Contracts of Affreightment and the difference of Charterparty and Bills of Lading

Contract of affreightments are contracts of charterparties including the bills of lading. However, charterparty  and bills of lading (BoL) are not the same. Where the charterparty is ‘the’ contract in essence, bills of lading is considered to be the document evidencing that particular contract.

There are distinct differences between the charterparty and the bills of lading.

A charterparty is used for full shipload of goods, whereas a BoL is used for less than full shipload. The services used are also different like a ‘tramp service’ for charterparty and ‘liner service’ for BoL. For charterparty common law applies, but BoL is governed by international rules like the ‘Hague-Visby Rules’. Charterparty is the contract for carriage of goods which governs the commercial relationship between the charterer and the shipowner and the BoL is issued under that contract as per the terms of the contract.

This is a summarised version of a detailed explaination given by John F Wilson in Carriage of Goods by Sea, 6^th edn.

Transfer of risk and transfer of ownership (part 2)

Goods are classified as specific and unascertained, and the laws relating to such goods differ. As per section 61 (1) of Sale of Goods Act 1979 (SoGA) goods are ‘specific’ if they are ‘identified and agreed upon at the time the contract was made.’ However ‘unascertained goods’ are not defined by SoGA. It is generally referred to goods that are not specific.

The basic rule under section 16 of SoGA, no property in the unascertained goods can pass to the buyer unless and until the goods become ascertained. Application of this section and the principles of ascertainment can be seen in Everwine Ltd & ors v Customs and Excise Commissioners  [2003] EWCA Civ 953.

Section 17 (1) of SoGA provides the rules for specific and ascertained goods. Accordingly where there is a contract for the sale of specific or ascertained goods, the property in them is transferred to the buyer at such time as the parties to the contract intend it to be transferred. Furthermore, if the parties did not expressly state as to when the property is transferred, as per section 17 (2) the intention may be implied from the circumstances of the contract.

However, it may be the case where no such intention of passing the property is found. For such situations section 18 is applied.

These are just the general principles that are applicable to the passing of property.

Transfer of risk and transfer of ownership (part 1)

According to Elphick v Barnes, the ‘risk’ concerning in Commercial contract means the risk of deterioration of or damage to the goods, and it includes accidental damage and damage caused by third party. The transfer of such risk generally transfers along with the property ownership. Section 20 (1) of Sale of Goods Act 1979 provides the law governing the transfer of risk. It states that, ‘unless otherwise agreed, the goods remain at the seller’s risk until the property in them is transferred to the buyer the goods are at the buyer’s risk whether delivery has been made or not’.

However, section 20 (1) will apply only if the contracting parties did not expressly agree as to when the transfer of ownership will occur.

It seems that the transfer of ownership is closely relevant to the transfer of risk. On the other hand, depending on the classification of the goods, the transfer of ownership is made. Different laws govern the transfer of such goods, whether specific, unascertained or ascertained.

Details of these classification and the laws will be discussed in my later post.

INCOTERMS....

The Incoterms® rules are an internationally recognized standard and are used worldwide in international and domestic contracts for the sale of goods that were promulgated by the International Chamber of Commerce first in 1936. Since then these standards have been modified every decade. However, they are not strictly classified as law, but rather as international custom. The purpose of these trade terms are to take care of the nuances of risk between the buyer and seller.

The application of these standards is often confused by the international contracting parties. Providentially, the strict purview of their scope was referred to in R. (on the application of Teleos Plc) v The Commissioners of HM Customs and Excise, where Moses J. noted: “They [Incoterms] do not apply to the contract of carriage”, but rather relevant to contract of sale of goods.

Recently, the Incoterms 2000 has been revised and will be coming into force on 1^st January 2011.The new Rules have been revised to take into account developments in international trade over the past ten years as the volume and complexity of global sales has increased, to address security issues arising in recent times and to provide for the on-going changes in electronic communication. The new Rules also recognise the growth of customs-free areas. The Incoterms 2010 has been reclassified and the rules now apply to the domestic as well as the international trade.

Details of the difference between the previous Incoterms and the latest one can be seen in <http://www.incelaw.com/documents/pdf/Strands/International-Trade/incoterms-2010.pdf>

Development of the conventions till date and the effects of the new convention governing the bills of lading

Initially, in order to provide a minimum degree of protection the ‘Hague Rules’ were introduced in 1921. It also defined the basic obligations of the carrier. However, these rules were inadequate, as they applied to outward bills and also for its minimum liability for ship owners.  Later the existence of the ‘Hague-Visby’ in 1968 brought in certain changes.

Developing countries, nevertheless sought for radical change. This resulted in the ‘Hamburg Rules’ which came into force in 1992. These were however only ratified by 33 states. Thereby to bring further harmonisation in 2008 the UNCITRAL Convention on Contracts for the International Carriage of Goods Wholly or Partly by Sea was adopted by the United Nations General Assembly. This new convention was named ‘The Rotterdam Rules’.

A legal briefing was done on the impact of the new convention by the UK P&I Club. Whereby, they have analysed the difference and additions on the rules governing bill of lading made till date. Interesting additions were found, for example, regarding the delivery of goods. Previously the rules were silent but now the carrier bears the responsibility until the goods are delivered to the consignee. Also previously there were no express provisions on the law and jurisdiction or arbitration, whereas now the claimant has the choice of choosing where to commence proceedings. Another important addition has been the express specification on the limitation of action rather the time bar for bringing proceedings. The 12 months has been extended to two years time in the new convention.  You can find detailed analysis of all the conventions in <http://www.ukpandi.com/ukpandi/resource.nsf/Files/Briefing27/$FILE/Briefing27.pdf>.

These developments may however satisfy the developing countries’ concerns regarding the rules of bills of lading.

Have the International Regulations Prohibiting Child Labour been Successful?

Child labour arose as a solution to cheap labour cost for the production based sectors since the mid-80s and 90s. Surprisingly till date 1 out of 12 children is now a child labour globally.[1]

Currently there are many international organisations fighting back this cruelty on children. One of them is the International Labour Organisation (ILO). Initially ILO’s main instrument against child labour has been the Convention No.138-Minimum Age required for employment. Gradually the Convention No.182 prohibiting the Worst Form of Child Labour, like slavery, trafficking, prostitution was introduced.[2]

Unfortunately the ratification rate of such conventions in developing countries, for example in Asia was much less than in developed countries. Nevertheless the ratification of child labour convention have boosted up dramatically in the last decade.[3] Moreover, economists have taken further policies, to restrict underage employment i.e. to put total or marginal ban on child labour; also setting penalties for using child labour. Even then loopholes remain considering the fact that illegal employment activities cannot be monitored properly.[4] Furthermore, the government’s failure to implement conventions properly into their national legislations and domestic implementation of those legislations holds back the effectiveness of ILO.[5]

Besides the ILO the United Nations Convention on the Rights of the Child (UNCRC) provides certain basic fundamental rights for the children. It ensure the children’s right to life, education, express their opinion, protection from abuse or exploitation and the right to play and enjoy culture and art.[6] In 2000 two additional protocols were introduced that provided children under the age of 18 should not be forcedly recruited into armed force, and the second, demands the states to prohibit child prostitution, pornography and sale of children into slavery. This ‘new’ protocols have already being signed by more than 120 states and are also allowed to be monitored by non-governmental organisations such as the ‘Save the Children’ organisation under Article 45a of the Convention.[7]

Although there are many nations which have signed this convention are bound to fulfil these rights and protect them, there is still violation of these rights, and proof of the fact is clearly visible around the world. This is a powerful struggle going on by the UN and other child protecting organisations against child labour, however, illegal child labour cannot be disappeared from one day to another.

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[1] End Child Exploitation – Child labour today, http://www.unicef.org.uk/publications/pdf/ECECHILD2_A4.pdf

[2] The Effect of ILO Minimum Age Conventions on Child Labour and School Attendance: Evidence From Aggregate and Individual-Level Data http://www.sciencedirect.com/science?_ob=MImg&_imagekey=B6VC6-4Y4XCW0-1-5&_cdi=5946&_user=122879&_pii=S0305750X09002381&_origin=article&_coverDate=05%2F31%2F2010&_sk=999619994&view=c&wchp=dGLbVtb-zSkzV&md5=67d6419d9cdabef6859cd71daead1807&ie=/sdarticle.pdf

[3] Ibid

[4] Ibid

[5] Ibid

[6] The United Nations Convention on the Rights of the Children http://www.savethechildren.org.uk/en/child-rights_9528.htm

[7] Ibid

Child Labour

Where child labour is known to all, its effects and impact is least bothered. Still today employers ignore the legal minimum age of employment. Some think it as giving an opportunity for jobs, which would enhance the economic growth at an early stage or build up one’s maturity level in handling responsibilities. Whereas others refers it as depriving children’s right, like education.

According to Maggie Atkinson, Children’s Commissioner, ‘putting through extra hours of work when their schooling is as demanding as it is –for some youngsters, it would be the last straw’. However, research by University College London shows how part-time jobs have no significant effect on studies.

It seems that there are two ways of seeing child labour: first where a child suffering with poverty takes it as a source of income, disregarding his other rights. Secondly, where a child is financially well-supported, he sees it as an opportunity to get a taste of the real world out there. So does poverty plays a significant role in the increase of hazardous child labour?

In fact, it is probably poverty which brought in the worst form of child labour (factory work, mining, prostitution, and even trafficking); it can no longer be seen as just giving the younger generation a chance to develop them.

International laws, conventions and regulations on child labour however have had a substantial impact on the fall of the rate of child labour. Nevertheless, in order to eliminate child labour countries like, India, Burma, Seirra Leone, having a higher rate of child labour must ratify such conventions soon.

Definitely, relying on laws and enforcement is insufficient. Therefore, it requires other human interventions, like campaigning, to fight against child labour.