Carriage of Goods by Sea: Bill of Lading and Liabilities

Contributor: Ifediora Obiora Chisom

Introduction

The carriage of goods by sea plays an important role in international trade, with the bill of lading serving as a material document in maritime.^[1] A bill of lading is an instrument in writing, signed by the carrier or their agent, which describes the goods in such a manner as to identify them, stating the name of the consignor, the terms of the contract for carriage, and agreeing that the freight be delivered to the order or assigns of a specified individual at a designated location.^[2] It acts as a receipt for goods shipped, a document of title, and evidence of the contract between the shipper and the carrier.^[3]

The liabilities of the parties involved, particularly the carrier, are governed by Nigerian legislations like the Carriage of Goods by Sea Act^[4] (COGSA) and the Merchant Shipping Act 2007, and international conventions such as the Hague-Visby Rules (1968) and Hamburg Rules (1978). These laws establish the carrier’s responsibilities for the safe transport of goods while outlining limitations on liability in cases of damage or loss during the transportation of the goods.

This article will explore the legal framework surrounding the carriage of goods by sea, with a particular focus on the bill of lading and the liabilities surrounding it. It will also examine the bill of lading as a vital document in maritime trade, thus, outlining its tripartite functions in the carriage of goods by sea. Finally, the liabilities of parties will be considered in this work.

Bill of Lading

In Basinco Motors LTD v Woermann – Line^[5], the court held that a bill of lading is a document in writing in which goods are embarked, acknowledging the receipt of the goods, and undertaking to deliver them at the end of the voyage subject to such conditions as may be mentioned in the bill of lading. Thus, it is a written contract between those who are expressed to be parties to it. In J I MacWilliam Company Inc v. Mediterranean Shipping Company S A,^[6] the Court noted that the bill of lading has the characteristic of a negotiable instrument and is recognized as a document of title, requiring presentation to obtain delivery of the cargo.

The bill of lading functions as:

1. a receipt for the goods which have been received for shipment;
2. a contract for the carriage of the goods and delivery thereof as it contains the terms and conditions of carriage;
3. a contract between the ship owners/carriers, the shipper/consignor on the one part and the consignee/endorsee on the other part.^[7]

A bill of Lading is used in a contract of carriage and that contract is the carriage of goods. According to the COGSA, contract of carriage applies exclusively to contracts governed by a bill of lading or any similar document of title, as long as the document pertains to the carriage of goods by sea.^[8] This includes any bill of lading or similar document issued under or in connection with a charter party, starting from the point when the bill of lading or equivalent document controls the relationship between the carrier and the holder.^[9] In furtherance, carriage of goods covers the period from when the goods are loaded onto the ship until they are unloaded.^[10]

Several responsibilities and liabilities accrue to the parties to the contract. It will be pertinent to discuss these points below.

Responsibilities and Liabilities in Contracts of Carriage of Goods by Sea

In a contract of carriage of goods by sea, the parties to the contract each have their responsibilities, and if they fail to fulfil these obligations, they will be held liable for any resulting breach. Thus, liabilities cannot be adequately discussed without first pointing out the responsibilities of the parties. The shipper, carrier, agent(s) and the consignee are relevant parties in a contract of carriage of goods by sea.

1. The carrier is expected to make the sea ship worthy, properly man, equip, and supply the ship.^[11] To be seaworthy, a ship must be fit in design, standard, condition and equipment to encounter the ordinary perils of the voyage.^[12] Thus, a ship is not sea worthy if there is a defect in the equipment or appliances sufficient to render it unfit for the due and safe carrying of the crew or the cargo, not being a defect which can be readily cured during the voyage.^[13]
2. After taking possession of the goods, the carrier, or the master or agent, shall, upon the shipper’s request, provide the shipper with a bill of lading, which will show, inter alia:
3. the identifying marks for the goods, provided in writing by the shipper before loading, which must be clearly displayed on the goods or their packaging and remain legible until the end of the voyage;
4. the number of packages, pieces, quantity, or weight, as provided in writing by the shipper;
5. the apparent order and condition of the goods;

However, the carrier, master, or agent is not required to state any marks, number, quantity, or weight in the bill of lading if they reasonably suspect inaccuracies or have no means of verifying the information.^[14]

1. On the other hand, the shipper is responsible for ensuring the accuracy of the information they provide to the carrier regarding the marks, number, quantity, and weight of the goods at the time of shipment.^[15] If any of these details are incorrect and cause the carrier to suffer loss, damages, or expenses, the shipper must indemnify the carrier for those losses.^[16] Thus, the shipper guarantees the accuracy of the information and takes responsibility for any errors.^[17]
2. The recipient of the goods is bound to give a written notice at the port of discharge before or at the time of removal of the goods of any loss or damage to the goods.^[18] Where the damage or loss is not apparent, he is expected to inform the carrier or his agent within 3 days in writing, after taking possession of the goods. Where he fails to do this, such removal of the goods shall be prima facie evidence of the delivery by the carrier of the goods as described in the bill of lading.^[19]
3. After the goods are loaded, the bill of lading to be issued by the carrier, master or agent of the carrier, to the shipper shall, if the shipper so demands, be a “shipped” bill of lading.^[20] However, if the shipper has already obtained a document of title for the goods, they must surrender it as against the shipped bill of lading. Alternatively, the carrier may note the document with the ship’s name and shipment date, which will then be treated as a “shipped” bill of lading.^[21]

Importantly, the Act provides that any clause, covenant, or agreement in a contract of carriage that seeks to exempt the carrier or the ship from liability for loss or damage to the goods due to negligence, fault, or failure in duties, or that attempts to reduce such liability beyond what is allowed by the Act, shall be considered null, void, and unenforceable.^[22] This provision ensures carriers are held accountable for their actions, thus, protecting cargo owners ‘ Interests.

Finally, in any event the carrier and the ship shall be discharged from all liabilities in respect of loss or damage unless a suit is brought within one year after delivery of the goods or the date when the goods should have been delivered.^[23] This provision is to the effect that the carrier and the ship are not liable for any loss or damage to goods unless a lawsuit is filed within one year of delivery or the expected delivery date. Although it serves to limit their liability and encourages prompt legal action from affected parties, it may not allow enough time for an aggrieved party to adequately prepare his case; maritime law being a technical area of law involving different parties and jurisdictions (in some cases).^[24]

Conclusion

The carriage of goods by sea, covered by the bill of lading, plays a crucial role in international trade.^[25] The bill of lading serves not only as a receipt but also as a document of title and a contract of carriage, outlining the rights and responsibilities of both the carrier and the shipper. Understanding the liabilities involved is essential for all parties, as it delineates the extent of the carrier’s responsibility for loss or damage to goods during carriage of goods.^[26] Legal frameworks, such as the COGSA, provide standardized provisions governing these liabilities, ensuring that parties are aware of their rights and obligations.

Finally, it is imperative to point out that the legislature should strengthen and amend some relevant provisions of the COGSA; the principal Act of discuss in this study. The time allowed by the Act to bring an action in cases of breach should be extended reasonably to allow parties have adequate time for the preparation of their cases.

SNIPPET: In a contract of carriage of goods by sea, the key parties to the contract variously have their responsibilities and the liabilities they will bear in the event that they do not adhere to their responsibilities

KEYWORDS: Responsibilities and Liabilities in Contracts of Carriage of Goods by Sea, Bill of Lading

1. Canup, B, ‘Carriage of Goods in International Trade’, <https://www.tradefinanceglobal.com/freight-forwarding/carriage/> accessed 18^th September, 2024. ↑
2. Ihedoro, F, ‘Bill of Lading: Contents of a Bill of Lading; And Who Can Sue on it’, <https://oal.law/bill-of-lading-contents-of-a-bill-of-lading-and-who-can-sue-on-it/> accessed 18^th September, 2024. ↑
3. Ibid. ↑
4. Cap 44 Laws of the Federation of Nigeria 1990. ↑
5. (2009) LPELR (756) 1 at 27-28. ↑
6. (2003) EWCA 556. ↑
7. Allied Trading Co LTD v GBN Line (1985) 2 NWLR pt 5 at p 74. ↑
8. COGSA, Art 1. ↑
9. Ibid. ↑
10. Ibid. ↑
11. Ibid, Art 3(1). ↑
12. Carver, RC, Carver on Carriage by Sea, (12^th edn, Stevens & Sons Ltd) p 94. ↑
13. Nigerian Maritime Administration and Safety Agency v Hensmor Nigeria Limiited (2014) 5 CLRN. ↑
14. COGSA, Art 3(3). ↑
15. Ibid, Art 3(5). ↑
16. Ibid. ↑
17. Ibid. ↑
18. Ibid, Art 3(6). ↑
19. Ibid. ↑
20. Ibid, Art 3(7). ↑
21. Ibid. ↑
22. Ibid, Art 3 (8). ↑
23. Ibid, Art 3 (6). ↑
24. Kagan, J, ‘What is Maritime (Admiralty) Law and Why is it Important?’, <https://www.investopedia.com/terms/m/maritime-law.asp> accessed 18^th September, 2024. ↑
25. Canup, B, ‘Carriage of Goods in International Trade’, (n1). ↑
26. Yiannopoulos, AN, ‘Liability for Safety of Goods’, <https://www.britannica.com/topic/carriage-of-goods/Liability-for-safety-of-the-goods> accessed 18^th September, 2024. ↑