Carriage Of Goods

The heart of maritime law lies in the transportation of goods and passengers for compensation. Contracts to transport cargo from one place to another are called “contracts of carriage” or “contracts of affreightment.” The two terms are used interchangeably. The “players” in water-borne transport include the following: owners, the persons who own commercial vessels; charterers, persons who contract to use the carrying capacity of a vessel owned by another; shippers, persons who want their goods transported from one place to another; consignees, persons entitled to receive the goods after they have been discharged from the carrying vessel; ocean freight forwarders, transportation specialists who assist shippers by arranging for the transport of their goods; and non vessel operating common carriers (NVOCCs), persons who undertake to transport goods of shippers as though they had their own vessels but who, in reality, contract with owners and charterers of vessels to actually perform the transportation function.

Maritime transport is divided into two general categories: common carriage and private carriage (also known as “tramp shipping”). The essence of a common carrier is that he holds himself out to the general public as engaged in the business of marine transport for compensation. An example is the general ship which carries different shipments of cargo from independent shippers. The essence of private (tramp) carriage is the charter-party, an arrangement where the shipowner leases the vessel to one person or agrees to take a shipment that takes up the whole reach of the vessel.

Carriage Liabilities under Bills of Lading – Common Carriage

At common law, distinctly different legal consequences attach to common carriage and private carriage. The common carrier was chargeable as an insurer of the goods, accountable for any damage or loss happening in the course of conveyance. There were only narrow exceptions to this liability: acts of God, acts of the public enemy, and inherent vice or faults of the shipper. By contrast, the shipowner engaged in private carriage was not subject to insurer’s liability, but was only liable for loss or damage to the extent this was proximately caused by a breach of an obligation contained in a contract of carriage. A ship hired for a specific voyage to carry a particular cargo for charterers was not a common carrier, but a bailee for hire required to exercise only ordinary skill and care.

With the passage of the Harter Act and Carriage of Goods by Sea Act (COGSA), the common law of common carriage was largely superseded and the area is now governed primarily by statute. The law of private carriage, now primarily charter-parties, are still governed by the principle of freedom of contract. Nevertheless, even in private carriage the parties may agree that the statute will govern their rights and duties. This is typically done by incorporating COGSA into the charter-party by a Clause Paramount.

Charter-Parties – Private Carriage

A charter-party is a highly standardized written document that provides the contractual arrangements for one party (the charterer) to hire the carrying capacity of a vessel, either in whole or in part, owned by another party. Generally, charter-parties are subject to the rules and requirements of contract law. Charter-party forms are used worldwide, and many of them have been drafted to take into consideration the specific needs of particular trades. Other charter-parties are more general in form and are not adapted to a specific trade. There are three basic types of charter-parties: a voyage charter, a time charter and a demise charter.

Excerpts from Admiralty and Maritime Law by Professor Robert Force (Federal Judicial Center 2004).