International BLaw Test 3 Ch 5&6
bill of lading
- "to the order of" -negotiable document of title, represents legal ownership to goods issued from carrier to shipper upon transport. BOL has these 3 roles: 1) receipt for the goods from the carrier, promising to deliver to the indicated consignee 2) contract of carriage between the shipper and the carrier (i.e. a transport document) 3) document of title to the goods described in it (if negotiable)
electronic documents: electronic data interchange
- EDI: shipping data is transmitted over the internet using one of several standards several advs: -lets parties track goods that are in transit and make adjustments in route -seller gets paid electronically (faster) -eliminates need to prepare multiple copies of documents
montreal convention: embarking or disembarking
-a carrier is only responsible for accidents that occur "on board" the aircraft -whether a passenger is embarking or disembarking is a factual question, whether the passenger is "under control" of airline employees
particular average claims
-a partial loss to the insured's cargo. many insurance policies limit the insurer's liability for particular average losses
other types of transport instruments
-air waybills: most air transport is handled through nonnegotiable air waybills issued by air cargo carriers. carrier makes delivery only to consignee named in the bill -forwarder's bill of lading: freight forwarders are federally licensed individuals who act as agents for sellers. they handle their foreign shipments, book transportation, prepare documents and custom forms, and perform other functions. forwarder's bills only allow claims against the forwarder itself -multimodal transport documents: if goods are transported using more than one mode of transportation, use a single contract between shipper and operator
freight forwarders
-are not carriers and are not liable for the cargo during shipment -act as agents for shippers in contracting w air, land, or sea carriers for the transportation of goods to a place of destination
montreal convention: air carrier's liability for death or bodily injury
-article 17 of montreal convention gives 3 elements for liability: death or bodily injury, resulting from an ACCIDENT, on board the aircraft or while embarking or disembarking -accident: requires the injury to be caused by some event peculiar to air travel and "external" to the passenger
rights of purchasers: documentary collections
-banking institutions serve as intermediaries to handle the exchange of documents for payment -controlling documents mean you control the goods
liability for air cargo and baggage losses
-cargo losses: air carrier is liable for "damages sustained" to cargo under its control, up to 17 SDR's per kilo, unless the shipper has declared a higher value on the waybill -baggage losses: limited to 1,000 SDR's for each passenger, unless higher value -baggage losses: limited to 1,131 SDRs -delay: airlines may be liable for delays, up to 4,694 SDRs per passenger -time limitations: two years for legal actions
cargo losses and the carriage of goods by sea
-cargo: term for goods carried aboard ships -freight: price charged to transport cargo -break-bulk: general cargo ships (goods are stowed in individual containers or on pallets in the ship's hold) -dry bulk ships: for carrying coal, ore, and other minerals, grains and cereals, steel, forest products, fertilizers, etc. -tankers: for oils, chemicals, and other liquids -reefer ships: specialized vessels w refrigerated units --> containerized ocean cargo is the fastest growing mode of ocean transport
carrier liability
-clean bill of lading: proof that goods were in good condition before shipping -carrier is responsible for: - cargo shortages (weight) - stowing cargo - sea worthy ship - carrier is NOT responsible for: - errors in navigation - perils of the sea
non-vessel operating common carriers (NVOCC)
-common carriers which do not operate the vessel but assume liability for goods during transport; issue house bills of lading based on master bills issued to them by the carrier -act as freight consolidators for small shipments, permitting them to take adv of lower freight rates
air waybills and air cargo losses
-cosignor: shipper -cosignee: person named in contract who can be delivered too -master air waybill: one issued directly to a shipper by an air carrier -house air waybill: one issued by a freight forwarder to the shipper (thus representing a contract between them), and is also used where the shipments of several shippers are being consolidated by the forwarder to one destination
rights of purchasers: CIF contracts
-cost, insurance, and freight -sellers obligations are to place the goods onboard, pay the freight to destination, and procure marine insurance -an INCOTERM 2010 (The Incoterms rules or International Commercial terms are a series of pre-defined commercial terms published by the International Chamber of Commerce (ICC) widely used in international commercial transactions)
montreal convention: limitations on liability for death or bodily injury
-damages now measured in special drawing rights (SDR's), a mix of different currencies -two tiered liability system: airline is STRICTLY liable for up to 100,000 SDR's, unless it can prove it was not negligent
certificates of inspection or analysis
-documentary sales transaction serves to protect the buyer as well as the seller -certificates of inspection -certificates of weight -certificates of analysis
Hague rules
-end of WWI, developed uniform rules governing ocean bills of lading -aka Int'l Convention for the Unification of Certain Rules of law relating to Bills of Lading -carriers could no longer use fine print provisions in BOL's to limit their liability, COSGA defined their responsibility to the cargo and cargo owners & limited carriers liability for loss or damage to cargo by law
general avg and FPA losses
-general average claims by carrier--> real and substantial danger (but perhaps not actual peril) -the york-antwep rules: standardized rules on general coverage (traditionally have become part of the contract of carriage bc their provisions are generally incorporated into all modern bills of lading)
admiralty jurisdiction in the US
-navigable waters: used or capable of being used for commercial activity -vessels in navigation: every description of watercraft or other artificial contrivance used, or capable of being used, as a means of transportation on water -maritime torts: historically only on water, but currently applies to injuries or property damage caused by a vessel on navigable waters, even though the injury or damage to a bridge is done or consummated on land" (ex: bridge struck by vessel on navigable waters) -maritime contracts: include ocean bills of lading, marine insurance contracts, contracts for towing or wharfage (charge for the use of a wharf or dock), contracts for fuel, supplies for or repairs to vessels
rights of purchasers: importance of negotiability to trade
-negotiability of bill of lading is critical to international trade -as the BOL is bought and sold, so are the goods it represents -permits merchants to buy/sell products while they are on route
how secure are documentary payment terms
-offers no guarantee the buyer will accept documents or will become insolvent
marine insurance policies and certificates
-open cargo policies: covers all shipments by shipper of certain types of goods to certain destinations over specified routes --> some confusion can arise in CIF contracts (seller purchases insurance in CIF contracts) -marine insurance policies cover several diff types of losses: 1) total losses of all or parts of shipment 2) general averages (loss that results when extraordinary expenses or losses are incurred in saving the vessel or its cargo from danger of the sea) or general average losses and 3) partial or particular average losses
per-package limitation
-per-package limitation and containerized freight -->"package" under COSGA: shipping unit, customary freight unit (ex: can be a box of merchandise, a bale of cotton, coil of wire, a barrel of oil, etc.) -# of packages not shown on bill of lading? COSGA requires carrier to become a virtual insurer of cargo -good shipping practices--> based on smallest unit of packaging
history of general maritime law
-rhodian law: (greek island of rhodes) came from customs and practices of sea trade. greatly influenced the westward expansion of maritime law -maritime courts: private courts developed in port cities, deal w problems of sea (jettison, salvage, perils of the sea) -maritime codes: dealt w uniquely marine problems, including shared responsibility for the ship and cargo at sea, ship owners' responsibility for caring for mariners who fell ill in foreign ports, hiring foreign local pilots, etc -rolls of oleron: most detailed/influential maritime code, "judgements of the sea", judgements in actual maritime courts in normandy and britain
documentary sale
-seller places goods with an ocean carrier, reduces transaction risk type of contract for the sale of goods in which possession and ownership of the goods are transferred from seller to buyer through negotiation and delivery of a negotiable document of title issued by an ocean carrier
per-package limitation
-shipper must be given a fair opportunity to declare the nature and value of the goods -COSGA's per package liability limitation: $500 per package limitation or freight unit, unless shipper declared and paid for higher value
trade terms
-sometimes called shipping terms (symbols such as FOB or CIF) -shorthand way of designation shipping and cargo payments -shorthand method that permits the parties to express their agreement quickly and with little confusion
rights of purchasers of documents of title: good faith purchasers of documents of title
-special protection for purchasers who take by negotiation, take free of any adverse claims) - "good faith purchaser" (aka a holder by due negotiation) is one who purchases: 1) for value (not to settle debt), 2) in good faith and without notice of antecedent claim, 3) in the ordinary course of business - if not a good-faith purchaser, then you only take the rights of a transferee
Banque de Depots v. Ferroligas (1990)
-swiss bank, Banque, brought action against Bozel, a brazilian exporter, bc Bozel had allegedly misapplied the bank's funds, goods were shipped to Louisiana -a court ordered seizure of goods can't stand when the title to the goods is represented by a BOL and the BOL itself wasn't seized by the court order
risk of loss in international sales under CISG
-unless the parties agree otherwise, loss of damage occurring after risk of loss has passed does not relieve the buyer of the obligation to pay for the goods -convention on contracts for the international sale of goods contains provisions that assign the risk of loss in articles 66-70
allocating the risk of loss
-when does the risk pass? -negotiated in the contract for sale within the shipping terms (INCOTERMS 2010) -destination contracts (risk passes when goods are given to buyer at delivery point, at destination)
freight and transportation charges
-who will pay the freight charges? -who will be responsible for damages during the voyage?
warsaw convention of 1929
1929- governed liability for passengers and goods limitation on liability -damage to cargo at about $10 per pound -$75,000 death, personal injury limit -may be exceeded if airline "reckless" --> so if a shipper wants protection he must declare and pay higher value seems to favor the carrier, encourage growth of airline industry- didn't allow devastation of airline -in place for 70 years, never modernized
proposed rotterdam rules
2009, United nations convention on contracts for the international carriage of goods wholly or partly by sea -makes carrier responsible door to do -electronic transport record has the same legal effect as a paper document of BOL -carrier obligation to use due diligence applies to entire voyage -carriers are now liable for errors in navigation
COSGA
Carriage of goods by sea act -applies to every BOL for the carriage of goods by sea between a US port and a foreign port -governs carrier's liability from loading to unloading (doesn't apply to losses that occur prior to loading or after discharge from the vessel) -carriers liability extends to stevedoring companies and subcontractors -protections that limit a carrier's liability for damage to goods usually apply to stevedoring companies and to subcontractors that transport or handle goods- not just the ocean carrier --> Himalaya clause: written provision extending these protections "downstream" to other parties involved in the transport
international rules for interpretation of trade terms
INCOTERMS 2010, effective Jan 2011: -"E" terms: places lowest amount of responsibility on the seller -"F" terms: seller is required to deliver the goods to the designated point of departure "free" of expense or risk to buyer -"C" terms: seller is responsible for certain costs after the goods have been delivered to carrier -"D" terms: is a destination contract- seller has a great responsibility -contract terms allocates passage of title
specially to cover clause
a shipper who desires additional coverage can purchase it from the insurer at an added charge
payment risk
aka credit risk, risk to the seller that the buyer will fail to pay as promised
Basse and Selve v. Bank of Australasia (1904)
bank has no duty to inspect when paperwork is in order and "regular"
maritime law
body of law within the admiralty jurisdiction of a court that governs private rights and obligations arising out of the operation of vessels on navigable waters or in maritime commerce -has been around for centuries
rights of purchasers: carrier's liability for misdelivery
carrier must deliver goods only to the holder of the bill of lading (otherwise liable)
Shaver Transportation Co. v. the Travelers Indemnity Co (1979)
contamination was not a covered loss under the policy because it happened before the voyage started
montreal convention: compensable damages
convention does not specify what damages can be collected by plaintiff -3rd party suits: MC only applies to claims held against air carriers. does not prohibit or govern claims against third parties (such as manufacturer of a defective design) --> ordinary tort law of the state or jurisdiction in which the case is heard
St. Paul Guardian Ins. Co. v. Neuromed Medical Systems and Support, Gmbh (2002)
court held that CISG and Incoterms applied, and INCOTERMS allocate risk of loss not passage of title
perils clause
covers the basic risks of an ocean voyage. generally covers extraordinary and unusual perils that are not expected during a voyage -only covers fortuitous (loss occurred by chance or accident and could not have reasonably been predicted) losses
measuring damages for breach of the documentary sale
damages measured by the difference between the contract price and the market price of the goods at the port of shipment on that date -under english view, damages are based on market value as of the date when the buyer would have paid for the goods had the seller not breached -american view, damages for breach of contract should be measured by the market price of goods at the port of shipment on that date
document of title
evidences ownership of goods it represents. the possessor is entitled to possess the goods. E.g. dock receipts, warehouse receipts, and bills of lading -the carrier is the bailor (holder only, never the owner) of the goods. ownership of goods passes with the documents
modification of trade terms
general rules: -if additional terms DO NOT contractict the agreed-upon terms, then the agreement is enforceable -if the additional terms DO contradict the agreed-upon terms, it can destroy the CIF terms
Kumar Corp. Nopal Lines, Ltd. (1985)
in a CIF contract, risk of loss remains with the seller if he fails to purchase marine insurance
admiralty jurisdiction
in the US these claims are governed by both federal and state statutes -maritime law is also referred to as admiralty law
3 main sources of maritime law
international conventions, national legislation, and the general maritime law
Lite-On Peripherals v. Burlington Air Express (1999)
lite on peripherals sells keyboards to burlington, burlington delivered these to reveal, and didn't obtain the copy of the BOL, carrier is found liable
general maritime law
made up of the decisions of US courts of "admiralty" jurisdiction, as it was handed down from the english admiralty courts when the US was founded
Prima U.S. v. Panalpina case (2000)
no, panalpina was a freight forwarder, not a carrier (nor a vessel operating as a common carrier)
constructive delivery
occurs when ownership of goods is transferred by the paper documents which represent the goods
El Al Israel Airlines Ltd. v. Tseng (1999)
plaintiff's private action for assault and false imprisonment was precluded by the Warsaw Convention -tseng bought ticket on el al flight from ny to tel aviv, prior to boarding was asked about travel plans and therefore marked her as a security risk, taken to security rom and told to remove shoes and lower jeans, female guard searched her. tseng sued el al in ny state court for assault and false imprisonment, district court dismissed concluding that her only remedy was under WC and WC precluded recovery unless there was a bodily injury
documentary collections
process by which banking institutions serve as intermediaries between seller and buyer to handle the exchange of the BOL for payment
transaction risk
refers to the risk facing the buyer and the seller when they move money and goods in an international sales transaction
montreal convention of 1999
replaces warsaw convention where ratified (adopted in US in 2003) -only applies to passengers ticketed for international travel, if approved by all countries involved in the "legs" of the journey -will not have to prove airline at fault in case of personal injury or death -application to international carriage |--> strictly liable for all damages up to $146,000 approx --> carrier is liable for damages above that UNLESS negligent (not acting reasonably) or was the sole result of negligence or wrongful acts of 3rd parties
delivery risk
risk to the buyer that the seller will fail to ship the goods as called for in the contract
negotiable instrument
such as checks and notes -serves as a substitute for money
olympic airways v. husain (2004)
the airline was liable for damages when an asthmatic patient died from allergic reaction to secondhand smoke aboard an aircraft decision: flight attendants actions was an "accident" that was external to passenger
Z.K. V Arch/V Archigetis (1991)
the court held each yacht was a "package" and carrier's liability was limited to $500 per yacht
negotiable documents of title
transfers ownership of goods "to the order of" a particular person and effectively passes title to the goods
bills of lading
types of ocean bills of lading: -clean bills of lading: contains no notations by the carrier that indicate any visible damage to the goods, packages, drums, or other containers being loaded -on-board bills of lading: signed by ship's master, states that the goods have actually been loaded aboard a certain vessel -received-for-shipment bills of lading: issued by a carrier only upon having received goods for transport -straight (nonnegotiable) bills of lading: suffices in non documentary sales. used only if seller intends that the goods be delivered directly to a consignee named in the bill
Liddell Brothers v. E. Clemens Horst Co (1911)
under a CIF contract, buyer has no right to inspect the goods, but is obligated to pay upon presentation of proper documents
negotiable document
used to move goods and to transfer their ownership and possession
