(1) does the claimant have title to sue the carrier;
(2) on what basis can the claimant claim against the carrier: do they have a contract with the carrier (or, alternatively do they need to rely on an implied contract, or tort, or the law of bailment);
(3) can the claimant prove the condition and amount of the goods when they were loaded and unloaded, so as to prove their claim against the carrier.
The following pages set out a high-level overview of the key pieces of the jigsaw. They are designed to provide a springboard into more detailed practitioner textbooks, like:
(1) Carver on Bills of Lading;
(2) Scrutton on Charterparties and Bills of Lading;
(3) Aikens, Lord and Bools on Bills of Lading;
(4) Debattista on Bills of Lading in Export Trade (soon Debattista on Bills of Lading in Commodities Trade).