ITL

21/8/2023 (Monday)

Hypothetical

Contract of carriage (CoC)- It is entered into b/w the carrier and the shipper (Person who is
responsible for the shipping the goods).

Carrier when he received goods from shipper, he handover shipper the transport document.

Nomenclature of Transport documents differs depending upon the modes of transportation.

- Air- Transport document referred to as- Airway bill

- Rails- Railway receipt
- Road- Lorry receipt
- Sea- Bill of lading
- Multimodal transport-

there is lot of similarity b/w these transport documents whatever be the mode of transport.

United Nations Convention on the Carriage of Goods by sea, 1978

- adopted in Hamburg
- Aka Hamburg rules
- CoC by sea means a contract whereby the carrier undertakes against payment of
freight to carry goods by sea from one port to another.
- Carrier- It means any person by whom a CoC of goods by sea has been concluded
with a shipper.
- Shipper- It means any person by whom a CoC of goods by sea has been concluded
with the Carrier.
- Consignor- It is a person who has the responsibility of placing or handing over the
goods to the Carrier. This person need not be the seller.
- What is the difference b/w Shipper and Consignor?
- Consignee- It is the person who receives the goods from the carrier at the port of
destination. This person need not be the buyer.
- Difference b/w Consignee and buyer?
22/8/2023 (Tuesday)

Bill of lading

- Ralph Folson- In his book International Business Transaction

“A bill of lading is a document issued by the carrier acknowledging that certain goods
have been received on board the vessel for conveyance to a named place for delivery
to a consignee who may be identified.”

- This definition does not say to whom the carrier issues the bill of lading.
- ‘Certain goods’- Why it doesn’t say good of contract description? What is the
obligation of the carrier to inspect the goods?
Practically not possible for carriers to inspect all goods received from different
shippers.

- Consignee who may be identified- When eventually goods arrive at port of

destination consignee has to be identified. Here he is talking about the identification
of consignee when the bill of lading is issued i.e when the goods are at port of
shipment.
b/c later on buyer may sell the goods before the goods arrive at the port of destination.

- Certain function that the bill of lading performs in international transactions

1. Receipt for goods (handed over to the carrier)
a. Shows that seller has fulfilled his obligation
2. Document of title
a. Bill of lading may operate as document of title. It will depend upon the type of
bill of lading.
3. Contract of carriage
 - Bill of lading also incorporates disclaimer clause by carrier. It is a clause by which
carrier seeks to absolve his liability in case the goods are not conforming.
“Weight, value, contents of goods when shipped unknown...”
- Historically liability of the carrier to safely ship the goods was strict except to act of
god,…., . However, with the development of freedom of contract (party autonomy),
carriers began to take advantage of their superior position (b/c less carrier as
compared to the people involved in the contract).
- Carrier rely on the information provided by the shipper, it is not practically possible
for the carrier to inspect whether the goods are conforming or not?
- How the courts have interpreted the disclaimer clause in the bill of lading?

Case: New Chinese Company v Ocean Steamship Co

- Action
- Complete absolvelity of the carrier by virtue of disclaimer clause.

Case: Compania Naviera Vascangada v Churchil

- Goods in question being timber.

- Timber was exposed to petroleum b/c of which it has deteriorated.
- Carrier has noted this in the separate logbook but failed to mention the same in the
bill of lading.
- Court- carrier is estopped or prevented from seeking recourse to the disclaimer
clause. B/c carrier was aware of the defect in the goods.

23/8/23 (Wednesday)

- Estoppel rule: This rule does not affect the way the carrier has to do an inspection of
goods.
- carrier is required to do a cursory inspection. If in this reasonable inspection, the
defect in goods is apparent, the carrier has to mention the same in the bill of lading.

Case: Silver Company v Ocean steamship company

- The goods were packaged in tins, some tins had deep cuts while some had tiny holes.
- Deep cuts were apparent whereas the tiny cuts were not.
 - Bill of lading contained the usual disclaimer clause.

2. Bill of Lading may Operate as a document of title

- Peter Gilles in his book International business transaction

“A document that confers or proves ownership is a document of title. A document of title

evidences that the person in possession of the document is entitled to receive, hold and
dispose of the goods covered by the document.”

- Originally bill of lading was non-negotiable. Thus, it was made out in favor of a
specific person only.
- Negotiable bill of lading came into practice b/c merchant needed a document which
could be used to raise credit and which can be used to sell the goods while in transit.
- Bill of lading is symbolic possession of goods- thus this can be used as a collatral –
in this way can be used to raise credit.
- Bill of lading will operate as a document of title only when it is negotiable.
- Negotiable bill of lading aka order bill of lading. (Name of consignee- Mr A or
order).

Case: Sanders v Maclean

Court: A cargo at sea while in the hands of a carrier is necessarily incapable of physical
delivery. During this period of voyage the bill of lading is universally recognized as its
(cargo) symbol and endorsement and delivery of bill of lading operates as symbolic
delivery of cargo.

Court also noted certain benefits of a negotiable bill of lading:

a. The person in possession of negotiable bill of lading duly endorsed in his favour
entitled to receive the goods at port of destination.
b. It entitles a person to further transfer ownership in the goods by further endorsing and
delivery.
c. It acts as security for the debt.
Bill of lading as a Contract of Carriage-

- Bill of lading is an outcome of CoC. Contract of Carriage is issued much before the
bill of lading.
- Terms of CoC ought to be reflected in the bill of lading. (If CoC provides certain
dates, certain route, particular type of vessel, the same terms and conditions should
be reflected in bill of lading). There might be some difference in the terms of CoC
and BoL.
- CoC is entered into much before the bill of lading is issued.
- BoL is not really a contract of carriage rather an excellent evidence of CoC. If the
terms in BoL differ from CoC, shipper is not prohibited from establishing the original
terms in CoC.
- Ex. If in BoL the route mentioned is different from the CoC. B/c of that variation in
BoL, if shipper suffers any loss, the terms in CoC will take precedence.

25/8/2023 (Friday)

Bill of lading as a Contract of Carriage-

Case: Crooks v Allan- Court observed – A bill of lading is not a CoC but only an evidence of
the contract. It does not therefor follow that the person who accepts the bill of lading which
the carrier hands in necessarily binds himself to abide by all its stipulation.

Case: The Ardennes Case- The goods in question were oranges and they were to be
transported from cartegana, a port city of Spain to London. The shipper informed the Carrier
that he wanted the vessel to arrive in London before 1st of December b/c after that there
would be hike in the import duty and under the sales contract the hike in import duty has to
be born by the shipper. The CoC provided that the vessel would sail directly to London, it
would not deviate in Voyage to London. The Bill of lading entitled the Carrier to deviate in
Voyage. The vessel deviated and stopped at a port city of Belgium and arrived at London on
4th of December and hike in duty born by seller.

Court Said- The bill of lading is not in itself the CoC though an excellent evidence of its
terms. Once a binding contract has been concluded which would not allow deviation, nothing
printed on the bill of lading subsequently issued could alter the terms of that pre-existing
contract.
Presentation of bill of lading to the carrier at the port of destination

- What if documents have not arrived and goods have arrived? What if consignee does
not have bill of lading and goods have arrived?
- What carriers have to do in this situation?
- Carrier incorporate an indemnity clause in bill of lading. An indemnity clause is a
clause whereby a carrier handovers goods to a person who is not in possession of bill
of lading but will do so only after receiving indemnity bond from the person.

Case: Sze Hai tong Bank Ltd v Ramble cycle company ltd- A carrier who delivers goods
without production of the bill of lading does so at his own peril.

Types of the Bill of lading

1. Negotiable and non-negotiable

2. Shipped (on Board) and Received B/L
3. Clean and unclean (Claused) B/L
4. Stale B/L
5. Multi modal Transport document

Negotiable- also referred to as order B/L which indicate the carrier has to deliver the goods
to consignee and someone to whom consignee orders.

Shipped- It indicates that the goods have been placed on board the vessel for carriage.

Received: It indicates that the goods have been received by the carrier. They can be received
much before the boarding.

Unclean- Indicates that there are certain clauses, some noting which are incorporated by
carrier in the B/L b/c the carrier has found some defects in the goods on reasonable
inspection.

Clean: Indicates that there are no clauses, there are no noting which have been made by
carrier on B/L. Which indicates that the carrier has not found any apparent defects in the
goods on reasonable inspection.
Stale: B/L becomes stale b/c it was represented very late to the bank after shipment. The
bank will refuse the stale B/L. How Late? So UCP (Uniform Customs and Practice) says that
B/L represented 21 days after shipment will be considered as stale B/L.

Multimodal Transport document: In India it is governed by Multimodal transportation

rules 199..

28/8/2023 (Monday)

Stale BoL

- What if the seller doesn’t receive documents on time and b/c of that the
representation becomes late and BoL becomes stale. Does that mean he will not
receive payment b/c of reasons not in his control even after fulfilling his obligations?
- What are alternatives available to the seller?

Multimodal transport document

- Document issued by multimodal transport operator to the shipper.

- Features of MMTD are similar to BoL
- In India MMT is governed by MMT Act 1993. The act provides for registration as an
MMT operator. Only those who are registered under the act can take up the functions
of MMT Operator. Only those who have the necessary resources and are registered
can take up this function, so the interest of the shipper is adequately taken care of.
- In MMT – the contract is entered into b/w shipper and MMT operator.
- Sec 2(a) MMT act- Defines MM transportation- MMT means carriage of goods by at
least two different modes of transport under an MMT contract from the place of
acceptance of goods to a place of delivery of the goods outside India.
- The act also defines MMT document- Sec 2(la)- MMT document means a negotiable
or non-negotiable document evidencing a MMT contract. (Certain Characteristic of
MMT document are similar to BoL)
Choice of Law Clause

- It is a clause in the Contract that specifies the Law applicable.

- If there is no choice of law, Pvt International law require the forum to determine the
law.
- Party autonomy- Fundamental principle of Pvt Int Law- Autonomy or freedom of
parties to choose the applicable law. Freedom of parties to incorporate particular
clauses in the contract.

Private International Law

- it refers to that branch of law ….

Determining the choice of law

- The forum in deciding the choice of law follow the hierarchy

a. Express selection
b. Implied selection
c. Closest connection test

A. Express selection
- Parties have exercised their right to chose the governing law. Made an express choice
of law in the contract.
- Where there is express selection, the forum will respect that choice and apply that
law.

B. Implied Selection
- This come into picture when there is no express selection.
- How the forum will interpretate that there is implied selection?
- One way- If there is use of certain terms which are specific to a particular
Jurisdiction. Let’s say in a contract b/w American and German Party the parties have
incorporated the term of Nachfrist notice (Concept followed in civil law jurisdiction,
 common law does not recognize this concept). Then the forum may conclude that the
applicable law as German law.

C. Closest connection test

- the forum will look at various aspect and elements of the contract and look from
which jurisdiction the contract is closely connected.
- It will look at nationality of the parties, Place where the contract was entered into,
place of business of parties, place where the contract has to be performed, currency
of contract.

This hierarchy is reflected in the convention on the Law Applicable to contractual

obligation (Rome Convention)

- Art 3 of Convention- Freedom of choice- A contract shall be governed by law

chosen by the parties. The choice must be expressed or demonstrated with reasonable
certainty by the terms of the contract or by the circumstances of the case.
- Art 4- Applicable law in the absence of choice- To the extent that the law
applicable to the contract has not been chosen in accordance with article 3, the
contract shall be governed by the law of the country with which it is most closely
connected. Nevertheless, a severable part of the contract which has a closer
connection with another country may by way of exception be governed by the law of
that other country.
- Depecage- French tern for Spliting
- Case:Wills M. Reese in his book Depecage : Choice of law issues: Depecage can be
broadly define to cover all situations where the rules of different states are applied to
govern different issues in the same case.

United Nations Convention on the Contract for the International Sale of Goods
(UNCISG)

- Aka CISG or Vienna Convention

- Attempt to harmonize or unify sales law across jurisdictions, thereby avoid the
choice of law issues.
- Developed by UNCITRAL
- There is no specific forum which will deal with the CISG.
 - If parties have not incorporated the choice of law clause and when states are parties
to CISG, the forum is likely to apply the CISG.
- It’s likely to be applicable law. Why even if both the states to which parties belong
are part of CISG, it may not be applicable law? Parties can exclude the applicability
of CISG (B/C it allows parties to exclude CISG under Article 6). However, the CISG
does not mention whether the exclusion should be implied or expressed.
- Considered to be one of the most successful documents in the context of the sale of
goods
- India is not party to CISG. Still, CISG may apply to a contract Where an Indian is a
party to the contract. US and Germany both are parties to CISG.
- CISG is not exhaustive – number of things are excluded from it- b/c it is a binding
document
- Thus, even incorporating CISG is not complete choice of law. Here the forum have to
go back to the Hiearchy.

29/8/2023 (Tuesday)

CISG

- Problem arises when the parties have not expressly excluded the applicability of
CISG.
- Certain types of sale of goods are excluded from the purview of CISG under art 2.
Thus, even if parties belong to states who are party to CISG, it would not be
applicable b/c it does not deal with those type of goods.
- CISG is divided into 4 parts
1. Part I- Sphere of Application and General Provisions
2. II- Formation of Contract
3. III- Rights and obligation of buyers and sellers and remedies available for breach
of contract
4. IV- reservation
Reservation

- Provisions whereby a state expresses its intention to exclude or modify the

applicability of certain provisions of the convention.
- It allows a state to remain party to a convention but at the same time the state would
not be bound by certain provisions of the convention.

Applicability of CISG

- Art 1 to 6, 10, and 95- for the purpose of determining whether CISG is applicable.

Art 1

- This convention applies to contracts of sale of goods b/w parties whose places of
business are in different states.
(a) When the states are contracting states, or
(b) When the rule of private international law leads to the application of the law of a
contracting state.

 How do you determine the international character of contract

- Nationality
- As per art 1 international character is determined on the basis of place of business.
However, it does not explain what does the place of business mean.
- (B) –
Ex. Let say X (place of business in India)- Y (Place of business in Canada)
Here sub para (a) would not be applicable b/c only Canada is party to CISG not India.
(c) If forum after applying rules of pvt International law determines that the
Applicable law would be law of Canada then CISG would be applicable.
- Let say instead of Canada, Place of Contract is US. Here forum need not go to
applicability of Para (b) of CISG b/c of art 19 of CISG.
 Art 10

- For the purpose of this convention, if a party has more than one place of business, the
place of business is that which has the closest relationship to the contract.

Art 6

- The parties may exclude the application of this convention or vary the effect of any
of its provisions.

 This article incorporates the principle of party autonomy. It also allows parties to
exclude certain provisions of CISG. But the art does not mention whether the
exclusion should be expressed.

Art 95

- Any state may declare at the time of deposit of its instrument of ratification or
accession that it will not be bound by subparagraph 1(b) of art 1of this convention.
 US has exercised this option.

Accession is an act of state to agree to become a part of the treaty by …. It happens after
treaty comes into force.

Article 2- This convention doesn’t apply to sales:

a. Of goods bought for personal, family or household use.

b. By auction

c. By authority of law

d. Of shares, investment securities, negotiable instruments or money

e. Of vessels or aircrafts

f. Of electricity
Article 3- Contracts for the supply of goods to be manufactured are to be considered sales
unless the party who orders the goods undertakes to supply a substantial part of the materials
necessary for such manufacture.

Substantial part is decided from the economic point of view.

Article 4- This convention governs only the formation of the contract of sale and the rights
and obligations of the seller and the buyer arising from such a contract. In particular, this
convention is not concerned with the validity of the contract.

Article 5- This convention doesn’t apply to the liability of the seller for death or personal
injury caused by the goods to any person.

For matters that are not governed by the CISG, the parties can use UNDROIT principles for
supplementing the contract:

The inspiration for UNDROIT principles comes from restatement of contract law- American
Law Institute. Restatement is not meant to have binding effect but

5/9/2023

UNIDROIT Principles

- Not binding.
- They become binding only when parties.
- Preamble- says that principles shall apply if the parties have chosen. Evrywhere else
it uses the word may.
- One of the purposes to fill the gaps in CISG.
- The principles apply to commercial contracts only.
- If at all conflict arises applicability of CISG and principles: Two possibilities
a. Contract for sale of goods
b. Commercial contract other than sale of goods- CISG not applicable b/c it is only
applicable in case of sale of goods
- Even in the case of contract for sale of goods principles are broader in scope than
CISG- b/c were drafted to fill the gaps in CISG. Thus, while drafting the principles
the CISG was an obligatory point of reference. In relation to CISG they are more
comprehensive:
 a. One of the purposes was to supplement the CISG, to fill the gaps.
b. Principles are not meant to be binding, CISG is binding if ratified. Since
negotiating states could not come to a consensus, a lot of aspects were kept
outside the purview of CISG.
- Two hurdles with respect to CISG
a. Gaps
b.
- Rules for interpretation of CISG has been provided in CISG itself
a. Art 7 Paragraph 1- In the interpretation of this convention regard is to be had to
its international character and to the need to promote uniformity in its application
and the observance of good faith in international trade.
Para 2- Questions concerning matters governed by this convention which are not
settled in it are to be settled in conformity with general principles on which it is to
be based or in the absence of such principles in conformity with the law applicable
by virtue of the rules of private international law.
 This article serves as a guiding principle for the forum. Para 1 lays down rules for
interpretation, para 2 serves as a guiding principle to the forum on how the gaps are to
be filled.
 Gap b/w theory and practice- Very often judges fail to keep in mind the principles of
interpretation in mind (regard is to be had to its international character). It should
not be interpreted as a national court would interpret a national contract. this problem
more likely to arise when forum is national court.
 need to promote uniformity in its application- How can a forum achieve this? It
requires the forum to look at matters of similar nature decided by forum in other
jurisdiction.
 CLOUT- Case law on UNCITRAL text-
 M. Bonnell in his book UNCISG- Despite art 7 para 1courts tend to interpret the
vienna convention with the domestic legal lens. Very rarely do courts take into
account the solutions adopted on the same point by courts in others jurisdiction. –
 Para 2 provide for filling the gaps in CISG
- Filling gap is two-step process
Art 11- A contract of sale need not be concluded in or evidenced in writing and is not subject
to any requirement as to form.

General burden of proof rule – General principles of convention

- Party has to proof the fact, the claim, defence which he is ascerting.

6/9/2023

Gaps or ambiguities in CISG and how the principles fill these gaps.

- CISG exclude issues related to validity of Contract, Chapter 2 of UNIDROIT

principles deals with validity.

Art 3 of Principles- A party may avoid the contract when it has been laid to conclude the
contract by the other party’s fraudulent representation or fraudulent non-disclosure of
circumstances which according to reasonable commercial standards the latter party should
have disclosed.

Payment of Interest- CISG though it makes the mention of interest but there is no clarity
about the same.

Art 78 of CISG- If a party fails to pay the price or any other sum that is in arrears, the other
party is entitled to interest on the rate.

- It does not talk about the rate of interest or how that interest is to be calculated.

Art 7.4 of the principles- If a party does not pay a some of money when it falls due, the
aggrieved party is entitled to interest upon that sum from the time when payment is due to the
time of payment.

The rate of interest shall be the bank lending rate to prime borrowers prevailing for the
currency of payment at the place for payment.
 - Who is prime borrower- Bank generally classifies borrower as prime and sub-prime
borrower. Prime borrowers are those who on the basis of his credit rating not just
likely to pay loan but also on the timely manner. Sub-prime borrower are those who
are more likely to not pay the loan on time.

CISG does not mention anything about hardship

Art 79 of CISG- Force majure

Principles deals with Force Majure (In Chapter titled Non-Performance) as well as hardship
(In chapter titled performance) under art 6 and 7.

- if party pleads force majure, then he is not required to perform his contractual
obligation, while on the other hand if party pleads hardship, it is still expected to
perform it’s contractual obligation.
- Would you expect a party, when he is suffering hardship, to perform contractual
obligation just in the same manner as it was expected to perform when entered into
contract. If that is the case then what is the point of impleading hardship?
- Hardship- Change in circumstance from the time when the contract concluded and
b/c of same it becomes very hard for the party to perform the contract.
- How party facing hardship be given some relieve- Ex. – Terms of the contract may
be renegotiated in order to take the hardship into account- ex. Extension of time,
- Principles of Force majure are more strict b/c here party impleads to be absolved
from performance.
- Some of the forums have read hardship into art 79 of CISG. while some said that
parties will be absolved when there is force majure.

Art of CISG 3366gtt

How parties should draft the choice of law clause? What are the options available to them?

Ex. “The contract would be Governed by CISG and the matters not governed by CISG by
General principle of International Law/ law of particular country.”
 - There is possibility that the forum may consider laws of particular country as general
principle of law.

Fundamental Breach of Contract

- Entitles/Allows the non-breaching party to avoid the contract in addition to bring the
actions for breach of contract.
- It’s a breach so fundamental that it entitles non-breaching party to avoid the contract.
- Significance- Pre-condition to avoid the contract.
- How do you determine that the breach is so fundamental? What are the factors which
the court must take into account?
- Art 25 Of CISG deals with fundamental breach of contract.

8/9/2023

For Midterm

- Need for international trade- Theories justifying international trade- absolute and
comparative advantage theory.
- Certain risks that can arise- legal, political, currency, language, cultural
a. Legal risk- choice of law clause
(i) Different jurisdiction- Common law and civil, Even, if from same
jurisdiction difference in law.
(ii) Nature of business transaction- export v counter trade

- Documentary credit transaction- LoC

a. Necessary documents to be presented to the bank by seller will depend upon the
main sales contract- ex. Whether the contract is CIF, FoB, etc.
b. Confirmed LoC-
- INCO terms- Drafted by ICC-
a. 11 terms – 4 categories
b. 10 obligations of seller and corresponding 10 of buyer
c. FOB and CIF in detail
d. CIF- most elaborate term is insurance
 e. CIF – essential feature- BoL- default in case of CIF- negotiable

- Carriage of Goods by Sea

a. Reason-
b. transport document-BoL
c. BoL-
(i) Features
(ii) Disclaimer clause- Interpretation of courts
(iii) May operate as document of title
(iv) Contract of carriage or evidence of CoC- In hands of shipper BoL operates
as evidence of CoC- if difference b/w CoC and BoL
(v) If carrier delivers goods in absence of BoL- Indemnity bonds from
consignee- to make good any loss which the carrier may suffer for having
deliver goods in the absence of BoL. Courts- If carrier delivers goods in
absence of BoL even after indemnity bond- does on his on peril
- MMT Document
- Choice of Law
a. Rome convention- provides hierarchy, principle of Depecage
b. CISG
(i) To determine Applicability of CISG- Art 1 to 6, 10, 95, certain type of
goods is excluded. Some states opted out of Sub para 1(b) of CISG
(ii) Not exhaustive- UNIDROIT principles- fill gaps in CISG and better
interpretate CISG – Ex. Interest,
c. General principles of international law- National court more likely to apply it’s
own rules of private international law.

Question paper

- Identify the issue- call of the question.

- Identify the rule- provision or a case law.
- Analyze the fact of hypo with the rules.
- On the basis of analysis come to the conclusion.
Don’t right issue, rule analysis, conclusion- right in the form of essay.