The Carriage of Goods by Sea Act

LAW

CARRIAGE OF GOODS BY SEA
Carriage of Goods by Sea Act (COGSA) encompasses statutory laws and provisions that
govern rights as well as responsibilities of cargo shippers and ship owners. Charter party is a
contract made between the owner of the ship and charterer for the purpose of hiring either an
entire vessel or principle part for voyage or its series for a definite period of time. The aim of the
assignment is to investigate all the statutory laws and principles related to the charter party in
Carriage of Goods by Sea Act. In this, different categories of charterparties that are voyage
charterparty, time charterparty and bareboat charterparty will be compared and contrasted.
Moreover, implied obligations on the charterer that is imposed by law will be thoroughly
examined. All the provisions will be evident with a case study and different legal cases.
Charter party
In Carriage of Goods by Sea Act, bill of lading and charterparty contract are widely used
contracts. Former is just a receipt that evident that goods had been loaded on the board and can
be used as evidence in legal disputes. It imposes legal contractual liabilities on the carrier for the
safe custody of goods before its delivery (Carriage of Goods by Sea, 2016). By contrast,
charterparty is a maritime contract between charterer and shipowner for hiring of either a ship for
carrying cargo or passengers or a yacht for the purpose of pleasure. As per the Act, there are
three categories of charterparties that are enumerated below:
Voyage charterparty: It is a contract wherein ship owner agrees to transport a fully
shipped cargo that is owned by another person, thus, vessel is chartered for specified voyage. In
such situation, charterer has authority to have shippers’ goods between all the nominated parts
(Wilson, 2008). In this respect, vessel use starts, when owner declares ready on arrival and
finishes at the point of departure.
Time charterparty: As name itself, vessel is chartered for a fixed time period, in which, it
is under the control & supervision of shipowner. Charterer pays monthly hire charges normally
in advance. Charterer is obliged to deliver the vessel on agreed geographical place.
Charterparty by demise: It is also called bareboat chartparty wherein entire vessel is
leased by shipowner to charterer who is accountable to operate it as it is his own vessel. It is the
responsibility of charterer to crew, manage and maintain ship during the period and follow all
such obligations being an owner called, disponent owner.
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Unlike bill of lading, it is not necessary for charterparties to mandatory follow Hague and
Hague-Visby Rules and also not subjected with the statutory obligation under COGSA m until
and unless a bill of lading has been issued and given to an innocent third party such as to
consignee. In a case, Companhia Siderugica Paulista (COSIPA) concluded a Gencon-form
voyage charterparty with disponent owner, Fednav for carriage of steel coils from Brazil to
Canada and the USA. COSIPA issued a letter of indemnity to Fednav to hold him harmless
against any claim of damages to the coils. T. Co. Metals sued Fednav and shipowner for the
condensation damage to the coils. Defendant invoked subsection 46(1) of Marrine Liability Act
against COSIPA in Federal court under LOI and Voyage charterparty. Prothonotary hed the
decision that voyage charterparty was a contract for the carriage of good by water under MLA.
However, appellant authority, Justice Scott reversed the decision and stated that both
Hague/Visby rules and Hamburg rules international conventions do not include charter parties
and in the given case, COSIPA had relationship with Fednav under subject to Voyage
charterparty. Court held the decision that it is not logical to invoke sec 46 of MLA to grant more
sue rights in Canada than Hamburg Rules (Is a charterparty a contract for carriage of goods by
water?, 2011).
Currently, standard set of clauses in charterparty includes following:
Introductory clause: It includes terms and conditions like vessel conditions, tank
cleanliness, contracting parties, agreed voyage and vessel. It also express cargo capacity in terms
of deadweight tonnage means that maximum permitted weight of cargo that the vessel can
loaded.
Cargo clause: It presents details about type and quantity of cargo that are under the
charter’s liability for deadfreight. These clauses are trade-specific like cargo retention, cargo
heating, oil washing, pumping, and others (Standard sets of clauses in voyage charterparty
contracts, 2016).
Freight clause: This clause specifies agreed freight charges, measurement unit along with
the time as well as payment place. It may be necessary to make advance payment of some freight
charges and rest at the time of delivery.
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