Voyage Charters

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Chapter 10


[clause 1 continued]  
… and there deliver the cargo … 18
[clause 1 is continued below]
10.1 As the layout of clause 1 indicates, delivery of the cargo is the final obligation of the shipowner under the charterparty. It brings about the termination of the bailment and therefore, generally speaking, it marks the point of time at which the carrier’s responsibility for safe custody of the goods comes to an end. However, the general rule may be varied by special terms of the contract of affreightment, frequently found in bills of lading, which provide that the carrier’s responsibility shall cease as soon as the goods are discharged from the ship, and before they are delivered to the consignee.1

What constitutes delivery?2

10.2 In the early days of the carriage of goods by sea, the giving and taking of possession of cargoes by receivers was a self-evident physical operation, but, with growing complexity of commerce, more modern practical mechanisms for effecting delivery were, and continue to be, developed (akin to the old-fashioned transfer of the “key to the warehouse”), but the principles remain the same.3 It has been said that delivery occurs when “the goods are so completely under the control of the consignee that he may do what he likes with them”,4 or when they are “placed under the absolute dominion and control of the consignees”.5 In practice, upon the discharge of the goods from the ship they are frequently in the custody of agents or contractors rather than

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the shipowner or consignee themselves, and in those circumstances delivery will occur when the goods are placed in the hands of an agent of the consignee. Thus, in British Shipowners v. Grimond,6 it was held that delivery occurred and the shipowner’s responsibility for the goods therefore ceased when they had been passed over the ship’s rail into the hands of harbour porters employed by the consignee. The same contractor may initially take possession of the goods as agent of the shipowner and later, when the shipowner’s obligations as regards discharge have been fulfilled, remain in possession thereafter as agent of the consignee. In The Jaederen,7 the vessel discharged at a dock where it was customary for the whole of the unloading to be carried out by the dock company’s servants. Gorrell Barnes J. expressed the view that, in taking the goods from the holds and placing them alongside the ship, the dock company were acting as agents of the shipowner, and that in taking up the goods from alongside and taking them away to store they were acting as agents of the consignees. 10.3 The effect of the requirement that delivery involves the placing of the goods under the complete control of the consignee or his agent by the voluntary and unconditional transfer of possession by the holder to the indorsee and an unconditional acceptance by the indorsee,8 is that, even when the shipowner’s obligations regarding discharge are complete, and the goods are in the hands of an independent warehouse, delivery will not be regarded as complete so long as the shipowner is maintaining any lien or right of disposition over the goods.9 10.4 Since delivery is a bilateral act, involving the receipt of the goods by the consignee or his agent as well as the relinquishing of possession by the carrier, it cannot be effected merely by discharging the goods over the ship’s side at the port of delivery.10 Equally, delivery cannot, in the absence of special terms, be effected merely by putting the goods into the custody of a person who is not the agent of the consignee.11 In many ports it is usual practice to deliver the goods into the custody of the port or customs authority. However, unless there is a legal requirement, or custom in the strict sense, that delivery should be made to the authority without production of the bill of lading, the carrier may well act at his peril if he delivers except against the bill of lading, unless, and sometimes even if, he takes a letter of indemnity (“LOI”),12 from his charterers or receiver.

Goods were carried to Viborg on f.i.o. terms. Upon arrival, the port authority took possession of the goods and discharged them, without presenting a bill of lading, and delivered them to X, who was not in possession of the bill of lading and had no title to the goods.

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