Indian Ports and Inland Cargo Locations

MARITIME BUSINESS
ENVIRONMENT ( LEGAL)

INDIAN MARITIME UNIVERSITY

 MBE

MARITIME BUSINESS
ENVIORNMENT
 INTRODUCTION
• What is Law?
• Source of Law
• Division of Law
• Law of Tort
• Law of Contracts incl. Agency, Bailment
• Sale of Goods & Taxation
• Law of Carriage of Goods
• International Conventions
 WHAT IS LAW ?
• Rules Prohibiting / Compelling ( Behaviour)
• Punishment
• Compensation for Injury
• Procedures ( Contracts, Wills, Transfer of
Property etc..)
• Administrative Rules ( Running Government)
• Regulating Legislature – Law Making Body
 ENGLISH & INDIAN LAW
• ENGLISH LAW
• Common Law >> Word of the King
• INDIAN LAW
• Oldest of any system
• “Dharma” >>> “Dharmashastra”
– Legal & Moral Values
• Upanishads
• Tirukural ( Thiruvalluvar)
 Background to Indian Law
• The “Govt. of India Act, 1858
– Transferred all powers from East India Company to
the “British Crown”

• First Supreme Court In Calcutta

 Source of Law
• Customs
– Local Customs, Conventional Customs (De Facto)
• Precedent
– A previous case/ instance as rule
• Legislation
– Statute Law (by Assembly / Parliament)
• Equity
– Law of Fairness / Fair play
• Common Law
– Word of the King
 Division of Law
STATE LAW INTERNATIONAL
(National Law) LAW
• Public Law • Public
International Law
• Private law (Conduct of
States)
• Private
International Law
– Rules for Private
citizens
 STATE LAW ( NATIONAL LAW)
• PUBLIC LAW
• Constitutional Law
• Administrative Law
• Criminal Law
• PRIVATE LAW ( CIVIL LAW)
• Law of Person
• Law of Property
• Law of Obligation ( Law of Contracts / Law
of Torts)
 ADMIRALTY LAW
• Origin of ADMIRALTY LAW
• The Rhodian Customary Law ( 900 B.C.)
• ( Rhodes Island, Mediterranean -
–( Still valid: Law of Jettison)
• British Common Law + European Civil law
(Mediterranean and European Sea Trade)
• Courts set up by the Lord High Admiral –
UK (14th Century)
–Jurisdiction to hear civil matters “done
upon high seas”
 LAW OF TORTS
TORT = Civil Wrong
• Tortum ( Latin) = twisted, crooked
• not straight or lawful
• A breach of duty fixed by law
• An act or omission which is unauthorised by
law

• An infringement (interference) of the right of a

private individual
 LAW OF TORTS
Types of Torts
• Trespass
• Nuisance
• Conversion
• Defamation
• Deceit
• Negligence
 TRESPASS
• = Interference with Person / Property
• Property: Trespassing on another’s land
actionable
• Person: Assault, Attack on another person
infringes one’s right to his body
• ( when an act endangers society, a tort
becomes Crime )
 NUISANCE
• Prevention from enjoyment of one’s property
• Disturbance = Public Nuisance
Private Nuisance
• To do Hurt, Annoy, Inconvenience, damage
– ( To a Person or to the Public in general )
 CONVERSION
• Inconsistent treatment of someone else’s
property
• Willful interference
• Wrongful dealing with goods / property
– Wrongfully taking, detaining;
– By parting / disposing of goods;
– By Sale;
 DEFAMATION
• Saying or publishing anything Untrue
• Statements against a person affecting his
reputation
• TWO TYPES”
• Libel ( Permanent form)
• Slander ( Word of mouth )
 DECEIT

• Fraud / Misrepresentation/ Cheating

– Intention to deceive another ( mens rea)
– Selling somebody’s Goods and Property as your
own
“No man can have any right to present his goods as
goods of somebody else”
 NEGLIGENCE

• Common & most important in Shipping

• Negligence= Carelessness; Failure ( Breach) of
Duty of Care
• Take reasonable care to avoid Acts / Omissions
likely to injure others
• Donogue vs. Stevenson, 1932 ( decomposed snail in
ginger beer)
 NEGLIGENCE ( Contd..)
• Carriers owe a duty of Care for cargo /
passengers
• ( Highways, Professionals, Doctors, Bailee of
Goods etc.. )- Torts founded on Contract
• “Res Ipsa Loquitor” ( the thing speaks for itself) –
Swimming pool owned, controlled and managed by 5-star
hotel – foreigner died ) Defence of contributory negligence
rejected
 VICARIOUS LIABILITY
• Liability on behalf of another
• Employer liable for torts of employees
• “ADLER vs. DICKSON, 1955 ( The Himalaya Case)
• ( Lady –Mrs. Adler injured while disembarking from ship –
gangway(ladder) collapsed- could not sue ship owner due to
exclusion clause in ticket- held Bosun & Captain responsible;
Captain held vicariously liable for Bosun’s negligence)
• The Himalaya Clause in Bill of Lading ( Exclusion Clause)
 REMEDIES IN TORT
• DAMAGES ( PECUNIARY – MONEY)
– Nominal Damages ( Not as compensation)
– Real Damages ( Real and Substantial)
Compensation actually suffered
• INJUNCTION
– Prohibitory
• SPECIFIC RESTITUTION OF PROPERTY
– To recover wrongfully dispossessed property
• EXTRA-JUDICIAL
– a) Self defence ; b) Expulsion/ re-entry
 DAMAGES
• Compensation so far as money can
compensate
• Ex. Personal injuries: 1. Loss of earnings/
earning capacity; 2. medical and other
expenses; 3. Pain, suffering and mental
distress; 4. Loss of life expectation etc..
• Different from ‘Exemplary Damages’: Not
just as compensation; but as punishment also
• Remote Damages not allowed
 UNIT – I

MARITIME ENVIRONMENT
 INDUSTRY ENVIRONMENT
2 Types of Factors

• MACRO Factors
– Legislation & Regulations , Demographics

• MICRO Factors
– Competition, Inputs (suppliers) & Output (buyers)
Products substitutes, Potential for New Entrants
 MACRO FACTORS
• LEGISLATIONS
– Legal System & Regimes
– Law making Bodies
– Judicial Systems,
– Arbitration Systems
– Ratification of International Conventions
• REGULATORY SYSTEMS
– Examples:
– Intellectual Property laws
– Tariff Authority for Major Ports (TAMP)
– Inland Waterways Authority of India (IWAI) etc.
 MARINE & COASTAL ENVIRONMENT
• The Director General of Shipping
• The Merchant Shipping (Amdt.) act, 2014
• The Multimodal Transportation of Goods Act,
1993
• The Inland Vessels Act, 1917/ 1986
 DG Shipping
• The Directorate General of Shipping (DG
Shipping):
• Deals with implementation of shipping policy and
legislation so as to ensure the safety of life and ships at sea,
prevention of marine pollution, promotion of maritime
education and training in co-ordination with the
International Maritime Organization, regulation of
employment and welfare of seamen, development of
coastal shipping, augmentation of shipping tonnage,
examination and certification of Merchant Navy Officers,
Supervision and Control of the allied offices under its
administrative jurisdiction.
 The Merchant shipping Act,1958
(Latest Amdt. 2014)
• The Merchant Shipping Act, 1958 was passed by
the Indian Parliament.
• This Act is divided into 24 parts, each part dealing
with specific aspects of merchant shipping like
registration of ships , sailing vessels and fishing
vessels, National Shipping Board, manning of ships,
engagement, discharge and repatriation of seamen
and apprentices, safety of passenger and cargo
ships, control of Indian ships and ships engaged in
the coasting trade, collisions, prevention and
control of pollution of the sea by oil from ships,
limitation of ship owners’ liability, civil liability for
oil pollution damage etc.
 Seafarers
• Seafarer = Sailor ( Seamen incl. officers)
• As per Merchant Shipping act 1958 ( in line with
ILO and IMO conventions), a seafarer has:
– right to wages and provisions, accommodation,
recreational facilities etc.
– right to be referred to a tribunal if there is a dispute
between seamen or a union of seamen and the ship
owners regarding the employment of the seamen.
– right to be referred to a tribunal if there is a dispute
– Right to be repatriated in case of distress.
– Right of Ship’s Arrest in suitable cases
(Port State Control Authorities to inspect, verify safety)
INTERNATIONAL
CONVENTIONS
 INTERNATIONAL CONVENTIONS
• An Agreement or Treaty between different
countries
• Binding on Contracting States
• Bilateral & Multi-lateral Agreements
• Binding when the Agreement is ratified ( Not
just by signing)
• Implementation depends on the Willingness
of the country
 IMO
• To provide machinery for co-operation among
governments in the field of Govt. regulations and
practices relating to matters of all kinds affecting
Shipping engaged in International Trade.
• SAFETY;
• POLLUTION
• International Convention for the Safety of Life at
Sea , 1960 (SOLAS)
• International Connvention for the Prevention of
Pollution from Ships, 1973 (MARPOL)
 ATHENS
THE
CONVENTION
 THE ATHENS CONVENTION

ATHENS CONVENTION
Convention relating to the Carriage of
Passengers and their Luggage by Sea (PAL)

Adoption: 13 December 1974; Entry into force: 28 April 1987; 2002

Protocol: Adoption: 1 November 2002; Entry into force: 23 April 2014
 THE ATHENS CONVENTION
• Designed to consolidate and harmonize two
earlier Brussels conventions dealing with
passengers and luggage and adopted in 1961
and 1967 respectively.
• A regime of liability for damage suffered by a
passenger if the incident causing the damage
occurred in the course of the carriage and was
due to the fault or neglect of the carrier.
 THE ATHENS CONVENTION
• The limits contained in the Protocol set a
maximum limit, empowering national courts
to compensate for death, injury or damage up
to these limits.
• The 2002 Protocol also includes an "opt-out"
clause, enabling State Parties to retain or
introduce higher limits of liability (or unlimited
liability) in the case of carriers who are subject
to the jurisdiction of their courts.
 ATHENS CONVENTION 1974
( incl. 2002 Protocol)
• Carriage of Passengers and their
Luggage by Sea
• Compensation (Limitation of Liability)
– For death or injury to passengers: SDR 250,000/-
– Loss or damage to Cabin baggage: SDR 2,250/-
– Loss of Vehicles : SDR 12,700/-
– Loss of other Luggage (Baggage) : SDR 3,375/-
(The 2002 Protocol, introduced compulsory insurance to
cover passengers on ships to SDR 250,000 SDR per
passenger)
 Exceptions to Limitation
• The carrier is NOT liable, if the carrier proves
that the incident resulted from:
• An act of war, hostilities, civil war,
insurrection or a natural phenomenon
of an exceptional nature, inevitable and
of irresistible character; or was wholly
caused by an act or omission done with the
intent to cause the incident by a third party.
 SOLAS Convention

• Safety Of Life At Sea

• 1914, 1929 1948 latest 1974 with latest updates

• Most important of all international treaties

concerning the safety of Merchant ships
 SOLAS
Salient Features
• Technical Provisions
– Standards of Construction, Operation, Flag States,
Port State Control
• Survey & Inspections
• Construction
• Fire protection/detection/ Extinction
• Life Saving Appliances
– Life Boats, Life Jackets etc.
 SOLAS
Salient Features (Contd.)
• Radio Communications
– Global Maritime Distress and Safety Systems
(GMDSS)
• Safety of Navigation
• Carriage of Cargoes
– Stowage, Securing etc.
• Carriage of Dangerous Goods (IMDG Code)
 SOLAS – CH. II-1
• Construction - Subdivision and stability, machinery and
electrical installations
The subdivision of passenger ships into watertight compartments
must be such that after assumed damage to the ship's hull the
vessel will remain afloat and stable. Requirements for watertight
integrity and bilge pumping arrangements for passenger ships are
also laid down as well as stability requirements for both passenger
and cargo ships.
•
• The degree of subdivision - measured by the maximum permissible
distance between two adjacent bulkheads - varies with ship's length
and the service in which it is engaged. The highest degree of
subdivision applies to passenger ships.
•
• Requirements covering machinery and electrical installations are
designed to ensure that services which are essential for the safety
of the ship, passengers and crew are maintained under various
emergency conditions.
 SOLAS – CH. II- 2
• Fire protection, fire detection and fire extinction
Includes detailed fire safety provisions for all ships and
specific measures for passenger ships, cargo ships and
tankers.
•
• They include the following principles: division of the ship
into main and vertical zones by thermal and structural
boundaries; separation of accommodation spaces from the
remainder of the ship by thermal and structural
boundaries; restricted use of combustible materials;
detection of any fire in the zone of origin; containment and
extinction of any fire in the space of origin; protection of
the means of escape or of access for fire-fighting purposes;
ready availability of fire-extinguishing appliances;
minimization of the possibility of ignition of flammable
cargo vapour.
 SOLAS – CH. III
• Life-saving appliances and arrangements
The Chapter includes requirements for life-
saving appliances and arrangements, including
requirements for life boats, rescue boats and
life jackets according to type of ship. The
International Life-Saving Appliance (LSA) Code
gives specific technical requirements for LSAs
and is mandatory under Regulation 34, which
states that all life-saving appliances and
arrangements shall comply with the applicable
requirements of the LSA Code.
 SOLAS – CH. IV
• Radio communications
•
The Chapter incorporates the Global Maritime Distress and
Safety System (GMDSS). All passenger ships and all cargo
ships of 300 gross tonnage and upwards on international
voyages are required to carry equipment designed to
improve the chances of rescue following an accident,
including satellite emergency position indicating radio
beacons (EPIRBs) and search and rescue transponders
(SARTs) for the location of the ship or survival craft.
• Regulations in Chapter IV cover undertakings by contracting
governments to provide radio communication services as
well as ship requirements for carriage of radio
communications equipment. The Chapter is closely linked
to the Radio Regulations of the International
Telecommunication Union.
 SOLAS – CH. IV
• Safety of navigation
• Chapter V identifies certain navigation safety services which should be
provided by Contracting Governments and sets forth provisions of an
operational nature applicable in general to all ships on all voyages. This is
in contrast to the Convention as a whole, which only applies to certain
classes of ship engaged on international voyages.
• The subjects covered include the maintenance of meteorological services
for ships; the ice patrol service; routeing of ships; and the maintenance
of search and rescue services.
• This Chapter also includes a general obligation for masters to proceed to
the assistance of those in distress and for Contracting Governments to
ensure that all ships shall be sufficiently and efficiently manned from a
safety point of view.
• The chapter makes mandatory the carriage of voyage data recorders
(VDRs) and automatic ship identification systems (AIS).
 STCW
• STCW
• International Convention on Standards
of Training, Certification and
Watch-keeping for Seafarers, 1978
 STCW
• International Convention on Standards of
Training, Certification and Watch-keeping for
Seafarers, 1978 was adopted on 7 July 1978
and entered into force on 28 April 1984. The
main purpose of the Convention is to promote
safety of life and property at sea and the
protection of the marine environment by
establishing a common agreement in
international Standards of Training,
Certification and Watch-keeping for
seafarers.
 STCW
• International Convention on Standards of
Training, Certification and Watchkeeping for
Seafarers (STCW), 1978
– ( Major Amendments in 1985, 1995, 2010 )
• Chapter I: General provisions
• Chapter II: Master and deck department
Chapter III: Engine department
Chapter IV: Radio communication and radio personnel
Chapter V: Special training requirements for personnel
on certain types of ships
Chapter VI: Emergency, occupational safety, medical
care and survival functions
Chapter VII: Alternative certification
Chapter VIII: Watch keeping
 STCW
• The STCW Convention & Code,
Manila Amendments 2010
• The Manila amendments to the STCW
Convention and Code were adopted on 25
June 2010, marking a major revision of the
STCW Convention and Code. The 2010
amendments are set to enter into force on 1st
January 2012
 2010 Manila Amendments
• Improved measures to prevent fraudulent
practices associated with Certificates of
Competency and strengthen the Evaluation
Process;
• Revised requirements on hours of work and rest
and new requirements for the prevention of
drug and alcohol abuse, as well as updated
standards relating to medical fitness standards
for seafarers;
• New certification requirements for able seafarers;
 2010 Manila Amendments
• New requirements relating to training in
modern technology such as Electronic Charts
Display and Information Systems (ECDIS);
• New requirements for Marine Environment
Awareness Training and training in leadership
and teamwork;
• New training and certification requirements
for electro-technical officers;
 2010 Manila Amendments
• Updating of Competence Requirements for
Ship’s Personnel on board all types of tankers,
including new requirements for personnel
serving on liquefied gas tankers;
• New requirements for Security Training, to
ensure that seafarers are properly trained to
cope up if their ship comes under attack by
pirates;
 2010 Manila Amendments
• Introduction of Modern Training Methodology
including distance learning and web-based
learning;
• New training guidance for personnel serving
on board ships operating in polar waters; and
• New training guidance for personnel operating
Dynamic Positioning systems (Dynamic Positioning
or DP as commonly known is a method of positioning
specially designed marine vessels within predefined
limits at sea using a combination of computers, thrusters
and position reference systems/units)
 MARPOL
• INTERNATIONAL CONVENTION FOR THE
PREVENTION OF POLLUTION FROM SHIPS:
(1973 / 1978 / 2002 ):
• Main Features:
• COW: Crude Oil Washing
– High Pressure Jets for Crude Oil Washing
• SBT: New Buildings stipulate Segregated
Ballast Tanks
 MARPOL
• 1978 PROTOCOL OF MARPOL
• New Tankers to be fitted with SBT ( above
20,000 Tons)
• To have International Oil Pollution Certificate
• PENALTIES: ( Art. 4 (4):
• Obliges Contracting States to Apply
– Penalties Severe Enough
– Criminal Sanctions
 MARPOL 2002
• REVISED REGULATION:
• Double Hull Tankers by 2015
• 2015- “ Drop – Dead Phase – Out of Date
• INSURANCE:
• P & I Clubs to provide for Guarantee under
CLC
• Mini Club: International Tanker Indemnity
Association
 OIL POLLUTION & International
Efforts

• 1969: International Convention on Civil

Liability for Oil Pollution Damage – CLC
• ( Enhanced by 1992 Convention)
• 1971: International Convention on
Establishment of an International Fund for Oil
Pollution Damage – The FUND CONVENTION)
 CIVIL LIABILITY FOR OIL POLLUTION,
1992 ( CLC)

• Ship Owners’ Liability as “Strict” ie. NOT

dependant on “Fault”
• ( International Oil pollution
Compensation Funds ( IOPC 1992)
 CLC- 1992 ( Ship Owners’ “STRICT
LIABILITY)”
• EXCEPTIONS to Strict Liability:
• a) Act of War or Hostilities
• b) Act of God – Exceptional Phenomenon of
Nature ( beyond human intervention)
• c) Intentional Act or Omission of some 3rd
Party
• d) Any Negligent Act or Wrong doing by any
Government
 CLC- 1992 ( Ship Owners’ “STRICT
LIABILITY)”
• LIMITATION OF LIABILITY Under CLC:
• (Effective 1st Nov. 2003) as amended in 2000
• Art. V: Depending on the size of the Ship

• Under 5,000 GT: SDR 4.51 Million

• 5,000 – 140,000 GT: 4.51 Mio + SDR 631 per
GT
• Over 140,000 GT: SDR 89.77 per GT
 CLC- 1992 ( Ship Owners’ “STRICT
LIABILITY)”
• If the Incident occurs as a result of “Owner’s
Actual Recklessness or Intent”, the limitation is
forfeited ( cancelled);
• All Oil Tankers above 2,000 Tons should carry an
‘appropriate Insurance Certificate’ for Cover
• The US, although not a signatory to the
Convention, has its own “ The Oil Pollution Act,
1990 (OPA 90) with similar but higher penalties.
• All vessels entering the US should carry a
“Certificate of Financial Responsibility” issued by
their Insurers
 Scope of CLC- 1992

• Scope: Largely Territorial ( Pollution affected

Territory – that of a ‘Contracting State’)
• Spill must be from a vessel flying ‘Flag of a
Contracting State’ OR using Ports or Off-Shore
Terminals of a Contracting State
CLC- 1992 ( INTERNATIONAL FUND)
• THE FUND CONVENTION
• To provide compensation for victims who
were unable to obtain full re-imbursement
under CLC
• Also applicable for areas where pollution
occurs and CLC not applicable
• The vessel must be carrying persistant oil in
Bulk
CLC- 1992 ( INTERNATIONAL FUND)
• CONTRIBUTION:
• > Made from Importers of Crude & Fuel Oil
who are residents in the Contracting State
• > Based on Annual Tonnage (Volume) of Oil
received by each importer by Sea
• > made by a Person who received 150,000
Tons in preceding Calendar Year
• An Assembly empowered to assess the
Contributions and Maintain Fund
CLC- 1992 ( INTERNATIONAL FUND)
• The fund UNDER no obligation if:
• A) Pollution Damage resulted from WAR,
HOSTILITIES, CIVIL WAR, INSURRECTION;
• B) OIL FROM WAR SHIP, VESSEL ON GOVT.
SERVICE;
• C) If claimant unable to prove Source of
Spillage
• D) If Damage results wholly / intentionally
from act of Claimant
CLC- 1992 ( INTERNATIONAL FUND)
• TIME BAR: 3 Years
• POLLUTION: Under Trespass, Public Nuisance,
Plain Negligence;
• ITOF: INTERNATIONAL TANKER OWNERS
pollution FEDERATION
• ITOF’s > Response Team is at ‘Constant
Readiness’ to assist Marine Oil Spills
 OIL POLLUTION & International
Efforts

• 1969: International Convention on Civil

Liability for Oil Pollution Damage – CLC
• ( Enhanced by 1992/2003 Conventions)
• 1971: International Convention on
Establishment of an International Fund for Oil
Pollution Damage – The FUND CONVENTION)
 Convention on Limitation of Liability for Maritime
Claims (LLMC Convention), 1976/1996/2012
• LIFE OR PERSONAL • OTHER CLAIMS/
INJURY PROPERTY
• SHIPS: • SHIPS
• not exceeding 2,000 gross • not exceeding 2,000 gross
tonnage is SDR 3.02 tonnage is SDR 1.51
million million
• For each ton from 2,001 • For each ton from 2,001
to 30,000 tons, SDR1,208 to 30,000 tons, SDR604

• • For each ton from • • For each ton from

30,001 to 70,000 tons, 30,001 to 70,000 tons,
SDR906 SDR453

• • For each ton in excess • • For each ton in excess

of 70,001, SDR604 of 70,001, SDR 302
 MARITIME LABOUR CONVENTION
2006/2016(MLC)
• Prepared by a Working Group under
INTERNATIONAL LABOUR ORGANISATION
(IL0)
– Minimum requirement for Seafarers to work on
Ship,
– Accommodation, Recreation, Food & Catering
– Health, Medical Care, Welfare, Social Security
– Maritime Labour Certificate
– Compliance & Enforcement
Port State Control
 FLAG STATE CONTROL
• The country under whose Registration vessels
operate is referred to as a Flag State whereas
the practice of registering the ship to a state
different than that of the ship’s owner is
known as Flag Of Convenience (FOC)
• A Flag State must have the necessary maritime
infrastructure – both financial and technical
and should adhere to all the norms and
regulations and adequately equipped to
impose strictest of penalties on the offending
vessel and party.
 FLAG STATE CONTROL
• The flag state of ships is entitled and required
to carry out regular monitoring and
inspections to ensure that the vessel is
following its maritime guidelines appropriately
• A vessel that flies the flag of a state not
complying with the monitoring and inspection
requirements is deemed to be of inferior
standard.
 FLAG STATE CONTROL
• Since large number of ships are registered
under Flag Of Convenience(FOC), and many of
such countries lack the professional and
technical competence to enforce strict
international maritime rules and regulations,
there arose alternative system – Port State
Control ( the right of the host country that the
ship is visiting), to enforce international rules
and regulation especially with regard to Safety
and Pollution control systems
 Port State Control
• Right of host country inspectors / surveyors to
board / inspect vessels
• Safety of life at Sea
• Prevention of Pollution
• Conditions on board the ship
• ( PARIS CONVENTION 1980 / 1982):
– To implement existing rules and regulations
 Port State Control
• The Fundamental aim of Port State Control is
to eliminate Sub-standard ships and to ensure
safer ships and cleaner oceans. The main
philosophy to the port state control is to
identify sub-standard ships at any port and
corrective action taken before they are
allowed to proceed to sail. Provision for
control emanates from the following IMO
instruments
 PORT STATE CONTROL
• Many of IMO's most important technical
conventions contain provisions for ships to be
inspected when they visit foreign ports to
ensure that they meet IMO requirements.
• These inspections were originally intended to
be a back up to flag State implementation, but
experience has shown that they can be
extremely effective.
 PORT STATE CONTROL
• IMO adopted resolution on Regional co-
operation in the control of ships. A ship going
to a port in one country will normally visit
other countries in the region and it can,
therefore, be more efficient if inspections can
be closely coordinated in order to focus on
substandard ships and to avoid multiple
inspections
 PORT STATE CONTROL
• Ensures that as many ships as possible
are inspected but at the same time
prevents ships being delayed by unnecessary
inspections. The primary responsibility for
ships' standards rests with the flag State - but
Port State Control provides a "safety net" to
catch substandard ships.
ISM Code
 ISM CODE

The International Safety

Management (ISM) Code
Annex to IMO Assembly Resolution A.741(18) -
1993
 ISM CODE
• International Safety
Management (ISM) Code:
• International Management Code for
the Safe Operation of Ships and for
Pollution Prevention as adopted by
the Assembly, as may be amended
by the Organization.
 ISM Code
The objectives of the Code are
to ensure safety at sea,
prevention of human injury or
loss of life, and avoidance of
damage to the environment, in
particular, to the marine
environment, and to property.
 ISM CODE
• The purpose of this Code is to provide
an International Standard for the Safe
Management and Operation of ships and
for pollution prevention
• To recognise the need for appropriate
organization of management to respond to
the need of those on board ships to achieve
and maintain high standards of safety and
environmental protection.
 ISM CODE
• Safety Management objectives of the
Company includes:
• Safe practices in ship operation and a safe
working environment;

• Establish safeguards against all identified risks;

and

• Continuously improve Safety Management Skills

of Personnel Ashore and Aboard ships, including
preparing for emergencies related both to safety
and environmental protection.
Functional requirements for a Safety
Management System (SMS)

• Every Company should develop,

implement and maintain a Safety
Management System (SMS) which
includes the following functional
requirements:
 ISM Code
• ISM- International Safety Management
Code
• Safe Management and Operation of ships at sea
• The purpose of this Code is to provide an
international standard for the safe management
and operation of ships and for pollution
prevention.
• Every company is expected "to designate a
person or persons ashore having direct access to
the highest level of management".

• (Maritime Safety Committee & The Marine

Environment Protection Committee of IMO)
 DG Shipping
• The Directorate General of Shipping (DG
Shipping):
• Deals with implementation of shipping policy and
legislation so as to ensure the safety of life and ships at sea,
prevention of marine pollution, promotion of maritime
education and training in co-ordination with the
International Maritime Organization, regulation of
employment and welfare of seamen, development of
coastal shipping, augmentation of shipping tonnage,
examination and certification of Merchant Navy Officers,
Supervision and Control of the allied offices under its
administrative jurisdiction.
 DG Shipping
• Objectives:
• Matters affecting Merchant Shipping & navigation and
administration of the Merchant Shipping Law ;
• Measures to ensure safety of life and ships at sea;
• Development of Indian Shipping;
• International Conventions relating to Maritime
matters;
• Provision of facilities for training of Officers and ratings
for Merchant Navy;
• Regulation of Employment of Seamen and their
welfare;
• Development of Sailing Vessel Industry and
• Regulation of Ocean freight rates in overseas trades
 The Merchant shipping Act,1958
• the Merchant Shipping Act, 1958 was passed
by the Indian Parliament. This Act had made
good the main deficiency in the earlier laws
that they did not provide for registration of
what may be termed as Indian Ships. Certain
enabling provisions were also incorporated in
the Act to accelerate the pace of development
of shipping in the post independence period.
 The Merchant shipping Act,1958
• This Act is divided into 24 parts, each part dealing
with specific aspects of merchant shipping like
registration of ships , sailing vessels and fishing
vessels, National Shipping Board, manning of
ships, engagement, discharge and repatriation of
seamen and apprentices, safety of passenger and
cargo ships, control of Indian ships and ships
engaged in the coasting trade, collisions,
prevention and control of pollution of the sea by
oil from ships, limitation of shipowners' liability,
civil liability for oil pollution damage etc.
 The Merchant Shipping Bill, 2016
• A) Augmentation of Indian tonnage
promotion/development of coastal shipping in India by:-
• a) allowing substantially-owned vessels and vessels on Bare
Boat-cum-Demise (BBCD); charter by Indians to be
registered as Indian flag vessels;
• b) recognising Indian controlled tonnage as a separate
category;
• c) dispensing with the requirement for issuing of licences to
Indian flag vessels for coastal operation and for port
clearance by the Customs authorities; and
• d) making separate rules for coastal vessels to develop &
promote coastal shipping.
 The Merchant Shipping Bill, 2016
• B. Introduction of welfare measures for seafarers, such
as:-
• a) seafarers held in hostage captivity of pirates will
receive wages till they are released and reach home
back safely;
• b) owners of vessels to compulsorily take insurance of
crew engaged on vessels including fishing, sailing
without mechanical means of propulsion and whose
net tonnage is less than 15; and
• c) the requirement of signing of articles of agreement
by the crew before the Shipping Master will no longer
be necessary.
 The Merchant Shipping Bill, 2016
• C. Registration of certain residuary category of vessels not
covered under any statute and to make provisions for
security-related aspects.
• D. Incorporation of all International Maritime Organisation
(IMO) Conventions/Protocols in the Indian laws up-to-date
(an essential pre-requisite for compliance with the IMO
Member-State Audit Scheme that is mandatory since
1/1/2016) by inserting provisions relating to seven different
conventions, namely,
• a) the Intervention Convention 1969,
• b) the Search and Rescue Convention 1979
•
 The Merchant Shipping Bill, 2016
• c) the Protocol for Prevention of Pollution from
Ships Annex VI to Marine Pollution Convention,
• d) the Convention for Control and Management
of Ships Ballast Water and Sediments, 2004,
• e) the Nairobi Wreck Removal Convention, 2007,
• f) the Salvage Convention 1989 and
• g) the International Convention for Bunker Oil
Pollution Damage, 2001.
 IMDG Code
• International Maritime Dangerous
Goods Code
• IMO : International Maritime Organisation

• IMO Cargo: Class:

• UN No.:
• Cargo Segregation: Non-Compatibility
 Dangerous Goods

• Class 1: Explosives (Military & Commercial

incl. Fireworks)
» TNT, Dynamite, Nitroglycerine, Fireworks, Ammunition
• Class 2. Gases ( Flammable, Poisonous, Non-
flammable)
• Class 3. Flammable Liquids ( Petrol, kerosine,
diesel)
• Class 4. Flammable Solids ( Magnesium, Safety
Matches, Phosphorous,
 Dangerous Goods
• Class 5: Oxidising Agent
– Ammonium Nitrate, Hydrogen Peroxide etc.,

• Class 6: Poisonous / Toxic substances

– Potassium Cyanide, Mercuric Chloride, Pesticides, Virus
culture,
– Pathology specimen etc..
 Dangerous Goods

• Class 7: Radio Active Substances

– Uranium, Plutonium.

• Class 8: Corrosives:
– Sulphuric Acid, Hydrochloric Acid, Potassium Hydroxide etc..

• Class 9: Miscellaneous
• - Asbestos, Dry Ice ( Solid form of Co2)
 Haz. (IMO) Cargo Declaration to
include
• Proper Shipping Name (PSN),
• Hazard Class, UN No.,
• Packaging group, (where assigned) division
No.,
• Subsidiary Hazard Class,
• Marine pollutant and observe the mandatory
requirements under applicable national and
International governmental regulations.
 IMO Cargoes (Haz Cargoes)
• UNNo.: 4 digit code
• MFAG: Medical First Aid Guide
• Flash Point
– A flammable liquid is a liquid having a flash point
of not more than 60 °C (140 °F), or any material in
a liquid phase with a flash point at or above 37.8
°C (100 °F)
• Packing Code/ Packing Group
– Packing Group I: high danger.
– Packing Group II: medium danger.
– Packing Group III: low danger
 IMDG- Marine Pollutant

• Marine pollutants or environmentally hazardous

substances.
• Materials that can pose a risk to aquatic
ecosystems
• When shipping marine pollutants by sea, the
Proper Shipping Name(PSN) shall be
supplemented with the technical name of the
marine pollutant.
• The term "MARINE POLLUTANT" shall be put in
the end of dangerous goods descriptions.
 More than 2000 Entries
with 11 Columns
• Column 1 UN Number
Contains the UN Number assigned by the United
Nations Committee of Experts on the Transport of
Dangerous Goods.
• Column 2 Proper Shipping Name (Name +
Description)
Contains the Proper Shipping Names which may be
supplemented by technical names or additional
descriptive words.
• Column 3 Class or Division
Contains the class and, in the case of class 1, the
division and compatibility group.
 More than 2000 Entries
with 11 Columns
• Column 4 Subsidiary Risk(s)
Contains the class number(s) of any subsidiary
risk(s).
• Column 5 Packing Group
Contains the packing group number (i.e. I, II or
III) assigned to the substance or article.
• Column 6 Special Provisions
Contains a number referring to any special
provision(s) indicated in chapter 3.e.
 More than 2000 Entries
with 11 Columns
• Column 7a Limited Quantities
Provides the maximum quantity per inner
packaging for dangerous goods transported
in limited quantities.
• Column 7b Excepted Quantities
Contains a code which can be referenced to
determine the maximum quantity per inner and
outer packaging.
• Column 8 Packing Instructions
Contains packing instructions for regular
packages and ISO Bulk Containers (IBCs).
 More than 2000 Entries
with 11 Columns
• Column 9 Special Packing Provisions
Contains special packing provisions for packing
instructions.
• Column 10 Instruction for Portable Tanks and
Bulk Containers
Contains instructions for portable tanks and bulk
containers
• Column 11 Special Provisions
Contains special provisions for portable tanks and
bulk containers.
 UNIT – II
LAW OF CONTRACTS
 LAW OF CONTRACTS
• Basis: Indian Contracts Act, 1872
• Contracts: A legally enforceable
Agreement
• 4 Basic requirements:
• OFFER <> ACCEPTANCE <>
• CONSIDERATION<>LEGALITY
• ( Offeror) ( offeree ) ( Price)
• ( Duration) (Acceptance to be communicated)
• CONTRACT= An Agreement enforceable by
law
 OFFER & INVITATION TO OFFER
• OFFER ( Proposal) • INVITATION TO OFFER
• Examples: • Examples:
• Bid in an Auction Sale • Tender Notice ( Advt.)
• A tender to supply goods • Advt. For sale / auction
at a certain date • Catalogue of goods for
sale
• Offer: ‘Carlill vs. Carbolic • Quotation of lowest price
Smoke Ball Co.,1893 in an answer to an
– Flue Remedy-Smoke Ball- enquiry
Advt- Accepted- Reward
Pds.100
– ( Communication of
acceptance implied by
conduct of parties)
 Types of Contracts ( Agreements)
• 1. Valid Agreements
• 2. Void Agreements
• 3. Voidable Agreements
• 4. Unenforceable Agreements
• 5. Illegal Agreements
 1. Valid Agreements

• Parties are Competent

• Consent is Free
• Object and Consideration are Lawful
• Agreement Not declared Void by Law
 Ingredients of Valid Contract
• 1. An enforceable agreement
• 2. Parties must be competent to contract
– Not a minor
– Not of unsound mind
– Not disqualified
 CONSIDERATION
• Agreements NOT supported by Consideration
• 1. Natural Love and Affection
– The Agreement is in writing
– Agreement is Registered under law relating to
Registration of Documents
– The Agreement is made on account of natural love
and affection
– The parties to the agreement stand in near
relation to each other
 CONSIDERATION
• 2. Compensation for Past Voluntary Services
– The act must be voluntary act
– For an act which the Promisor was legally
compellable to do e.g., supporting the minor child
of the promisor
• A finds B’s dog and returns to him. B subsequently
promises to give A Rs.1000/- This promise is
enforceable
• A supports B’s minor child. B promises to reimburse A.
The Agreement is valid
 CONSIDERATION
• 3. Time-barred Debt
– There must be an express promise to pay the
time-barred debt
– The promise must be in writing
– It must be signed by the person to be charged
therewith
• E.g., A owes B Rs.10,000/- but the debt is time-barred
by the Limitation Act. A signs a written promise to pay B
Rs.5,000/- B can enforce the agreement
 Competent Parties
• 1. Is of the age of Majority
– Above the age of 18. ( Indian Majority Act, 1875
Sec.3)
– No Estoppel against a minor ( E.g.: A minor who
misrepresents his age and get a loan from a
money lender cannot recover the amount)
• Estoppel: A principle of Law under which a
person is bound be the representation he
makes; and he is not allowed to subsequently
go back on his representation
 Competent Parties
• Benefit of a Contract may be given to a Minor
– A mortgage executed in favour of a Minor, where he
had advanced mortgage amount, is enforceable
• Minor Cannot be Partner in firm
– Although Minor cannot be a Partner in a Firm, he may
be admitted to the benefits of Partnership; but not
liable for the losses of the firm
• No subsequent Ratification by a Minor
– A Minor, on attaining majority, cannot ratify or adopt
an agreement entered by him during minority
 Competent Parties
• Minor as an agent
– Minor as an agent incurs no personal liability to
his Principal
If a Minor is supplied with necessaries,
such person can claim re-imbursement
from his properties, but not personally
liable
 Competent Parties
• 2. Of Sound Mind
– A person in a Lunatic Asylum, who at intervals of
sound mind, may contract during those intervals
– A sane man who is so drunk that he cannot
understand the terms of a contract or form a
rational judgement cannot contract as long as the
drunken-ness last
• 3. Not disqualified
– Not bankrupt (Pauper)
– Not a Prisoner etc..
 4. UNENFORCEABLE CONTRACTS
• An Agreement one which cannot be enforced
in a Court of Law because of some technical
defect
– For want of Registration
– For want of Proper Stamp
– By Law of Limitation
– Valid but cannot be proved and enforced in a
Court of Law
• Illegal Contracts are Void and are also
Unlawful
 5. ILLEGAL CONTRACTS
• All contracts that are Unlawful / Forbidden by
Law
– To Murder / Contract Killing / Quotation Killing /
Kidnapping
– To commit Dacoity
– To Smuggle Goods
– Agreements with Minors are Void; but not Illegal
or Unlawful
– An agreement with a Minor or a Person of
Unsound Mind; the Court shall NOT enforce such
an agreement
 ILLEGAL CONTRACTS
– Agreements which are void as the legislature
prohibits or penalises it as they are Unlawful
– A void agreement may not be illegal
– Both Illegal and Void Agreements are VOID and
are unenforceable
– In case of Void agreement, the agreement
collateral to it can be valid
• E.g.: Wager is the main transaction which is void, but a
loan given to one of the parties to pay a wagering debt
is valid
 2. Void Contracts
• An Agreement NOT enforceable by Law is a
VOID contract
• Neither Legal Rights NOR Legal Obligations
• No party to such Agreement can claim any
right under it
 Ingredients of valid contract
• 1. An enforceable agreement
• 2. Parties must be competent to contract
– Not a minor / of unsound mind / not
disqualified
• 3. Free Consent
– Not under duress / coercion / undue
influence/ fraud/ misrepresentation/
mistake of fact
 Ingredients of valid contract (contd.)

• 4. Lawful consideration and object

–Not forbidden by law
• 5. Not a void agreement
• 6. Must fulfill the law of the land (India)
 VOID CONTRACTS
• VOID: Agreements: (void ‘ab initio’)
• a) Under mistake of facts
• b) in Restraint of marriage
• c) in Restraint of trade
• d) in Restraint of judicial proceedings
• e) the meaning of which is not clear/certain
• f) by way of wager (betting)
• g) to do an impossible act
 3. VOIDABLE CONTRACTS
• An Agreement one which is not enforceable
by law at the option of one or more Parties
• But NOT at the option of the other
• A voidable agreement can be avoided or Set
Aside at the Option of One of the Parties to
the Agreement
 DOCTRINE OF FRUSTRATION
(VOIDABLE CONTRACTS)
• DOCTRINE OF SUPERVENING IMPOSSIBILITY
• IMPOSSIBILITY BY:
– FORCE MAJEURE ( natural calamities, war, strike,
lock-out, strike etc..
– FRUSTRATING EVENT ( not at the fault of either
party)
– CHANGE OF LAW OF LAND
– DESTRUCTION OF SUBJECT MATTER
– INCAPACITY OF THE PROMISOR
 VOIDABLE CONTRACTS
• A CONTRACT WHICH CAN BE LEGALLY
REJECTED AT THE OPTION OF ONE OF THE
PARTIES
• Example:
– Mistake of fact,
– Misrepresentation
– Lack of free will
– May be ratified by the party with power to avoid
contract, once the reasons no longer exists
 4. UNENFORCEABLE CONTRACTS
• An Agreement one which cannot be enforced
in a Court of Law because of some technical
defect
– For want of Registration
– For want of Proper Stamp
– By Law of Limitation
– Valid but cannot be proved and enforced in a
Court of Law
• Illegal Contracts are Void and are also
Unlawful
 5. ILLEGAL CONTRACTS
• All contracts that are Unlawful / Forbidden by
Law
– To Murder / Contract Killing / Quotation Killing /
Kidnapping
– To commit Dacoity
– To Smuggle Goods
– Agreements with Minors are Void; but not Illegal
or Unlawful
– An agreement with a Minor or a Person of
Unsound Mind; the Court shall NOT enforce such
an agreement
 ILLEGAL CONTRACTS
– Agreements which are void as the legislature
prohibits or penalises it as they are Unlawful
– A void agreement may not be illegal
– Both Illegal and Void Agreements are VOID and
are unenforceable
– In case of Void agreement, the agreement
collateral to it can be valid
• E.g.: Wager is the main transaction which is void, but a
loan given to one of the parties to pay a wagering debt
is valid
 QUASI CONTRACTS
• RELATIONS RESEMBLING THOSE CREATED BY
CONTRACT ( Sec. 68-72 of Indian Contracts Act)
• Not Resulting from:
• Any Express Agreement/ Any Implied Agreement/
No Offer / Acceptance
• 1. A minor’s / lunatic’s liability to pay for
‘necessaries’
• 2. Finder of Goods
• 3. Doing a non- gratuitous act for another
• 4. Payment of money due to another
 QUASI CONTRACTS
• 1. A minor’s / lunatic’s liability to pay for
‘necessaries’
– A supplies B, a lunatic with necessaries suitable to
his conditions in life. A is entitled to be
reimbursed from B’s property
– The expenses can only be reimbursed from the
property of the incapable person. Not Personally
liable.
 QUASI CONTRACTS
• 2. Finder of Goods
– A finder of Goods has right to retain goods until
he receives compensation for the trouble and
expense voluntarily incurred by him to preserve
goods; but no right to sue the owner for such
amount
– Where the Owner offered a specific reward for the
return of goods, the finder may sue for such
reward and may retain goods until he receives the
amount of the reward.
• The Responsibilities of the Finder of Goods are
similar to that of a Bailee of Goods
 QUASI CONTRACTS
• 3. Liability to pay for Non-Gratuitous Act
– A, a trader leaves his goods at B’s godown/
warehouse by mistake and B uses ( sells) as his
own. B is bound to pay for A’s goods.
– A saves B’s property from fire. A is not entitled to
compensation from B, if the circumstances show
that he intended to act gratuitously.
 QUASI CONTRACTS
• 4. Payment under Mistake or Coercion
– A person whom money has been paid or anything
delivered by mistake or coercion must repay or
return ( sec. 72)
• A and B jointly owes Rs.10,000/- to C. A pays the
amount to C and B without knowing this fact, pays
Rs.10,000/- to C. C is bound to repay the amount to B
• A Railway company refuses to deliver goods to the
consignee except upon payment of illegal charges. The
consignee pays the sum to obtain goods. He is entitled
to recover the excess sum paid.
 DISCHARGE OF CONTRACT
• 1. By Agreement or Consent
– Mutual agreement between Parties
• 2. By Performance
– Contract already performed to mutual satisfaction
• 3. By impossibility of Performance
– Force Majeure / Frustration
• 4. By Breach
 DISCHARGE OF CONTRACT
• 5. Novation:
– Parties to the Contract agree to substitute a New
Contract for it or Alter it, the Original need not be
performed.( Sec 62 of the Contracts Act)
– A owes B Rs.50,000/- . A enters into an agreement with B and
gives B a mortgage of his (A’s) property for Rs. 25,000/- This is
a new contract and extinguishes (cancels) the old one
– The Original Contract should be subsisting, not
expired
– The New Contract must substitute the Original
contract
 DISCHARGE OF CONTRACT
• 5. Novation (contd..)
– Novation may involve either discharge of parties,
the contract remaining the same or change in
terms of contract, the parties remaining the same
– A owes Rs.50,000/- to B under contract. It is agreed between
A, B and C that henceforth C will be debtor instead of A. the
old debt of A to B comes to an end and a new debt from C to B
has been contracted
– Novation must be with mutual consent of all the
parties concerned
 DISCHARGE OF CONTRACT
• 6. Remission of Performance (remission=reduction)
– Remit wholly or in part the performance
– Extend the time for Performance
• A owes B Rs.25,000/-. A pays B Rs.10,000/- in satisfaction of the
whole debt of Rs.25,000/- The whole debt is discharged
• A owes B Rs.10,000/-. C Pays B Rs.5,000/- an B accepts this in
satisfaction of his claim on A. This payment is a discharge of the
whole claim of Rs.10,000/-

• ..
 DISCHARGE OF CONTRACT
• 7. Waiver
– A release or surrender of a contractual right
– Giving up all claims
• 8. Accord and Satisfaction
– Instead of giving complete release, accepts
something else giving up his right. Then the
contract is said to have been discharged
• A build a house for B for a consideration of
Rs.500,000/- After construction of the house, B offers A
a plot of land to instead of Rs.500,000/- If A accepts B’s
offer, it is a case of discharge by Accord and
Satisfaction.
 EXCLUSION CLAUSES
• Clauses which excludes liability of a party to
contract
• Must be properly incorporated in to the
contract
• Not possible to exclude liability for fraudulent
misrepresentation
• The clause must be in clear language
• “Thornton vs. Shoe Lane Parking Ltd, 1971”
• “ Adler vs. Dickson, 1954”
 QUASI CONTRACTS
• RELATIONS RESEMBLING THOSE CREATED BY
CONTRACT ( Sec. 68-72 of Indian Contracts Act)
• Not Resulting from:
• Any Express Agreement
Any Implied Agreement
No Offer / Acceptance
• Finder of Goods
• Doing a non- gratuitous act for another
• Payment of money due to another
• A minor’s / lunatic’s liability to pay for
‘necessaries’
BREACH OF CONTRACT -REMEDIES
• DAMAGES = Compensation ( Money
Award)
• Principle: “Injured Party to be put in the same
position as if the contract is performed”
• “ Hadley vs. Baxendale,1854’
– Millers- Common Carrier- deliver crankshaft
for repairs –redelivery by certain date – delayed/
failed – Jury: Pds. 25/- as damages ( But no profit
loss – too remote)
 DAMAGES

• Measure of Damages = Difference between

Contract Price & Market Price

• ‘A’ contracts to charter his ship to ‘B’ from 1st

Jan for a year- freight rises – ‘A’ breaks his
promise – Must pay ‘B’ by way of compensation
difference between charter rate and price for
which ‘B’ could get a similar ship.
 LIQUIDATED DAMAGES

• Damages amount specified in

contract
• ( Penalty previously agreed upon by both
parties)

• ( Example: Demurrage, Service Contracts /

Volume Contracts)
 SPECIFIC PERFORMANCE
• (Specific Relief Act, 1963)
• Specific Relief = Specific Remedy = Specific
Fulfillment
• An Equitable Relief
• Specific Performance by way of Damages for
Breach, where Remedy of Damages is
inadequate.
 SPECIFIC PERFORMANCE
• MODES of Specific Relief:
• Restoration of Possession
• Specific Performance of Contract
• Injunction to prevent breach
• ( When pecuniary – Money- Compensation NOT
adequate)
• Ex.: Shares in a company not ordinarily available
in market
• Property transaction
 SPECIFIC PERFORMANCE

• Specific Performance when:

• Affected Party wants the ‘thing’ in Specie
and cannot have in any other way
• Courts will NOT decree Specific
Performance to Build, Repair or Maintain
works
 ANTICIPATORY BREACH

• A party to contract has refused to

perform or disabled himself from
performing his promise in its entirety, the
Promisee may put an end to contract (
and claim damages) and acquiese its
continuance.
• Frost vs. Knight, 1872 ( promise to marry upon his (K)
father’s death)
 CONTRACT OF INDEMNITY &
GUARANTEE
• CONTRACT OF INDEMNITY ( Sec 124 of Indian
Contracts Act, 1872)
• A Contract by which One Party promises to save
the Other from Loss caused to him by the
conduct of the Promisor himself or by the
conduct of any other person
• A direct engagement between TWO parties
• A promise to become liable for a debt
• Ex.: A deposits a box of Jewelry for safe custody with bank;
Receipt lost. ‘A’ gives an Indemnity Bond indemnifying any
loss ( Also B/L)
 CONTRACT OF INDEMNITY &
GUARANTEE
• Contract of Guarantee:
• A Contract to perform the promises or
discharge of Liability of a Third person in case
of his default.
• Anything done or the promise made for the
benefit of the Principal Debtor is sufficient
consideration to the Surety
– Bank guarantee: Equal to a credit-note issued by
the bank. Commitment by banks must be allowed
to be honoured – for free and smooth functioning
of International Commerce
 CONTRACT OF INDEMNITY &
GUARANTEE
• CONTRACT OF INDEMNITY • CONTRACT OF GUARANTEE
• 2 Parties • 3 Parties
– Indemnified – Principal Debtor
– Indemnifier – Creditor
For re-imbursement of Loss – Surety
Person giving Indemnity has Guarantor is totally
some interest in unconnected with the
transaction contract
An Original & Direct There is a Primary &
engagement Secondary liability
Person giving the Indemnity If Surety discharges debt, he
is primarily liable can proceed against
Eg.: Letter of Indemnity to get principal debtor making
‘Clean Bill of Lading’; to get default
release of cargo without ( Eg.: Guarantee for Loan;
OBL. Bank Guarantee)
 CONTRACT OF INDEMNITY &
GUARANTEE
• CONTRACT OF • CONTRACT OF
INDEMNITY GUARANTEE
• Number of Contracts:1 • Number of Contracts:3
• Between Indemnifier & • One Express Contract
Indemnified between Creditor &
Principal Debtor
• One between the
Creditor and the Surety
• A third Implied
Contract between the
Principal Debtor &
Surety
 CONTRACT OF INDEMNITY &
GUARANTEE
• CONTRACT OF • CONTRACT OF
INDEMNITY GUARANTEE
• Nature of Liability: • Nature of Liability:
• The Indemnifier is liable • The Principal Debtor is
to make good the loss : Primarily liable; The
Surety is only
• No secondary Liability secondarily liable
• The Surety can sue the
Principal debtor after
paying the Creditor
 RIGHTS OF SURETY (GUARANTOR)
• RIGHTS AGAINST PRINCIPAL DEBTOR:
• Right of Subrogation: Upon payment of Debt,
he has all rights as the Creditor
• He steps into shoes of the Creditor
• Right of Subrogation available to Surety only when
he has discharged his entire obligations to Creditor
• Right of Indemnity: There is an implied
promise by the Principal Debtor to indemnify the
Surety
 RIGHTS OF SURETY (GUARANTOR)
• Surety’s Right against the Creditor:
• The Surety is entitled to every Security which
the Creditor has against the Principal Debtor
• Surety’s Right against Co-Sureties:
• If there are Two or more Sureties for the same
debt, they are liable to contribute equally
towards the debt
 CONTRACT OF GUARANTEE
• DISCHARGE OF SURETY (Conditions):
• Alteration in terms of Contract
• Discharge by Principal Debtor
• Discharge by Operation of Law
• Compromise
• Release of Security
• Death of Surety
• Automatic Discharge ( Co-sureties do not join)
• Invalidity of Guarantee
– Guarantee obtained by misrepresentation
– Guarantee obtained by concealment of facts
 LIABILITY OF SURETY

• Liability of Surety is same as that of the

Principal Debtor
• Liability co-extensive as that of the Principal
Debtor
 CONTINUING GUARANTEE
• A guarantee which extends to a Series of
Transaction ( Ordinary Guarantee- only for a
single transaction)
– Guarantees performance of successive
transactions
– A guarantees to B for C’s employment with B for
collecting Chit fund cash daily. A guarantees for an
amount upto Rs.50,000/-
• .
 CONTINUING GUARANTEE
• REVOCATION of Continuing guarantee:
• 1. By Notice
– May be revoked any time by giving notice
• 2. On Death of Surety
– The Estate of Surety is liable for all transactions
prior to the death of the Surety
• ..
 INVALID GUARANTEE
• Guarantee obtained by means of:
– 1. Misrepresentation
• Misrepresentation concerning some material fact
• Misrepresentation made by Creditor or with his knowledge
– 2. Concealment
– Hiding certain facts by the creditor
• B is working with A and fails to account for certain money. A
wants B to furnish security and C gives his guarantee without
knowing B’s previous default.
– 3. Where the Co-surety does not join
• A guarantee given on condition that the creditor will not act
upon until another person or persons join him as co-surety
or sureties
CONSIDERATION FOR GUARANTEE
• CONSIDERATION may be anything done
or any promise made for the benefit of
the Principal Debtor
• Ex.: ‘B’ wants goods from ‘A’ on credit. ‘A’ agrees
provided ‘C’ will guarantee payment, in
consideration of ‘A’s promise to deliver goods. This is
sufficient consideration for ‘C’s promise
 CONTRACT OF GUARANTEE
• Ordinary Guarantee
– Liable for Single Transaction

• Continuing Guarantee
– Liable for Successive and Series of Transactions
Revocation of Continuing Guarantee: May be
revoked any time by Surety by giving notice to the
Creditor
 CONTRACT OF GUARANTEE
• DISCHARGE OF SURETY (Conditions):
• Alteration in terms of Contract
• Discharge by Principal Debtor
• Discharge by Operation of Law
• Compromise
• Release of Security
• Death of Surety
• Automatic Discharge ( Co-sureties do not join)
• Invalidity of Guarantee
– Guarantee obtained by misrepresentation
– Guarantee obtained by concealment of facts
 ARBITRATION
• Arbitration is the “Private means of settling
disputes”.
• By Agreement between parties
• By Order of the Court
• Normally, Pre-Contractual Agreement / But
can also be a separate agreement later
• Arbitrator should make “Award”
• Must decide according to law
 The Arbitration and Conciliation Act,
1996 ( India)
• 86 Sections in 4 parts:
– ( in accordance with UN Model Law adopted by
UNCITRAL)
• Part I: Relates to Arbitration in India
• Part II: Enforcement of ‘Foreign Awards’
under New York and Geneva Conventions
• Part III: Relates to Conciliation
• Part IV: Empowers High Courts to make Rules
which are consistent with the Act.
 ARBITRATORS
• Parties are free to decide on the number
• If not decided; then the Arbitral Tribunal to
consist of “Sole Arbitrator”
• Shall NOT be in EVEN number
• The appointed Arbitrators to appoint another
3rd Arbitrator ( Presiding Arbitrator)
• No Provision for Appeal ( Final & Binding );
except in certain unusual situation
 FOREIGN AWARDS
• When :
• One of the Parties is a Foreign National
• The Subject matter is International
Commerce, Trade, Investment etc..
• Award made in a Foreign country
– ( Conflict of Laws > Ex.: contract made in London
between an Indian and an American; to be
performed in India > Conflict of laws of Indian/
American/ British courts.
– Pre-contractual agreement to choose National law
 ARBITRATION VS. CONCILIATION
• Arbitration • Conciliation
• Prior agreement usually • Conciliation after the dispute
• Not only assist; but actively has arisen
arbitrates and resolve by • Role of conciliators to help and
Arbitral Award Assist parties in arriving at
• No confidentiality in agreement
information • Parties can ask ‘Conciliator’ to
• Not merely a settlement keep information confidential
agreement; but a judgement • Settlement agreement made
• An arbitration proceedings by parties; Conciliator to
cannot be terminated authenticate it
• Proceedings may be
terminated unilaterally
 ARBITRATION COSTS
• Who will bear Arbitration Costs?
• 1) The Losing Party bears the costs.
– Principle of “loser pays all”
• 2) To be apportioned among parties on the
merits of each aspect.
• 3) To be shared equally among parties as per
expenses incurred by them.
 Arbitration Societies
• Popular Centres of Arbitration;
• LMAA: London Maritime Arbitration Association
• SMA: Society of Maritime Arbitrators (New York)
• ICADR : Indian Council of Alternate Dispute
Resolution, New Delhi ( and Other Cities)
• Other Locations:
• Mosco, Paris, Beijing, etc..
 UNIT - III

LAW OF AGENCY &

LAW OF BAILMENT
LAW OF AGENCY
 AGENT ( Basis: Indian Contracts Act, 1872)
• Definition: An AGENT is a person
employed to do any act for another or
to represent another in dealing with
THIRD PERSON

• AGENT > < PRINCIPAL

• ^
• THIRD PARTIES
 AGENT
• Relationship:

• AGENT & PRINCIPAL

• AGENT & THIRD PARTIES
• PRINCIPAL & THIRD PARTIES

• PRINCIPAL answerable to THIRD PARTIES

 TYPES OF AGENTS
• BROAD DIVISION:
• MERCANTILE AGENTS: Ship’s Agent, Ship
Broker, Auctioneers, Sales Agent etc..

• NON-MERCANTILE AGENTS: Advocate, Wife,

Power of Attorney (POA) etc..
 TYPES OF AGENTS
• 1. Del-credere agent:
– One, who for extra remuneration ( del-credere
commission) undertakes liability to guarantee the
due performance by the other party. ( Ex.: in case
of insolvency)
• 2. Commission Agent:
– One who buys and sells goods on behalf of his
employer on best possible terms and receives
commission for his labour
 TYPES OF AGENTS ( contd..)
• 3. Broker:
– A mercantile agent employed for the purpose of
Purchase and Sale of Goods. Establish privity
between two parties and gets commission. ( Ex.:
Shipbrokers)

• 4. Factor
– Entrusted with possession of goods for the
purpose of selling them. He can sell in his own
name.
 TYPES OF AGENTS (contd.)
• 5. Co- Agent :
– Agency given to several persons – have a joint
authority
• 6. Sub-Agent:
– A person employed by and acting under the
original agent
 CREATION OF AGENCY
• 1. BY EXPRESS AUTHORITY:
– Authority given by WORDS- Spoken or Written
– Given by the Principal to the Agent enabling the
Agent to bind the Principal

• However, Formal Documents needed in:

– A) Conveyance of Landed Property ( POA)
– B) Advocate to execute ‘Vakalatnama’
 CREATION OF AGENCY ( contd..)
• 2. BY IMPLIED AUTHORITY:
– Conduct of a Principal may create an Inference
– By Estoppel and Holding Out
• When a Person permits or represents another
to act on his behalf, a reasonable man infers
that the relationship is of Principal and Agent.
• Ex.: ‘A’ living in Chennai owns a shop in Coimbatore managed
by ‘B’. ‘A’ visits shop occasionally. ‘B’ used to order goods from
‘C’ and paying out of ‘A’s funds with ‘A’s knowledge. ‘B’ has an
implied authority from ‘A’
 ESTOPPEL
• Estoppel = An admission or something which
Law treats as an admission --- A legal principle
that bars a party from denying or alleging a
certain fact owing to that party's previous
conduct, allegation, or denial.
• A bar that prevents one from asserting a claim or
right that contradicts what one has said or done
before.
• Estoppel by Silence
• Estoppel by Tenant
 CREATION OF AGENCY ( contd..)
• 2. IMPLIED AUTHORITY ( contd..)
• By Presumption ( Ex.: By fact of Co-habitation)
– Man and Woman living as Husband and Wife..
Pledges for necessities
– A Partner who retire from partnership must give
Notice of Retirement
• ..
 CREATION OF AGENCY ( contd..)
• 3. Agency by RATIFICATION
– Where Acts are done by by one Person without
the other’s knowledge or Authority – He may
Ratify or Disown
– Thus an Un-authorised Act is converted into
Authorised Act
• 4. Agency of NECESSITY
– Original Express Agreement to act within the
scope of Authority
– In case of Emergency, when the interest of
another in danger, it becomes necessary to
preserve Property
 RIGHTS AND DUTIES ( Warranties)
• AGENT (Duties) • PRINCIPAL (Duties)
• Exercise ‘Due Diligence’ • To Remunerate the
• Apply Special Skills Agent
• Render Accounts to the • To indemnify the Agent
Principal from any Liability
• Not to compete with (Vicarious Liability)
the Principal
• To communicate with
the Principal
 TERMINATION OF AGENCY
• 1. By Principal revoking the Agency
• 2. By the Agent renouncing the Agency
• 3. By the Business of Agency being
completed
• 4. By either the Principal or Agent Dying
or Insane
 TERMINATION OF AGENCY (contd..)

• 5. By the Principal becoming Insolvent

• 6. By the destruction of Subject matter of
the Agency
• 7. Happening of any event rendering the
agency unlawful ( Alien Enemies)
• 8. Limited Period Agency – Period Ends
 DOCTRINE OF PRIVITY
• “ One cannot sue unless Party to the
Contract” ( original concept / principle)
• Rectified in UK by “ Contracts ( Rights of Third
Parties ) Act, 1999
• Japan has introduced a similar law long back.
 STANDARD LINER AGENCY
AGREEMENT
• PREAMBLE
• DUTIES OF AGENT
• ACTIVITIES ( PORT/ REGIONAL/ GENERAL
AGENCY)
• ACCOUNTING AND FINANCE
• DUTIES OF PRINCIPAL
• REMUNERATION
• DURATION
• TERMINATION
• JURISDICTION ( ARBITRATION???)
LAW OF BAILMENT
 BAILMENT
• “Delivery of Goods by one person to another
for some purpose, upon a contract, when
Purpose accomplished, be returned or
otherwise disposed of according to direction
of person delivering them”.
• Bailor = Person Delivering Goods
• Bailee = Person receiving Goods
• Delivery of Goods > Delivery of Possession
 BAILMENT
• Sale and Exchange are NOT bailment
• Ex.: Giving goods ( Gold / Ornaments) to a
Goldsmith for making jewelry / ornaments is
bailment ( delivery for some purpose).
• Car park owner
• Port Warehouse
• CFS
 BAILMENT
( Types of Bailment)

• Non-Gratuitous Bailment
• Bailment for Consideration

• Gratuitous Bailment
• No consideration
 Non – Gratuitous Bailment
( Bailment for Consideration)

• Bailment for Mutual Benefit

– Example: Giving Vehicle for Repair
– Giving Goods to a Warehouse / Port Authorities
– Giving Goods to a Carrier
• ( Damages for Negligence)
 Gratuitous Bailment

• Bailment for Exclusive Benefit of Bailee

• Taking jewellery for attending a function / marriage
• Student taking book friend or library

• Bailment for Exclusive Benefit of Bailor

• Giving a vehicle or jewellery to friend while going on a
Tour
• Damages only for ‘Gross Negligence’
 BAILMENT
• DUTIES OF BAILOR:
• 1. Duty to disclose defects ( which Bailor is
aware)
– Bailment for consideration ( Bailor responsible for
loss suffered by Bailee) - vicious horse / defective
car from ‘Rent-a-car company..
– Gratuitous Bailment ( Ornaments given to another for
marriage) – Finder of goods- a gratuitous bailee.
 BAILMENT
• DUTIES OF BAILOR (contd..):
• 2. Liability to repay Expenses ( Ex.: Repair/
work done)
• 3. Liability to Compensate ( for loss suffered
by Bailee by reason of Imperfect title)
 DUTIES OF BAILEE

• 1. Duty to take Care ( Ordinary prudence as

his own goods. ( No extra-ordinary care)
– Ex.: Carrier , Railways, Warehouses
• 2. Not to deviate from Terms of Contract
– ‘A’ lets ‘B’ for hire a car for his own driving.. ‘’B’ gives car to
‘C’’. Termination at the option of ‘A’
• 3. Not to use bailed goods unauthorisedly
 DUTIES OF BAILEE:

• 4. NOT to mix goods with his own goods /

other goods
• 5. Return goods after expiration of time /
purpose accomplished
• 6. NOT to set up a title.
– Hire purchase agreement:
– Pawn / pledge: Things bailed as security for
payment
 UNIT IV

SALE OF GOODS &

TAXATION
 SALE OF GOODS
• THE INDIAN SALE OF GOODS ACT, 1930 ( Amdt. 1963)
• A Contract of Sale of Goods = a contract
whereby seller transfers the property or agrees to
transfer property or goods for a price
• When goods are transferred, it is sale
• When transfer at a future date, it is an
agreement to sell
• A contract may be absolute or conditional
 Subject matter of SALE CONTRACT
• AGREEMENT TO SELL
• 1. Existing Goods or Future Goods
• 2. Specified Goods ( Identified and agreed upon)
• 3. Unascertained Goods (Described; but NOT
identified)
• 4. Future Goods ( To be manufactured)
• 5. Contingent Goods ( may or may not happen)
 SALE AND AGREEMENT TO SELL
• SALE • AGREEMENT TO SELL
• 1. Transfer of Property • Transfer of Property
– Goods passes from Seller – Refers to future and
to Buyer immediately contingent goods
• 2. Risk of Loss • Risk of Loss
– If the goods are – If the goods are
destroyed, the loss falls destroyed, the loss falls
on the buyer on the Seller
• 3. Results of Breach • Results of Breach
– If buyer fails to pay Price, – If the buyer fails to pay
the Seller can sue for the price, the Seller can
Price sue for Damages
 SALE AND AGREEMENT TO SELL
• SALE • AGREEMENT TO SELL
• 4. Right to Re-Sell • Right to Re-Sell
– Seller cannot re-sell except – Seller can sell and the
as an ‘Unpaid Seller’ buyer who unaware of
prior agreement gets a
• 5. ‘Jus in Rem’ against the good title
whole world
• ‘Jus in Personam’ ( right
against the seller only)
• 6. Insolvency of Buyer • Insolvency of Buyer
– If before payment, the – Seller is not bound to part
Seller must return them to with goods
the official Receiver
• Insolvency of Seller
• 7. Insolvency of Seller
– A buyer who paid the
– Buyer entitled to recover price, can claim only a
goods from official receiver rateable dividend
 VOID SALE CONTRACTS
• Goods perishing before making of Contract
• Goods perishing before Sale; but after
Agreement to Sell
• ( BOTH HAPPENING WITHOUT SELLER’S KNOWLEDGE)

PRICE:
• 1. May be fixed by the contract or
• 2. Fixed or agreed later
 CONDITIONS AND WARRANTIES
(Stipulation with reference to Goods)

• CONDITION • WARRANTY
• A stipulation essential • A stipulation collateral
to the main Contract to the main Contract
• Ex.: Undertaking as to
the title of Goods
• Goods corresponds to
description
• As to quality and fitness
• Terms of Payment
(essence)
 CONDITIONS AND WARRANTIES
(Stipulation with reference to Goods)

• CONDITION • WARRANTY
• If there is a Breach, the • If there is a breach, the
affected party can affected party can claim
repudiate (cancel) the damages only
contract • A breach of warranty
• A breach of condition may not be treated as a
may be treated as a breach of condition
breach of warranty
 CONDITIONS AND WARRANTIES
SALE BY SAMPLE
• IMPLIED CONDTION THAT:
• 1. The Bulk corresponds to Sample
• 2. The Buyer has opportunity to compare Bulk
with Sample
• 3. Goods shall be free from any defect
rendering them Un-merchantable
 CONDITIONS AND WARRANTIES
• IMPLIED CONDTION THAT:
• 4. As to Quality and Fitness
– Buyer has a chance to get satisfied of the fitness
before he buys them
– When the buyer expressly or by implication
stipulates the particular purpose, the seller has to
supply such goods
• 5. Goods shall be free from any defect
rendering them Un-merchantable
– Must be commercially saleable ( merchantable
quality) – Manila hemp case ( Jones v. Just (1868)
 CONDITIONS AND WARRANTIES
• IMPLIED CONDTION THAT:
• 6. Condition Implied by Custom
– Quality and fitness for a particular Purpose
– Priest v. Last (1903); Hot Water Bottle case
• 7. Condition as to Wholesomeness
– In the case of eatables and provisions
– Milk containing typhoid germs ( Frost v. Aylesbury
Dairy Co. ltd., (1905)
– Bun containing stone; teeth broken
 CONDITIONS AND WARRANTIES
• IMPLIED WARRANTIES:
• 1. Warranty of quiet possession
– By way of defective Title ( no quiet possession)
• 2. Freedom from Encumbrances
– Not subject to any charge or right in favour of a
third party
• 3. As to Quality and Fitness by Usage of Trade
• 4. As to disclose Dangerous nature of Goods
– Handle with care; keep away from children;
precautions to be taken while handling etc..
 “CAVEAT EMPTOR”
• Principle of ‘Caveat Emptor’ ( Traditional /
Old principle)
– “ Let Buyer Beware” ( Risk passes with
property- Risk remain at Seller’s until
property is transferred)
Principle of “Caveat Venditor”
“ Let Seller Beware”
‘Priest vs. Last’, 1903 (Hot water bottle case)
 Performance of Sale Contract
• 1. Duty of Seller to Deliver; and Buyer to Accept
• 2. Payment and Delivery are concurrent
conditions
• 3. Rules as to Delivery ( Ex.: Refer INCOTERMS)
• 4. Delivery of Wrong Quantity
– Buyer may Reject; But if he accepts, he must pay at
contracted rate
– ‘Barrow Lane Ballard Ltd vs. Phillip Phillips Co.
1929
( contract for 700 bags of Groundnut, 100 bags stolen,
delivered remaining, Buyer refused; Held: Contract
Indivisible)
Performance of Sale Contract (contd.)
• 5. Delivery to Carrier / Warehouse/Docks
– Deemed Delivery
• 6. Buyers Right of examining Goods
• 7. Acceptance of Goods
– As and when buyer intimates seller that he has
accepted
• 8. Buyer NOT bound to return rejected Goods;
– But just intimate the Seller
 RIGHTS OF UNPAID SELLER
• Who is an Unpaid Seller? > When ‘Whole’ or
‘Part’ price NOT paid by Buyer
• UNPAID SELLER’S RIGHTS
• a. A Lien on Goods while Goods are in his
possession ( Lien = Right to obtain Possession of another’s
property pending discharge of Debt)
• b. In case of Insolvency of Buyer, “RIGHT OF
STOPPAGE IN TRANSIT”
-By taking possession of goods; by Notice to the
Carrier
• c. A Right of Re-Sale
 Order of “UNPAID SELLER”
• RIGHT OF STOPPAGE OF GOODS IN TRANSIT
– ( Redelivery at the Expense of Seller)
• “TRANSIT” =
– From the Time when: Goods Delivered to
Carrier
– Until : goods released by
Carrier
– Including - Goods in Warehouse
– CY / CY : Until Picked up by Consignee
 SUITS FOR BREACH
• 1. Suit for Price:
– a) After Sale
– b) Price payable on a day irrespective of Delivery
of Goods
• 2. Damages for Non-Acceptance
– Claim by Seller ( Seller to sue /file case)
• 3. Damages for Non-Delivery
– Claim by Buyer ( Buyer to sue)
LIENS
 LIENS
• = To Bind ( Latin – ‘Ligae’)
• RIGHT TO OBTAIN POSSESSION OF ANOTHER’S
PROPERTY PENDING DISCHARGE OF DEBT.
• Types of Liens:
• Possessory Lien
• Equitable Lien
• Contractual Lien
• Statutory Lien
• Maritime Lien
 Possessory Lien
Possession of Property is a Must – Right Full & Continuous
Possession, a must
GENERAL LIEN PARTICULAR LIEN
• In course of • Only in respect of
continuous Usage those goods
• Ex.: Lawyers, Stock • Ex.: Common
Brokers, Carriers, Ship
• Bankers Owners ( Freight
payable)
• Ship Owners (
General Average)
 Possessory Lien
• Rightful and Continuous Possession
– “Hatton Vs. Car Maintenance Co. Ltd., 1915”
– Hatton (H), Owner of Car, agreed with
maintenance Co that they would maintain and
garage her car for 3 years on being paid annual
sum. H was entitled to take her car as and when
she liked. Annual payment in arrears, CMC
detained car and claimed lien. Held: Entitled to
take car as and when she pleased. Possession was
not continuous.
 Possessory Lien
• Enforcement of Possessory lien: By Right of
Detention
• No General Right of Sale of Property
– Except: 1) Repair of Goods
– 2) Unpaid Seller of Goods
• Possession Extinguished ( lost) by:
– 1) Loss of Possession of Goods
– 2) Payment of Amount claimed
– 3) Taking Security in substitution of Payment
 Equitable Lien
• In Respect of ‘Beneficial Ownership’

• Equitable Lien Lost if ‘Property sold to a

“Bonafide Purchaser’ ( Equity’s Darling )

• Equitable Lienor: Does NOT have Right

of Sale except by Order of Court
 Statutory Lien
• Based on Statutes:
• Enforcement by selling Property
– Eg: Major Port Trust Act
– Port is a Bailee of Cargo
– Holds Lien for Unpaid Storage / Wharfage /
Charges
– May Sell Cargo to recover
 CONTRACTUAL LIEN

• Dependant upon requirements as set out in

Contract
• Eg.: Dead Freight
Demurrage in Charter Party
 MARITIME LIEN
• A PRIVILEGED LIEN in respect of Maritime
Property
• NOT dependant upon possession of Property
• NOT defeated by Sale to 3rd Party even if to a
“Bonafide Buyer’
• A ‘Bonfide Buyer’ is ‘Equity’s Darling’ ( Why?)
• Because of Personification of Ship
• Ship as Wrong-Doer
• So Lien justified even if with ‘Change in
Ownership’
 MARITIME LIEN ( Contd..)
• Maritime Lien Basically arises out of:
• A) Unpaid Salvage Awards
• B) Harm caused by ship ie. Collision to Ship / Port
/ Terminals etc.
• C) Unpaid Contractual Wages Eg.: Crew Wages /
Disbursement etc..
• MARITIME LIEN IS A “PROVIDED CLAIM”
• Holder of Maritime Lien has ‘Higher priority ‘over
other Creditors
 MARITIME LIEN ( Contd..)
• In 1993, The International Convention on
Maritime Liens and Mortgages, 1993, adopted.
• Following Priorities:
– Master, Crew wages including cost of repatriation,
Social Insurance, Loss of Life, Personal Injury in direct
connection with Vessel’s Operation;
– Salvage;
– Claims of Ports, Canals, Waterways, Pilotage;
– Arising out of physical loss / damage
– ( Effecting Maritime Lien: “Action in Rem” )
 MORTGAGES
• ( Similar to Hypothecation )
• Creation of an Encumbrance in favour of a
Lender of a money
• IN TIME CHARTER: Assignment in Bank’s favour
• Mortgagor = Borrower of Money
• Mortgagee = Lender of Money
• ( A Legal Mortgage is capable of Registration)
• Mortgagee cannot interfere with Charter Party
• Mortgagor has right to redeem Property after
Redemption
 INCOTERMS (2010)
( ICC- International Chamber of Commerce)
• EXW EX WORKS
– Goods at Seller’s Premises at Buyer’s Disposal
• FCA FREE CARRIER
– Seller Delivers Goods Export Cleared to Carrier
• FAS FREE ALONGSIDE SHIP
– Risk Passes to Buyer. Only Export Clearance with
Shipper
• FOB FREE ON BOARD
– FAS + Loading on Vessel at Shipper’s cost
 INCOTERMS (2010)
• CPT CARRIAGE PAID TO
– Seller Delivers Goods to agreed Place of
Destination ( Seller Pays for Carriage)
• CFR COST AND FREIGHT
– FOB + Payment of Freight –named
port(destination)( Risk passes to Buyer On Board
vessel)
• CIF COST INSURANCE AND FREIGHT
– CFR + Insurance ( Risk same as CFR)
 INCOTERMS (2010)
• CIP CARRIAGE AND INSURANCE PAID TO
– Similar as CPT; but Insurance also paid by Seller
• DAT DELIVERED AT TERMINAL
– Seller delivers Goods Unloaded at Destination ( Quay,
Warehouse, Yard, Terminal etc. ) No Import Clearance by
Seller.
• DAP DELIVERED AT PLACE
– Seller delivers Goods at Destination. No Import Clearance
(Replaces DAF & DDU)
• DDP DELIVERED DUTY PAID
– Seller Delivers Goods at Buyer’s Disposal including Import
Duty Paid by Seller. ( Just Opposite of EXW)
TAXATION
 TAXATION
• Purpose of Taxation
• Raise Revenue to meet huge public
expenditure.
• Financing of Governmental Activities
• Employment Generation by boosting Demand
• Reduce Private Spending ( Control Inflation)
• Reduction of Inequalities ( Taxing the Rich )
• Controlling BOP situation
 CUSTOMS DUTIES
• A Tax collected by Governments on Goods
/Services moving into or out of a country.
• A significant source of Income for a country
• An Instrument of controlling Imports
• Control BOT and BOP
• Encourage Domestic production ( thereby
generate Employment)
• Control Cyclical Fluctuation of Goods
 TYPES OF DUTIES
• Basic Duty
• Additional Customs Duty ( Countervailing
Duty – CVD)
– On Goods which are also made in India
• Special Additional Duty
– On Goods which are also made in India which
suffers other duties as Sales Tax
• Anti-Dumping Duty
– On Goods Imported at a price lower than the
domestic price of the origin country
 DUTY DRAWBACK

• Refund of Customs duty/ taxes of

central Excise that are chargeable
on imported and indigenous
materials used in the manufacture
of Exported goods.
 SAFEGUARD DUTY
• SAFEGUARD DUTY / PROVISIONAL DUTY
• Duty imposed on Goods imported in huge
quantity which may pose a Serious Threat to
Domestic Industry / Production
• Imposed under Safeguard Provisions of
Customs Tariff Act, 1975
• By Director General (Safeguards) appointed
by Central Government
 VALUE ADDED TAX ( VAT )
• VAT charged on Goods and Services when
ultimately Sold to Customer
• Actual Tax levied on End-Users
• VAT is calculated on difference between
Output Tax and Input Tax
• Output Tax: Received by the Seller
• Input Tax: Paid by the Seller to get Raw
materials for production
GOODS & SERVICES TAX ACT (GST)
• India’s biggest Tax Reform after
Independence
• Simplify Taxation system from the present
multi-point level taxation by Central & State
Governments
• India to become a ‘Unified Market’
• Business ‘sans frontiers’ and check posts
within India
• Taxes like Central & State Sales Tax, Central
Excise, CENVAT, Octroi gets Abolished
 GST
Advantages:
• India to become a Single Market
• Reducing Time and Cost
• More Revenue for the Govt.; but less burden
to consumers
• Reduced Paper Work ( at various points of
taxation and check posts)
• Lower Prices for Manufactured Goods
• Expected Increase in GDP of 2.0% to 2.5%
 GST & LOGISTICS
• A Game changer for Logistics
• Tax parity across States
• Logistics Hubs can be developed on the basis
of Connectivity rather than Octroi boundaries
• Logistics to move from Unorganised to
Organised sector
• Integrated Logistics Parks will replace mere
Warehouses
• Disadvantages of crossing over State Tax
Jurisdictions done away with
 GST & LOGISTICS
• Investments to flow in
• Warehousing and Logistics spaces to see a
consolidation of Assets
• Developers to focus on development of large-
scale, technologically advanced Warehouses.
• Logistics Expenses can be set off as input costs
by Manufacturers
• Integrated Logistics Parks to offer value
addition in Supply Chain
 GST & LOGISTICS
• Increased Efficiency in Inter-State transportation
of Goods at reduced costs
• Overhaul of Supply Chain Management by
consolidation of Warehouses
– Operational Efficiency than mere Tax Efficiency
• Possibility of Hub- and- Spoke model movement
for freight movement
– Eg.: Nagpur: “Zero Mile Connectivity”
– Fewer Warehouses in Strategic locations, instead of
scattered ones for each State
 GST & LOGISTICS
• Entry of New Stake holders ( companies)
– On-Line Truck booking
– Eg.: Lobb, Bangalore; Freight Bazar, Telangana;
Lynk, Chennai etc.

• Bringing in Transparency in Logistics activities,

reduce corruption
 e-Way Bill
• What is e-Way bill?
• An Electronic way bill for movement of goods
which can be generated on the e-Way Bill
Portal
• Transport of goods of more than Rs.50,000/-
in value ( each invoice or aggregate for all
invoices in a vehicle)
• Can be generated or cancelled through SMS,
Android App or Site –Site integration
 GST STRUCTURE (0% to 28%)
• 0.5% : Rough, unsorted diamonds

• 5.0% : Footwear, Skimmed Milk/ Powder,

Medicines, Lifeboats, Bio-gas,
Branded wood, Paper/Plastic Scrap
etc..
– Services: Transport Services, Restaurants, Rooms
less than Rs.7,500/- etc.
 GST STRUCTURE (0% to 28%)
• 12.0% : Cell phones, Note books, Frozen
Products, Butter, Cheese, Metals,
Fertilisers, Ornamental Articles etc.
– Services: Work Contracts, Non- AC hotels etc.
• 18% : Trade Marks, Sugar, Steel Products,
Computer monitors, Furniture etc.
• Services: Telcom Services, IT Services, Financial Services,
Rooms above Rs.7,500/- etc..
 GST STRUCTURE (0% to 28%)
• 28% : Luxury and Sin Tax : pan masala,
Washing Machines, Automobiles,
Motor Cycles etc..
– Services: Cinema, Race Club Betting etc..
 GST COUNCIL
• Joint Forum of Central & State Govts.
• Members:
• Union Finance Minister ( Chair person)
• Union Minister of State for Finance
• Minister of Finance of Each State Govt
• Member Secretary (ex-officio)
 Transportation in India

• Road : 60.2%
• Rail : 32.1%
• Coastal Shpg. : 7.4%
• Air : 0.3%
 e-Way Bill
• When e-Way Bill can be generated?
• 1. In relations to Supply;
• 2. In relations to “Return”;
• 3. In relations to Inward supply from an
unregistered person
– Supply means: Sale of goods and payments made;
– Transfer (Branch transfer);
– Exchange of Goods
 e-Way Bill
• 4. For certain specified goods below Rs.50,000/-
– Inter-State movement by the Principal to the job
worker
– Inter-State transfer of handicrafts are EXEMPTED from
GST registration
• Who should Generate?
– A) Registered person
– B) Unregistered person (supplying to a registered
person)
– Transporter carrying goods by Air, rail, road etc.. If
Supplier has not generated e-way bill
 e-Way Bill
• E-Way Bill NOT required if:
– a) Mode of transportation is by non-motor
– b) Transportation from Port, Airport, Air cargo
complex to ICDs, CFS,
– c) Transport of Specified Goods viz.:
• Printed Books, Live Animals, Live Poultry, meat, Animal
Fat, Fish, Curd, Lassi, Milk, Human Hair,
Bones/products, Vegetables, Coffee Beans, Grain etc..
 e-Way Bill
• Validity of an e-Way Bill
– Less than 100 kms: 1 Day
– Every Addl. 100 Kms : 1 Day
• Documents required to generate e-Way Bill:
– Invoice / Challan
– Transporter ID / Vehicle Nr
– Transport Document
 UNIT - V

•LAW OF CARRIAGE OF
GOODS
 CARRIAGE OF GOODS BY SEA

• Basis: Common Law Principles

• Contract Law
• Law of Torts
• International Conventions
 CARRIER

• CARRIER:

• A Person who undertakes Carriage and issues

his Document of Carriage
 CARRIER
• COMMON CARRIER: • PRIVATE CARRIER:
• 1. One who holds himself • 1. Reserves himself the
out as ready for hire to right of accepting or
transport from one place rejecting offers of goods-
to another – land, sea, air ( whether full or empty)
etc.. • 2. Bailee of Goods ( Liable
• 2. Service to All and for negligence)
Sundry
• 3. Strict Liability
• 4. Common Carrier bound
to carry Goods of All
 COMMON CARRIER’S DUTIES
• COMMON CARRIER BOUND TO CARRY GOODS OF
ALL:
• EXCEPT ( UNLESS):
– 1. No Space in Carrier / Vehicle
– 2. Not the kind of cargo usually carried
(ex.: DG)
– 3. Not the destination
– 4. Unusual Time / hour
– 5. Not properly packed / marked
– 6. Payment of Freight Terms ( PP / CC)
 COMMON CARRIER

- Common Carrier: Hold Himself out to All

- Liable for Loss / Damage during Care – even
without Negligence ( Unless there is express
contract )
 EXCEPTIONS UNDER STRICT LIABILITY
OF COMMON CARRIER
• a) ACT OF GOD – Natural Causes beyond Human
intervention
• b) QUEEN’S ENEMIES – Act of Enemy countries
• c) INHERENT VICE OF GOODS – Wear and Tear,
Deterioration in quantity/ quality
• d) FAULT / FRAUD OF CONSIGNOR: Inaccurate
addressing / fraudulent practice of Consignor –
Dangerous Goods / IMO cargo – Warranty by shipper
Non- Declaration: Criminal offence
TYPES OF CONTRACT OF CARRIAGE
• 1. Under Bill of Lading or Seaway Bill
– ( Contract of Carriage)
• 2. Under Charter Party
– ( whole or substantial part of ship)
• Contract of Affreightment = more than one
ship – covers quantity of cargo during a period
of time
 TYPES OF CHARTER PARTIES

• 1. Voyage Charter party

• 2. Time Charter party
• 3. Bareboat ( Demise ) Charter
party
 VOYAGE CHARTER PARTY
• VOYAGE CHARTER ( TRIP CHARTER)
• Carriage of Cargo for a specified voyage /
voyages
• From Named port/s to named port/s or
Geographical Range (ARHB)
• Freight : Lump sum / Volume / Weight
 TIME CHARTER PARTY
• Hire for a period of Time
• Hire Payment: Monthly / Semi-monthly basis
• Possession and Control with owner
• Charterer pays for: Fuel, Berth hire, Harbor Dues,
Load / Discharge Expenses
• Charterer: Gives instruction to Master as to
which port it should go
• Master / Crew: Servants of Ship Owner ( vicarious
liability)
• Option of Sub-Charter ( Sub-Let)
• Charterer : Disponent Owner ( Deemed to be
Owner)
BARE BOAT ( DEMISE) CHARTER PARTY
• Charterer: takes Possession and Control
of Ship
• Charterer: Mans, Equips and assumes all
responsibility ( Management &
Operation) for Navigation
–Vicarious Liability for Charterer
• Charterer can even Change ‘Ship’s Flag’
 CARRIAGE OF GOODS BY SEA
• LAW OF CARRIAGE OF GOODS BY SEA
• Background:
• 1893: Harter Act (USA)
– Cargo to / from USA
• 1904: Sea Carriage Goods Act ( Australia)
• 1910: The Water Carriage of Goods by Sea
(Canada)
• 1921: The Hague Rules, Brussels ( Europe)
 CARRIAGE OF GOODS BY SEA
• LAW OF CARRIAGE OF GOODS BY SEA
• Background: ( contd..)
• 1924: Carriage of Goods by Sea Act, ( UK & India)
• 1968: Hague –Visby Rules ( Brussels Protocol)
– Ratified by World’s major Maritime Nations
• 1978: The Hamburg Rules
– No major Maritime Nation ratified it
• 2009: The Rotterdam Rules ( UNCITRAL)
 The Hague-Visby Rules, 1968
• Art. I. : Definitions
• Art. II.: Re: Loading, Stowage and Care of
Cargo
• Art.III.: Ship Owner’s Obligations
– Seaworthiness ( Due Diligence), man, equip,
make holds fit for cargo, Load, Handle,
Stow, Issue B/L, shipper’s guarantee,
limitation: 1 year etc..
 The Hague-Visby Rules
• Art. IV.: Exclusions
– No liability unless seaworthiness, Act, neglect of
master, servant, fire, perils of sea, Act of God, Act
of War, Public enemies, Arrest, Quarantine,
act/omission of shipper, strikes, lock out, riots,
civil commotion, wastage in bulk, Latent defect of
cargo etc..
• Limitation of Liability: SDR 666.66 per package
or SDR 2.00 per Kilo whichever higher
• Art. V.: Surrender Rights, Jurisdiction etc..
 HAMBURG RULES, 1978
• BACKGROUND:
• Developing Nations concerns
– Hague Rules Unfair
• Hague Rules drawn up by “Colonial Maritime
Nations”
• Carrier not responsible in most cases (in H-V
Rules)
• New Tech, New Cargoes, New issues
• No major Maritime nation ratified!
 Hague-Visby Rules 1968 Hamburg Rules 1978

a. Liability: From / To Ship’s Rail a. Liability: For Whole Voyage

b. Deck Cargo : Not Considered as b. Deck Cargo: States conditions for
Cargo carrying Deck Cargo
c. Not Liable for Delay c. Liable for Delay ( Fixed at 2 ½
d. Limitation Period: 1 Year Times Freight.
e. Limitation of Liability : d. Limitation Period: 2 Years
SDR 666.67 per Package OR e. Limitation of Liability :
SDR 2. 00 per Kilo whichever SDR 835.00 per Package OR
higher SDR 2.50 per Kilo whichever
f. Jurisdiction: higher
POL f. Jurisdiction:
Where B/L Issued POL
By Specific Incorporation POD
g. Vague & Ambiguous Language Where B/L Issued
Eg.: Reasonable Deviation Any One of Optional POD
Due Diligence By Specific Incorporation
g. Clearer language
 ROTTERDAM RULES 2009
( International Carriage of Goods Wholly or Partly by Sea )
• Liability Period: Place of Receipt till Place of Delivery
• Deck Cargo: If cargo in containers, or cargoes which are
carried on deck as per custom of trade
• Limitation of Liability: SDR 875.00 per package or
• SDR 3.0 per Kilo (whichever higher)
• Liability for Delay: 2 ½ Times the Freight Amount
• Limitation Time: 2 Years
• Jurisdiction: Place of Receipt/ Place of Delivery, Domicile of
Carrier, POL / POD, Any competent court/s as agreed between
parties,
• ( also takes care of Electronic Bill of Lading)
 ROTTERDAM RULES 2009
• Volume Contracts: Free to contract out of
Liability
• Promote Electronic B/L
– Presently One consignment generates: 36 Original
papers; 240 copies from 27 Parties
• General Average: Nautical Defence abolished
ie. Negligence of Master, Crew etc. Then NO
General Average
• Technical & Commercial developments taken
into account
• European Freight Forwarders - sceptical
 GENERAL AVERAGE
• General Average:
• An Extra-Ordinary and Intentional Sacrifice for
the Benefit of the whole Adventure to be
shared by ‘All’ in Proportion
• Particular Average:
• Ex.: One of the Life boats carried away in
storm--- Ship Owner to bear expenses
 GENERAL AVERAGE
• 3 Risks:

• The Ship
• The Cargo
• The Freight
 GENERAL AVERAGE
• Conditions to declare General Average:
• 1. Common Danger
• 2. Must NOT be due to fault of party claiming
(Ex.: Undeclared DG Cargo thrown overboard)
• 3. Danger must be a Real One
• 4. Voluntary , Reasonable & Intentional
Sacrifice (Ex.: Cargo thrown overboard to
lighten ship)
• 5. The Interests called upon to contribute
must have been saved
 GENERAL AVERAGE
• General Average Contribution: (By Benefitted
parties)
• 1. Ship Owner: Ship / Freight Payable (B/L, C/P)
• 2. Charterer: (In case, he charters for a cargo
interest)
• 3. Cargo Owner ( Cargo)
• 4. Containers in Container ships( not owned
by Line ( SOC, Leasing Cos. Etc..)
Liability enforced by S/Owner on behalf of all
other interested parties
 GENERAL AVERAGE
• RULES ON GENERAL AVERAGE
• YORK-ANTWERP RULES, 1994
• Uniform approach to GA contribution
• a. Introduction to Rule Paramount ( “ in no
case shall there be any allowance for sacrifice
or expenditure unless reasonably made or
incurred’ )
 GENERAL AVERAGE
• b) Reg. Tugs and Tows
• c) Rule ‘C’ on environmental liabilities to
exclude ‘pollutant substances
• d) Rule ‘E’ to reduce delays in preparation of
GA adjustments
GA Action: Discharge Ports
Average Bonds / Guarantee by Cargo Interest to
take delivery of Cargo
 GENERAL AVERAGE
• GA Calculation ( on Proportionate basis)
• Example:
• Salvage / Repair: $ 1,000,000/- ( 1.0 Mio)
• Value of Ship: $ 8,000,000/- ( 8.0 Mio)
• Value of Cargo Saved:$ 2,000,000/- ( 2.0Mio)
• GA Contribution:
• $ 800,000/- from Ship Owner
• $200,000/- From Cargo Interests
MULTIMODAL TRANSPORTATION OF
GOODS ACT, 1993
Multimodal Transportation = Carriage of
Goods by at least TWO different Modes of
Transport
Carrier = A person who undertakes carriage by
Rail, Road, Sea, Air or Inland Waterway
Multimodal Transport Document (MTD) = A
Negotiable or Non-Negotiable Document
Designated Authority:
The Director General of Shipping ( DGS)
MULTIMODAL TRANSPORTATION OF
GOODS ACT, 1993
MULTIMODAL TRANSPORT OPERATOR
(MTO)
= A Person who concludes a Multimodal
Transport Contract on his own behalf or
through another person acting on his behalf
/ A person who acts as a Principal
MULTIMODAL TRANSPORT DOCUMENT
(MTD) = a Negotiable or Non-Negotiable
Document
 MTO REGISTRATION
• In Prescribed Format
• Registration Fees: Rs. 10,000/ ( Ten Thousand)
• Who can Register?
– a) Shipping Company
– b) Freight Forwarding Company
a) & b): Minimum Annual Turnover of Rs.50.00 Lakhs in
previous financial year OR average Rs.50.00 Lakhs
during preceding 3 financial years
– c) Other Companies : Minimum subscribed Share
Capital of R.50.00 Lakhs ( or capital a/c of partners/
proprietors)
 MTO REGISTRATION

• RENEWAL: Every THREE YEARS

• Renewal Fees: Rs. 10,000/- ( or Rs. 20,000/- if
not re-applied within 60 days of Expiry Date.
• CANCELLATION OF REGISTRATION: If Incorrect
or False information / If no activity during two
years
 MTO LIABILITY
• FOR LOSS OR DAMAGE:
– SDR 2.00 per Kilo OR
– SDR 666.67 per Package, whichever higher
– SDR 8.33 per Kilo if Multimodal Transportation
does NOT cover Sea or Inland Waterways
• FOR DELAY: Maximum amount Equal to the
Freight Payable
• LIMITATION PERIOD: NINE Months
 MTO ACT JURISDICTION
• Jurisdiction for Instituting Action:
• The Principal Place of Business or
• Habitual Residence of Defendant or
• Place where Contract was made or
• Place of taking charge of goods or
• Place of Delivery or
• Any other place specified in Multimodal
Transport Contract
 BILL OF LADING
• A Commercial Document signed by/ on behalf
of the Carrier

• FUNCTIONS:
• Receipt of Goods
• Evidence of Contract
• Title of Goods
 BILL OF LADING

• 1. RECEIPT OF GOODS;
• Details of Quantity ( Tons / CBM)
• Identity ( Marks & Numbers)
• Name of Consignor / Consignee etc..
 BILL OF LADING
• 2. EVIDENCE OF CONTRACT:
• Includes Terms and Conditions of Shipment
• ( In Charter Party (C/P): B/L is a Receipt of
Goods & Title of Goods) – Not an ‘Evidence of
Contract” All Terms and conditions, clauses and
exceptions contained in C/P will apply to the B/L
• Charter Party itself is a Contract of Carriage

• Carriers free to terms and conditions which increases

liability:
– Torneo vs. Owners of the Ardennse” ( The Ardennese)
 “Torneo vs. Owners of the Ardennse” ( The
Ardennese)
– Shipped Spanish Oranges – should reach before a scheduled
increase in import duty – Received assurance ( Oral
understanding – ship would proceed directly to London – but
called Antwerp – Did not reach before crucial date - Owners
tried to assert rights and liabilities printed on B/L
• Held: 1. B/L Terms did not prevent Shippers from giving
evidence to “true contract” ( ie. Direct to London”) –
Amounted to Warranty
• 2. Breach of Warranty > Shippers entitled to ‘Damages’
representing ‘Import Duty’ + Additional Sum the cargo
would have fetched in the market without delay.
 BILL OF LADING
• 3. TITLE OF GOODS ( Negotiable
Document)
– ie. Title ( Ownership) gets transferred through
endorsement)
• A valid Title Holder gets Ownership of Cargo
THE BILL OF LADING

THE BILL OF LADING

 BILL OF LADING COLUMNS
• Shipper
• Consignee
• Notify Party
• Place of Receipt
• Port of Loading
• Port of Discharge
• Place of Delivery
• Vessel Name / Voyage Nr.
 BILL OF LADING COLUMNS (Contd..)
• Description of Goods
• Marks & Numbers/ Gross Weight / Net Weight /
Measurement
• Freight Details
– Freight Prepaid / Freight Collect ( Payable
Destination)
• Number of Original Bills of Lading
• Place & Date of Issue
• Signed for the Carrier ( As Agents )
• Bill of Lading Number ( Top / Bottom)
 THE BILL OF LADING
• FUNCTIONS:

• 1. RECEIPT OF GOODS
– Identity of Goods
– Marks and Numbers
– Description of Goods: Number / Kind of Packages
– Weight & Measurement
– In Apparent Good Order & Condition
 BILL OF LADING
• FUNCTIONS:

• 2. EVIDENCE OF CONTRACT
– All Clauses / Terms and Conditions of Contract of
Carriage inserted on the Bill of Lading
– Signed by the Carrier with Place and Date of
Contract
 THE BILL OF LADING
• FUNCTIONS:
• 3. DOCUMENT OF TITLE (Negotiable Document)
– Enables the Holder to claim delivery of Goods at
Destination
– Permits Holder to transfer ownership of Goods at any
point of transit
– Used as a Security for Payment
– Must be presented at destination to get delivery of
Goods.
 SEAWAY BILL
• A DOCUMENT SIMILAR TO BILL OF LADING

• DIFFERENCE: SEAWAY BILL IS NOT

NEGOTIABLE
• NO PRESENTATION NEEDED AT DESTINATION
TO OBTAIN DELIVERY OF GOODS
 TYPES OF B/L
• Basic Principle: Any B/L is a B/L
• MBL: Master B/L ( issued by Actual Carrier)
• HBL: House B/L ( Issued by NVOCC/NVO,
Forwarder etc..)
• FBL: Forwarder’s B/L ( FIATA B/L Format)
– Federation of International Freight Forwarders
Association – “ Federation Internationales des
Associations de Transitaires et Assimilles.
 TYPES OF B/L
• CTD: Combined Transport Document
• CT B/L: Combined Transport B/L
• MTD: Multimodal Transport Document
– Place of Receipt > POL > POD > Place of Delivery
– Rail / Road / Inland Water / Sea (Ocean)
• Through B/L: POL / POD (with Transhipment)
 B/L
• Received for Shipment B/L
• Shipped on Board B/L
SEAWAY BILL
• - Non Negotiable > Not a Document of Title
– No Presentation needed at Port of Discharge
MISSING B/L .. LATE B/L
Letter of Indemnity
Principal’s Agreement
Load Port Agreement
Shipper’s Agreement
 B/L
• STRAIGHT B/L
• “TO ORDER” B/L
• Mate’s Receipt
• Dock’s Receipt ( Terminal Receipt)

• FCL / FCL
• FCL / LCL
• LCL / LCL
• LCL / FCL
 MAIN CLAUSES IN BILL OF LADING
• Paramount Clause: To incorporates which of the Rules
– Hague-Visby , Hamburg Rules to apply
• Lien Clause: Ship Owner entitled to Lien on cargo for
unpaid freight, other charges ( Contractual Lien )
• Freight Clause: Pre-paid, Collect- Freight earned
whether cargo lost or not lost
• General Average: Applicability of York – Antwerp Rules
• Transhipment Clause: Ship Owner’s choice
• Himalaya Clause: Exclusion Clause ( Carrier, agents,
servants, contractors, stevedores NOT liable loss or
damage to cargo)
 Shipping Contracts
• Bill of Lading
• MTD – Multimodal Transport Document
• CTD - Combined Transport Document
• Seaway Bill
• Charter Parties
• CFS
• Warehousing
• Container Transportation ( Trailer Operation)
• Shipping Order
• ( Any Transport /Warehousing / Handling / Yard
Contract )
 CARRIAGE BY RAIL
• The Railway Act, 1989 came into force on
July 1, 1990 superseding the erstwhile Indian
Railway Act, 1890. Carriage of Goods has been
dealt with in inter alia Chapter IX-XI of the Act
(Sections 61-112). The Act provides for inter
alia responsibilities, duties and liabilities of
the Indian railway administration as a carrier
of goods, provision for rates and procedure
required to be complied with and redressal
mechanism for grievances related to carriage
of goods.
 RAILWAY ADMINISTRATION AS
CARRIERS (Ch. XI- Sec 93-112)
• RESPONSIBILITY:
• Responsible for loss, damage, destruction and
deterioration in transit or non-delivery
• EXCEPTIONS:
• 1. Act of God
– Unforeseen natural causes beyond human
intervention. Ex.: Earthquake, storm, tsunami
• 2. Act of Public Enemies
– Not liable for loss as a result of public enemy actions
• 3. Inherent Vice (Latent defect) in the goods or
natural deterioration or wastage in bulk or weight
– Not liable for inherent defect of goods
 RAILWAY ADMINISTRATION AS
CARRIERS (Ch. XI- Sec 93-112)
• EXCEPTIONS: ( Contd.)
• 4. Arrests, Restraint or Seizure under legal
process
• 5. Restriction orders by the Central or State
Govt.
• 6. Act of Omission or Negligence of Consignor,
Consignee or Endorsee
• Fire, explosion or any unforeseen risk
 RAILWAY ADMINISTRATION AS
CARRIERS (Ch. XI- Sec 93-112)
• RESPONSIBILITIES (LIABILITY):
• Delay or Detention
– And subsequent loss, destruction, deterioration etc
• Owner’s risk Rate or Railways risk rate
• Defectively or Deceptively packed goods
– Not responsible
• Liability after termination of Transit
– Liability extends to another 7 days after end of Transit
 RAILWAY ADMINISTRATION AS
CARRIERS (Ch. XI- Sec 93-112)
RESPONSIBILITIES (LIABILITY):
• Responsibility on Luggage
– Not liable if luggage is under custody of Passenger
• As Carrier of Animals
– Not responsible
• Exoneration (Exclusion) of Liability
– If the loss is due a false description of goods
– Where a fraud has been done by Consignor, Consignee or
endorsee
– Caused by improper loading or unloading by consigner /
consignee respectively
– Due to riot, civil commotion, strike, lock-out, restraint of
labour
 RAILWAYS CLAIMS TRIBUNAL
• The Railway Claims Tribunal Act, 1987
provides for the establishment of a Railway
Claims Tribunal for enquiring into and
determining claims against a railway
administration for loss, destruction, damage,
deterioration or non- delivery of animals or
goods entrusted to it and connected matters.
This Act has an overriding effect. Section 15
read with Section 13 of the Railway Claims
Tribunal Act, 1987 bars the jurisdiction of civil
courts.
 CARRIERS’ ACT, 2007
• GOODS RECEIPT
– The goods receipt shall be prima facie evidence of
the weight or measure and other particulars of
the goods
• DELAY – Liable for Delay
• REGISTRATION – with competent Authority
• LIABILITY
– limited to such amount as may be prescribed
having regard to the value
CARRIAGE BY AIR
• LAWS RELATING TO THE CARRIAGE
BY AIR
• The Carriage by Air Act, 1972
– ( Replaces Carriage by Air Act, 1934)

Montreal Convention
 The Montreal Convention
• This Convention applies to all international
carriage of persons, baggage or cargo
performed by aircraft for reward. It applies
equally to gratuitous carriage by aircraft
performed by an air transport undertaking.
 The Montreal Convention
• “International Carriage" means any carriage in
which, according to the agreement between
the parties, the place of departure and the
place of destination, whether or not there be
a break in the carriage or a transhipment, are
situated either within the territories of two
States Parties, or within the territory of a
single State Party if there is an agreed
stopping place within the territory of another
State, even if that State is not a State Party.
 The Montreal Convention
• The Air Way Bill shall be made out by the consignor
in three original parts.
• The first part shall be marked "for the carrier"; it
shall be signed by the consignor. The second part
shall be marked "for the consignee"; it shall be
signed by the consignor and by the carrier. The
third part shall be signed by the carrier who shall
hand it to the consignor after the cargo has been
accepted.
• The signature of the carrier and that of the
consignor may be printed or stamped.
 The Montreal Convention
• LIMITATION OF LIABILITY:

• Death or Injury : SDR 100,000/-

• Delay /Loss of Baggage: SDR 1,000/- Per Package
• SDR 4,150/-Per Passenger
• Delay/ Loss of Cargo : SDR 17.0/- Per Kilo
 Documents of Carriage by Air
• 1. Passenger Ticket
– Name of Passenger
– Place and Date of Issue
– Place ( Airport) of Departure / Destination
– Agreed Stopping (Transit) places (Airports)
– Name and address of Carrier/s
– Rules of carriage
• 2. Baggage / Luggage Ticket
– Apart from above, the number of baggage
– Weight of Baggage ( packages)
– Value ( if declared)
 Airway Bill or Air Consignment Note
• 3. Airway Bill or Air Consignment Note
• Must be made in THREE original parts:
– One for the Carrier
– One for the Consignee
– One for the Consignor
– Must be printed and stamped
• Must contain:
• 1. The Place and date of execution
• 2. Place of Departure and Place of Destination
• 3. Place of stopping (Transit)
 Airway Bill or Air Consignment Note
• Must contain:
• 4. Name and Address of Consignor (Shipper)
• 5. Name and Address of Consignee
• 6. Name and Address of First Carrier
• 7. Nature of Goods
• 8. Number of Packages, marks and numbers
• 9. Weight, Volume, quantity or dimension
• 10. Apparent condition of goods
• 11. Freight Details – Prepaid or To Collect
 Airway Bill or Air Consignment Note
• Must contain:
• 12. If the price of goods to be paid on delivery
• 13. Amount of value declared
• 14. The number of parts of Airway Bill
• 15. Rules relating to liability
• AWB is a prima facie evidence of contract
• The consignee entitled to be given cargo upon
payment of necessary charges
TYPES OF CONTRACT OF CARRIAGE
• 1. Under Bill of Lading or Seaway Bill
– ( Contract of Carriage)
• 2. Under Charter Party
– ( whole or substantial part of ship)
• Contract of Affreightment = more than one
ship – covers quantity of cargo during a period
of time
CHARTER PARTIES (Basic Anatomy)

• 1. Voyage Charter party

• 2. Time Charter party
• 3. Bareboat ( Demise ) Charter
party
 VOYAGE CHARTER PARTY
• Carriage of Cargo for a specified voyage /
voyages
• From Named port/s to named port/s or
Geographical Range (ARHB)
• Freight : Lumpsum / Volume / Weight
 TIME CHARTER PARTY
• Hire for a period of Time
• Hire Payment Basis: Per Day
• Payable: Monthly / Semimonthly basis
• Possession and Control with owner
• Charterer pays for: Fuel, Berth hire, Harbour Dues,
Load Discharge Expenses
• Charterer: Gives instruction to Master as to which
port it should go
• Master / Crew: Servants of Ship Owner ( vicarious
liability)
• Option of Sub-Charter ( Sub-Let)
• Charterer : Disponent Owner ( Deemed to be Owner)
BARE BOAT ( DEMISE) CHARTER PARTY
• Charterer: takes Possession and Control
of Ship
• Charterer: Mans, Equips and assumes all
responsibility ( Management &
Operation) for Navigation
–Vicarious Liability for Charterer
• Charterer can even Change ‘Ship’s Flag’
 LAW OF MULTIMODAL
TRANSPORTATION IN INDIA
• Carriers’ Act, 2007 (Road)
– ( The Indian Carriers’ Act of 1865 REPEALED )
• The Indian Railway Act, 1989 (Rail)
• Carriage of Goods by Sea (Sea)
• The Multimodal Transportation of Goods Act,
1993 ( Multimodal)
 CARRIERS’ ACT, 2007
• GOODS RECEIPT
– The goods receipt shall be prima facie evidence of
the weight or measure and other particulars of
the goods
• DELAY – Liable for Delay
• REGISTRATION – with competent Authority
• LIABILITY
– limited to such amount as may be prescribed
having regard to the value
 The INDIAN RAILWAY ACT, 1989
• RAILWAY RECEIPT
– evidence of the weight and the number of
packages
• LIABILITY
– by an application before the Claims Tribunal for
compensation for loss, destruction, damage,
deterioration or non-delivery of any goods
• TYPES OF RAILWAYS:
– Government Railway & Non- Government Railway
Carriage of Dangerous Goods in INDIA

BASIS LAWS
• Enviornment Protection Act, 1986
• Carriage by Road Act, 2007 ( Sec. 13 & 14)
• Domestic Air Cargo : Same as International
Civil Aviation Authority (ICAO) guidelines.
 CONVENTIONS on Road / Rail Modes
• CMR Convention, 1956 (1978)
– International Carriage of Goods by Road
• CIM, 1956
– International Agreement on Rail Transport
– CIM ( 8th Revision, 1980) – Inter-governmental
Organisation for International Carriage by Rail
(OTIF) convention
• US Carriage of Goods by Sea Act, 1936
(USCOGSA)
 Carriage by Road
• CMR Convention

• CMR: Carriage of Goods by Road, 1956 / 1978

• (Convention relative au contrat de transport
international de Marchandises par Route)

Liability: SDR: 8.33 per Kilo

 Carriage by Rail
• CIM (OTIF Convention)
• CIM: International Agreement of Rail
Transport, 1956
• ( Inter-governmental Organisation for
International Carriage by Rail (OTIF)
• Liability: SDR 17.00 per kilo
 GENERAL AVERAGE
• General Average:
• An Extra-Ordinary and Intentional Sacrifice for
the Benefit of the whole Adventure to be
shared by ‘All’ in Proportion
• Particular Average:
• Ex.: One of the Life boats carried away in
storm--- Ship Owner to bear expenses
 GENERAL AVERAGE
• 3 Risks:

• The Ship
• The Cargo
• The Freight
 GENERAL AVERAGE
• Conditions to declare General Average:
• 1. Common Danger
• 2. Must NOT be due to fault of party claiming
(Ex.: Undeclared DG Cargo thrown overboard)
• 3. Danger must be a Real One
• 4. Voluntary , Reasonable & Intentional
Sacrifice (Ex.: Cargo thrown overboard to
lighten ship)
• 5. The Interests called upon to contribute
must have been saved
 GENERAL AVERAGE
• General Average Contribution: (By Benefitted
parties)
• 1. Ship Owner: Ship / Freight Payable (B/L, C/P)
• 2. Charterer: (In case, he charters for a cargo
interest)
• 3. Cargo Owner ( Cargo)
• 4. Containers in Container ships( not owned
by Line ( SOC, Leasing Cos. Etc..)
Liability enforced by S/Owner on behalf of all
other interested parties
 GENERAL AVERAGE
• RULES ON GENERAL AVERAGE
• YORK-ANTWERP RULES, 1994
• Uniform approach to GA contribution
• a. Introduction to Rule Paramount ( “ in no
case shall there be any allowance for sacrifice
or expenditure unless reasonably made or
incurred’ )
 GENERAL AVERAGE
• b) Reg. Tugs and Tows
• c) Rule ‘C’ on environmental liabilities to
exclude ‘pollutant substances
• d) Rule ‘E’ to reduce delays in preparation of
GA adjustments
GA Action: Discharge Ports
Average Bonds / Guarantee by Cargo Interest to
take delivery of Cargo
 GENERAL AVERAGE
• GA Calculation ( on Proportionate basis)
• Example:
• Salvage / Repair: $ 1,000,000/- ( 1.0 Mio)
• Value of Ship: $ 8,000,000/- ( 8.0 Mio)
• Value of Cargo Saved:$ 2,000,000/- ( 2.0Mio)
• GA Contribution:
• $ 800,000/- from Ship Owner
• $200,000/- From Cargo Interests
 SALVAGE
• Salvage: “A legal liability arising out of the fact
that property has been saved should
compensate to those who have saved it.
• The rescue of a ship, its crew, or its cargo from
danger.
• One who has no contractual relationship with
‘Saved Property”
• > Voluntariness:
• > Useful Service ( degree of success)
• > Subject of Salvage must be in danger
 SALVAGE
• Salvage services of Crew of Abandoned ship
beyond contractual duty arising from
employment contract
• Ex.: Crew rescued ship which was earlier
abandoned by orders of Master
• LIFE SALVAGE: Life Salvage alone do not qualify
(unable to assess value)
• But Life + Property: Custom to Award Higher
Salvage Award
• ( Owners of All Property who have benefitted
from Salvage must contribute)
THANK YOU