Wrong Contract

With so many forms and contract choices available it is not surprising that sometimes ill-advised marriages of terms and clauses arise as well as attempts to mix items from totally different types of contracts. In February 2003 an interesting case referred to as the Jordan II was heard in the UK Court of Appeal and decided in the owner’s favour. Since there is the possibility that this case may go to the House of Lords the final outcome may yet be changed. The case revolves around some damage caused to a steel cargo because of poor stowage. The Bill of Lading incorporated the Hague-Visby Rules, which, according to Article III Rule 2 states: “The carrier shall properly and carefully load, handle, stow, carry, keep, care for, and discharge the goods carried”. Rule 8: “Any … agreement in a contract of carriage relieving the carrier or ship from liability for loss or damage … arising from negligence, fault or failure in the … obligations provided in this Article… shall be null and void…” Although the cargo was steel products the parties had chosen to use the Stemmor 1983 form of voyage charter: which stated: Clause 3. Freight to be paid at … $3.3 per metric ton. F.I.O.S.T. – lashed / secured / dunnaged…” Clause 17. Shippers / charterers / receivers to put the cargo on board, trim and discharge cargo free of expense to vessel…” Last year a deputy High Court Judge, Nigel Teare QC, held that neither the shipper or receiver of a steel cargo, nor the voyage charterer, were entitled to sue the Jordan II’s owner for alleged damage due to poor stowing and handling. Applying the 1954 precedent of Pyrene v Scindia, he ruled that Article III rule 2 of the Hague-Visby (formerly Hague) Rules which requires ‘proper performance’ of loading, stowing and carriage by the carrier, only applies if he had agreed to undertake those functions. The appeal court unanimously upheld that decision.