Law Essay Research Paper LAW OF CARRIAGE

Law Essay, Research Paper

LAW OF CARRIAGE OF GOODS BY SEA

ASSIGNMENT ONE

?…… the shipowners? undertaking to tender a seaworthy ship, has as a result of numerous decisions as to what can amount to ?unseaworthiness?, become one of the most complex of contractual undertakings. It embraces obligations with respect to every part of the hull and machinery, stores and equipment and the crew itself. It can be broken by the presence of trivial defects easily and rapidly remedial, as well as by defects which must inevitably result in a total loss of the vessel.? per Diplock LJ in The Hong Kong Fir Shipping case [1962] 2 QB 26 (CA).

Discuss:

In the Hong Kong Fir Shipping Co.,Ltd v. Kawasaki Kisen Kaisha Ltd case the principals were indeed fundamental. The plaintiffs (owners) had chartered the Hong Kong Fir to the defendants (charterers) for twenty-four months from delivery to the charterers in Liverpool. The vessel was delivered in Liverpool on February 13th 1957. The vessel then started it voyage to America to get a cargo of coal. It then left for Osaka and was delayed by five weeks due to the repairs needed on the engine. On arrival to Osaka the vessel was found to need more repairs due to the vessel being in very bad condition, and was worked on for fifteen more weeks, to make the vessel seaworthy. by the time the vessel was rendered ?seaworthy? it was September 15 but on the 6th of June and on the 11th of September the Charterers had written to the owners(plaintiffs) repudiating the Charter.

It is on the date of delivery of the vessel to the docks in Liverpool when the court found the vessel to be ?unseaworthy? as the engine room staff were found to be incompetent and inadequate in number in view of the age of the vessels machinery.

In this case the defendants had chartered the ship from the plaintiffs. It was a term of contract that the ship was seaworthy. In fact the ship was unseaworthy, owing to the combination of an aging engine and an less than adequate engine room staff. This led to the repeated need to stop for repairs. there was a definite breach of contract and the defendants would have been entitled to bring an action for damages. instead the elected to terminate the contract. the plaintiff claimed that alough they(the plaintiffs) were in breach of contract, the breach was not one which entitled the defendants to terminate,and that, therefore, the defendants had repudiated the contract by wrongful termination.

The question has to asked weather the term ?seaworthiness? is a condition or a warranty. In fact one Judge did this and his outcome was that it was a warranty. However Diplock LJ made an historical judgment and said that they were not entitled to terminate the contract. This judgment was brought about because Diplock LJ said that two fold analysis into conditions and warranties was incomplete, and that there were intermediate terms where the effect of breach depended on the importance of the breach. He thought that the term ? seaworthiness was on of these terms, because it could be broken into a wide variety of ways and could have a wide variety of effects due to this?.

This Judgment was significant because up to this point most contract lawyers would have said that there two types of contractual terms, conditions and warranties. Conditions were the most important of these two terms, as breach of this term ment termination of the contract and enabled you to sue for damages. A warranty was declared less important because a remedy for breach of warranty was an action for damages. But Diplock LJ said that there was another term the ?intermediate? terms, terms without names.

The Charterers in this case believed that that because the ship was considered not to be ?seaworthy? that they could repudiate. Repudiation is a remedy, and its effect is to terminate the contract. It puts the parties involved back to the beginning before they have signed the contracts. This was believed because one of the clauses in a time charter contract is that the ship has to be ?seaworthy.? Diplock LJ said that this is wrong because the term ?seaworthy? is to big a definition. This term can be broken in many different ways from the trivial to the serious and it is impractical to to attempt to asses the seriousness of the breach without first paying attention to the way in which it has been broken.

The other information to do with this case was that there was a steep fall in freight rates from 47s in June to 13s. 6d.per ton in August. This clearly indicated that the charterer could be paying less if they started another time charter. By simply repudiating the contract, they had a chance to do this. On the other hand the owner was making vast money compared to the present freight rates. So with one party wanting to terminate the contract and the other wanting to keep it, it was only a matter of time, the foundations were cast when the ship was docked for repairs, the charterers terminated the contract on the ground of breach of contract.

It can be seen that Diplock LJ, saw the potential of this happening every time the charterer saw an opportunity elsewhere. In effect he was protecting the interests of the shipowners, as the term ?seaworthy? could be from the trivial to the serious. To put it another way the charterer could find many reasons to terminate the contract because the ship was not ?sea