China Social Economy

Sarbanov Emil (伊米) 2015722024

4.2 Part B (p.122)

1.         in this case the limitation on carriers liability 500$ per package specified by COGSA would govern the transaction. And I think considering that this sum (500$ per package) is more than real cost of publication, so Sam, Bill and Howard can be fully protected by carriers liability. Remember that both contracts: with Bill F.O.B. Savannah & with Howard C.I.F. Bath, United Kingdom shall be governed by ICC INCOTERMS (2010 Edition) (CISG Art 9(1) or CISG Art. 9(2)).  In contract with Bill, under the UCC (2-319) Sam has no obligations to the buyer to make a contract of insurance. But he must provide the buyer, at the buyers request, risk, and expense, with information that the buyer needs for obtaining insurance. On the contrary, in contract with Howard, Sam must obtain cargo insurance, the insurance shall cover the goods from the point of delivery to at least the named port of destination, Sam must provide Howard with the insurance policy or other evidence of insurance cover, and Sam also must provide Howard with information that Howard needs to procure any additional insurance, maybe should consider for the goods to be insured against loss or damages. In both contracts the buyer bears all risk of loss or damage to the goods from the time they have been delivered and placed on board the vessel at the loading port.

2.        (1) if Sam misdescribed the goods, does such a clause relieve the carrier of all obligations regarding the nature of the goods received from Sam?

Yes, because SLC clause apply, carrier only check weight and count, then stamp “On board”, “Shippers load”, “contents unknown” , rely on shippers document, and is not required to open every package received from a shipper and inspect the contents before issuing a bill of lading.

(2) Would your answer change if the carrier could have discovered the discrepancy only by opening sealed cartons?

        In this case, shipper still responsible for discrepancy, carrier would rely on shippers description of goods,  as Tetley points out, the carrier must make only “reasonable” inspection of the goods, under COGSA 3(3)(c) carrier would be released from liability.

(3) Or if the discrepancy instead was apparent from markings on the outside of the cartons?

        Consider what is the marking on the cartons, if there are obvious differences between shipper’s description in documents and real goods carrier could has doubt and the carrier would be liable, as I conclude above carrier only must make only “reasonable” inspection of the goods, check weight and count, SLC clause relieve carrier, and if there is no discrepancy than carrier relies on shipper’s description.

3.        (Comments) if world maritime states ratify Rotterdam Rules, then it could be much easier to analyze in provisions on limitations of carrier liability. Rotterdam Rules limitation amount875 “units of account” per package or “shipping unit” or 3 units of account per kilogram is higher than COGSA’s 500$ per package, Article 61 provides that the carrier shall be precluded from relying on the package limitation only where a loss resulted from “a personal act or omission . . . done with the intent to cause such loss or recklessly and with knowledge that such loss would probably result.” (Article 61 of Rotterdam Rules)

4.        (1) No, first carrier may not be held liable beyond a per package limitation for damaged goods contained in the bill of lading or COGSA unless carrier had actual knowledge of the damaged condition at the time of loading or the damage was readily apparent at that time, second if Sam misdescribed the goods, carrier won’t be liable because of SLC clause.

        (2) Sam has to describe clearly shipped goods, check the package of the goods and control its loading on the ship , make sure that bill of lading issued correctly, also correctly obtain the insurance CIF or provide the buyer with information that the buyer needs for obtaining insurance FOB, but anyway I think that there is no full protection to his customers, still rely on carriers good faith and authority.  

5.         Under the Hague Rules at art.3(4) stipulate that a clean bill of lading only creates a prima facie presumption that the goods are as described on the bill of lading. Nevertheless, the principle of estoppel has prevented a carrier from proving that the goods were other than as described against a third party holder of the bill of lading for value who is acting in good faith. In order to avoid being bound by the description of the goods on the bill of lading, the carrier add SLC clause, and such a clause relieve the carrier of obligations. Shipper is obligated to prove that bundles listed on the bill of lading were actually stowed in the container.  The carrier may limit its responsibility to 500$, asserting its rights under COGSA and its bill of lading with respect to the shipment and alleging that it acted without any fault or neglect.