Wed, Oct

Identity of shipper


Identity of shipper. While the Hague-Visby Rules and Hague Rules define the “carrier” and the “ship”, they do not define the “shipper” although Art. 1(a) refers to a “shipper” in its definition of a carrier.

The Hamburg Rules are much more explicit. They define the shipper as being:

“... any person by whom or in whose name or on whose behalf a contract of carriage of goods by sea has been concluded with a carrier, or any person by whom or in whose name or on whose behalf the goods are actually delivered to the carrier in relation to the contract of carriage by sea.” The shipper has certain obligations and certain acts or omissions of the shipper may be a breach of the
contract of carriage preventing the shipper from having any remedy. For example, Art. IV, r. 2(i) of the Hague-.Visby Rules/Hague Rules state that neither the shipowner nor the carrier will be liable for loss of or damage to goods resulting from an act or omission of the shipper or owner of the goods, his agent or representative. The shipper can be the charterer of the ship but may also be a person who does not need to charter the entire ship. The ship may also be chartered by a charterer who sublets the vessel to carry cargo for a separate shipper.
In an international sale of goods, it may be important to distinguish the identity of the shipper who may be a party to the contract of carriage with the shipowner. The bill of lading is the document issued by the carrier to the shipper. If the goods are sold on CIF or C and F terms it is usually the seller who is the shipper. He enters into the contract of carriage with the shipowner. The payment of the sale price by or for the buyer simply transfers the property in the goods but the endorsement and delivery of the bill of lading is constructive delivery of the goods and also a transfer of the rights under the contract of carriage. The identity of the shipper is important for a number of reasons, and not only to identify the person to whom the bill of lading is issued by the carrier. For example, under section 2 of the Bills of Lading Act 1855, the shipper is liable for freight.
Normally, especially in a CIF sale, the seller would be the shipper. Whether the buyer is the shipper or not requires an analysis of the contracts of sale and of carriage. The buyer may be the shipper if the terms of trade are one category of FOB. There are a number of varieties of FOB contracts and the variations were described in Pyrene v. Scindia, 1954, in which the judge held that the buyer was the shipper. The buyer had entered into the contract of carriage with the shipowner but was nOt the charterer. During the loading operations the shipowner’s servants were negligent and the cargo was dropped and damaged. Before the goods passed the ship’s rail, under the usual concept of FOB, they were still the property of the seller. The seller had no contract of carriage with the shipowner. Therefore the seller could not bring an action for breach of contract. Therefore he brought an action for the tort of negligence. In this situation, the shipowner could not have relied on protective clauses in the contract of carriage which limited his liability.
The shipowner claimed the seller was party to the contract of carriage; the seller denied this. The judge took pains to describe different classes of FOB contracts.

He said:
“In ... the classic type... the buyer’s duty is to nominate the ship, and the seller’s is to put the goods on board for account of the buyer and procure a bill of lading in terms usual in the trade. In such a
case the seller is directly a party to the contract of carriage at least until he takes out the bill of lading in the buyer’s name.... Sometimes the seller is asked to make the necessary arrangements; and the contract may then provide for his taking the bill of lading in his own name and obtaining the payment against the transfer, as in a c.i.f. contract. Sometimes the buyer engages his own forwarding
agent at the port of loading to book space and procure the bill of lading; . . . In such a case the seller discharges his duty by putting the goods on board, getting the mate’s receipt and banding it to the
forwarding agent to enable him to obtain the bill of lading.”
Therefore, in the first type, the seller is party to the contract and is initially the “shipper”. In the second type, the seller makes the contract in his own name, takes the bill of lading and then transfers it to the buyer as if the transaction was a normal CIF transaction. In the third type, the seller is not a party to the contract at all. In Pyrene v. Scindia, it was held that the FOB sale was in the third category.
Therefore the buyer was in contract with the shipowner and was the “shipper”.However, the seller was held to be in an “implied” contract with the shipowner owing to the judge’s opinion that the three parties, buyer, seller and shipowner, were all parties in a joint venture. Therefore the seller was bounc by the protective clause in the contract of carriage. (This aspect of the implied contract between the seller and the shipowner when the buyer was clearly the “shipper” is doubtful after f a decision in the House of Lords in 1962, Scruttons v. Midland Silicones, which criticised this aspect of Pyrene. However, it is probably still correct that the buyer can be the “shipper”.)