A trick question..?? Lets discuss this with a case study of a case that is raging on in one of the social media forums..
A forwarder booked 2×20′ containers with a shipping line to Doha on behalf of his client.. Due to a mistake of the shipping line staff, the shipping line shipped 1×20′ to Doha and put the other 1×20′ with some other clients container and shipped it to Bremerhaven.. This happened because the Doha container was linked by mistake to the booking of the Bremerhaven container.. By the time the forwarder found this mistake out, the container was already on its way to Bremerhaven.. The shipping line has advised that this container will be rerouted but the container will take about 60 days to reach Doha instead of the original transit time of 20 days if it had gone directly..
Due to this delay, the forwarder has lost his client (the shipper), because the shipper blames the forwarder, the shipper has lost future orders with his client and has lost his credibility in the market..
When the forwarder placed the shipping line on notice and raised a claim against them, the shipping line is trying to hide under their bill of lading clauses as below
19.1 :
Q: 19.1 The Carrier may at any time and without notice to the Merchant:
(a) use any means of transport or storage whatsoever;
(b) transfer the Goods from one conveyance to another including transshipping or carrying the same on a Vessel other than the Vessel named on the reverse hereof or by any other means of transport whatsoever and even though transshipment or forwarding of the Goods may not have been contemplated or provided for herein; UNQQ: 19.2 The liberties set out in clause 19.1 may be invoked by the Carrier for any purpose whatsoever whether or not connected with the Carriage of the Goods. Anything done or not done in accordance with clause 19.1 or any delay arising therefore shall be deemed to be within the contractual Carriage and shall not be a deviation. UNQ
Q:
20. Matters affecting performanceIf at any time Carriage is or is likely to be affected by any hindrance, risk, danger, delay, difficulty or disadvantage of whatsoever kind and howsoever arising which cannot be avoided by the exercise of reasonable endeavours, (even though the circumstances giving rise to such hindrance, risk, danger, delay, difficulty or disadvantage existed at the time this contract was entered into or the Goods were received for Carriage) the Carrier may at his sole discretion and without notice to the Merchant and whether or not the Carriage is commenced either:
(a) Carry the Goods to the contracted Port of Discharge or Place of Delivery, whichever is applicable, by an alternative route to that indicated in this TD or that which is usual for Goods consigned to that Port of Discharge or Place of Delivery. If the Carrier elects to invoke the terms of this clause 20(a) then, notwithstanding the provisions of clause 19 hereof, he shall be entitled to charge such additional Freight as the Carrier may determine; or UNQ
The hapless freight forwarder is left without a solution as the shipping line is rejecting his claim for
- delayed delivery
- loss of current and subsequent business of their client
- the shipper is blaming the freight forwarder for the mishap and is expecting them to sort out the problem
Here’s what i think :
I think the forwarder has a valid case, as the delay was due to the the shipping line making the mistake and routing the container to the incorrect destination in an entirely different continent and trade route and not due to delay in transit to Doha..
If the container that was bound for Doha was delayed, then the SL can hide behind the clause mentioned and say we promised to get your container to Doha but didn’t promise you how long it will take..
But in the case of the container that was originally bound for Doha but sent to Bremerhaven incorrectly, they cant hide under this premise because they have sent the container to an entirely different port (without informing the customer) and this contravenes the contract of carriage (which was for Doha).. The bill of lading was issued correctly, but the containers were routed incorrectly..
I think the forwarder stands a chance if he goes to court..
Do you agree with my view..?? Did anything similar happen to you..?? Please do share your experience and also what was the final outcome.. It will be a good lesson for all to learn..
wonderfull!!
Sophie, some customers of the shipping companies may grouse about the “fairness” of the standard terms of the shipping company’s bill of lading, as set forth in paragraphs 19.1, 19.2 and 20 in the example provided in this blog. However, from the shipping company’s point of view, they are fair, and commercially necessary, if the shipping company is going to survive to serve its customers year after year. Think what disaster would arise if these clauses were not applied and the shipping line had to operate within rigid and unbending lines that do not comport with the reality of ocean transport.
Your statement that, “. . . . if a contract contains a clause that’s abusive or misleading, that clause is invalid.” is not exactly correct and is compound. But that’s OK. Non-lawyers often apply what they believe is commons sense to legal situations . . . that’s a mistake. One must apply the law, not opinion, if an accurate analysis is to be made and a consistent result is to be obtained. Of course, we hope that the law does apply common sense, and in my opinion, in most cases it does. I am talking about the common law principles of contracts, which were established hundreds of years ago in England and have survived in basic concept through until today, modified somewhat of course by the changing times.
First, if the contact is written by one party and includes a misleading statement of fact so that the other party does not and cannot, through the exercise of due diligence, know that that the statement is misleading (actually, I believe you mean to say “fraudulent” rather than misleading) a court may very well find in favor of the non-drafting party and construe the contract, or the clause in their favor.
Second, courts can invalidate a contract, or a clause of a contract due to mistake. For a good explanation of what constitutes mistake, see: http://en.wikipedia.org/wiki/Mistake_(contract_law)
Third, you use the word “abusive”. I am unaware of any application of that word under the law of contracts. Both parties to a contract are free to negotiate terms. Sometimes the terms favor or protect one party more than another. It could be argued that the standard terms of a bill of lading are weighted toward the shipping line. However, I believe the terms set forth in the example here as paragraphs 19.1, 19.2 and 20 are clear as to how those clauses protect the shipping company, but those clauses do not protect the shipping line from their own mistakes . . . i.e. their negligence, as was the case in this blog. (See my previous comments in this blog comment section.)
In common law jurisdictions, clauses in a contract which are unconscionable are voidable by the court. The standard terms of a bill of lading could be considered an “adhesion contract”. An example of an adhesion contract is a standardized contract form that offers goods or services to consumers on essentially a “take it or leave it” basis without giving consumers realistic opportunities to negotiate terms that would benefit their interests. When this occurs, the consumer cannot obtain the desired product or service unless he or she acquiesces to the form contract.
There is nothing unenforceable or even wrong about adhesion contracts. In fact, most businesses would never conclude their volume of transactions if it were necessary to negotiate all the terms of every consumer credit contract. Insurance contracts, real property leases, purchase order terms, invoice terms, and the standard terms and conditions of a bill of lading are other kinds of adhesion contracts.
Adhesion contracts are not per se invalid. However, adhesion contracts, or adhesive clauses in a contract, that are “unconscionable” may be invalidated by a court if they are deemed to be so unfair to the weaker party that a court will refuse to enforce them. An example would be severe penalty provisions for failure to pay loan installments promptly that are physically hidden by small print located in the middle of an obscure paragraph of a lengthy loan agreement. In such a case a court can find that there is no meeting of the minds of the parties to the contract and that the weaker party has not accepted the terms of the contract.
In reading the standard terms of the bill of lading set forth in this blog’s example, I see nothing unconscionable, or even unfair – but of course, what’s the old saying? . . . . fairness is in the eye of the beholder, and disputes over what is fair and what is not fair often end up before the courts.
In drafting their standard terms and conditions of the bill of lading, the shipping company merely protects itself from the occurrences of normal business situations. These clauses do not, however, exculpate the shipping company from their own mistakes or negligence, which is what was apparently the case in the blog’s example. Please read my earlier posts, which I believe clearly explains this.
Oh, and yes, in this business, shipping companies are the “king of the world” . . . they set the rates, they set the sailing schedules, they set the terms on their bill of lading . . . hey, that’s life.
This is a very interesting topic, and I very much appreciated everyone’s input on this case. However, there’s another question that I think should be given more attention: aren’t some of the BoL clauses completely abusive? How can such clauses be even allowed to exist? Shipping lines often behave as the “kings of the world”, with no one above them to “supervise” them, and they are the ones who decide what’s acceptable or not in their business relationships. Shippers have no say – you either accept, or don’t ship at all. But at the same time, I’ve always heard that, if a contract contains a clause that’s abusive or misleading, that clause is invalid. So I wonder…how far goes the shipping lines’ right to “hide” behind these clauses that they’ve made up? Are these “no liability” clauses even acceptable from a legal standpoint? I mean, I know they couldn’t possibly be held responsible for everything that might go wrong during a shipment, but “no liability at all” doesn’t seem fair and correct either.
Stan, you are correct about the business relationship with the shipping lines, however, it is a two-way street and if the shipping line has integrity, it will atone for its mistakes. Even small freight forwarders are free to determine which lines they use, and shipping lines are always unreasonable, they will lose business and in today’s economy, the lines can’t afford to lose business.
But what I have been talking about is liability. I have previously pointed out that the calculation of damages is a totally different matter. The shipping line was negligent. If they have integrity, they will pay “reasonable damages”. Most likely they are insured, so their insurance company will actually pay.
But what is the “measure of damages” here? We have not been given enough facts to determine that. Certainly, the freight forwarder’s loss of his customer is not recoverable. As was pointed out earlier in this discussion by Willie, “. . . customers come and go for various reasons, many being related to situations completely out of the hands of the forwarder . . .”
If we knew what damages the freight forwarder is seeking, we could analyze that. But for now I don’t believe there is much more that can be said in this matter.
David, I am totally agree with you but in reality the D&G syndrom is deeply rooted in the realationship with the Lines. Let’s wait for the end of this story. But anyway it was very interesting & cognitive, thank you