Delivery of the Goods

A very common area of conflict between the bill of lading contract and the charterparty is delivery of the goods at a discharge port. The charterer will wish to discharge and deliver the goods as soon as possible. If the charterer is a time charterer, he will be paying a daily hire for the ship while she is discharging, so the faster she discharges, the more hire he saves. Similarly, a voyage charterer has agreed to discharge the goods in a certain amount of time and delay will cost him demurrage. Further, if a voyage charterer is the seller of goods, his sale contract may require physical delivery of the goods before he is paid for them. Delay in delivery will delay payment to him. A carrier under a bill of lading will want to deliver the goods only on production of the original bills of lading by a receiver/bill of lading holder. Only such production will assure him that his delivery is not a misdelivery (to the wrong person, not entitled to receive the goods). If a carrier misdelivers goods he is liable to the bill of lading holder for the full value of the goods. A conflict can arise where the bills of lading are delayed in reaching the discharge port. This situation arises commonly where the voyage is short and also where the goods aboard the vessel are bought and sold several times. In those situations, it is quite often impossible for the bill of lading to be negotiated through the banking chain and to arrive in the hands of the intended receiver at the discharge port in time to produce to the ship for delivery. As discussed in Module 2, the time charterer has the right to give owners instruction as to what goods to carry, where to load them, where to discharge them etc. However, the charterer cannot order the shipowner to discharge the goods without production of the original bill of lading. That is an illegitimate order which an owner is entitled to refuse to comply with. BILL OF LADING OBLIGATIONS CAN OUTLIVE CHARTERPARTY OBLIGATIONS. We have looked at situations where obligations under charterparty and bills of lading contracts run side by side and sometimes conflict or interact. The contracts are separate. Therefore, if one contract is terminated the other may continue. The common example of this is where a charterparty is terminated, for example, by the owners’ withdrawal for charterers’ non-payment of hire under a time charterparty. This ends the charterers’ ongoing obligations under the time char- terparty so they have no obligation to pay hire (though this may have a liability for damages for future loss of hire). However, the bill of lading contract will be unaffected by the termination of the time charterparty. Therefore, the carrier/shipowner will continue to have obligations to the holders of the bills of lading and must complete the goods voyage. He will effectively do so without payment (of hire). This is a reason why an owner will often not use his right to withdraw a vessel under a time charterparty, when the ship is laden with goods and he is the bill of lading carrier.