9tl'ucture

j 2 .o Objectives
i1 Introdiictiun
12.2 Carriage by Land
! 2.2.IClassrlicat~onot' Ciirrier.5
12 2.2 Rights of a Conitnon Carricl.
(2.2.3 Du:ies of a khrnlnon Carrier
12.2.4 Liabililies 01' a Common Canlei'
12.3 Cairiage by Rail
12.3.1 Duties of the d a i l w a ~Adnrinistrntlon
12.3.2 Liabil~liesof the llailway Administration
12.3.3 Exonerntion of Responsibilities in Certain Cases
12.3.4 Notice of C l a ~ m
12.4 Carriage by Sea
12.4.1 Contract of At'frelghtment
12.4.2 lmpl~edWarranties
12.4.3 Charter Party
12.4.3.1 Kinds of Charter Party
12.4.3.2 Forms and Clauses ol' C'horter Party
12.4.4 Rill of Lndil~g
12.4.4.1 Characteristics o r Bill of Lading
-
12.4.4.2 Bill of Lading und Charter Party Comparison
12.4.4.3 Forms and Kinds of Bill o r Lading
12.4.5 Right of Stoppage in Transit
12.4.6 Duties of a Carrier by Sen
12.4.7 Liabilities of' n Cnmier by SCP
12.4.8 Shipowners, lien and Maritime Ilen
12.4.9 Bottomry and Rcspondentia Bond
12.5 Carriage by Air
12.5.1 Definitions
12.5.2 Documents of Carriage
12.5.3 liiyht of Disposition of Cargo
12.5.4 Kightsof thc Consignce
12.5.5 Linhilities of P Currier
12.6 LetUs SumUp
12.7 Key Words
12.8 Some Useful Books
12.9 Answers to Check Your Progress
12.10 Terminal ~ucstio~s/!xercises

12.0 OBJECTIVES
After studying this unit, you should be able to:
define a carrier and classify carriers;
describe the rights, duties and liabilities of a cornnlon carrier and the responsibilities and
liabilities of railways as carriers of goods;
define contract of affreiyhwent;
@ differentiate between charter party and bill of lading;
explain the various types of bill of lading and charter party;
describe the duties end liabilities of carriers by sea;
describe the various types of documents of caniage by air;
explain the rights of the consignor and consignee and the extent of liabilities of the air
carrier.
Specific Contracts

8 2.1 INTRODUCTION
All of you know that goods are transported by the seller to the buyer in trade. The goods may
be carried by different means of transport. Thc carriage of goods take place either by land, by
sea or by air. The law of carriage of goods, thus shall be studied under three distinct heads
i.e., I) Caniage by land, 2) Carriage by sea, and 3) Carriage by air. The statutes dealing with
these three heads are ,as under :
1. Carriage by land
a) Tile Carriers Act, 1865
b) The Indian Railways Act, 1890
2. Carriage by Sea
a) The Indian Bill of Lading Act, 1856
b) The Carriage of Goods by Sea Act 1925
c) The Merchant Shipping Act 1958
d) The Marine Insurance Act, I963
3. Carriage by Air
The Carriage by.Air Act 1972.

A contract whereby a person or a firm or corripany agrees to carry goods or people from one
place to another in return for apayment is called a contract of carriage. The pa* who undertakes
to carry the goods or people for payment is called 'the carrier' e.g. bus owner, railways, airlines
or streamship company. The person who delivers the goods is called 'consignor' or 'shipper'
and the person to whom the goods are addressed and to whom the carrier should deliver tlie
consignment is called the 'consignee'.

You should note that the principle; of English common law apply where any of the above
statutes are silent on any point.

12.2 CARRIAGE BY LAM)

Goods are carried by land either by road or by inland waterways or by railways. There are
two laws dealing with caniage of goods by land. These are :

a) The Carriers Act 1865

b) The Indian Railways Act 1890

The Carriers Act 1865 deals with camage of goods over land and inland waterways'and does
not apply to carriage of passengers. The Indial Railways Act 1890 deals with carriage of
goods by railways.
I
First we shall discuss the provisions of the Carriers Act 1865. The Indian ~ a i i w a Act,
~ s 1890,
which deals with carriage of goods by railways will be discussed later.

12.2.1 Classification of Carriers

Carriers are classified into two types:
a) C o m o n carrier
b) Private carrier
B
a) Common Carrier
A common carrier, as defined under the Carriers Act, 1865, is any individual, firm,or company
(other than government) who transports goods, as a business, for money, over land or inland ,
waterways, without discriinination beheen dii'ferent consignors.
Characteristiesof a Common Carrier
Froan this definition the following characteristics of a common carrier einerge:-
1. C o m o n carrier may be an individual, firm or a company. The govern&ent is not
included in this defmition. A post office iu not a common carrier. Railways are not .
governed by the Carriers Act 1865 but by Indian Railways Act 1890.
 2. The common carrier should be engaged in the business of transportiilg goods, not
passengers.
3. The common cairier transports goods for hire, i.e., carry goods as a busincss for money,
One who carries goods free of charge is called 'gratuitous c a ~ ~ i eand
r ' is not a common
carrier. Similarly if ally one carries goods or passengers occahionally and not as business
is not a common carrier
4. Goods may be transported overlancl or inland waterways, not by air.
5 . The common carrier is bound to carry goods of any person, who chooses to employ him
for the purpose, without discrimination, provided that there is accommodation in the
carnage. If he reserves the right to reject or refuse to cany goods, he is not a coImon
carrier.
A common carrier, however, can refuse to cany the goods of any person in following cases:
a) If there is no space or room available in liis vchicle.
b) If the goods are not of the type he usually professes to carry.
c) If the goods are of dangerous nature and he is put to some extraordinary I isk.
d) If the destination, to which the goods are to be carried, is not on his normal route. .
e) If the goods have not been packed properly.
f ) If reasonable charges for hire are not paid.
g) If the consignor refuses to disclose the nature of goods.

. The common carrier can be sued and is liable for damages if he refuses to carry goods except
on grounds stated above.

I b) Private Carrier

A private carrier carries goods for selected persons on special terms lnutually agreed upon
between him and sender of goods. He has the discretion to accept or reject the offer to carry
goods. He carries goods oilly occasionally and not as a regular business. He may carry the
goods not for money.

I Carriers as Bailee

You have read the duties of a bailee in Unit 10. As you know, a bailee is responsible only
when the goods entrusted to hiin are lost or damaged due to his fault. A private carrier is not
governed by the Carriers Act, 1865. His position is that ofa bailee. He is governed by Indian
Contract Act 1872. Iiowever, carrier has to take care of goods as his own.

A common carrier, on the other hand, takes upon himself the responsibility oi'safe delivery of
the goods. It is immaterial if the loss or damage is due to negligence of his or some one else.
The common carrier is responsible even if goods are stolen or destroyed or damaged not
because of his fault or if the goods are handed over lo a wrong person. Thus you note that a
private carrier is like a bailee and rules of Contract Act 1872 apply to him. Ifhe is a common
carrier then the Carriers Act, 1865 will apply.
The rights, duties and liabilities of a common carrier are governed by the Carriers Act 1865.

12.2.2 Rights of a Common Carrier

The rights of a Common Carrier are as follows:

1. To get remuneration: He is entitled to the agreed remuneration or reasonable

remuneration if +heamount was not already agreed. If no remuneration is payable he is
'gratuitious carrler and not a common carrier.
2. Lien on goods : He has a right of lien on goods carried for his charges which can be
enforced against the consignor or the consignee who has to pay his chargcs. I-Ie has a
particular lien over the goods, He can refuse to deliver the goods unless Ids charges have
been paid.
3. Recover damages: He can recover damages from the consignor if goods dre of a
hazardous nature, or not properly packed and the carrier suffers injury tharefrom. If the
consignor discloses the nature of goods then damages cannot be recovered.
4. Refuse to carry goods: He is not bound to carry goods of all types under id1
circumstances. There are certain circumstances where the common carrier can refuse to
cany goods. This we have already discussed.
Specific Contracts
5 Recover reasonable expenses : If the consignee refuses to take delivery of goods, he can
recover reasonable expenses incurred by him. But he must take reasonable steps as are
necessary under the circumstances.
6. Limit his liability : He can limit his liability under certain circumstances by entering into
a special contract with consignor.

12.2.3 Duties of a Common Carrier

A common carrier has the following duties :

To carry goods for every person who chooses to employ him.
To carry goods safely. If goods are damaged he is responsible,
To follow the agreed route or the customary and usual route if no route is agreed
between him and the consignor.
4. To deliver the goods in time or within a reasonable time if no time is agreed upon.
5. To deliver the goods according to the instructions of the consignor. If the consignee
refuses to take delivery of goods, the common carrier becomes a bailee.

12.2.4 Liabilities of a Common Carrier

In order to determine the liabilities of a common carrier, goods may be classified into two
types. These are : a) Scheduled goods, b) Non scheduled goods. The liability of a common
carrier depends upon whethel. the goods are "Scheduled goods" or "Non scheduled goods".
Scheduled goods are goods as enumerated in the schedule of the Comnion Carriers Act 1865,
all other goods are known as "Non scheduled goods". Scheduled goods include, inter nlia,
gold and silver coins, ornaments, precious stones, clocks and timepieces of any descriptions,
bills, hundies, bank notes, maps, writings, pailltings, photographs, sculptures, works of art,
glass, - china or marble. <ilk, sliawls, furs, opium, articles of ivory, coral, sandalwood or
ebony and musical and y , 11-11 I i fic instruments.

A carrier is not liable for loss 01. damage of sclleduled goods over Rs. 100 if at the time of
delivery their description and value are not expressly made known to the carrier. But he is
liable if the goods are lost or damaged by gross negligence or any criminal act of the carrier
himself, his servant or agent, and for unlawful act or misfeance, whether goods are scheduled
or non scheduled. He cannot limit his liability in respect of scheduled goods by any special
clause or contract with the consignor. Such liniit shall be null and void. He is however
entitled to charge extra freight for carrying scheduled goods.

As regards non-scheduled goods, carried by him, the liability of a comnioq carrier is that of
an insurer. He is liable for loss or damage to the goods while they are in transit, except
when the loss is caused under exceptional circumstances. These circuinstances are: (a) an act
of God, (b) damage caused by country's enemies, (c) defective packing, (d) fraud by the
consignor, (e) inherent vice in the things carried. .

In case of non-scheduled goods, the carrier may limit his liability'by a special clause or ,
contract with the consignor. I

Isr I

In case of loss or damage, the claimant inust illform in writing to the carrier his claim within
six months of the date when he first knew of such loss or injury. Thus, in case of scheduled I
goods, the carrier cannot limit his liability, bul in case of non-scheduled goods, he can limit I
his liability by a special contract or clause. The carrier is always liable for loss or damage to
goods, caused by him or his agent's/ servant's negligence or unlawful acts.
~
1

As regards goods of dangerous character, the consignor is under a duty to infoin1 the carrier.
The consignor is liable, if an implied warranty exits to the effect that the goods are fit to be
carried, even though the consignor is unawart*of dangerous character of goods. If such
implied warranty does not exist, the consignor is not answerable for loss, if the carrier knew
about the dangerous character of the goods carried.
 P

Cnrriage of goods
12.3 CARNAGE BY RAIL

you have already read that carriage of goods over land may be by railways iLs well.
Carriage by rail in India is regulated by the Indian Railways Act, 1890, as amznded in 1961,
1972 and 1975. The 'Railway Administration' is the legal authority set up to look after the
adininistration and working of railways.

Goods are transported by railways noimally by 'goods train'. Goods may be transported also
in 'passenger trains' to ensure quick delivery. Perishable goods and snlall packages are
transported by passenger trains but the freight charges for passenger trains are. higher than
goods train. Before we discuss t l ~ eadministration of railways, let us note that there are two
important documents used in carriage of goods by railways. These are : (a) Fonvarding Note
and (b) Railway Receipt.

(a) Forwarding Note

According to Section 72 of the Indian Railways Act 1890, evely consignor of goods or animals
has to execute a note in the form prescribed by the railway administration and approved by the
central government. This note is called 'Forwarding Note or Consignment Note' and the
required particulars are filled in by the consignor. For different types of goods there are
different forms of consignment note. The consignment/forwarding note contl~insdescription
of the goods, the train that is to carry the goods or animals, the number of packages, weight,
the names and addresses of the consignor and the consignee, articles carried at owner's risk or
railways risk. The notc is also to contain particulars of articles of special value, goods with
defective packages, or perishable goods or articles of dangerous nature. It may be marked
either 'freight paid' or 'freight to pay' accordingly as consignor has paid,the freight or
consignee will pay the freight. Tile terms and conditions on which goods or allimals are
carried are printed on the back of the note.

(b) Railway Receipt (WR)

After the consignor has submitted the forwarding note to the railway parcel office, the
consignor is given a receipt by the railways, The receipt is called lUR (railway receipt). This
receipt is the acknowlcdgrnent of the goods and is an undertaking to carry them according to
the conditions printed at the back of the receipt and the instructions given by the consignor.
This receipt is a document of title to the goods and a semi-negotia.bleinstrument. This receipt
is sent by the consignor to the consignee so that on presenting it at the destin:\tion to the
railway office, the consignee can take the delivery of the goods.

12.3.1 Duties of the Railway Administration

NOW we shall discuss the duties of the Railway Administration. The duties of the Railway
administration laid down under Sec. 27,27A, 28 and 42A of the Indian Railways Act. 1890 are
as follows:
1. To afford all reasonable facilities for the receiving, forwarding and delivery of traffic
without unreasonable delay.
2. Not to give any undue or unreasonable preference or advantage to, or in Iavour of, any
particular person or any particular description of traffic, in respect whatsoever or subject
any particular person or any particular description of traffic to any undue or unreasonable
prejudice or disadvantages in any respect whatsoever.
3. TO comply with any directions given by central government with regard 10 transport of
goods. The central government is empowered to give special facilities or preference to the
transport of any goods or class of goods consigned to central or state go\ ernments or
such other goods or class of goods as may be specified in the order. Any action taken
shall not be deemed to be in contravention of point 2 stated above. Any order so made
shall cease to have effect after the expiry of six months from the date thereof. It may be
renewed from time to time.
4. The Railway Administration is bound (like a common carrier) to carry goods of every
person who is ready and willing to pay the freight and observes the other ~.equirements.
Specific Contracts 12.3,2 Liabilities of the Railway Administration
You should note that railways are like coinmon carriers in India and their liabilities are also like
those of a common carrier. We shall now disci~sstheir liabilities during and after transit and
liabilities in case of goods of special value and in case of defective condition or packing, etc.

1. Liabilities during Transit : The Railway Administration is liable for loss, destruction,
damage or deterioration of goods in transit. But the liability depends upon the instructions of
the consignor in the forwarding note as to whether goods or animals are to be carried at
'railway's risk' (ordinary rate) or at 'owner's risk' (reduced rate). The rate of the former are
higher than that of the latter. The goods or animals shall be deemed to have been tendered to
be carried at 'owner's risk' rate unless the consigner or his agent elects in writing to pay the
'railway risk' rate. A certificate is issued by thc3railways for railway risk rate.

(a) Railway's Risk : If the goods are canied at 'Railway's Risk', the Railway Administration is
liable for any loss or destruction etc., in transit in respect of goods, arising from any cause
except the following:

(1) act of God, (2) act of war, (3) act of public enemies, (4) arrest, restrain or seizure
under legal process, (5) order or restrictions imposed by the government, (6) Act or
omission or negligence of consignor or the coi~signeeor the agent or servant of either, (7) I
latent defects, (8) fire, explosion or any unforcseen risk. The position of Railway i
I
Administration is that of an insurer of goods and thus ~dministration'willo: .:-dlr. :Stho
goods are stolen, while in its custody, even vl;.hout ,~,i;,:,.ce "11 it3 $air.
1
t

(b) Owner's Risk : T l ~~fi~ninistration

i camlot be made liable for any loss, destruction or
damage, in transit of such goods, from whatever cause arising except upon proof that such
loss or damage was due to negligence or misconduct on the part of the Administration or any
of its servants. The position of the Administration isthat of a bailee.

Thus there are two major differences between owner's risk and railway's nsk, In case of
owner's risk the liability of railways it is that of a bailee and in case of railway's risk it is that of
an insurer. In case of the former the railway is liable only if the loss is caused by its
negligence and in case of the latter the railway is liable (except in the cases given above)
unless it proves that it had used reasonable foresight and care in the carriage of goods or
L
animals.

Liability for delay or detention during transit : The Adininistratioi~shall be responsible for
loss etc, of goods or animals if the owner prot es that such loss or destruction, damage or
deterioration, was caused by delay, or detention in transit. It can, however, escape liability by
proving that the delay or detentiou arose without negligence or misconduct on its part or on i
the part of its servants . t

2. Responsibility of deviation of route : The Railway Administration shall not be guilty of i

breach of contract if due to causes beyond its coi~trolor due to the congestion in the yard or @ I

other operational reasons, goods or animals are carried over a route other than the route by
which they are booked (the usual or customary route) .
I /

3. Responsibility for Wrong Delivery: When the ~ a i l w ~hrninistration

a~ delivers the
goods in good faith to the person who produces the original railway receipt, it shall not be
responsible on the ground that such person is not legally entitled thereto or that endorsement
on the R/R is forged or otherwise.

4. Liability after termination of Transit : Transit terminates on the expiry of the free time
allowed (after the arrival of consignment at destination) for its unloading from railway wagon
without payment of de~11u1.1 age and where such unloading has been completed within free time
so allowed, transit tem~inateson the expiry of free time so allowed for removal of goods from
railway premises without payment of wharfage.

Free time means time within which delivery of goods must be taken on arrival by the
consignee. Demurrage is an extra charge to be paid if delivery of goods is taken after free time
and wharfage is rent paid for accormnodation occupied at railway godown.
 Carriage of goods
5. Liability in case of articles of special value: Where any articles mentioned in secoild
schedule of the Act (Articles of special value like gold, silver,.) are contained ill a parcel or
packages delivered for carriage and the value of such articles exceeds Rs. 500, the railways
shall not be responsible for the loss, destn~ctionetc. unless the consignor declared the value
and contents thereof in the forwarding note and had paid higher freight, if required.

6. Liability for damage to goods in defective condition o r packing : The Railway

Administration shall not be liable for any loss goods are in a defective condition or
defectively packed and such defect was noted by the consignor or his agent on the
forwarding note. But it shall be liable if loss or damage etc.in such case was clue to the
negligence or misconduct on the part of administration or its servants.

12.3.3 Exoneration of Responsibility in Certain Cases

The Railway Administration shall not be responsible for any loss, destruction or non delivery
of goods in the following cases:

a) Where the goods have been dispatched with a false description and the loss or damage is,
in any way, brought about by false description.
b) Where a fraud has been committed by the consignee or consignor or agent of either.
c) Where it is proved by the Administration that loss or damage has been caused by or has
arisen from either (i) improper loading or unloading by consignor or cor~signeeor their
agent, or (ii) riot civil commotion, strike, lock out, stoppage or restraint of labour from
whatever cause, whether general or partial.
d) Where there is any indirect or consequential damage or loss of particular market.

12.3.4 Notice of Claim

The claini for damages can be made by the consignor The claim must be made within six
months from the delivery of goods for carriage by the railways. The notice must be in writing
and may be given to the Chief Comnlercial Superintendent or manager of railways. The
claim for refund of any overcharge can be made either to the administratioil to which goods
or animals were delivered or on wliose railway the destination station lies or the loss, damage
or destruction occurs.
Check Your Progress A
1. State whether the following statements are true or false:
i) A cornnlon carrier carries persons and goods.
ii) A common carrier can refuse to accept goods from any person.
iii) Scheduled goods are goods of high value.
iv) Railways are not liable for loss of goods due to theft.
v) Responsibility of railway for goods consigned at railway risk is that of a bailee.

2. What is owner's risk?

.............................................................................................................................................................................................................................
.............
...................
3. Define demurrage and a forwarding note.
,. ............................
.................................................................................................................... ...................................................
..........I.(......

.........................,.,........................................................................................................ ................................. .
............................................................................................
............................... .
.
..
1 .,,.......1..............................................
.......................I

AGE BY SEA

12.4.1 Contract of Affrieghtment

In international trade, goods are mostly carried by sea, i.e., by ship. A contr~ctof carriage
of goods by sea is called 'contract of affreightment'. The consignor is called shipper and the
consideration is called 'freight' i.e., the price of carriage of goods. A contract of affreightnlent
may take either of two foinls :
(a) Charter Party, (b) Bill of Lading.
i
Spcclflc Cofitraetd
Both these contracts are mainly governed by the Carriage of Goods by Sea Act 1925 and the
B Bill of Lading Act 1856. Note thattwo other related Acts to carriage by sea are Merchant
Shipping Act 1958 and the Marine Insurance Act 1963.

A charter party is a contract where an entire, 01. a principal part, of a ship is hired. A bill of
lading is a contract where the goods are carried in a general ship.

There are certain 'Implied warranties', in both these forms of contract. Let us discuss these
warranties in detail before discussing charter party and bill of lading.

312.4,2 Implied Warranties

A warranty may be express or implied. Express warranties are those warranties which are
decided by the parties and implied warranties are implied by law:

In a contract of affreightrnent, the following implied warranties are provided under Marine
Insurance Act, 1963:

1. The ship is seaworthy and reasonably fit to encounter the 'perils of sea'. The ship should
be seaworthy at the cornrneilcement of each stage of the voyage. It means that the ship is
worthy to undertake the particular voyage and to carry the particular cargo. According to
the Merchant Shipping Act 1958, a ship is unworthy when the materials of which she is
made, her construction, the qualifications of the master, the number, the description and
tlie qualification of the crew including officers, and the weight, description and storage of
the cargo and ballast, the condition of her hull and equipment, boilers and machinery are
not such as to render her in every respect lit for a proposed voyage or service.
2. The 'ship shall be ready to commence the voyage agreed on and to load the cargo to be
carried and shall proceed upon and complete the voyage without all reasonable dispatch.
3. The ship shall carry out the voyage in the usual and customary manner. It shall not
deviate from the prescribed or usual course, Deviation takes place even if the ship starts
on a usual course, deviates later on and again resumes the usual course.
4. The shipper shall not ship dangerous gootls or illegal cargo. Breach of warranty before
the commencemeilt of voyage gives right uo repudiate the contract and claim damages,
and after the commencement, gives a right to claim damages only.

e 12.4.3 Charter Party

You know that the contract of affreightment may take the form of (a) Charter Party or (b)
Bill of lading.

A 'Charter party' is a contract of affreightment entered into for hiring the whole ship or a part
of it to carry the goods, at the disposal of charterer, It binds the ship owner to carry the goods
to a particular place on payment of freight. It also refers to the formal written document in t
which the contract of hiring of the whole or part of the ship is expressed.

You should note the following points:

r
a) The charter party may be under seal, but it must be stamped.
b) A bill of lading is issued as an acknowledgment of the receipt of goods in case of general
ship and a charter party is a receipt of goods in case of a chartered ship. Thus bill of
lading is different from charter party.
c) The bill of lading in case of a general ship must be signed by the owner o r master of ship.

12.4.3.1 Kinds of Charter Party

A Charter party may be :
(a)' Time Charter party, or
(b) Voyage Charter party
Time Charter Party is for aparticular period.
Voyage Charter party is for aparticular Voyage.
 Carriage of goods
Sometimes the tenns of a charter party may operate as a lease (also called denliseJ of a ship.
The ship is given on lease to the charterer by the ship owner. The charterer pays 'rental' to
the ship owner. Alongwith the ship the master and crew also become the servants of the
charterer. Such a conkact of lease of a ship is not a contract of carriage but hiring of the ship
itself.

12.4.3.2 Forms and Clauses of Charter Party

There is no specific form of a charter party. It differs from trade to trade depending upon the
prevailing customs. There may be a special formused in a trade. However, it generally
contains the following clauses:
1. Name and description of the ship owner and the 'charterer and the fact of their
agreement.
2. The name of the ship, its rating (i.e. A or B etc.) with Lloyds Register and tonnage
(measurement of the ship).
3. The location of the ship, place of loading and unloading.
4. The ship owner's guarantee that the ship is sea worthy and fit for the contemplated
voyage.
5. The statement that the cargo shall be lawful merchandise both at the port of dispatch and
the port of discharge. The weight and volume of cargo.
6. The names and places where the ship is to go in between.
7. The liability of the charterer to pay freight i.e, to be paid in advance or on completion of
voyage. The charterer is under an obligation to pay the freight for full ca~lyingcapacity
even if it is used not for only the quantity agreed upon. He has to pay 'dead' freight if he
fails to produce or load the agreed amount of cargo.
8. Cesser Clause : Under this clause the charterer is exempted from liability when the cargo
is loaded. The shipowner acquires a lien on cargo for nonpayment of freight and
demurrage.
9. The duties of the Master or the captain of the ship.
10. Prosecution of the Voyage : A clause stating that the voyage shall be prosecuted with
all convenient speed i,e., voyage shall commence soon after the clearance from port
authorities has been obtained.
I 1. Delay through break down: In cases where delay is caused through break down of the
machinery or other damage to the ship or the deficiency of the crew for 24 hours, the hire
ceases till such time as the ship is again fit to sail.
12. Excepted Perils and Negligence : This clause contains those risks for which shipowner
is not liable for the loss. Such risks are called 'excepted perils'. These perils arise from
'Act of God', the action of foreign enemies, restraints of princes and rulers, fire and every
other,dangers and accidents of the seas, rivers and navigation, of whatever nature and
kind. The ship owner has to exercise reasonable care and diligence to avoid such perils.
13, Circumstances under which the contract shall be deemed as cancelled and the panalties to
which the parties shall be liable for breach of contract.
14. Lay days and demurrage: Lay days are the days allowed for loading and unloading the
ship, The charterer is liable to pay demurrage if loading or unloading takes more than lay
days.
15, Delivery of goods in the usual manner: The master of the ship should have the ship
properly moved when it reaches the port. He has to get the cargo out of the ship's and put
them on the deck. Thereafter the charterer has to take the goods off the ship.
I

12.4.4 Bill of Lading

This is a very important document in the carriage of goods by sea.
A bill of lading is a document issued by the shipowner or his servant when the cargo is
delivered for carriage to a general ship, The position of a shipowner is that oj'a common
carrier,

When the goods are delivered on board a ship, a receipt is issued by the master of the ship.
This receipt is called "MATE'S Receipt".

A bill of lading may also be issued when entire ship is chartered. In that case, the bill of
lading just serves as a receipt of goods.
 A bill of iading niust be stamped and signed by the shipowner. It must certain the following
particulars:
a) The main terms of contract.
b) The leading marks necessary for identifica'tion of the goods; the marks must be legible
till the end of the voyage.
c) The number of packages, pieces or the quantity or weight in writing.
d) The apparent order and condition of tlie cargo.

12.4.4.1 ~haracteristicsof a Bill of Lading

A bill of lading is prima facie evidence of the Follo\ving:

a) It is an acknowledgmcut of the receipt of goods on board. It is a syillbol of goods during

transit and remains till goods are delivered.
b) It is an evidence of the contract for the carriage of goods.
c) It is a document of title to goods. It is a "key which in the hands of a rightful owner is
intended to unlock the door of the warehouse, floating or fixed, in which goods may be".
d) It contains the terms and conditions of the carriage of goods.
e) It is a semi Negotiable 1ns.trument. It can be transferred to another person by
indarsement and delivery, if the gocds under the bill of lading are deliverable to a
particular person or 'his order', and by mere delivery if the goods under the bill of lading
are deliverable to the bearer, This characteristic of a bill of lading resembles that of a
negotiable instruments, In strict legal sense it is not a negotiable instrument because the
hansferee takes it subject to all the defects of the transfer even ti~oughtransferee took it
bonafide and for value. It is negotiable in commercial sense.

12.4.4.2 Bill of Lading and Charter Party - Comparison

Now you are in a position to know that a Rill of Lading and 'Charter Party' are different.

Following are the differences between the two :-

1. A bill of hdiog is an ~cknowledgrnentof the receipt of goods,on board the ship. A

charter party is just receipt of goods.
2. A bill of lading is a document of title to the goods but the charter party is not such a
document.
3, A bill of lading is not issued on lease of a ship, whereas a charter party contract is made on
lease (detnise) of a ship or part thereof.
4. A bill of lading can be transferred by endoi-sementand or delivery whereas a charter party
cannot he transfei-red.
5 . A bill of lading is for a particular destination and charter party may be for a particular
\
voyage or time.

12.4.4.3 Forms and Kinds of Bill of Lading .

There is no special form of a bill of lading. It differs from trade to trade and according to
means of carriage. The bill of lading may be oFthe following types:
1. Clean bill of lading : Where the cargo is in apparent good order and condition and the bill
of lading acknowledges this, it is called cloan.
2. Foul o r dirty or claused bill of lading: When condition ofthe goods received for shipping
is not good the words "shipped in good order and condition" are cancelled out. In such a
case the bill of lading is foul (dirty or clauscd) bill of lading.
3. Through bill of lading : When goods are partly carried by sea and partly by land, the bill
of lading issued is called "through bill of lading"
4. Freight paidmreight collect bill of lading: The bill , ' .~dliigI> L I ~ J I , ~.15 ~ ,'freight
! paid'
if it is paid in advance; if it is to be paid later itis'fielght collect' bill of lading.
5 . Stale bill of lading : It is that bill of lading which is retained by the consignor for a
longer time than necessary.
6. Received Bill of Lading and On Board Bill ofLading : The received Bill ofLading is
issued before the cargo has been loaded on board the ship and "on board" when the
cargo has been loaded on board the ship.
 Carriage of goods
12.4.5 Right of Stoppage in Transit
A consignor has right to stop the goods in transit. If a bill of lading is lawfblly transferred to
any person as buyer or owner of goods, and that person transfers the documents by way of
sale to one who takes it in good faith and for value, the right of lien and stoppage in transit is
defeated. But if the transfer is merely by way of pledge, the consignor has right to stop the
goods in transit, subject to the payment or tender to the pledgee the amount of the advance.

12.4.6 Duties of a Carrier by Sea

In every contract of carriage of goods by sea, the camer is subject to the following
responsibilities:
1. The shipowner shall be bound, before and at the beginning of the voyage, to exercise
due diligence to
a) make the ship seaworthy
b) properly man, equip and supply the ship
c) make holds, refrigerating and cool chambers and all other parts of the ship in which
goods are carried, fit and safe for their reception, carriage and preservation.
2. The carrier must properly and carefully load, handle, stow, carry up, keep care for and
discharge the goods carried.
3. The master or agent or the shipowner has to issue a bill of lading after the goods have
been received.

12.4.7 Liabilities of a Carrier by Sea

1. Loss or damage due to negligence: The carrier of goods by sea is liable only for loss
or damage arising from his negligence, fault or failure in the duties and oldigations
provided in the Act and not otherwise, He is not liable even for the loss caused by
neglect or default of the master mariner, pilot or the crew in the navigation or in the
management of the ship.
2. No limitation : The carrier cannot limit or lessen his liasility arising f i o ~ nhis negligence
or failure in the duties and any clause in the contract to that effect shall be null and void,
3. No liability for misstated value: The carrier shall not be liable for any loss or damage
to goods if the nature or value thereof has been knowingly misstated by the shipper in the
- Bill of Lading.
4. Extent of liability : The carrier shall not be liable for loss or damage in any event to the
goods in an amount exceeding £ 100 per package or unit, unless the nature and value of
such goods have been declared by the shipper before shipment and, by agreement, fixed
another maximum amount, provided that such maximum shall not be less than the figure
above named.
5. Liability in case of dangerous goods: Goods of an inflammable, explosive or
dangerous nature to the shipment, where of the carrier, master or agent of the carrier, has
not consented, with knowledge of their nature and character, may, at any time before
discharge, be landed at any place or destroyed or rendered innocuous by the carrier
without compensation. The shipper of such goods shall be liable for all damages and
expenses directly or indirectly arising out of or resulting from such shipment.
6. Time Barred liability : The carrier shall be discharged from all liability for loss or
damage unless suit is brought within one year after delivery of the goods or the date when
the goods shall have been delivered.

12.4.8 Shipownersf Lien and Maritime Lien

There are two types of rights available in case of carriage of goods by sea: (a) Shipowners',
- -
lien this right is of shipowners, and (b) Maritime Lien this right is available against the ship,
cargo and freight. Let us explain them.

A shipowners' lien is the right of a shipowner to retain possession of goods c;~rriedby him
until freight and other charges due to him under the contract of carriage have l~eenpaid. It is a
possessory lien. Any charges paid over and above the freight by custom (e.g, tips) is called
"PRIMAGE".
Specific Contrncts
A "maritime 1ien"is a claim on ship, cargo and the freight in respect of services rendered to
them. This right is given by law to all persons who have rendered some services to save the
ship or cargo in time of danger. By virtue of this right, the parties can recover their charges
from the shipowner or cargo owner. Until then charges are paid, the ship is not allowed to
leave the port and ship or cargo may be ordered by the court to be sold. This right of lien is
available to seamen for their wages, the holder of "bottomery bond" for his dues, persons who
rescue ship or property from the charges in connection with salvage, a ~ i dpersons who have a
claim against the ship, for damages caused by collision due to negligence.

A maritime lien can be exercised independently of possession of cargo or ship by filing a suit
in a court.

12.4.9 Bottomry and Respondentia Bond

When a ship needs urgent repairs i; course of its voyage and it is not possible for the master
of the ship to communicate with shipowner to arrange the necessary funds, the captain of the
ship may borrow money on the security of tlie ship or cargo by executing a bond. If only
cargo is given as security, the bond is called "ltespondentia Bond". If the ship, cargo and
freight are hypothecated, the bond is called 'Bottomry Bond". I

Check Your Progress B

1. Define Charter Party and Bill of Lading.

2. Is bill of lading a negotiable instrument ?

,.,.."....................................................................................................................................................................................................................
3. Define a contract of affreightment, Bottomcry and Respondentia Bonds, Primage,
Shipowners lien and Maritime lien. ~

...........................................................................................................................................................................................................................
4. Tick &I)the statements that are true.
i) Carrier is liable for loss or damage of goods even if misstated by the consignor.
ii) The rights of an indorsee are different from the original holder of bill of lading.
iii) Implied warranties in a contract of carriage of goods by sea can be waived by
agreement.
iv) Bill of Lading is 'negotiable instrument' in commercial sense.
v) Lay days are days allowed for loading and unloading the ship.
vi) Primage and Demurrage are same type of charges.

12.5 CARRIAGE BY AIR

In modem days, as you know, the goods can be carried by air quickly and to long distances.
But carriage by air is expensive as compared to carriage by land or sea.

The carriage of goods and passengers by air in India is governed by the Carriage by Air Act
1972. This Act is based on Warsaw Convention 1929, as amended by the Hague Protocol
signed in 1955.
' '
The Carriage by Air Act 1972 contains two schedules. Scheduie I contains the Warsaw
conventidn rules, which are applicable to hternational carriage by air of countries which have
not yet signed the Hague Protocol. Schedule II contains the amended rules (as amended in
1955) applicable to international carriage by air of countries which have signed the ~ a g u %
Protocol. The Central government is empowei<edto make the rules contained in these
schedules as may be applicable to internal (donlestic) carriage by air. Some important
defmitions under the Act are given below.
12.5.1 Definitions Carriage of goods

There are certain definitions of some special terms used in carriage by air. Some of these
definitions are given below:

Convention : It means the convention for the unification of certain rules relating to
international carriage by air signed at Warsaw on 12-10-1929 [Sec 2(ii)] " Amended
Convention" means Warsaw convention as amended by the Hague Protocol signed on 28-9-
1955 [(Sec 2 ($1.

High Contracting Party: It means all the parties originally signatories to tht: convention,
together with those who adhere thereto subsequently. India is a signatory to the amended
convention.

International Carriage :It means any carriage in which according to the agreement between
the parties the place of departure and the place of destitiation, whether or not there be a break,
in the carriage or transhipment, are situated either within the territories of two high contracting
parties or within the territory of a single high contracting party if there is an agreed stopping
place within the territory of another state, even if that state is not a High Contracting Paity.
Carriage between two points within the territory ofa single High Contracting party, without an
agreed stopping place within the territory of another state is not international carriage.

12.5.2 Documents of Carriage

Just as there are certain important documents used in carriage by land or by sea, similarly
there are some important documents used by carriage by air; These are mainly :'
Passenger Ticket, Baggage check, and Air Way Bill. In Chapter IIof the S'eco~idSchedde to
the Act the documents of carriage have been mentioned.

a) Passenger Ticket : This ticket is issued for carriage of passengers, indicating the place of
departure and destination (embarking and disembarking) and place of one or more agreed
stopping places. This ticket is a prima facie evidence of the conclusion, and conditions of
the contract of carriage. The absence, irregularity or loss of the passengel*ticket does not
affect the existence of the validity of the contract of carriage (Rule 3).

b) Baggage Check (Luggage Ticket) : This check is issued for the carriage of luggage,
other than small personal objects of which passenger takes charge himself It is made out
in duplicate, one part is for the passenger and the other part for the carrier. The ticket
constitutes primafacie evidence of the registration of the luggage and cortditions of the
contract of carriage. The absence, irregularity or loss of baggage check does not affect
the existence or the validity of the contract of carriage. But if the carrier accepts baggage
without delivering a baggage check, he shall not be entitled to the benefit of the
provisions which limit his liability in respect of loss of, or damage to, the baggage,

c) Airway Bill (Air Consignment Note) : This note is prepared by the constgnor, in
triplicate, one copy for the carrier, one for consignee and one for consignor. The airway
bill is signed and stamped by the carrier. The absence, irregularity or loss of airway bill
does not affect the existence or the validity of the contract of carriage. But, if the carrier
allows the loading of cargo on board the aircraft without an airway bill, hu liability shall
not be limited.

~ h airwaytill
d contains many details including the name and address of the consignor and
consignee, the nature of goods, the amount of freight, conditions of goods, nurnher of
packages, place of departure and destination, value of goods and other documents handed
over alongwith the airway bill.

The consignor is responsible for the correctness of the note and liable to pay lor loss suffered
by the carrier for incorrect airway bill.

The airway bill may be negotiable. It is the prima facie evidence of the conclusion of the
contract.
 Spccilie Contracts 12.5.3 Right of Disposition of Cargo
The consignor has the right to dispose of or cidl back or stop,the cargo at any time before it is
handed over to the consignee. He can change the name of the consignee as well. He has a
right to dispose of or call back the cargo if the consignee declines to accept the airway bill or
cargo.

12.5.4 Rights of the Consignee

Unless it is otherwise agreed, the consignee has the right to receive notice from the carrier as
soon as the cargo arrives at the port of destination.
The consignee has right to receive the airway bill and on payment of charges to take delivery
of the cargo. On loss or arrival of cargo after seven days from the date on which it ought to
have arrived, the consignee may enforce the right as agreed upon in the contract.

12.5.5 Liabilities of a Carrier

The carrier by air is liable to pay damages if (a) destruction, loss or damage is caused to any
registered baggage or any cargo during the carriage, i.e., period during which the haggage OT
cargo is in charge of the carrier in any place; (b) the damage is occasioned by delay in the
carriage of baggage or cargo.

Limit to carrier's liability

The carrier is not liable to pay damages if he proves that the damage was caused or
contributed to by the negligence of the injured person or he and his servants or agents have
taken all necessary measures to avoid the damage or that it was impossible for him or them to
take such measure.

The maximum liability in case of loss or damage or delay is limited to a sum of 250 Franks
per kilogram, unless the consignor has made a special declaration showlng the value of the
package and has paid additional frelght if the case so requires. The canier will be liable to
pay a sum not exceeding the declared sum, unLess the declared value is greater than the real
value. In case of loss or damage or delay of part of registered baggage or cargo the amount
of liability of the carrier is limited to the damaged part of the cargo rateably unless the
damaged cargo affects the value of other packages covered by the same airway bill.

In Case of Passengers
Though we have to read only about liabilities of the air carrier for cargo, yet for general
information you should know about liabilities of air carrier in case of passengers,

a) In the event of death or bodily injury: The carrier is liable for damage sustained in the
event af the death or injurs of a passenger or any other bodily injury suffered by a
passenger, if the accident which caused the damage so sustained took place on board the
aircraft or in the course of operations of ernbarking or disembarking. The liability of the
carrier for each passenger is limited to 1,25,000 Francs (raised in the second schedule to
2,25,000 Francs). L

b) Luggage in charge of the passenger: As regards objects of which the passenger takes
charge himself, the liability is limited to SO00 Francs per passenger. The carrier's liability
cannot be lower or he cannot be relieved of this liability. An action can be taken for
damages, in case of death of the person liable ill accordance with these rules, against
those legally representing his estate. .
You should note the following points:
a) These rules apply equally to gratuitous cairiage by aircraft perfomled by an air transport
carrier.
b) These rules do not apply to carriage of mail and postal packages
c) These rules apply notwithstanding anything contained in rule of law in force in any part
of India.
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 d) Receipt by the person entitled to delivery of luggage or goods without cornplaint is prinza
facie evidence that the same have been delivered in good condition.
e) In the case of damage of cargo, the person entitled to delivery must lodge a complaint
within three days from the date of receipt of goods and in case of delay within fourteen
. days from the date on which luggage or goods have been placed at his disposal. If no
complaint is lodged within prescribed tiAe, no action lies except in case of fraud on the
part of the carrier.

I Check Your Progress C

I 1. Who prepares an airway bill ?

2. What documents of carriage are to be issued when goods and passengers are carried by .
air ?

3. How far can the liability of a carrier be'modified by a special contract ?

t
7.. ..................................................................
...........................................................................

1 . 4. What is the minimum liability of a carrier by air '?

5. What is a consignment note ?

.................................................................................................................................................
........................................................................................... .......................................*........
.Aa.

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12.6 LET US SUM UP

Goods may be carried by either land or sea or air, The carriers are persons who carry goods
and are of two types : (a) common carriers (b) private carriers. A common carrier carries
goods of any one who employs him and a private carrier carries goods only for selected
persons. A common carrier can refuse to carry the goods under certain circumstances.

Carriage by Rail: It is governed by the Indian Railways Act, 1890 and nlay be at owner's
risk rate or railway risk rate. In case of owner's risk rate the railways' liability is like that of
a bailee and in case of railway risk it is like that of an insurer. The railways ace liable for
delay or detention of goods during transit. The railways are not liable for loss or damage to
goods for deviation of route, delivery of goods to a wrong person who providzs receipt, or
for goods in defective condition. The liability of railways for any loss of goods within a
period of seven days after termination is that of a bailee.

Carriage by Sea: A contract of carriage of goods by sea is called "Contract of

Affreightment", and may be (a) a charter party where the entire ship or part 01' it may be
hired, or (b) a bill of lading, where the goods are to be carried in a general ship which is ready
to carry the goods of any person who intends to use it for that purpose. The implied warranty
in a contract of affreightment is that the ship should be sea worthy, should not deviate from
the usual or customary route and voyage should be legal.
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