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Contract

There’s no denying that the world is being more than a little battered by some extreme weather as of late. From the likes of hurricanes Harvey, Irma and Maria, to the sub-zero temperatures battering the USA this January, there has been no shortage of disruption to every industry. But how does the freight and logistics industry cope? What happens to the Contracts of Carriage when they can’t be fulfilled correctly? Here at Barrington Freight, we’ve taken a look for you.

What is a Contract Of Carriage?

In legal terms, a Contract of Carriage is “a binding contract which includes terms of transportation that state the duties and privileges of a transporter and a passenger/shipper.” These are, quite simply, the contract between a transporter and the passenger or shipper using their service after the transporter takes responsibility of delivering passengers or cargo from a given departure point, to a given destination. The terms stated in each Contact of Carriage will depend on the transporter chosen, but will tackle issues around the cargo being carried, the liability associated with the transportation and the goods, and any remuneration should damage, injury or loss occur.

So, what happens when it all goes wrong?

Deviations From Planned Routes

Any vessels carrying cargo may deviate from their initially planned route to avoid extreme weather events, which could ultimately result in late delivery and potential losses for the receivers of the cargo. In the case that these receivers have suffered losses as such will not be entitled to anything under bills of lading that incorporate the Hague or Hague-Visby rules. These rules state that “Any deviation in saving or attempting to save life or property at sea or any reasonable deviation shall not be deemed to be an infringement or breach of this convention or of the contact of carriage, and the carrier shall not be liable for any loss or damage resulting therefrom…” – In other words, there is no liability in the case that the deviation is deemed appropriate or necessary to save life or damage.

Changing The Place Of Discharge

In the bill of lading, a place of discharge will be named but it isn’t always possible to use this destination. In the case where this point of discharge is unavailable, the terms of the bill of lading may state that the carrier can discharge the cargo elsewhere – or, in some cases, it can be agreed between the holder of the bill of lading and the carrier that the cargo be discharged at another, substitute place of discharge. In this case, every effort should be made to destroy the original bill of lading, to avoid the cargo being sold using this invalid bill.

In the case where changing the place of discharge is not possible and no substitute is agreed, the contract of carriage could become frustrated – which we’ll look into in more detail below!

Frustration Of Contracts

In short, the frustration of contracts ultimately means that the contract is rendered worthless. If loading or discharging cargo at the given point of loading or discharge is not a possibility, and no other substitute has been named or allowed, then the contract between the transporter and passenger or shipper could be frustrated. If the contract is frustrated, all obligations from either party regarding the contract is null and void, and neither can recover any losses in this instance. It can be difficult to determine whether a contract of carriage has been frustrated, and could depend on anything from how long the circumstances have been ongoing, to how long they could go on and whether the cargo is perishable.

Damage To Cargo

It’s no secret that cargo can become damaged in the best of conditions, so when freight is being carried through extreme, adverse weather conditions, it’s a distinct possibility. Of course, this all depends on when the cargo was damaged, and how. Cargo-carrying vessels that have been unable to avoid the effects of extreme weather could have a defence against claims for any damage to cargo under Article IV Rule 2 of the Hague and Hague-Visby rules. The rules state;

“Neither the carrier nor the ship shall be responsible for loss or damage arising or resulting from:

(c) Perils, dangers, and accidents of the sea and other navigable waters…”

However, carriers will need to prove that they have exercised diligence to ensure their vessel is seaworthy before they set off, and after they begin their voyage.

The laws and regulations around cargo shipping and how adverse weather conditions can affect shipments, as well as the rights and liability should it all go wrong are important to understand if you’re planning on shipping or importing goods. For more information, or to book your shipment with us here today, don’t hesitate to get in touch!

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