Law of International Trade - Essay Example

Question Law of International Trade Introduction: Law of International trade is the law relating to the exchange of resources, merchandise and service crossways across the nationwide boundaries or regions. Foreign exchange got its primary momentum from the trade revolution in the late 18th century and near the beginning of 19th century. In this case, Sammy bought 1000 tons of sugar from the shipper and three bills of lading were issued to “Samson or assigns”. Sammy decided to put up for sale of the 1000 tons of sugar to Benny and he provided Benny the first bills of lading. After that Sammy creates a mistake and agrees to put up for sale of sugar to Denny with two bills of lading which are numbered 2 and 3. Denny knows nothing of the prior sale to Benny. The three contracts existing in this case are, first one is between Sammy with the carrier that who carry the 1000 tons of sugar, second is among Sammy and Benny and third contract is between Sammy and Denny. The contract becomes valid only if it fulfills the entire legal requirement. It will come under the Sales of Goods Act 1979. “A bill of lading is a type of document that is used to acknowledge the receipt of a shipment of goods. A transportation company or carrier issues this document to a shipper.” (What is a bill of landing? 2010). Is Denny entitled to ask for all the three Bills of lading? If he is; can he refuse to Continue with the contract or can he only claim monetary compensation? Bill of trading offers safety to each and every party in the global trade. In these particular case three Bills of lading is offered to Sammy. And also Denny is enabled to ask for all these three Bill of lading from Sammy at the time of receiving 1000 tons of sugar. If Sammy is not giving all these three Bills of lading to the Denny he can neither refuse to carry on with the contract or he can claim financial compensation for the fraudulent contract. Assuming that Denny does accept the two bills of lading would the carrier have to release the goods to Denny if she presented the Bill numbered 2? Denny has to admit the two of the three Bills from the Sammy or else, Denny has the right to refuse the bills for the reason that Sammy takes action in bad faith. He should bind with various responsibilities that he must obey. Primarily, he should provide a shipped moveable fresh Bill of Lading to the purchaser. Secondly, Sammy has to offer an agreement of Marine Insurance for the commodities which is constantly concerned by insurer. Thirdly, Sammy must offer a profitable invoice to the purchaser. Denny had to admit the Bills and recompense for the 1000 tone of sugar if Sammy accomplish his responsibilities by tendering fresh Bill of Lading, assurance plan, and profitable invoice. In this case, there is agreement among Sammy and shipping so that the carrier must be followed by certain responsibilities under the Hague Visby Rules. Article III Rule 1 says that, “The carrier shall be bound, before and at the beginning of the voyage, to exercise due diligence to (a) Make the ship seaworthy; (b) Properly man, equip and supply the ship; (c) Make the holds, refrigerating and cool chambers, and all other parts of the ship in which goods are carried, fit and safe for their reception, carriage and preservation.” (Hague Visby rules, n.d). The carrier is in a duty to distribute the cargo to the original bill of lading or else the carrier is responsible in the agreement in addition to the tort to the bill of lading owner. “In the case of Sanders v/s MacLean (1883), the bill of lading by the law merchant is universally recognized as its symbol and the endorsement and delivery of the bill of lading operates as a symbolic delivery of the cargo.” (Joglekar n.d). The individuals who have ownership of the merchandise must discharge them to the primary individual presenting anybody of the bills. At the same time the transporter can also reject to the merchandise to Denny in certain conditions mainly at the time of reasonable suspicion. If the carrier did release the goods to Denny; could Benny sue the carrier? In this case if the carrier did release the goods to Denny, Benny could take legal action, if the transporter can verify the awareness of the former sale to Benny and still discharge the merchandise to Denny. If the purchaser receives the bill of lading as well as document of title to the goods, he can sue in agreement against transporter for the wrongful act. “Section 2(1) provides that: "Subject to the following provisions of this section, a person who becomes, The lawful holder of a bill of lading: The person who (without being an original party to the contract of carriage) is the person to whom delivery of the goods to which a sea waybill relates is to be made by the carrier in accordance with that contract.” (The Carriage of Goods by Sea Act 1992, 2002). Still, if the transporter had no thought on the subject of previous sales and released merchandise to Denny, Benny could not take legal action against the transporter for the reason that there is no violation of obligations of transporter. If the Carrier Did Release the Goods to Denny, Could Benny sue Denny? If the carrier releases the goods to Denny, Benny has not right any right to sue against Denny. Sammy cannot put up for sale merchandise two times to dissimilar people. Denny is not liable for the wrongful act of the Sammy at any time. So that, Benny cannot sue to Denny for the wrongful possession of the goods. “The Goods carried hereunder are subject to all terms and conditions of the Carrier’s applicable tariff(s), which are hereby incorporated herein. Copies of the relevant provisions of the applicable tariff(s) are obtainable from the Carrier upon request.” (Bill of landing terms and conditions, n.d). If Benny is Successful in Suing Denny, is There Anyone He Could Sue? If Benny is successful suing Denny against, Denny can sue only for Benny of the wrongful contract made by Sammy. Denny is not aware of the first contact made by Sammy with Benny. So, Denny can sue for the wrongful act as well as for the monetary compensation from Sammy. Also, at the same time Sammy provide bill2 &3 to Denny. But it is a duty of Denny to enquire about the bill of lading 1. Conclusion: In this case, Sammy gives Denny two bills of lading which are numbered 2 and 3 so that if Denny present these bill of madding to the Carrier, he has the legal responsibly to release 1000 tones of sugar to Denny. And also, Benny has legal rights to take legal action against Sammy for violation of the contract. But at the same time, he doesn’t have right to claim against the carrier of the violation of duty. Question 2: Discuss the Carrier’s (Scruttons Ltd.)Liability Issue: This case study consists of two distinct legal aspects that need to be considered. The first part regarding total loss of five containers containing engine parts carried on deck, and second part damages five container chairs due to the seepage of sea water into the hold where these were stored. Part 1: The Total Loss of Consignment of Engine Parts: Total Loss of Consignment of Five Containers of Engine parts: In this case, as mutually agreed by both parties; carriers (Scruttons Ltd.) and shipper (Carver Ltd.), relevant English laws would apply in this case. It is now necessary to examine whether the Hague –Visby laws (of which the United Kingdom is a signatory) could be legally applied in this case. Under the provisions contained in Article 1(c) of the Hague-Visby laws, goods under these laws could be defined as “goods" includes “goods, wares, merchandise and articles of every kind whatsoever, except live animals and cargo which by the contract of carriage is stated as being carried on deck and is so carried.“ (Hague Visby rules, n.d). To be fair to the claim of the carrier, it could be said that he has not violated any terms in the Bill of Lading (BOL), while placing the five containers of engine parts on deck. The carrier, Scrutton Ltd.had implicitly followed relevant BOL instructions. If there had been a violation of placing the containers on deck, either through covenant clauses or the terms of the BOL, they could straightaway be held responsible for the losses, but their actions were in line with BOL directives. Article III of the Hague Rules: However under paragraph 1 of Article III of the Hague rules, “Neither the carrier nor the ship shall be liable for loss or damage arising or resulting from unseaworthiness unless caused by want of due diligence on the part of the carrier to make the ship seaworthy, and to secure that the ship is properly manned, equipped and supplied, and to make the holds, refrigerating and cool chambers and all other parts of the ship in which goods are carried fit and safe for their reception, carriage and preservation.“ (The Hague rules as amended by the Brussels protocol 1968: Article IV, 1971). Exclusion Clause not Part of Terms of the Bill of Lading: Again, the exclusion clause exculpating the carrier from blame through oral contract cannot be substantiated, unless this exclusion clause is duly entered into the BOL. Thus, the carrier cannot escape liability if the circumstances so dictate. Daewoo Heavy Industries Ltd- v. Kilpriver Shipping Ltd (2003) case: In the case of the Daewoo Heavy Industries Ltd- v. Kilpriver Shipping Ltd (2003) case, where the question of compensation for deck goods being damaged occurred, “The Court of Appeal therefore concluded that the Commercial Court had been correct to decide that the defendant carriers were entitled to the benefit of the package limitation provisions in the Hague Rules, notwithstanding the derisory sums that would be payable.” (Carriage of goods by Sea Daewoo heavy industries ltd. -v- Klipriver shipping ltd, 2003). Part II – Damages Caused to 5 Containers of Chairs: Coming next to the analysis of the second loss, to consider the damages caused to 5 containers chairs due to seepage of sea water into the hold. Applying English laws and the Hague Visby rules (issue covered by Hague Visby and not exempted), the following could be said: There are certain responsibilities that must be carried out by the carrier, Scrutton Ltd with respect to the goods entrusted to him by the shipper, Carver Ltd. in this case. Under Article III (c) of The Hague Visby Rules, it is incumbent that the carrier “makes the hold, refrigerating and cool chambers, and all other parts of the ship in which goods are carried, fit and safe for their reception, carriage and preservation.” (The Hague rules as amended by the Brussels protocol 1968, 1968). Carrier’s Duties to Take Good Care of Ship and Cargo: Prima facie, there has been a lowered degree of caution and due diligence exercised by the carrier. In that case, the damages to the five packages occurred due to a defective seal in the fabric of the ship and a cargo hold which had been left open during an occasional routine inspection carried out while the ship is at sea. The routine examination at sea and not before the commencement of voyage comes under the purview of the duties of carrier and/or his agents and servants and this damages could, in all probability have been caused by their lack of carefulness and due diligence in overseeing the goods and making the goods safe and secure as is demanded under the Hague Visby conventions. In the case of “Parsons Corporation and Others -v- C V Scheepvaartonderneming “- The "Happy Ranger" case, the issue arouse as to who should be liable for ship damages sustained due to crane malfunctioning. Evidently, the Judges ruled that “breaches of duty by the Owners were causative of the damage. Judgment was, therefore, given in favour of the cargo claimants.” (Carriage of goods by Sea Parsons corporation and others -v- C V Scheepvaartonderneming: The "Happy Ranger, 2006). First, the silver bullet in this case is evident from the fact that s3 of the Carriage of Goods by Sea Act 1971 categorically states that “There shall not be implied in any contract for the carriage of goods by sea to which the Rules apply by virtue of this Act any absolute undertaking by the carrier of the goods to provide a seaworthy ship.” (Carriage of Goods by Sea Act 1971, 1971). International Packers London Ltd v. Ocean Steamship Co. Ltd. (1955) 2 Lloyd’s Rep 218: Coming to the decision in the International Packers London Ltd v. Ocean Steamship Co. Ltd. (1955) 2 Lloyd’s Rep 218, wherein the Hague rules were enforceable. It was ruled that the carrier/ship owner was in no way responsible for bolts that were not been secure, since this was to be done at the commencement of the journey. However, in this case, the disaster occurred not due to the lapses at the commencement, but due to the fact that during the course of the voyage, certain irregularities were perforce. It would hardly be logical or rational to blame the shipper for actions or inactions of the captain, crew or servants of the carrier and this needs to be borne by the carrier himself, possibly with enforcement of Strict Liability Clause under which the ship owner/carrier could be held responsible for actions/inactions of his crew members. Conclusions: These case scenarios have conjured up mixed results. For the loss of five containers of engine tools, Scruttons need to prove that no lack of due diligence or impacts of unseaworthiness is evident from their side. It is the onus of the party claiming innocence to prove it under the framework of the existing law governing sea trade. Article III sub sections 1 and 2 of the Hague Rules: However, regarding the damages to five containers of chairs, the seepages could occur due to the negligence during the course of the voyage for which the shipper could be held liable under Article III sub sections 1 and 2 of the Hague Rules as amended by the Brussels Protocol 1968. However, to his defence, the carrier may seek recourse to the exclusion clause, which could limit the scope and extent of his liability under prevailing laws. Reference List Bill of landing terms and conditions, n.d. [Online] Seaboard Marine Ltd. Available at: http://www.seaboardmarine.com/sml/BillofLadingTermsandConditions.htm [Accessed 10 July 2010]. Carriage of goods by Sea Daewoo heavy industries ltd. -v- Klipriver shipping ltd, 2003. [Online] Waltons & Morses. Available at: http://www.waltonsandmorse.com/Decisions2.jsp?decisionsID=39 [Accessed 9 July 2010]. Carriage of goods by Sea Parsons corporation and others -v- C V Scheepvaartonderneming: The "Happy Ranger, 2006. [Online] Waltons & Morses. Available at: http://www.waltonsandmorse.com/Decisions2.jsp?decisionsID=82 [Accessed 9 July 2010]. Carriage of Goods by Sea Act 1971, 1971. [Online] OPSI. Available at: http://www.opsi.gov.uk/RevisedStatutes/Acts/ukpga/1971/cukpga_19710019_en_1 [Accessed 9 July 2010]. Hague Visby rules, n.d. [Online] Available at: http://www.admiraltylaw.com/statutes/hague.html [Accessed 9 July 2010]. Joglekar, P., n.d. Functions of the bill of landing. [Online] Legal Service India.com. Available at: http://www.legalserviceindia.com/articles/billoflad.htm [Accessed 10 July 2010]. The Carriage of Goods by Sea Act 1992, 2002. [Online] The Free Library. Available at: http://www.thefreelibrary.com/The+Carriage+of+Goods+by+Sea+Act+1992-a0146652553 [Accessed 10 July 2010]. The Hague rules as amended by the Brussels protocol 1968: Article IV, 1971. [Online] OPSI. Available at: http://www.opsi.gov.uk/RevisedStatutes/Acts/ukpga/1971/cukpga_19710019_en_2 [Accessed 9 July 2010]. The Hague rules as amended by the Brussels protocol 1968, 1968. [Online] Available at: http://www.dbschenker.com.mx/upload/attachments/154/15409/TheHagueVisbyrules.pdf [Accessed 9 July 2010]. What is a bill of landing? 2010. [Online] Wise Geek. Available at: http://www.wisegeek.com/what-is-a-bill-of-lading.htm [Accessed 10 July 2010]. Read More