SHIPPING MANAGEMENT CONTENT

INTRODUCTION
LESSON 1: SHIP TRANSPORT LESSON 2: MODES OF TRANSPORT LESSON 3: BASIC TYPE OF SHIPS

LESSON 4: THE MARINE SOCIETY LESSON 5: BAILMENT LESSON 6: SPECIAL CONTRACTS - INDEMNITY AND GUARANTEE LESSON 7: GENERAL DAMAGES LESSON 8: TORT - NEGLIGENCE IN SHIPPING AND DEFENSES AGAINST TORTUOUS LIABILITIES LESSON 9: BILLS OF LADING

LESSON 10: HAGUE RULES, GOVERNING LAW AND JURISDICTION LESSON 11: SHIPMANAGEMENT AND THE ISM CODE

INTRODUCTION
Objectives of Shipping Management To promote and establish the status of qualified shipping personnel in commercial organizations and industries To promote the interests of the shipping communities and the development of improved methods in the shipping trade To stimulate and promote the interest of shipping personnel to acquire higher qualification in modern shipping To hold conferences and meetings for the discussion of professional affairs, interests and duties, the reading of papers, and the delivery of lectures; to compile and revise registers of the Institute, to issue copies of such papers, lectures and professional records from time to time to Members of the Institute, and generally to collect, and publish information of services or such interests to members of the profession or similar business and the public at large To do such other lawful things as are conducive and incidental to the attainment of the objects and welfare of the Members, including affiliation

Lesson 1 SHIP TRANSPORT

Ship transport refers to the use of watercraft to carry people, generally referred to as passengers, and goods, generally referred to as cargo, from one place to another. Although the historic importance of sea travel for passengers has decreased due to the development of automobiles and aviation, it is still very effective for short trips and pleasure cruises. Sea transport remains the largest carrier of freight in the world. While slower than air transport, modern sea transport is a highly effective method of moving large quantities of non-perishable goods. Transport by water is significantly less costly than transport by air for trans-continental shipping. Ship transport is often international by nature, but it can be accomplished by barge, boat, ship or sailboat over a sea, ocean, lake, canal or river. This is frequently undertaken for purposes of commerce, recreation or military objectives. When a cargo is carried by more than one mode, the transport is termed Intermodal or co-modal. Ships have long been used for warfare, with applications from naval supremacy to piracy, invasions and bombardment. Aircraft carriers can be used as bases of a wide variety of military operations. Ship transport is used for a variety of unpackaged raw materials ranging from chemicals, petroleum products, and bulk cargo such as coal, iron ore, cereals, bauxite, and so forth. So called "general cargo" covers goods that are packaged to some extent in boxes, cases, pallets, barrels, and so forth. Since the 1960s containerization has revolutionized ship transport Merchant shipping 2005 registration of merchant ships (1,000 gross register tons (GRT) and over) per country. A nation's shipping fleet comprises the ships that operated by civilian crews used to transport passengers or cargo. Depending on the nation, the terms merchant navy, merchant marine, or merchant fleet may be used to refer to these vessels. There are a number of terms applied to the

people who operate the ships, including merchant seaman, merchant sailor, and merchant mariner, or simply seaman, sailor, or mariner. The terms "seaman" or "sailor" may also refer to a member of a country's navy. According to the 2005 CIA World Fact book, the world total number of merchant ships of 1,000 Gross Register Tons or over was 30,936. Statistics for individual countries are available at the List of merchant marine capacity by country. Professional mariners Seafarers hold a variety of professions and ranks, each of which carry unique responsibilities which are integral to the successful operation of a seafaring vessel. A ship's complement can generally be divided into four main categories: the deck department, the engineering department, the steward's department, and other. Deck department

An able seaman stands iceberg lookout on the bow of the freighter USNS Southern Cross during a re-supply mission to McMurdo Station, Antarctica; circa 1981. Officer positions in the deck department include but not limited to: Master and his Chief, Second, and Third officers. The official classifications for unlicensed members of the deck department are Able Seaman and Ordinary Seaman. A common deck crew for a ship includes:

(1) Chief Officer/Chief Mate (1) Second Officer /Second Mate (1) Third Officer / Third Mate (1) Boatswain (2-6) Able Seamen (0-2) Ordinary Seamen

A deck cadet is person who is carrying out mandatory sea time to achieve his/her officer of the watch certificate. Their time onboard is spent learning the operations and tasks of everyday life on a merchant vessel.

Engineering department A ship's engineering department consists of the members of a ship's crew that operate and maintain the propulsion and other systems on board the vessel. Marine Engineering staff also deal with the "Hotel" facilities on board, notably the sewage, lighting, air conditioning and water systems. They deal with bulk fuel transfers, and require training in firefighting and first aid, as well as in dealing with the ship's boats and other nautical tasks- especially with cargo loading/discharging gear and safety systems, though the specific cargo discharge function remains the responsibility of deck officers and deck workers. On LPG and LNG tankers however, a cargo engineer works with the deck department during cargo operations, as well as being a watchkeeping engineer. A common Engineering crew for a ship includes:

(1) Chief Engineer (1) Second Engineer / First Assistant Engineer (1) Third Engineer / Second Assistant Engineer (1-2) Fourth Engineer / Third Assistant Engineer (0-2) Fifth Engineer / Junior Engineer (1-3) Oiler (unlicensed qualified rating) (0-3) Greaser/s (unlicensed qualified rating) (1-5) Entry-level rating (such as Wiper (occupation), Utilityman, etc)

Many American ships also carry a Qualified Member of the Engine Department. Other possible positions include Motorman, Machinist, Electrician, Refrigeration Engineer, and Tanker man. Engine Cadets are trainee engineers who are completing sea time necessary before they can obtain a watch keeping license. Steward's department A typical Steward's department for a cargo ship would be composed of a Chief Steward, a Chief Cook, and a Steward's Assistant. All three positions are typically filled by unlicensed personnel. The chief steward directs, instructs, and assigns personnel performing such functions as preparing and serving meals; cleaning and maintaining officers' quarters and steward department areas; and receiving, issuing, and inventorying stores.

On large passenger vessels, the Catering Department is headed by the Chief Purser and managed by assistant pursers. Although they enjoy the benefits of having officer rank, they generally progress through the ranks to become pursers. Under the pursers are the department heads - such as chief cook, head waiter, head barman etc. They are responsible for the administration of their own areas. The chief steward also plans menus; compiles supply, overtime, and cost control records. May requisition or purchase stores and equipment. May bake bread, rolls, cakes, pies, and pastries. A chief steward's duties may overlap with those of the Steward's Assistant, the Chief Cook, and other Steward's Department crewmembers. In the United States Merchant Marine, in order to be occupied as a chief steward a person has to have a Merchant Mariner's Document issued by the United States Coast Guard. Because of international conventions and agreements, all chief cooks who sail internationally are similarly documented by their respective countries. Other Departments Various types of staff officer positions may exist on board a ship, including Junior Assistant Purser, Senior Assistant Purser, Purser, Chief Purser, Medical Doctor, Professional Nurse, Marine Physician Assistant, and Hospital Corpsman, are considered administrative positions and are therefore regulated by Certificates of Registry issued by the United States Coast Guard. Pilots are also merchant marine officers and are licensed by the Coast Guard. Formerly, there was also a radio department, headed by a chief radio officer and supported by a number of radio officers. Since the introduction of GMDSS (Satellite communications) and the subsequent exemptions from carrying radio officers if the vessel is so equipped, this department has fallen away, although many ships do still carry specialist radio officers, particularly passenger vessels. Many radio officers became 'electrotechnical officers', and transferred into the engineering department. Life at sea The tanker SS Overseas Alice takes seas over the bow during a 1981 run from New Orleans to Panama. Mariners live on the margins of society, with much of their life spent beyond the reach of land. They face cramped, stark, noisy, and sometimes dangerous conditions at sea. Yet men and women

still go to sea. For some, the attraction is a life unencumbered with the restraints of life ashore. Seagoing adventure and a chance to see the world also appeal to many seafarers. Whatever the calling, those who live and work at sea invariably confront social isolation. Findings by the Seafarer's International Research Center indicate a leading cause of mariners leaving the industry is "almost invariably because they want to be with their families." U.S. merchant ships typically do not allow family members to accompany seafarers on voyages. Industry experts increasingly recognize isolation, stress, and fatigue as occupational hazards. Advocacy groups such as International Labor Organization, a United Nations agency, and the Nautical Institute are seeking improved international standards for mariners. Ocean voyages are steeped in routine. Maritime tradition dictates that each day be divided into six four-hour periods. Three groups of watch keepers from the engine and deck departments work four hours on then have eight hours off watchkeeping. However there are many overtime jobs to be done daily. This cycle repeats endlessly, 24 hours a day while the ship is at sea. Members of the steward department typically are day workers who put in at least eight-hour shifts. Operations at sea, including repairs, safeguarding against piracy, securing cargo, underway replenishment, and other duties provide opportunities for overtime work. Ones service aboard ships typically extends for months at a time, followed by protracted shore leave. However, some seamen secure jobs on ships they like and stay aboard for years. In rare cases, veteran mariners choose never to go ashore when in port. Further, the often quick turnaround of many modern ships, spending only a matter of hours in port, limits a seafarer's free-time ashore. Moreover, some foreign seamen entering U.S. ports from a watch list of 25 high-risk countries face restrictions on shore leave due to security concerns in a post 9/11 environment. However, shore leave restrictions while in U.S. ports impact American seamen as well. For example, the International Organization of Masters, Mates & Pilots notes a trend of U.S. shipping terminal operators restricting seamen from traveling from the ship to the terminal gate. Further, in cases where transit is allowed, special "security fees" are at times assessed. Such restrictions on shore leave coupled with reduced time in port by many ships translate into longer periods at sea. Mariners report that extended periods at sea living and working with shipmates who for the most part are strangers takes getting used to. At the same time, there is an opportunity to meet people from a wide range of ethnic and cultural backgrounds. Recreational opportunities have improved aboard some U.S. ships, which may feature gyms and day rooms for watching movies, swapping sea stories, and other activities. And in some cases, especially tankers, it is made possible

for a mariner to be accompanied by members of his family. However, a mariners off duty time is largely a solitary affair, pursuing hobbies, reading, writing letters, and sleeping. On modern ocean going vessels, typically registered with a flag of convenience, life has changed immensely in the last 20 years. Most large vessels include a gym and often a swimming pool for use by the crew. Since the Exxon Valdez incident, the focus of leisure time activity has shifted from having officer and crew bars, to simply having lounge-style areas where officers or crew can sit to watch movies. With many companies now providing TVs and DVD players in cabins, and enforcing strict smoking policies, it is not surprising that the bar is now a much quieter place on most ships. In some instances games consoles are provided for the officers and crew. The officers enjoy a much higher standard of living on board ocean going vessels. Crews are generally poorly paid, poorly qualified and have to complete contracts of approx 9 months before returning home on leave. They often come from countries where the average industrial wage is still very low, such as the Philippines or India. Officers however, come from all over the world and it is not uncommon to mix the nationality of the officers on board ships. Officers are often the recipients of university degrees and have completed vast amounts of training in order to reach their rank. Officers benefit on board by having larger, more comfortable cabins, table service for their meals, etc. Contracts average at the 4 month mark for officers, with generous leave. Most Ocean going vessels now operate an Unmanned Engine room System allowing engineers to work days only. The engine room is computer controlled by night, although the duty engineer will make inspections during unmanned operation. Engineers work in a hot, humid, noisy atmosphere. Communication in the engine room is therefore by hand signals and lip-reading, and good teamwork often stands in place of any communication at all.

Lesson 2 MODES OF TRANSPORT

With the beginning of the cosmic era and with the increasing commercialization, the demand for goods and products has been tremendously increasing from all parts of the World. This means that the importance of transport companies is on top. Transport companies are offering a wide selection of services to the customers who are looking for shifting their products or goods to their desired destination. They often provide different modes of transport facilities such as air, sea, road, and rail. However, there are various advantages and disadvantages with the use of all these modes of transport. Advantages of Air Transportation: Fastest for long distance deliveries Customer perception is high, easy for order fulfillment Very safe mode of transport Reduces lead time on suppliers Improved service levels Disadvantages of Air Transportation: Risky Potential for flight delays and/or cancellations Customs and Excise restrictions Expensive vs. other modes Unsuitable for some goods, Limited routes, and inflexible timetables Environmental pollution Airport taxes Advantages of Sea Transportation: Ideal for transporting heavy and bulky goods

Suitable for products with long lead times Cheap for large volumes Disadvantages of Sea Transportation: Very slow, longer lead/delivery times Difficult to monitor exact location of goods in transit Customs and Excise restrictions Could be costly Inflexible routes and timetables Port duty/taxes Requires inland transportation for door-to-door delivery Advantages of Rail Transportation: Fast delivery Capacity Cost effective Safe mode of transport Reliable More environmentally friendly than alternatives Does not add to congestion Disadvantages of Rail Transportation: Potential of damages, from shunting Subject to unforeseen delays Reliance on rail freight operator's timetable Suppliers/customers are not always located near a rail freight depot and delivery to/from the depot can be costly and time consuming Limited routes, inflexible routes and timetables Advantages of Road Transportation: Cost effective Fast delivery, Ideal for short distances Ideal for transporting perishables Easy to monitor location of goods Easy to communicate with driver

Ideal for sending by courier shortages to customers Private Disadvantages of Road Transportation Transport subject to traffic delays Transport subject to breakdown Goods susceptible to damage through careless driving Bad weather Driving regulations can cause delays Pollutes the environment Less safe than alternatives Can be expensive where there are congestion or road charges. It is advisable to decide before you investigate a transport company what type of services you are looking for. Some of the common types of services are door-to-door car transport, terminal-toterminal transport, special car mover, and delivery to a specified location. Many transport companies are offering worldwide goods transportation solutions to the individuals or business sectors. These companies specialize in reliable and efficient. They always commit in sending damage-free products at the final destination. Nefab is a leading transport company that offers different modes of transport facilities for the customers convenience around the World. Nature-and Significance Water transport is considered as a portent of modem civilization, a source of employment and an active agent of progress and the development. Water transport is the oldest and cheapest form for moving goods from one place to another place. It operates on natural tracks and hence does not require huge capital investments in the construction and maintenance of waterways. The path is provided by nature and less investment is required in laying down the track and its maintenance. This mode of transport has the largest carrying capacity and suitable for transport of bulk goods over long distance. The landmass in the world is connected with various waterways through ocean. Due to thais connectivity the water transport is considered as the best means for transport of bulk commodities. This form of transport is extensively used for the international trade. Ocean transport is favorable because of geographical fact that the oceans and seas are interconnected. British Empire could establish several colonies all over the world due to its well-developed, well-equipped overseas water

transport system. Water transport can easily carry goods and commodities of low values and high volume. After discovery of various ocean routes, the economic importance of these routes has been increased significantly. Oceans are considered to be the cheapest and the safest highway to carry passenger and cargo. Water transport can be classified into Inland water transport and Ocean transport.

Inland Water Transport Transport by rivers, canals and lakes are referred to as 'Inland Water Transport'. Inland Waterways have greatly expanded during 20th century in many countries of the world. It is playing an important role in internal trade and commerce in many countries. Inland waterways may be natural such as navigable rivers or lakes or maybe artificial such as canals. Many rivers provide natural waterways, which can be used for providing transport services through small boats as well as big barges. River transport was one of the oldest modes of transport. It played a very important role prior to the development of modern means of land transport. It provides transport facilities to inaccessible forest areas and other natural regions not connected by roads. Canals are artificial waterways basically made for irrigation or 'navigation or for the both. Canals can be used as waterways for inland water transport, but huge amount of capital investment is required in the construction and maintenance of such man made artificial waterway. The cost of canal transport is higher than that of the river transport. Apart from this, providing adequate water in the canal to facilitate movement of big boats is considered as a big problem for this mode of transport. Natural lakes provide transport facilities to its coastal areas. Although, the distance covered by laketransport is less, it provides low cost transport facilities to the areas connected by the lakes. Advantages of Inland Water Transport 1. Inland water transport is the cheapest mode for certain kind of traffic both for long and short hauls provided the points of origin and destination are located on waterfront and no trans-shipment of goods is involved. 2. It is also one of the most efficient modes of transport from the point of view of energy consumption. 3. It can provide immediate access wherever water exists without requiring investment in line haul capacities as in other mode of transport.

4. Inland water transport is a labor-intensive mode and generates more employment per rupee of investment than any other mode and so particularly benefits weaker section of society. 5. It provides transport for heavy, bulky, non-perishable and low-grade traffic with a low price relative to weight where speed is not an important factor. 6: It provides economical means of transportation of minerals and other bulky dry and liquid raw materials for industries. 7. Being gift of nature, the waterways require no investment for its maintenance. 8. In mountain areas, inland water transport provides excellent service for downhill movement of goods and passengers. Limitations of Inland Water Transport (i) This form of transport is slow as compared to other forms of land transport. (ii) Navigable waterways are not perennial in nature in many areas. (iii) Transport activity becomes very much-limited in polar region because freezing of water may cause hindrance. (iv) Heavy capital investment is also required in construction maintenance and dredging operation of canals. (v) Climatic factors exercise greater influence in case of inland water transport than in any other mode of transport i.e., the routes are often blocked by ice in winter. (vi) This form of transport can be used where speed and time are not important. Perishable products cannot generally be transported by inland water transport for a longer distance. National Waterways, The Government of India has so far identified ten important waterways for declaring them as 'National Waterways'. Three out of these ten waterways have already been declared as National Waterways. The details National waterways are as follows: (a) National Waterway No.l-(Allahabad and Haldia 0,620 km) stretch of the Ganga-Bhagirathi-Hoogly

river system). Cargo Transportation in the stretch Haldia- Farakka- Patna are being carried out by the Central Inland Water Transport Corporation (CIWDC) and by Goa Barge Owners' Association. (b) National Waterway No.2 (891 km. The Sadiya-Dhubri stretch of the river Brahmaputra). The CIWTC is operating cargo services between Calcutta and Guwahati. ' . (c) National Waterway No.3 The Kollam-Kottapuram stretch of West Coast Canal (168 km) along with Champakara Canal (14 km in Kerala). Keral Shipping and Inland Navigation Corporation, ABC and Sons and Hindustan Petroleum Corporation Limited operate cargo services in this waterway. The responsibility of development and maintenance of National Waterways rests with the Inland Waterways Authority of India. Charter of Functions of Inland Waterways Authority of India (164) (i) To carry out economic surveys to assess future traffic potential on main rivers, feeders and creek routes. (ii) To draw program of river canal conservancy works, including river training works and provision of navigational aids. (iii) To draw programs of dredging requirements and priorities for efficient maintenance of existing navigable waterways and for revival of dead and dying rivers, channels or canals for navigation. (iv) To develop, maintain and operate inland river ports landing ghats and terminal facilities in such ports or ghats. . (v) To maintain pilotage and hydrographic survey services. (vi) To disseminate navigational and meteorological information including publication of river charts. , (vii) To carry out removal of wrecks and obstructions in navigable waterways. (viii) To fix maximum and minimum fares and freight rates for inland water transport on behalf of the government. (ix) To approve timetables for passenger services. (x) To ensure coordination of inland water transport with other forms of transport, with major sea ports and with industries, trade and agriculture interests for optimum utilization of the available transport capacity. (xi) To conduct research in matter relating to inland water transport including development of : (a) craft design, (b) techniques of towage and (c) landing and terminal facilities.

(xii) To arrange program of technical training for inland water transport personnel. (xiii) To maintain liaison with the shipyards and ship repairing industries to meet the requirements of the inland water transport fleets, repairs and new constructions. (xiv) To register country boats and mechanized crafts and issue of certificate of fitness for vessels plying on waterways. (xv) To issue permit for license for right of operations. (xvi) To issue certificate/license for various categories of crew of inland vassals. (xvii) To perform any other functions related to IWT assigned by the government. Ocean Transport Navigation through the open sea is known as ocean or sea transportation. Navigation along indented or broken coastline is known as coastal shipping. Coastal shipping is synonymous with domestic shipping by sea between two points in the same country. Ocean transportation is in fact an extension of coastal shipping to wider expanses of water. So, as far as the transportation of goods is concerned inland water transportation and the coastal shipping are of national and intra-regional importance. Ocean transportation is very significant and vital for the growth of international trade. Ocean transport has its origin in the beginning of human civilization. It is considered as an indispensable means for development of foreign trades. It has brought different parts of the world closer for developing one big world market. On account of its operation in natural ocean tracks, this form of transport generally requires no infrastructure investment for providing transport facility. Coastal Shipping Coastal shipping is the most energy efficient and comparatively cheaper mode of transport for carriage of bulk traffics over long hauls, particularly when the origin and destination of a traffic stream is located along the coast. It is ideally suited to carry long distance bulk cargo and passenger traffic, especially for destinations located on the waterfront. Coastal shipping can, play an important role in integrated transport network of the country, particularly when inland modes are strained. Factors determining Ocean routes Generally ocean going ships follow well-defined routes. They in general follow Great Circle Route i.e. the shortest distance between two points. However at times they have to choose different routes because of physical and economic considerations. The factors responsible for such deviation are as follows:

(a) Suitable weather conditions. The route should be free from storm and fog. Although strong against wind is not a problem for smooth sailing of the ships, it is desirable to sail the ship with wind from economical point of view as it saves fuel cost. Foggy and stormy and icy coast area should be avoided as far as practicable for undertaking commercial shipping. (b) Deep Waters. Shipping in shallower water should be avoided. Deepness of the water is a prerequisite feature for smooth sailing of the ship. While choosing a route dangerous shoals and other perils which may endanger the safety of the ship and carrying cargo should be avoided in this route. (c) Availability of Harbors and Ports. The presence of good ports and harbors with quick loading and unloading facilities are also responsible for choosing a particular route by the transporters. (d) Availability of full load of traffic. The economies of shipping transport deals with Ship carrying large volume of traffic. Unless full load of traffic is guaranteed, the shipping companies may face loss. Hence they always try to choose a particular route when full load of traffic is guaranteed not only on out-ward journey but also during the return journey. (e) Availability of cheaper route and fuel supplies. Ships generally use those canal routes where dues are comparatively less. Further availability of fuel supplies and ship maintenance facilities at different ports encourages the shipping companies to choose a particular route. (f) Shipping Services. The shipping services are organized according to the nature and requirements of goods traffic in International trade, which provides the demand for such services. World trade can be classified in to two broad categories, bulk and non-bulk depending on the type of cargo. Bulk Cargoes include liquid bulk like petroleum and dry bulk like ores, fertilizers, food grains, etc. Traffic in non-bulk category is composed of manufactured, semi-manufactured, process and semi-processed goods and materials moving in cases, packages, parcels, bales etc. These items are generally referred to as general merchandise in shipping parlance. So availability of both types of cargo makes a route commercially viable.

Lesson 3 BASIC TYPE OF SHIPS

(a) Single Deck Vessels Such vessels have one continuous deck, which means easy access with one hatch for each hold. The hatch is an opening in a ship's deck. Hatches are used for lowering and taking out large object into and out of the cargo hold of a ship. Many single desk vessels have large hatches and some are known as self trimmers" because of the provision for the cargo to flow into all corners of the held. These types of vessels are suitable only for heavy bulk cargoes like grain, iron ore, coal etc. (b) Twin Deck Vessels Such vessels have additional decks (twin deck) below the main deck, running the full length of the vessel. These vessels are suitable for general cargo. The space is divided into separate tiers and the decks eliminate the risk of cargo damage by preventing too much weight to be put on the cargo at the bottom. (c) Shelter Deck Vessels These vessels have additional deck above the main deck's shelter deck, which provides more under deck- space for carrying light cargoes. The shelter deck vessels may be a close type or open type. The difference relates to the measurement of a ship. (d) Other Types of Vessels (i) Unitized cargo ships and specialized vessels. These types of vessels include pallet vessels, barge carriers, container ships, RO/LO ships, OBOs, gas carriers, wood carriers, car carriers, oil tankers, refrigerator ships etc. (ii) Roll-on-Roll-off ships (Ro-Ro). Ferries are now employed on a multitude trade routes based on Roll-on-Roll-off concept. This facilitates loading and unloading of all types of cargoes which can be rolled on horizontally including cars, lorries, and other wheeled type of cargoes. Most large Ro-Ro vessels carry their own specially designed cargo handling facilities. This type of cargo handling facilities helps to load and unload a host of non-wheeled commodities such as pallets bundled goods, pre-

slung bags and containers. The cargo operations in a RO-RO ship are extremely speedier and are independent of special shore facilities. (iii) Barge ships. Barge ships are standard sized ships, which can be towed or pushed by tugs into ports and island water ways and which can be hoisted abroad special Barge carriers with adopted equipment for the Sea voyage. Barges are not internationally standardized. Main advantage of the Barge system over other transport system is its reduced dependence on the infrastructure facilities in the ports and on land. Like containers barges can also be prepared specially for transporting various commodities assists for quick turnaround of publicized ships. Various types of barges are Lash, Sea-bee, Bacat, Super sea-bee. (iv) (v) Cellular ships. Such ships have holds designed to form a series of cells into which the containers are placed. Panamax. The bulk carriers with a breadth which can pass through the Panama Canal (106 ft wide) are described as the panamax type. Such bulk carriers carry up to 80,000 tonnes of cargo and are popular as the handi sized bulkers with 10,000 dwt. (vi) (vii) Bulker container carrier. The container or bulker is a recent development. Such ships are also known as "Conbulkers. Very large crude carriers (VLCC) Ultra large crude carriers (ULCCs). VLCCs are very large crude carriers with a capacity ranging between 2, 00,000 to 3, 00,000 dwt., while ULCCs are ultra large crude carriers in the size range of over 3, 00,000 dwt. (e) Multi-purpose Vessels In recent year's multi-purpose vessels have been developed to cater the need of transporting different variety of cargo. These vessels charge more for transporting than liner vessels, but cheaper than container ships, Ro-Ro vessels and barge ships. These vessels can be classified into four main categories; (i) Combination General Cargo Liner and Containers. These vessels are designed to accommodate not only containerized cargo but also general cargo. (ii) Combination Bulk Carriers and Container Vessels. The open hatch nature of many modern bulk carriers also carry containerized cargo. The flexibility of vessels of this type facilitates their use on different route. The hatch is an opening in a ship's deck. hatches are used for lowering and taking out large objects into and out of the cargo hold of a ship.

(iii) BO-RO vessels. There are ships, which can carry RO-RO cargo and containers on the one leg of the voyage and bulk cargo on the return trip., (iv) Combination Container and RO-RO Vessel. With the advent of multimodal transport, these vessels are very important. They generally carry container on deck and in the front holds, while rolling cargoes are loaded through Ramps often located in the stern. Ramps are slopping passages connecting two different levels. These are used for movement between decks in RO-RO ships. Type of Shipping Services Basically there are three types of shipping viz. (I) Tramp Shipping or chartering, (II) Liner shipping, and (III) Tankers shipping. I. TRAMP SHIPPING According to Rojer Comoy "the tramp is a freight vessel that does not run in any regular line but takes cargo wherever the shippers desire". Tramps are generally chartered for a full and complete cargo. Its main purpose is the carrying of full shipload of cargo of wide variety from many shippers to many receivers. Such ships offer services basically on induction. There is no commitment to provide the service at a fixed rate and according to the schedule. When a tramp ship is engaged for carriage of cargo, it is said to be under charter as either the whole of the bulk or one charterer hires its space. The rates in the tramp market are determined purely by the free interplay of forces of demand and supply. Nature of Tramp Trade (a) The market for supply and demand for shipping services of bulk commodities has been traditionally known as the "tramp markets" or "chartered market". Tramp trade refers to the business of hiring out the bulk carriers to carry cargoes of homogeneous variety in large quantities from one port to another. A tramp ship means a ship, which is not committed to any discipline in terms of rates, for its service. Tramps are cargo vessels suitable for movement of bulky goods.

(b) Tramp trade does not have any fixed ports of loading the discharge. There is no periodicity of shipments and tramps are engaged on terms and conditions including freight rates/ hire charges, which is mutually agreed between ship owners and the charters. (c) Tramp owners are always looking for ports, where profitable cargo is likely to be found. Charters are looking for tramps, which are available for hiring at competitive rates. Freight rate/ hirecharge in tramp trade is generally decided by the loss of supply and demand of tonnage/cargoes and various other technical and commercial factors. Thus, tramp engagement is accomplished without any given set of conditions and rules. II. LINER SHIPPING The market for shipping services to transport general merchandise is known as Liner shipping. Liners ships follow certain routes and ply on the advertised dates irrespective of the quantity of cargo they receive for transportation. But, the need to achieve economies in operation, availability of full load of cargo is a necessity. Manufactured and semi-manufactured goods require such shipping services as these goods can be forwarded from one point to another in such a way that the marketing requirements are met at regular intervals. They render speedier shipping services to different markets, at reasonable rates of freight for different items and on a regular basis according to a schedule. There are two types of liner shipping. (a) Passenger Liners These liners primarily carry passengers and mails, but may also carry comparatively small cargo. These liners have a fast speed and provide a comfortable service. In order to make better use of capacity; passenger liners employ their vessels for cruises, particularly in the off-seasons. (b) Cargo Liners These liners are the ships meant primarily for carrying cargo and at the same time also they carry a few passengers. They also have a rapid speed but are not as spacious as passenger liners. This type of steamer really performs the function of both tramp as well as a liner as it carries large quantities of cargo and limited number of passengers. Some of the ships are specially built and contain facilities of cold storage and refrigeration. These liners are specialized in transporting particular cargo. These liners are equipped with loading and unloading equipment to and from quays or lighters using their own gear exclusively. "'In order to minimize manual handling cost, goods are categorized and classified to meet the requirements of mechanical handling. This can be done by containerization. Palettes or containers provide great ease in handling cargo loads. Both passenger and cargo liners have regular fixed routes, time and rate schedules. III. TANKER SHIPPING

Tankers are the vessels, which are specially designed to carry oil, petrol and such other liquids. Large sized super tankers are now being built to carry petroleum products and other liquid products from the producing area to the area of consumption. Chartering of Ships There are various types of chartering of ships for carriage of bulk cargoes. (a) Voyage charter. In case of a voyage charter:i) A ship is chartered for the shipment of an agreed quantity of cargo from a port to another agreed port or ports. (ii) The chartered agrees to pay a certain amount known as freight which can be computed either on a lump-sum basis or per ton basis. (iii) In a voyage charter the owner is not only to meet the running expenses of the ship like officers/crew wages, stores, provisions, insurance etc, but also operating expenses like port charges, light dues, bunker cost etc. (iv) In voyage charter, normally the cargo expenses are borne by the charter/shipper/receiver and hence the freight rate is expressed on FIO i.e. "Free in and out". In some instances, the loading expenses are to be borne by the ship owner in which case the freight is quoted on "gross load" basis. Sometimes freight is quoted on FIOT i.e. "free in and out trimmed" or FIOST "free in and out spout and trimmed". (v) The ship owner acts as the carrier and responsible for all expenses in the running and operation of the ship. The charterer pays only the thread charges as agreed upon. (vi) In a voyage charter a ship is engaged for either a single voyage or for consecutive/round voyages for shipment of an agreed quantity of cargo. The ship owner undertakes to provide the vessel to the charterers for carriage of agreed cargoes from one of the two agreed ports to be discharged at the named port or ports within a certain range at rates and conditions mutually agreed in advance. The ship may be put at the charterer's disposal by letting out its full capacity or part of it. Some times, the ship's capacity may be let out to more than one charterer, in which case the ship owner enters into different agreements with the individual charterer. (viii) The ship owner under the voyage charter are to direct the master of the vessel to report of the named port for the first loading within a specified time period after the signing of the agreement or at or before an agreed date as stipulated in the agreement. If the vessel does not report for loading accordingly the chatterer may cancel the contract or can claim damage for any consequential loss.

Computation of Freight. For engaging a tramp on voyage basis the chatterer has to pay certain freight. Freight can be computed either on a lump-sum basis or per-ton basis. Thus, where freight payable is on the actual quantity of cargo loaded, freight is calculated on per-ton basis or on dead weight capacity put on a charterers disposal. Alternatively lump-sum freight may also be charged. Ports Indias coastline of about 6,000 km is dotted with 13 major and 185 other ports. Nearly 95 per cent of the countrys foreign cargo (by volume) moves by sea and, therefore, ports/and their development assume an important place in policy making. Development and maintenance of Indias major ports are the responsibility of the Central Government, while Other Ports are in the Concurrent list. Major Ports Indias major ports are governed by the Indian ports Act 1908 and the Major Port Trusts Act 1963. The former allow the Statutory to declare any port a major port, define port limit, levy charges etc. while the formation of Port trust Boards and vests the administration control and management of major ports in these Boards. Development of port after the independence, the development of major ports was taken up in a planned manner. Mechanization and modernizations of cargo-handling facilities at Ports have been a thrust area in recent years, with emphasis on development of dedicated infrastructure. Deepening of ports to receive lager vessels has been another priority area. Vishakhapatnam and Chennai ports have already been deepened.

Name of the 13 major ports Calcutta, Haldia, Paradeep, Mumbai, Chennai, Cochin, Tuticorin, Jawaharlal Nehru Port at Nhava Sheva, Kandla, Vishakhapatnam, New Mangalore, Marmugao and Ennore Port Trust. All these major ports are equipped with latest material handling equipment. The capacity of India Ports increased from 20 million tonnes of cargo handling in 1951 to 390 million tonnes as on March 2004. The number of cargo vessels handled at major ports is about 16,000 per annum. Containerization of major ports is increasing rapidly. Consequent upon adoption of open market economy, Port sector has been opened for private investment. Various areas of Port Functioning such as leasing out existing assets of the port, creation of additional assets, leasing of equipment for port handling and leasing of floating craft from private

sector, pilotage and captive facilities for port based industries have been identified for participation/investment by the private sector. Ship transport infrastructure For a port to efficiently send and receive cargo, it requires some infrastructure. Harbors, seaports and marinas host watercraft, and consist of components such as piers, wharfs, docks and roadsteads. A port is a facility for receiving ships and transferring cargo to and from them. They are usually situated at the edge of an ocean or sea, river, or lake. Ports often have cargo-handling equipment such as cranes (operated by stevedores) and forklifts for use in loading/unloading of ships, which may be provided by private interests or public bodies. Often, canneries or other processing facilities will be located very close by. Harbour pilots, barges and tugboats are often used to safely maneuver large ships in tight quarters as they approach and leave the docks. Ports which handle international traffic will have customs facilities. Access to other transport systems, such as rail and truck terminals can contribute to a port's efficiency. Some ports feature canals, allow further movement inland. The presence of deep water in channels or berths, the provision of protection from the wind, waves and storm surges and access to intermodal transportation such as trains or trucks are critical to a good port. A port must also have navigational aids such as lighthouses, buoys and sea marks. Ships and watercraft Ships and other watercraft are used for ship transport. Various types can be distinguished by propulsion, size or cargo type. Recreational or educational craft still use wind power, while some smaller craft use internal combustion engines to drive one or more propellers, or in the case of jet boats, an inboard water jet. In shallow draft areas, such as the Everglades, some craft, such as the hovercraft, are propelled by large pusher-prop fans. Most modern merchant ships can be placed in one of a few categories, such as: Bulk carriers, such as the Sabrina I seen here, are cargo ships used to transport bulk cargo items such as ore or food staples (rice, grain, etc.) and similar cargo. It can be recognized by the large box-like hatches on its deck, designed to slide outboard for loading. A bulk carrier could be

either dry or wet. Most lakes are too small to accommodate bulk ships, but a large fleet of lake freighters has been plying the Great Lakes and St. Lawrence Seaway of North America for over a century. Container ships are cargo ships that carry their entire load in truck-size containers, in a technique called containerization. They form a common means of commercial intermodal freight transport. Informally known as "box boats," they carry the majority of the world's dry cargo. Most container ships are propelled by diesel engines, and have crews of between 10 and 30 people. They generally have a large accommodation block at the stern, directly above the engine room. Tankers are cargo ships for the transport of fluids, such as crude oil, petroleum products, liquefied petroleum gas, liquefied natural gas and chemicals, also vegetable oils, wine and other food - the tanker sector comprises one third of the world tonnage. Reefer ships are cargo ships typically used to transport perishable commodities which require temperature-controlled transportation, mostly fruits, meat, fish, vegetables, dairy products and other foodstuffs. Roll-on/roll-off ships, such as the Chi-Cheemaun, are cargo ships designed to carry wheeled cargo such as automobiles, trailers or railway carriages. RORO (or ro/ro) vessels have built-in ramps which allow the cargo to be efficiently "rolled on" and "rolled off" the vessel when in port. While smaller ferries that operate across rivers and other short distances still often have built-in ramps, the term RORO is generally reserved for larger ocean-going vessels. Coastal trading vessels, also known as coasters, are shallow-hulled ships used for trade between locations on the same island or continent. Their shallow hulls mean that they can get through reefs where seagoing ships usually cannot (sea-going ships have a very deep hull for supplies and trade etc.). Ferries are a form of transport, usually a boat or ship, but also other forms, carrying (or ferrying) passengers and sometimes their vehicles. Ferries are also used to transport freight (in lorries and sometimes unpowered freight containers) and even railroad cars. Most ferries

operate on regular, frequent, return services. A foot-passenger ferry with many stops, such as in Venice, is sometimes called a waterbus or water taxi. Ferries form a part of the public transport systems of many waterside cities and islands, allowing direct transit between points at a capital cost much lower than bridges or tunnels. Many of the ferries operating in Northern European waters are ro/ro ships. See the Herald of Free Enterprise and M/S Estonia disasters. Cruise ships are passenger ships used for pleasure voyages, where the voyage itself and the ship's amenities are considered an essential part of the experience. Cruising has become a major part of the tourism industry, with millions of passengers each year as of 2006. The industry's rapid growth has seen nine or more newly built ships catering to a North American clientele added every year since 2001, as well as others servicing European clientele. Smaller markets such as the Asia-Pacific region are generally serviced by older tonnage displaced by new ships introduced into the high growth areas. On the Baltic sea this market is served by cruise ferries. Cable layer is a deep-sea vessel designed and used to lay underwater cables for telecommunications, electricity, and such. A large superstructure, and one or more spools that feed off the transom distinguish it.

A tugboat is a boat used to maneuver, primarily by towing or pushing other vessels (see shipping) in harbors, over the open sea or through rivers and canals. They are also used to tow barges, disabled ships, or other equipment like towboats.

A dredger (sometimes also called a dredge) is a ship used to excavate in shallow seas or fresh water areas with the purpose of gathering up bottom sediments and disposing of them at a different location.

A barge is a flat-bottomed boat, built mainly for river and canal transport of heavy goods. Most barges are not self-propelled and need to be moved by tugboats towing or towboats pushing them. Barges on canals (towed by draft animals on an adjacent towpath) contended with the railway in the early industrial revolution but were out competed in the carriage of high value items due to the higher speed, falling costs, and route flexibility of rail transport.

Lesson 4 THE MARINE SOCIETY

The Marine Society was the world's first seafarers charity. In 1756, at the beginning of the Seven Years' War against France, Austria, Russia, Sweden and Saxony (and subsequently Spain and Portugal) Britain urgently needed to recruit men for the navy. Jonas Hanway (1712-1786), who had already made his mark as a traveller, Russia Company merchant, writer and philanthropist, must take the chief credit for founding the society which both contributed to the solution of that particular problem, and has continued for the next two and a half centuries to assist many thousands of young people in preparing for a career at sea. Formation

Plaque marking site of the foundation of the Marine Society The Marine Society, is the worlds oldest public maritime charity, and was the brainchild of a group of London merchants and gentlemen, who first met at the Kings Arms Tavern, Cornhill, London on June 25th 1756 to discuss a plan to supply two or three thousand mariners for the navy. Recruitment began immediately. Sponsors were sought and advertisements for volunteers appeared in newspapers and on the street: "Notice is hereby given, that all stout lads and boys, who incline to go on board His Majestys Ships, with a view to learn the duty of a seaman, and are, upon examination, approved by The Marine Society, shall be handsomely clothed and provided with bedding, and their charges born down to the ports where His Majestys Ships lye, with all other proper encouragement." Ten men were duly clothed and delivered to ships of the Kings navy. In this small way began the work of The Marine Society. The main object of the charity when founded was sending unemployed or orphaned teenagers to sea as officers' servants. The Royal Navy was estimated to need about 4,500 boys as servants during wartime. Approximately a thousand were 'young gentlemen' intending to be officers, and many of the remainder were supplied by the Society. As the boys were for the most part from non-seafaring families the Society probably provided a real increase of several thousand to the pool of naval recruitment. The Society also provided over ten thousand naval recruits with free clothing, which helped reduce the typhus problem.

Incorporated by Act of Parliament The scheme really took off. By 1763, the Society had recruited over 10,000 men and boys; in 1772, such was its perceived importance in the life of the nation, it was incorporated in an Act of Parliament. Admiral Nelson became a stalwart supporter and trustee of the charity, such that by the time of the Battle of Trafalgar (1805) at least 15% of British manpower was being supplied, trained and equipped by The Marine Society. The relative professionalism of these men, the great British naval hero readily acknowledged, played a part in his victories. Hostilities cease, Education starts But the end of hostilities meant that naval recruitment was no longer the nations first priority, although Admiral Boscawen was later to write: "No scheme for manning the navy, within my knowledge, has ever had the success as the Marine Societys." Hanway now formulated plans for transferring boys to the merchant service on their discharge from naval ships and from then on, the Society was equally involved with both Royal and Merchant navies. Early reports from commanding officers had indicated that the number of desertions might be reduced if boys equipped by the Society were given a period of training before being sent to sea. Initially the Society hired a schoolmaster and bandmaster to teach some of the boys and in 1786 purchased a merchant ship the Beatty, which was converted to a training ship and renamed Marine Society. The Society thus became the first organisation in the world to pioneer nautical training for boys in its special school ship which was moored in the Thames between Deptford and Greenwich. This example was followed in the nineteenth century by many other organisations in ports round the British Isles. From 1799 until 1918 The Admiralty provided a succession of training ships, the last two of which were renamed War spite. In 1922 the Society commissioned HMS Hermione as the third War spite. However the outbreak of the Second World War forced the Society to evacuate the ship owing to the probability of air attack. From 1756 to 1940 the Society recruited over 110,000 men and boys for the Royal Navy, the British East India Company and Merchant service. Records show that from 1756 to 1815 the charity

provided some twelve percent of naval manpower, all the more valuable to the nation since each one was a volunteer. After the Second World War After the Second World War, the Society concluded that there were by then sufficient facilities for sea-training provided by national authorities. It continued to provide sea-kits for many young seafarers and, where necessary, offered grants for their education, but in the 1950s the Society began to insist that cadets thus helped should have completed a good general education, obtaining a minimum of four GCE passes at O level. In this way The Marine Society pioneered what was subsequently accepted as standard practice for the entry of officers into the Merchant Navy. Between 1940 and 1987, as the Societys reserves increased, was not only able to help individual seafarers but also to make grants to many maritime charities. In 1981 it provided the base funds for the Marine Adventure Sailing Trust, a limited life investment trust fund, which enabled it to make further substantial grants to the Sea Cadet Corps, TS Foudroyant, Ocean Youth Club and other maritime youth charities. In 1976 the Society amalgamated with various other maritime charities with similar aims, including the Incorporated Thames Nautical Training Trust (HMS Worcester), the Seafarers Education Service The Marine Society College of the Sea, the Sailors' Home and Red Ensign Club, the Merchant Navy Comforts Service Trust and the British Ship Adoption Society. The merger of the Seafarers Education Service with The Marine Society at this time was hugely significant and helped to ensure the continued relevance of both operations. The SES consisted of the College of the Sea and Seafarers Libraries the Marine Society College of the Sea, and had been inaugurated in 1919 by Albert Mansbridge who had earlier founded the Workers Educational Association. Both the College of the Sea and Seafarers Libraries continue to flourish today. For the past 30 years, the principal objectives of The Marine Society have been to facilitate and to provide practical and financial support for the education, training and well-being of all professional seafarers and to encourage young people to embark on maritime careers. For many years The Marine Society has had strong ties with the Sea Cadet Corps, not only as benefactor and landlord to the SCA, but also by providing sea training opportunities for hundreds of sea cadets each year.

It was because of these ties plus the complementary objectives of the two charities and, more specifically, the mutual desire to introduce an element of Merchant Navy ethos to the Sea Cadet Corps, that the merger of the Sea Cadet Association with The Marine Society came about 30 November 2004. The new charity thereby created is known as The Marine Society & Sea Cadets. As the UKs largest maritime charity, the Marine Society and Sea Cadets exists to offer seafarers and prospective seafarers a range of services to enhance their well-being and lifestyle. The combination of these two powerful brands also makes for a potent force in the promotion of maritime careers and the task of raising the profile of shipping and its importance. Its education delivery arm is The Marine Society College of the Sea The Marine Society College of the Sea Trade route A trade route is a logistical network identified as a series of pathways and stoppages used for the commercial transport of cargo. Allowing goods to reach distant markets, a single trade route contains long distance arteries which may further be connected to several smaller networks of commercial and non commercial transportation. Historically, the period from 1532 BCE1 CE saw the Western Asian, Mediterranean, Chinese and Indian societies develop major transportation networks for trade. Europe's early trading routes included the Amber Road, which served as a dependable network for long distance trade. Maritime trade along the Spice route became prominent during the middle ages; nations resorted to military means for control of this influential route. During the Middle Ages organizations such as the Hanseatic League, aimed at protecting interests of the merchants and trade, also became increasingly prominent. With the advent of modern times, commercial activity shifted from the major trade routes of the Old World to newer routes between modern nation states. This activity was sometimes carried out without traditional protection of trade and under international free trade agreements, which allowed commercial goods to cross borders with relaxed restrictions. Innovative transportation of the modern times includes pipeline transport, and the relatively well known trade using rail routes, automobiles and cargo airlines. Development of early routes Early development

The period extending from the middle of the 2nd millennium BCE to the beginning of the Common Era saw the Western Asian, Mediterranean; Chinese and Indian societies develop major transportation networks for trade. One of the vital instruments which facilitated long distance trade was portage and the domestication of beasts of burden. Organized caravans, visible by the 2nd millennium BCE, could carry goods across a large distance as fodder was mostly available along the way. The domestication of camels allowed Arabian nomads to control the long distance trade in spices and silk from the Far East to the Arabian Peninsula. However, caravans were useful in long-distance trade largely for carrying luxury goods, the transportation of cheaper goods across large distances was not profitable for caravan operators. With productive developments in iron and bronze technologies, newer trade routes - dispensing innovations of civilizations - began to rise slowly. Maritime trade Visible maritime trade between civilizations can be traced back to at least two millennia. Navigation was known in summer between the 4th and the 3rd millennium BCE, and was probably known by the Indians and the Chinese people before the Sumerians. The Egyptians had trade routes through the Red sea, importing spices from the "Land of Punt" (East Africa) and from Arabia. Maritime trade began with safer coastal trade and evolved with the manipulation of the monsoon winds, soon resulting in trade crossing boundaries such as the Arabian Sea and the Bay of Bengal. South Asia had multiple maritime trade routes which connected it to Southeast Asia, thereby making the control of one route resulting in maritime monopoly difficult. Indian connections to various Southeast Asian states buffered it from blockages on other routes. By making use of the maritime trade routes, bulk commodity trade became possible for the Romans in the 2nd century BCE. A Roman trading vessel could span the Mediterranean Sea in a month at one-sixtieth the cost of overland routes. Visible trade routes The peninsula of Anatolia lay on the commercial land routes to Europe from Asia as well as the sea route from the Mediterranean to the Black Sea.[16] Records from the 19th century BCE attest to the existence of an Assyrian merchant colony at Kanesh in Cappadocia (now in modern Turkey).[16] Trading networks of the Old World included the Grand Trunk Road of India and the Incense Road of Arabia.[2] A transportation network consisting of hard-surfaced highways, using concrete made from volcanic ash and lime, was built by the Romans as early as 312 BCE, during the times of the Censor

Appius Claudius Caecus. Parts of the Mediterranean world, Roman Britain, Tigris-Euphrates river system and North Africa fell under the reach of this network at some point of their history. According to Robert Allen Denemark (2000): "The spread of urban trading networks, and their extension along the Persian Gulf and eastern Mediterranean, created a complex molecular structure of regional foci so that as well as the zonation of core and periphery (originally created around Mesopotamia) there was a series of interacting civilizations: Mesopotamia, Egypt, the Indus Valley; then also Syria, central Anatolia (Hittites) and the Aegean (Minoans and Mycenaeans). Beyond this was a margin which included not only temperate areas such as Europe, but the dry steppe corridor of central Asia. This was truly a world system, even though it occupied only a restricted portion of the western Old World. Whilst each civilization emphasized its ideological autonomy, all were identifiably part of a common world of interacting components." These routes - spreading religion, trade and technology - have historically been vital to the growth of urban civilization. The extent of development of cities, and the level of their integration into a larger world system, has often been attributed to their position in various active transport networks. Combined land and waterway routes Incense Route The economy of the Kingdom of Qataban (light blue) was based on the cultivation and trade of spices and aromatics including frankincense and myrrh. These were exported to the Mediterranean, India and Abyssinia where they were greatly prized by many cultures, using camels on routes through Arabia, and to India by sea. The Incense Route served as a channel for trading of Indian, Arabian and East Asian goods. The incense trade flourished from South Arabia to the Mediterranean between roughly the 3rd century BCE to the 2nd century CE. This trade was crucial to the economy of Yemen and the frankincense and myrrh trees were seen as a source of wealth by its rulers. Ptolemy II Philadelphus, emperor of Ptolemaic Egypt, may have forged an alliance with the Lihyanites in order to secure the incense route at Dedan, thereby rerouting the incense trade from Dedan to the coast along the Red Sea to Egypt. I. E. S. Edwards connects the Syro-Ephraimite War

to the desire of the Israelites and the Aramaeans to control the northern end of the Incense route, which ran up from Southern Arabia and could be tapped by commanding Transjordan. Gerrha - inhabited by Chaldean exiles from Babylon - controlled the Incense trade routes across Arabia to the Mediterranean and exercised control over the trading of aromatics to Babylon in the 1st century BC. The Nabateans exercised control over the routes along the Incense Route, and their hold was challenged - without success - by Antigonus Cyclops, emperor of Syria and Palestine. The Nabatean control over trade further increased and spread in many directions. The replacement of Greece by the Roman Empire as the administrator of the Mediterranean basin led to the resumption of direct trade with the East and the elimination of the taxes extracted previously by the middlemen of the south. According to Milo Kearney (2003) "The South Arabs in protest took to pirate attacks over the Roman ships in the Gulf of Aden. In response, the Romans destroyed Aden and favored the Western Abyssinian coast of the Red Sea." Indian ships sailed to Egypt as the maritime routes of Southern Asia were not under the control of a single power. Pre-Columbian trade Some similarities between the Mesoamerican and the Andean cultures suggest that the two regions became a part of a wider world system, as a result of trade, by the 1st millennium BCE. The current academic view is that the flow of goods across the Andean slopes was controlled by institutions distributing locations to local groups, who were then free to access them for trading. This trade across the Andean slopes - described sometimes as "vertical trade" - may have overshadowed the long distance trade between the people of the Andes and the neighboring forests. The Callawaya herbalists traded in tropical plants between 6th and the 10th centuries, while copper was dealt by specialized merchants in the Peruvian valley of Chincha. Long distance trade may have seen local elites resorting to struggle in order for manipulation and control. Prior to the Inca dominance, specialized long distance merchants provided the highlanders with goods such as gold nuggets, copper hatches, cocoa, salt etc. for redistribution among the locals, and were key players in the politics of the region. Hatchet shaped copper currency was produced by the Peruvian people, in order to obtain valuables from pre Columbian Ecuador. A maritime exchange system stretched from the west coast of Mexico to southernmost Peru, trading mostly in Spondylus, which represented rain, fertility and was considered the principal food of the gods by the people of the Inca Empire. Spondylus was used in elite rituals and the effective redistribution of it had political effect in the Andes during the pre-Hispanic times.

Silk Route Trading routes used around the 1st century CE centred on the Silk Road. The Silk road was one of the first trade routes to join the Eastern and the Western worlds. According to Vadime Elisseeff (2000): "Along the Silk Roads, technology traveled, ideas were exchanged, and friendship and understanding between East and West were experienced for the first time on a large scale. Easterners were exposed to Western ideas and life-styles, and Westerners too, learned about Eastern culture and its spirituality-oriented cosmology. Buddhism as an Eastern religion received international attention through the Silk Roads." Cultural interactions patronized often by powerful emperors, such as Kanishka, led to development of art due to introduction of a rich variety of influences. Buddhist missions thrived along the Silk Roads, partly due to the conducive intermixing of trade and cultural values, which created a series of safe stoppages for both the pilgrims and the traders. Among the frequented routes of the Silk Route was the Burmese route extending from Bhamo, which served as a path for Marco Polo's visit to Yunnan and Indian Buddhist missions to Canton in order to establish Buddhist monasteries. This route - often under the presence of hostile tribes - also finds mention in the works of Rashid alDin. Grand Trunk Road For centuries, the Grand Trunk Road has served as the main artery for travel across Northern India. A scene from the Ambala cantonment during the days of the British Raj. The Grand Trunk Road - connecting Calcutta in India to Peshawar in Pakistan - has existed for over two and a half millennia. One of the important trade routes of the world, this road has been a strategic artery with fortresses, halting posts, wells, post offices, milestones and other facilities. Part of this road through Pakistan also coincided with the Silk Road. This highway has been associated with emperors Chandragupta Maurya and Sher Shah Suri; the latter became synonymous with this route due to his role in ensuring the safety of the travelers and the upkeep of the road. Emperor Sher Shah widened and realigned the road to other routes, and provided approximately 1700 roadside inns through his empire. These inns provided free food and lodgings to the travelers regardless of their status.

The British occupation of this road was of special significance for the British Raj in India. Bridges, pathways and newer inns were constructed by the British for the first thirty seven years of their reign since the occupation of Punjab in 1849. The British followed roughly the same alignment as the old routes, and at some places the newer routes ran parallel to the older routes. Vadime Elisseeff (2000) comments on the Grand Trunk Road: "Along this road marched not only the mighty armies of conquerors, but also the caravans of traders, scholars, artists, and common folk. Together with people, moved ideas, languages, customs, and cultures, not just in one, but in both directions. At different meeting places - permanent as well as temporary - people of different origins and from different cultural backgrounds, professing different faiths and creeds, eating different foods, wearing different clothes, and speaking different languages and dialects would meet one another peacefully. They would understand one another's food, dress, manner, and etiquette, and even borrow words, phrases, idioms and, at times, whole languages from others." Amber Road The Amber Road was a European trade route associated with the trade and transport of amber. Amber satisfied the criteria for long distance trade as it was light in weight and was in high demand for ornamental purposes around the Mediterranean. Before the establishment of Roman control over areas such as Pannonia, the Amber Road was virtually the only route available for long distance trade. Towns along the Amber Road began to rise steadily during the 1st century CE, despite the troop movements under Titus Flavius Vespasianus and his son Titus Flavius Domitianus. Under the reign of Tiberius Caesar Augustus, the Amber Road was straightened and paved according to the prevailing urban standards. Roman towns began to appear along the road, initially founded near the site of Celtic oppida. The 3rd century saw the Danube river become the principal artery of trade, eclipsing the Amber Road and other commercial routes. The redirection of investment to the Danubian forts saw the towns along the Amber Road growing slowly, though yet retaining their prosperity. The prolonged struggle between the Romans and the barbarians further left its mark on the towns along the Amber Road. Via Maris

Via Maris, literally Latin for "the way of the sea," was an ancient highway used by the Romans and the Crusaders. The states controlling the Via Maris were in a position to grant access for trade to their own citizens and collect tolls from the outsiders to maintain the trade route. The name Via Maris is a Latin translation of a Hebrew phrase related to Isaiah. Due to the Biblical significance of this ancient route, many attempts to find its present day location have been made by Christian pilgrims. 13th century traveler and pilgrim Burchard of Mount Zion refers to the Via Maris route as a way leading along the shore of the Sea of Galilee.

Trans Saharan trade Map indicating locations with significant numbers of Tuareg people, who exercised influence over the Trans Saharan Trade. Early Muslim writings confirm that the people of West Africa operated a sophisticated network of trade, usually under the authority of a monarch who levied taxes and provided bureaucratic and military support to his kingdom. Sophisticated mechanisms for the economic and political development of the involved African areas were in place before Islam further strengthened trade, towns and government in western Africa. The capital, court and trade of the region find mention in the works of scholar Ab 'Ubayd 'Abd Allh al-Bakr; the mainstay of the trans Saharan trade was gold and salt. The powerful Saharan tribes, Berber in origin and later adapting to Muslim and Arab cultures, controlled the channels to western Africa by making efficient use of horse-drawn vehicles and pack animals. The Songhai engaged in a struggle against the Sa'di dynasty of Morocco over the control of the trans Saharan trade, resulting in damage on both sides and a weak Moroccan victory, further strengthening the uninvolved Saharan tribes. Struggles and disturbances continued till the 14th century, by which the Mand merchants were trading with the Hausa, between Lake Chad and the Niger.[48] Newer trade routes developed following extension of trade. Hanseatic trade Main trading routes of the Hanseatic League. Shortly before the 12th century the Germans played a relatively modest role in the north European trade. However, this was to change with the development of Hanseatic trade, as a result of

which German traders became prominent in the Baltic and the North Sea regions. Following the death of Eric VI of Denmark, German forces attacked and sacked Denmark, bringing with them artisans and merchants under the new administration which controlled the Hansa regions. During the third quarter of the 14th century the Hanseatic trade faced two major difficulties: economic conflict with the Flanders and hostilities with Denmark. These events led to the formation of an organized association of Hanseatic towns, which replaced the earlier union of German merchants. This new Hansa of the towns - aimed at protecting interests of the merchants and trade - became prominent for the next hundred and fifty years. Philippe Dollinger associates the downfall of the Hansa to a new alliance between Lubeck, Hamburg and Bremen, which outshadowed the older institution. He further sets the date of dissolution of the Hansa at 1630 and concludes that the Hansa was almost entirely forgotten by the end of the 18th century. Scholar Georg Friedrich Sartorius published the first monograph regarding the community in the early years of the 19th century. Predominantly maritime routes Roman-India routes The Ptolemaic dynasty had initiated Greco-Roman maritime trade contact with India using the Red Sea ports. The Roman historian Strabo mentions a vast increase in trade following the Roman annexation of Egypt, indicating that monsoon was known and manipulated for trade in his time. By the time of Augustus up to 120 ships were setting sail every year from Myos Hormos to India, trading in a diverse variety of goods. Arsinoe, Berenice Troglodytica and Myos Hormos were the principal Roman ports involved in this maritime trading network, while the Indian ports included Barbaricum, Barygaza, Muziris and Arikamedu. The Indians were present in Alexandria and the Christian and Jew settlers from Rome continued to live in India long after the fall of the Roman empire, which resulted in Rome's loss of the Red Sea ports, previously used to secure trade with India by the Greco-Roman world since the time of the Ptolemaic dynasty. Spice Route This figure illustrates the path of Vasco da Gama heading for the first time to India (black) as well as the trips of Pero da Covilha (orange) and Afonso de Paiva (blue). The path common to both is the green line.

As trade between India and the Greco-Roman world increased spices became the main import from India to the Western world, bypassing silk and other commodities. The Indian commercial connection with South East Asia proved vital to the merchants of Arabia and Persia during the 7th century and the 8th century. The Abbasids used Alexandria, Damietta, Aden and Siraf as entry ports to India and China. Merchants arriving from India in the port city of Aden paid tribute in form of musk, camphor, ambergris and sandalwood to Ibn Ziyad, the sultan of Yemen. Moluccan products shipped across the ports of Arabia to the Near East passed through the ports of India and Sri Lanka. Indian exports of spices find mention in the works of Ibn Khurdadhbeh (850), al-Ghafiqi (1150 AD), Ishak bin Imaran (907) and Al Kalkashandi (14th century). After reaching either the Indian or the Sri Lankan ports, spices were sometimes shipped to East Africa, where they were used for many purposes, including burial rites. On the orders of Manuel I of Portugal, four vessels under the command of navigator Vasco da Gama rounded the Cape of Good Hope, continuing to the eastern coast of Africa to Malindi to sail across the Indian Ocean to Calicut. The wealth of the Indies was now open for the Europeans to explore; the Portuguese Empire was one of the early European empires to grow from spice trade. Modern routes The modern times saw development of newer means of transport and often controversial free trade agreements, which altered the political and logistical approach prevalent during the Middle Ages. Newer means of transport led to the establishment of new routes, and countries opened up borders to allow trade in mutually agreed goods as per the prevailing free trade agreement. Some old trading route were reopened during the modern times, although in different political and logistical scenarios. The entry of harmful foreign pollutants by the way of trade routes has been a cause of alarm during the modern times. A conservative estimate stresses that future damages from harmful animal and plant diseases may be as high as 134 billion US dollars in the absence of effective measures to prevent the introduction of unwanted pests through various trade routes. Wagon way routes Networks, like the Santa Fe Trail and the Oregon Trail, became prominent in the United States with wagon trains gaining popularity as a mode of long distance overland transportation for both people and goods. The Oregon-California routes were highly organized with planned rendezvous locations and essential supplies. The settlers in the United States used these wagon trains sometimes made up of 100 of more Conestoga wagons - for westward emigration during the 18th and

the 19th centuries. Among the challenges faced by the wagon route operators were crossing rivers, mountains and hostile Native Americans. Preparations were also made according to the weather and protection of trade and travelers was ensured by a few guards on horseback. Wagon freighting was also essential to American growth until it was replaced by the railroad and the truck. Railway routes Route of the first American transcontinental railroad from Sacramento, California, to Council Bluffs, Iowa. The 1844 Railway act of England compelled at least one train to a station every day with the third class fares priced at a penny a mile. Trade benefited as the workers and the lower classes had the ability to travel to other towns frequently. Suburban communities began to develop and towns began to spread outwards. The British constructed a vast railway network in India, but it was considered to serve a strategic purpose in addition to the commercial purpose. The efficient use of rail routes helped in the unification of the United States of America. The modern times saw nations struggle for the control of rail routes: The Trans-Siberian Railway was intended to be used by the Russian government for control of Manchuria and later China; the German forces wanted to establish Berlin-Baghdad Railway in order to influence the Near East; and the Austrian government planned a route from Vienna to Salonika for control of the Balkans. According to the Encyclopedia Britannica (2002): Railroads reached their maturity in the early 20th century, as trains carried the bulk of land freight and passenger traffic in the industrialized countries of the world. By the mid-20th century, however, they had lost their preeminent position. The private automobile had replaced the railroad for short passenger trips, while the airplane had usurped it for long-distance travel, especially in the United States. Railroads remained effective, however, for transporting people in high-volume situations, such as commuting between the centres of large cities and their suburbs, and mediumdistance travel of less than about 300 miles between urban centres. Although railroads have lost much of the general-freight-carrying business to semi-trailer trucks, they remain the best means of transporting large volumes of such bulk commodities as coal, grain, chemicals, and ore over long distances. The development of containerization has made the railroads more effective in handling finished merchandise at relatively high speeds. In addition, the introduction of piggyback flatcars, in

which truck trailers are transported long distances on specially-designed cars, has allowed railroads to regain some of the business lost to trucking. Modern road networks High-capacity freeway interchange in Los Angeles, California, USA. The advent motor vehicles created a demand for better use of highways. Roads evolved into two way roads, expressways, freeways and toll ways during the modern times. Existing roads were developed and highways were designed according to intended use. Trucks came into widespread use in the Western World during World War I, and quickly gained reputation as a means of long distance transportation of goods. Modern highways, such as the TransCanada Highway, Highway 1 (Australia) and Pan-American Highway allowed transport of goods and services across great distances. Automobiles continue to play a crucial role in the economies of the industrialized countries, resulting in rise of businesses such as motor freight operation and truck transportation. The emission rate for cars using highways has been on a decline between 1975 and 1995 due to regulations and the introduction of unleaded petrol.[80] This trend is especially notable since there has been a growth in vehicles and vehicle miles traveled by automobiles using these highways. Modern maritime routes

Canals in the US circa 1825. A consistent shift from land based trade to sea based trade has been recorded since the last three millennia.[81] The strategic advantages of port cities as trading centers are many: they are both less dependent on vital connections and less vulnerable to blockages. [82] Oceanic ports can help forge trading relationships with other parts of the world easily.[82] Modern maritime trade routes - sometimes in the form of artificial canals like the Suez Canal had visible impact on the economic and political standing of nations. [83] The opening of the Suez Canal altered British interactions with the colonies of the British Empire as the dynamics of transportation, trade and communication had now changed drastically. Other waterways, like the Panama Canal played an important role in the histories of many nations. Inland water transportation

remained significantly important even as the advent of railroads and automobiles resulted in a steady decline of canals. Inland water transport is still used for the transportation of bulk commodities e.g. grains, coal, and ore. Waterway commerce was historically important to Europe, particularly to Russia. According to the Encyclopedia Brittanica (2002): "Russia has been a significant beneficiary. Not only have inland waterways opened vast areas of its interior to development, but Moscow-linked to the White, Baltic, Black, Caspian, and Azov seas by canals and rivers-has become a major inland port." Oil spills are recorded both in case of maritime routes and pipeline routes to the main refineries. Oil spills, amounting to as much as 7.56 billion liters of oil entering the oceans every year, occur due to damaged equipment or human error. Free Trade Areas Historically, governments followed a policy of protection of trade. International Free Trade became visible in 1860 with the Anglo-French commercial treaty and the sentiment further gained momentum during the post World War II era. "After World War II, strong sentiment developed throughout the world against protection and high tariffs and in favor of freer trade. The results were new organizations and agreements on international trade such as the General Agreement on Tariffs and Trade (1948), the Benelux Economic Union (1948), the European Economic Community (Common Market, 1957), the European Free Trade Association (1959), Mercosur (the Southern Cone Common Market, 1991), and the World Trade Organization (1995). In 1993, the North American Free Trade Agreement (NAFTA) was approved by the governments of Canada, Mexico, and the United States. In the early 1990s, the nations of the European Union (the successor organization to the Common Market) undertook to remove all barriers to the free movement of trade and employment across their mutual borders."

Lesson 5 BAILMENT
Bailment is the process of making delivery of an asset or other type of property. Generally, this type of transaction involves the owner of the assets choosing to temporarily place them in the control of another individual. The person who delivers the asset is usually known as the bailor, while the recipient of the assets is known as the bailee. The process of bailment is not a casual situation where an individual is asked to function as a caretaker for a short period of time. Part of the procedure with bailment it that a legal relationship is established between the owner and recipient. While the owner retains full rights to the assets, the physical possession of the assets is granted to the recipient. Along with the physical possession of the property or assets, the bailee may also be granted certain powers of administration that are related to management of the assets. Along with defining the rights of management during the time that the bailment is in effect, the legal documentation usually also contains specific instructions on how long the state of bailment will be in effect. Typically, most bailment agreements also include some sort of out clauses that are related to both the bailor and the bailee. For example, the bailor could revoke the bailment if there was evidence that the bailee was mismanaging the asset. At the same time, the bailee would be able to terminate the arrangement and return the property if there was a perception that the bailor is not living up to the terms of the agreement in some manner. A legal state of bailment can be a great option when the owner will be unavailable to manage or oversee an asset for a short period of time. A bailee may be designated that can manage rental property in the absence of the owner, or perhaps oversee a stock portfolio for a given period of time. The idea behind the bailment is to ensure that the asset is in good hands, even if the owner is not in a position to manage the asset at the present time. Delivery of assets into the possession of another person is nothing to be taken lightly. A great deal of trust must exist between the owner and the bailee in order for the business relationship to work. Great care should be taken before entering into a bailment agreement, whether as an owner granting temporary care of assets to another individual, or as the person who is being asked to serve as a bailee.

I. ELEMENTS OF A BAILMENT A. PERSONAL PROPERTY Only personal property (tangible or intangible) is bailable. B. DELIVERY OF POSSESSION (WITHOUT TITLE) A bailee must (1) be given exclusive possession and control of the property and (2) knowingly accept it. Delivery may be actual or constructive. C. AGREEMENT THAT THE PROPERTY BE RETURNED OR DISPOSED OF The agreement must provide for the return of the property to the bailor or a third person or for its disposal by the bailee. II. ORDINARY BAILMENTS The three types of ordinary bailments are: (1) Bailment for the sole benefit of the bailor, (2) bailment for the sole benefit of the bailee, and (3) bailment for their mutual benefit. III. RIGHTS AND DUTIES OF THE BAILEE A. RIGHTS OF THE BAILEE 1. Right of Possession Temporary control and possession of property that ultimately is to be returned to the owner. During a bailment, a bailee can recover damages from any third persons for damage or loss to the property. 2. Right to Use Bailed Property The extent to which bailees can use the property depends on the contract. If no provision is made, the extent depends on how necessary it is for the goods to be at the bailees disposal. 3. Right of Compensation A bailee has a right to be compensated as agreed and to be reimbursed for costs and services in the keeping of the property. To enforce this right, a bailee can place a lien on the property (see Chapter 31). 4. Right to Limit Liability Bailees can limit their liability as long as

a. Limitations Are Called to the Attention of the Bailor Fine print on the back of a ticket stub is not sufficient. b. Limitations Are Not Against Public Policy Exculpatory clauses are carefully scrutinized by the courts and, in bailments, often held to be illegal. If a bailee attempts to exclude liability for his or her own negligence, the clause is unenforceable. B. DUTIES OF THE BAILEE 1. Duty of Care Bailees must exercise care over the property in their possession. The appropriate standard is a. Slight Care In bailments for the sole benefit of the bailor, the bailee is liable only for gross negligence. b. Great Care In bailments for the sole benefit of the bailee, the bailee is liable for even slight negligence. c. Ordinary Care In bailments for the mutual benefit of both parties, the bailee is liable for a failure to use reasonable care. 2. Duty to Return Bailed Property When a bailment ends, the bailee must relinquish the property. Failure to do so is a breach of contract (unless the property is destroyed, lost, or stolen through no fault of the bailee, or given to a third party with a superior claim) and could result in liability for conversion. 3. Delivery of Goods to the Wrong Person A bailee may be liable if the property is given to the wrong person. 4. Presumption of Negligence When the bailee has the property and damage occurs that normally results only from someones negligence, the bailees negligence is presumed. The bailee must prove that he or she was not at fault. IV. RIGHTS AND DUTIES OF THE BAILOR

A. RIGHTS OF THE BAILOR Complementary to the bailees duties 1. The property will be protected with reasonable care while in the bailees possession. 2. The bailee will use the property as agreed (or not at all). 3. The property will be relinquished according to the bailors directions. 4. The bailee will not alter the goods except as agreed. 5. The bailor will not be bound by any limitations on the bailees liability unless these limitations are known and are enforceable by law. 6. Repairs or service will be done without defective workmanship. B. DUTIES OF THE BAILOR A bailor has a duty to provide the bailee with goods that are free from hidden defects that could injure the bailee. a. In a mutual-benefit bailment, bailor must notify bailee of all known defects and any hidden defects that the bailor knew of or could have discovered with reasonable diligence and proper inspection. b. In a bailment for the sole benefit of the bailee, the bailor must notify the bailee of any known defects. 2. To Whom Does Liability Extend? To anyone who might be expected to come in contact with the goods. A bailor may also be liable under UCC Article 2As implied warranties V. TERMINATION OF BAILMENTS Bailments for a specific term end when the term ends. If no term is specified, a bailment can be terminated by mutual agreement of the parties, a demand by either party, completion of the purpose of the bailment, an act by the bailee that is inconsistent with the terms of the bailment, or the operation of law. VI. SPECIAL FEATURES OF SPECIFIC BAILMENTS

A. DOCUMENTS OF TITLE AND ARTICLE 7 1. What a Document of Title Is A receipt for goods in the charge of a bailee-carrier or a bailee-warehouser and a contract for the shipment or storage of identified goods. Includes bills of lading, warehouse receipts, and delivery orders. 2. Negotiability of a Document of Title A document of title is negotiable if it specifies that goods are to be delivered to bearer or to the order of a named person. If so a. The possessor of the document is entitled to receive, hold, and dispose of the document and the goods it covers. b. A good faith purchaser of the document may acquire greater rights to the document and the goods it covers than the transferor had or had the authority to convey (he or she may take free of the claims and defenses of prior parties). 3. Due Negotiation Due negotiation means that the buyer of a document of title takes it (1) in good faith, for value, and without notice of a defense against or a claim to it, and (2) in the regular course of business or financing (not in settlement or payment of a money obligation). 4. Goods Delivered According to a Thiefs Instructions A bailee who receives goods from a thief and acts according to that individuals instructions is not liable to the goods true owner (if he or she acted in good faith and observed reasonable commercial standards). B. COMMON CARRIERS Common carriers are publicly licensed to provide transportation services to the general public. 1. Strict Liability Common carriers are absolutely liable, regardless of negligence, for all loss or damage to goods in their possession, except if it is caused by an act of God, an act of a public enemy, an order of a public authority, an act of the shipper, or the nature of the goods.

2. Limits to Liability Common carriers can limit their liability to an amount stated on the shipment contract. The shipper bears any loss occurring through its own fault or improper crating or packaging procedures. 3. Connecting Carriers when connecting carriers are involved under a through bill of lading, the shipper can recover from the original carrier or any connecting carrier. Normally, the last carrier is presumed to have received the goods in good condition. C. WAREHOUSE COMPANIES Warehouse companies are liable for loss or damage to property resulting from negligence A warehouse company can limit the dollar amount of liability, but the bailor must be given the option of paying an increased storage rate for an increase in the liability limit. D. INNKEEPERS Those who provide lodging to the public for compensation as a regular business are strictly liable for injuries to guests (not permanent residents).

Lesson 6 SPECIAL CONTRACTS - INDEMNITY AND GUARANTEE

We enter into contracts so many times in a day that contract has become an indispensable part of our life. When you purchase milk or newspaper in the morning or go to movie in the evening, you are entering into a contract. Indian Contract Act really codifies the way we enter into a contract, execute a contract, and implement provisions of a contract and effects of breach of a contract. Basically, a person is free to contract on any terms he chooses. The Contract Act consists of limiting factors subject to which contract may be entered into, executed and breach enforced. It only provides a framework of rules and regulations which govern formation and performance of contract. The rights and duties of parties and terms of agreement are decided by the contracting parties themselves. The court of law acts to enforce agreement, in case of non-performance. Section 1 of Contract Act provides that any usage or custom or trade or any incident of contract is not affected as long as it is not inconsistent with provisions of the Act. In other words, provision of Contract Act will prevail over any usage or custom or trade. However, any usage, custom or trade will be valid as long as it is not inconsistent with provisions of Contract Act. The Act extends to the whole of India except the State of Jammu and Kashmir; and came into effect on 1-9-1872. It must be noted that contract need not be in writing, unless there is specific provision in law that the contract should be in writing. [e.g. * contract for sale of immovable property must be in writing, stamped and registered. * Contracts which need registration should be in writing * Bill of Exchange or Promissory Note must be in writing. * Trust should be created in writing * Promise to pay a time barred loan should be in writing, as per Limitation Act * Contract made without consideration on account of natural love and affection should be in writing]. A verbal contract is equally enforceable, if it can be proved.. A contract can be enforced or compensation/damages for breach of contract can be obtained through Civil Court Essential Ingredients of a contract As per Contract Act, an agreement enforceable by law is a contract. [Section 2(h)]. Hence, we have to understand first what agreement is. Every promise and every set of promises, forming the consideration for each other, is an agreement. [section 2(e)]. - - A person makes a proposal (offer). When it is accepted by other, it becomes a promise. However, promise cannot be one sided. Only a mutual promise forming

consideration for each other is agreement. - - For example, A agrees to pay Rs 100 to B and B agrees to give him a book which is priced at Rs 100. This is set of promises which form consideration for each other. However, if A agrees to pay Rs 100 to B, but B does not promise anything, it is not set of promises forming consideration for each other and hence not an agreement. It should be noted that the term agreement as defined in Contract Act requires mutual consideration. - - Thus, if A invites B to dinner and B agrees to come, it is not an agreement as defined in Contract Act. MEANING OF PROPOSAL When one person signifies to another his willingness to do or to abstain from doing anything, with a view to obtaining the assent of that other to such act or abstinence, he is said to make a proposal. [section 2(a)].- - Thus, a proposal can be to do a positive act or abstinence from act (i.e. negative act). [English Act uses the word offer, while Indian Contract Act uses the word proposal. Generally, both words are used inter-changeably. This is not technically correct, as the word offer is not used in Contract Act]. MEANING OF PROMISE When the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted. A proposal, when accepted, becomes a promise. [section 2(b)]. - - Thus, when a proposal (offer) is accepted, it becomes a promise. As is clear from the definition, only person to whom proposal is made can signify his assent. Other person cannot accept a proposal. PROMISOR AND PROMISEE The person making the proposal is called the promisor, and the person accepting the proposal is called the promisee. [Section 2(c)]. RECIPROCAL PROMISES Promises which form the consideration or part of the consideration for each other are called reciprocal promises. [section 2(f)]. Consideration for promise

The definition of agreement itself states that the mutual promises should form consideration of each other. Thus, consideration is essential for an agreement. A promise without consideration is not agreement and hence naturally, it is not a contract. DEFINITION OF CONSIDERATION When, at the desire of the promisor, the promisee or any other person has done or abstained from doing, or does or abstains from doing, or promises to do or to abstain from doing, something, such act or abstinence or promise is called a consideration for the promise. [section 2(d)]. Steps involved in contract The steps involved in the contract are * proposal and its communication * acceptance of proposal and its communication * Agreement by mutual promises * Contract * Performance of Contract. - - All agreements are not contract. Only those agreements which are enforceable by law are contracts. Following are essential requirements of a valid contract. Offer and its acceptance Free consent of both parties Mutual and lawful consideration for agreement It should be enforceable by law. Hence, intention should be to create legal relationship. Agreements of social or domestic nature are not contracts Parties should be competent to contract Object should be lawful Certainty and possibility of performance Contract should not have been declared as void under Contract Act or any other law Communication, acceptance and revocation of proposals Communication of proposal/ revocation/acceptance are vital to decide validity of a contract. A communication is complete only when other party receives it. ACCEPTANCE MUST BE ABSOLUTE In order to convert a proposal into a promise, the acceptance must - (1) be absolute and unqualified; (2) be expressed in some usual and reasonable manner, unless the proposal prescribed the manner in which it is to be accepted. If the proposal prescribes a manner in which it is to be accepted, and the acceptance is not made in such a manner, the proposer may, within a reasonable time after the acceptance is communicated to him, insist that his proposal shall be accepted in the prescribed manner, and not otherwise; but if he fails to do so, he accepts the acceptance. [Section 7].

Acceptance of offer is complete only when it is absolute and unconditional. Conditional acceptance or qualified acceptance is no acceptance. PROMISES, EXPRESS OR IMPLIED Insofar as the proposal or acceptance of any promise is made in words, the promise is said to be express. Insofar as such proposal or acceptance is made otherwise than in words, the promise is said to be implied. [Section 9]. - - For example, if a person enters a bus, there is implied promise that he will pay the bus fair. VOIDABLE CONTRACT An agreement which is enforceable by law at the option of one or more of the parties thereto, but not at the option of the other or others, is a voidable contract. [Section 2(i)]. - - (a) when consent is obtained by coercion, undue influence, misrepresentation or fraud is voidable at the option of aggrieved party i.e. party whose consent was obtained by coercion/fraud etc. However, other party cannot avoid the contract. (b) When a contract contains reciprocal promises and one party to contract prevents the other from performing his promise, the contract becomes voidable at the option of the party to prevent. (Section 53). Obvious principle is that a person cannot take advantage of his own wrong (c) When time is essence of contract and party fails to perform in time, it is voidable at the option of other party (section 55). A person who himself delayed the contract cannot avoid the contract on account of (his own) delay. VOID CONTRACT A contract which ceases to be enforceable by law becomes void when it ceases to be enforceable. [Section 2(j)]. - - Thus, initially a contract cannot be void, i.e. a contract cannot be voidable into. The simple reason is that in such a case, it is not a contract at all to begin with. Hence, only a valid contract can become void contract due to some subsequent events. e.g. the person dies or property is destroyed or Government imposes a ban etc. - - A void agreement is voidable into. It never becomes a contract. It is nullity and cannot create any legal rights. What agreements are contracts All agreements are contracts if they are made by the free consent of parties competent to contract, for a lawful consideration and with a lawful object, and are not hereby expressly declared to be void. Nothing herein contained shall affect any law in force in India and not hereby expressly

repealed, by which any contract is required to be made in writing or in the presence of witnesses, or any law relating to the registration of documents. [Section 10]. Who are competent to contract Every person is competent to contract who is of the age of majority according to the law to which he is subject, and who is of sound mind, and is not disqualified from contracting by any law to which he is subject. [Section 11]. Free consent Consent of both parties must be free. Consent obtained through coercion, undue influence, fraud, misrepresentation or mistake is not a free consent. - - Two or more persons are said to consent when they agree upon the same thing in the same sense. [Section 13]. - - Consent is said to be free when it is not caused by - (1) coercion, as defined in section 15, or (2) undue influence, as defined in section 16, or (3) fraud, as defined in section 17, or (4) misrepresentation, as defined in section 18, or (5) mistake, subject to the provisions of sections 20, 21 and 22. - - Consent is said to be so caused when it would not have been given but for the existence of such coercion, undue influence, fraud, misrepresentation or mistake. [Section 14]. Void agreements An agreement not enforceable by law is said to be void. [section 2(g)]. - - Note that it is not void contract, as an agreement which is not enforceable by law does not become contract at all. Following are void agreements - * Both parties under mistake of fact (section 20) * Unlawful object or consideration (section 24) * Agreement without consideration (section 25) * Agreement in restraint of marriage (section 26) * Agreement in restraint of trade (section 27) * Agreement in restraint of legal proceedings (section 28) * Uncertain agreement (section 29) * Wagering agreement (section 29) * Agreement to do an impossible Act (section 56). - - These are discussed below. Obligation of person who has received advantage under void agreement or contract that becomes void When an agreement is discovered to be void, or when a contract becomes void, any person who has received any advantage under such agreement or contract is bound to restore it, or to make compensation for it, to the person from whom he received it. Contingent contract

A contingent contract is a contract to do or not to do something, if some event, collateral to such contract, does or does not happen. Illustration - A contracts to pay B Rs. 10,000 if Bs house is burnt. This is a contingent contract. [Section 31]. Contracts which must be performed The parties to a contract must either perform, or offer to perform, their respective promises, unless such performance is dispensed with or excused under the provisions of this Act, or of any other law. Promises bind the representatives of the promisors in case of the death of such promisors before performance, unless a contrary intention appears from the contract. - - Illustrations - (a) A promises to deliver goods to B on a certain day on payment of Rs. 1,000. A dies before that day. As representatives are bound to deliver the goods to B, and B is bound to pay Rs. 1,000 to As representatives. (b) A promises to paint a picture for B by a certain day, at a certain price. A dies before the day. The contract cannot be enforced either by As representative or by B [section 37]. The performance can be actual performance or attempted performance, i.e. offer to perform. Performance of reciprocal promises Promises which form the consideration or part of the consideration for each other are called reciprocal promises. [Section 2(f)]. A mutual promise can be of following types (a) Mutual and independent Where each party must perform his promise independently and irrespective of whether the other party has performed or willing to perform e.g. Seller agrees to deliver on 5th and Buyer agrees to pay on 15th. (b) Conditional and dependent Performance of promise by one party depends on prior performance of promise by other party. e.g. Buyer agrees to pay for goods 15 days after delivery. Hence, unless seller delivers goods, buyers liability does not arise. (c) Mutual and concurrent Where the promises of both parties must be performed simultaneously. E.g. buyer agrees to pay immediately on delivery of goods i.e. cash payment. Contracts which need not be performed Normally, a contract is expected to be performed. The performance my be actual or by way of tender, i.e. attempted performance. However, in certain situations as stated below, the contract need not be performed. * Novation, rescission and alteration of contract * Promisee may dispense with or remit performance of promise * Effect of neglect of promisee to afford promisor reasonable facilities for performance * Merger of superior rights with inferior right under contract. This is usually termed as discharge of contract.

Quasi Contracts Quasi means almost or apparently but not really or as if it were. This term is used when one subject resembles another in certain characteristics but there are intrinsic differences between the two. Quasi contract is not a contract. It is an obligation which law created in absence of any agreement. It is based on equity. There are certain relations resembling those created by contract. These are termed as quasi contracts. These are (a) Supply of necessaries (section 68) (b) Payment of lawful dues by interested person (section 69) (c) Person enjoying benefit of a gratuitous act (section 70) (d) Finder of goods (section 71) (d) Goods or anything delivered by mistake or coercion (section 72). Consequences of Breach of Contract Compensation is payable for breach of contract. Penalty is also payable if provided in contract. Breach of contract may be actual or anticipatory. Summary of principles of compensation and damages - Following points are important - * Compensation for loss or damage is payable. Since the word used is compensation, punitive damages cannot be awarded. * These should be in usual course or known to parties i.e. both parties must be aware * No compensation for remote and indirect loss or damage * Same principle applies to quasi contract also.

Lesson 7 GENERAL DAMAGES

General damages are those which result from direct and proximate consequences from breach of contract. Normally, what can be awarded is compensation for loss or damage which can be directly or proximately attributed to the breach of contract. One way of assessing damages is the

difference between the contract price and the market price on date of breach of contract, plus reasonable expenses incurred by him on account of the breach plus cost of suit in court of law. CONSEQUENTIAL LOSS OR SPECIAL DAMAGE Special damages or consequential damages arise due to existence of special circumstances. Such damages can be awarded only in cases where the special circumstances were foreseeable by the party committing the breach or were specifically known to the party. Consequential losses like loss of profit due to breach, which may occur indirectly due to breach cannot be normally awarded unless there are special circumstances which parties were aware. Loss of profit can be awarded only in cases where seller could have foreseen those losses and arose directly as result of breach. PROMISEE SHOULD TAKE STEPS TO MITIGATE THE LOSS OR DAMAGE Explanation to section 73 specifically provides that in estimating loss or damage, the means available for remedying the inconvenience caused by breach of contract shall be taken into account. Thus, promisee should take all reasonable steps to mitigate the losses e.g. if promisor does not supply goods, he should make efforts to procure from alternate sources may be even at higher price, to reduce his losses arising out of breach of contract. VINDICTIVE OR EXEMPLARY DAMAGES Vindictive or exemplary damages cannot be awarded under Contract Act. However, these may be awarded by Court under tort under special circumstances e.g. * Dishonour of cheque by Bank when there was balance in account, as it causes loss of reputation of credit worthiness of person issuing cheque * Breach of contract to marry, as it hurts both feelings and reputation. Quantum Meruit Quantum meruit means as much as earned. A contract may come to end by * breach of contract * contract becoming void or * Voidable contract avoided by party. In such case, if a party has executed part of contract, he is entitled to get a proportionate amount i.e. as much as earned by him. This is not by way of damages or compensation for loss. - - The principle is that even when contract comes to a premature end, the party should get amount proportional to the work done/services provided/goods supplied by one party. One party should not get enriched at the cost of other. Contract of indemnity

A contract by which one party promises to save the other from loss caused to him by the conduct of the promisor himself, or by the conduct of any other person, is called a contract of indemnity. - - Illustration - A contracts to indemnify B against the consequences of any proceedings which C may take against B in respect of a certain sum of 200 rupees. This is a contract of indemnity. [Section 124]. Contract of guarantee A contract of guarantee is a contract to perform the promise, or discharge the liability, of a third person in case of his default. The person who gives the guarantee is called the surety; the person in respect of whose default the guarantee is given is called the principal debtor, and the person to whom the guarantee is given is called the creditor. A guarantee may be either oral or written. [section 126]. - - [Person giving guarantee is also called as guarantor. However, Contract Act uses the word surety which is same as guarantor]. - - Three parties are involved in contract of guarantee. Contract between any two of them is not a contract of guarantee. It may be contract of indemnity. Primary liability is of the principal debtor. Liability of surety is secondary and arises when Principal Debtor fails to fulfill his commitments. However, this is so when surety gives guarantee at the request of principal debtor. If the surety gives guarantee on his own, then it will be contract of indemnity. In such case, surety has all primary liabilities. CONSIDERATION FOR GUARANTEE Anything done, or any promise made, for the benefit of the principal debtor, may be sufficient consideration to the surety for giving the guarantee. - - Illustrations - (a) B requests A to sell and deliver to him goods on credit. A agrees to do so, provided C will guarantee the payment of the price of the goods. C promises to guarantee the payment in consideration of As promise to deliver the goods. This is sufficient consideration for Cs promise. (b) A selms and delivers goods to B. C afterwards requests A to gorbear to sue B for the debt for a year, and promises that if xe does so,`C will pay for them in default of payment by B. A agrees to forbear as requested. This is a sufficient consideration for Cs promise. (c) A sells and delivers goods to B. C afterwards, without consideration, agrees to pay for them in default of B. The agreement is void. [Section 127]. Bailment Bailment is another type of special contract. Since it is a contract, naturally all basic requirements of contract are applicable. - - Bailment means act of delivering goods for a specified purpose on trust. The goods are to be returned after the purpose is over. In bailment, possession of

goods is transferred, but property i.e. ownership is not transferred. A bailment is the delivery of goods by one person to another for some purpose, upon a contract that they shall, when the purpose is accomplished, be returned or otherwise disposed of according to the directions of the person delivering them. The person delivering the goods is called the bailor. The person to whom they are delivered is called the bailee. - - Explanation: If a person already in possession of the goods of another, contracts to hold them as a bailee, he thereby becomes the bailee, and owner becomes the bailor, of such goods, although they may not have been delivered by way of bailment. [Section 148]. [Thus, initial possession of goods may be for other purpose, and subsequently, it may be converted into a contract of bailment, e.g. seller of goods will become bailee if goods continue in his possession after sale is complete]. Bailment can be only of goods. As per section 2(7) of Sale of Goods Act, goods means every kind of movable property other than money and actionable claim. - - Thus, keeping money in bank account is not bailment. Asking a person to look after your house or farm during your absence is not bailment, as house or farm is not a movable property. Bailment of pledges Pledge is special kind of bailment, where delivery of goods is for purpose of security for payment of a debt or performance of a promise. Pledge is bailment for security. Common example is keeping gold with bank/money lender to obtain loan. Since pledge is bailment, all provisions applicable to bailment apply to pledge also. In addition, some specific provisions apply to pledge. The bailment of goods as security for payment of a debt or performance of a promise is called pledge. The bailor is in this case called the pawnor. The bailee is called the pawnee. [Section 172]. Contract of Agency Agency is a special type of contract. The concept of agency was developed as one man cannot possibly do every transaction himself. Hence, he should have opportunity or facility to transact business through others like an agent. The principles of contract of agency are (a) Excepting matters of a personal nature, what a person can do himself, he can also do it through agent (e.g. a person cannot marry through an agent, as it is a matter of personal nature) (b) A person acting through an agent is acting himself, i.e. act of agent is act of Principal. - - Since agency is a contract, all usual requirements of a valid contract are applicable to agency contract also, except to the extent excluded in the Act. One important distinction is that as per section 185, no consideration is necessary to create an agency.

AGENT AND PRINCIPAL DEFINED An agent is a person employed to do any act for another or to represent another in dealings with third persons. The person for whom such act is done, or who is so represented, is called the principal [section 182]. WHO MAY EMPLOY AGENT Any person who is of the age of majority according to the law to which he is subject, and who is of sound mind, may employ an agent. [Section 183]. - - Thus, any person competent to contract can appoint an agent. WHO MAY BE AN AGENT As between the principal and third persons any person may become an agent, but no person who is not of the age of majority and of sound mind can become an agent, so as to be responsible to his principal according to the provisions in that behalf herein contained. [Section 184]. - - The significance is that a Principal can appoint a minor or person of unsound mind as agent. In such case, the Principal will be responsible to third parties. However, the agent, who is a minor or of unsound mind, cannot be responsible to Principal. Thus, Principal will be liable to third parties for acts done by Agent, but agent will not be responsible to Principal for his (i.e. Agents) acts. CONSIDERATION NOT NECESSARY No consideration is necessary to create an agency. [Section 185]. Thus, payment of agency commission is not essential to hold appointment of Agent as valid. Authority of agent An agent can act on behalf of Principal and can bind the Principal. AGENTS DUTY TO PRINCIPAL An agent has following duties towards principal. * Conducting principals business as per his directions * Carry out work with normal skill and diligence * Render proper accounts [section 213]. * Agents duty to communicate with principal [section 214] * Not to deal on his own account, in business of agency [section 215]. * Agents duty to pay sums received for principal [section 218] * Agents duty on termination of agency by principals death or insanity - [section 209]. REMUNERATION TO AGENT

Consideration is not necessary for creation of agency. However, if there is an agreement, an agent is entitled to get remuneration as per contract. RIGHTS OF PRINCIPAL Recover damages from agent if he disregards directions of Principal * Obtain accounts from Agent * Recover moneys collected by Agent on behalf of Principal * Obtain details of secret profit made by agent and recover it from him * Forfeit remuneration of Agent if he misconducts the business. DUTIES OF PRINCIPAL * Pay remuneration to agent as agreed * Indemnify agent for lawful acts done by him as agent * Indemnify Agent for all acts done by him in good faith * Indemnify agent if he suffers loss due to neglect or lack of skill of Principal.

TERMINATION OF AGENCY An agency is terminated by the principal revoking his authority; or by the agent renouncing the business of the agency; or by the business of the agency being completed; or by either the principal or agent dying or becoming of unsound mind; or by the principal being adjudicated an insolvent under the provisions of any Act for the time being in force for the relief of insolvent debtors. [section 201]. - In following cases, an agency cannot be revoked * Agency coupled with interest (section 202) * Agent has already exercised his authority (section 203) * Agent has incurred personal liability. INDEMNITY AND GUARANTEE. (Indian Law) 124."Contract of indemnity" defined. 124."Contract of indemnity" defined.-A contract by which one party promises to save the other from loss caused to him by the conduct of the promisor himself, or by the conduct of any other person, is called a " contract of indemnity". Illustration A contracts to indemnify B against the consequences of any proceedings which C may take against B

in respect of a certain sum of 200 rupees. This is a contract of indemnity. 125. Rights of indemnity holder when sued. 125. Rights of indemnity holder when sued. The promisee in a contract of indemnity, acting within the scope of his authority, is entitled to recover from the promisor(1) all damages which he may be compelled to pay in any suit in respect of any matter to which the promise to indemnify applies (2) all costs which he may be compelled to pay in any such suit if, in bringing or defending it, he did not contravene the orders of the promisor, and acted as it would have been prudent for him to act in the absence of any contract of indemnity, or if the promisor authorized him to bring or defend the suit ; (3) all sums which he may have paid under the terms of any compromise of any such suit, if the compromise was not 50 contrary to the orders of the promisor, and was one which it would have been prudent for the promisee to make in the absence of any contract of indemnity, or if the promisor authorized him to compromise the suit. 126."Contract of guarantee", "surety", principal debtor" and "creditor". 126."Contract of guarantee", "surety", principal debtor" and "creditor".-A "contract of guarantee is a contract to perform the promise, or discharge the liability, of a third person in case of his default. The person who gives the guarantee is called the surety"; the person in respect of whose default the guarantee is given is called the " principal debtor ", and the person to whom the guarantee is given is called the " creditor ". A guarantee may be either oral or written. 127. Consideration for guarantee. 127. Consideration for guarantee.-Anything done, or any promise made, for the benefit of the

principal debtor, may be a sufficient consideration to the surety for giving the guarantee. Illustrations (a) B requests A to sell and deliver to him goods on credit. A agrees to do so, provided C will guarantee the payment of the price of the goods. C promises to guarantee the payment in consideration of as promise to deliver the goods. This is a sufficient consideration for Cs promise. (b) A sells and delivers goods to B. C afterwards requests A to forbear to sue B for the debt for a year, and promises that, if he does so, C will pay for them in default of payment by B. A agrees to forbear as requested. This is a sufficient consideration for Cs promise. (c) A sells and delivers goods to B. C afterwards, without consideration, agrees to pay for them in default of B. The agreement is void. 28. Suretys liability. 128. Suretys liability.-The liability of the surety is coextensive with that of the principal debtor, unless it is otherwise provided by the contract. Illustration A guarantees to B the payment of a bill of exchange by C, the acceptor. The bill is dishonored by C. A is liable not only for the amount of the bill but also for any interest and charges which may have become due on it. 129."Continuing guarantee". 129."Continuing guarantee".-A guarantee which extends to a series series of transactions is called a "continuing guarantee". Illustrations (a) A, in consideration that B will employ C in collecting the rent of Bs zamindari, promises B to be responsible, to the amount of 5,000 rupees, for the due collection and payment by C of those rents.

This is a continuing guarantee. (b) A guarantees payment to B, a tea-dealer, to the amount of pound 100, for any tea he may from time to time supply to C. B supplies C with tea to above the value of pound 100, and C pays B for it. Afterwards B supplies C with tea to the value of pound 200. C fails to pay. The guarantee given by A was a continuing guarantee, and he is accordingly liable to B to the extent of pound 100. 51.(c) A guarantees payment to B of the price of five sacks of flour to be delivered by B to C and to be paid for in a month. B delivers five sacks to C. C pays for them. Afterwards B delivers four sacks to C, which C does riot pay for. The guarantee given by A was not a continuing guarantee, and accordingly he is not liable for the price of the four sacks. 130. Revocation of continuing guarantee. 130. Revocation of continuing guarantee.-A continuing guarantee may at any time be revoked by the surety, as to future transactions, by notice to the creditor. Illustrations (a) A, in consideration of Bs discounting, at As request, bills of exchange for C, guarantees to B, for twelve months, the due payment of all such bills to the extent of 5,000 rupees. B discounts bills for C to the extent of 2,000 rupees. Afterwards, at the end of three months, A revokes the guarantee. This revocation discharges A from all liability to B for any subsequent discount. But A is liable to B for the 2,000 rupees, on default of C. (b) A guarantees to B, to the extent of 10,000 rupees, that C shall pay all the bills that B shall draw upon him. B draws upon C. C accepts the bill. A gives notice of revocation. C dishonours the bill at maturity. A is liable upon his guarantee. 131. Revocation of continuing guarantee by suretys death. 131. Revocation of continuing guarantee by suretys death.-The death of the surety operates, in the

absence of any contract to the contrary, as a revocation of a continuing guarantee, so far as regards future transactions. 132. Liability of two persons, primarily liable, not affected by arrangement between them that one shall be surety on others default. 132. Liability of two persons, primarily liable, not affected by arrangement between them that one shall be surety on others default.Where two persons contract with a third person to undertake a certain liability, and also contract with each other that one of them shall be liable only on the default of the other, the third person not being a party to such contract, the liability of each of such two persons to the third person under the first contract is not affected by the existence of the second contract, although such third person may have been aware of its existence. Illustration A and B make a joint and several promissory note to C. A makes it, in fact, as surety for B, and C knows this at the time when the note is made. The fact that A, to the knowledge of C, made the note as surety for B, is no answer to a suit by C against A upon the note. 133. Discharge of surety by variance in terms of contract. 133. Discharge of surety by variance in terms of contract.-Any variance, made without the suretys consent, in the terms of the contract between the principal 1[debtor] and the creditor, discharges the surety as to transactions subsequent to the variance. Illustrations (a) A becomes surety to C for Bs conduct as a manager in Cs bank. Afterwards B and C contract, without as consent, that Bs salary shall be raised, and that he shall become liable for onefourth of the losses on overdrafts. B allows a customer to overdraw, and the bank loses a sum of money. A is --------------------------------------------------------------------1 Ins. by Act 24 of 1917, s. 2 and Such. I. ---------------------------------------------------------------------

52.discharged from his surety ship by the variance made without his consent, and is not liable to make good this loss. (b) A guarantees C against the misconduct of B in an office to which B is appointed by C, and of which the duties are defined by an Act of the Legislature. By a subsequent Act, the nature of the office is materially altered. Afterwards, B misconducts himself. A is discharged by the change from future liability under his guarantee, though the misconduct of B is in respect, of a duty not affected by the later Act. (c) C agrees to appoint B as his clerk to sell goods at a yearly salary, upon As becoming surety to C for Bs duly accounting for moneys received by him as such clerk. Afterwards, without As knowledge or consent, C and B agree that B should be paid by a commission on the goods sold by him and not by a fixed salary. A is not liable for subsequent misconduct of B. (d) A gives to C a continuing guarantee to the extent of 3,000 rupees for any oil supplied by C to B on credit. Afterwards B becomes embarrassed, and, without the knowledge of A, B and C contract that C shall continue to supply B with oil for ready money, and that the payments shall be applied to the then existing debts between B and C. A is not liable on his guarantee for any goods supplied after: this new arrangement. (e) C contracts to lend B 5,000 rupees on the 1st March. A guarantees repayment. C pays the 5,000 rupees to B on the 1st January. A is discharged from his liability, as the contract has been varied, inasmuch as C might sue B for the money before the 1st of March. 134. Discharge of surety by release or discharge of principal debtor. 134. Discharge of surety by release or discharge of principal debtor.-The surety is discharged by any contract between the creditor and the principal debtor, by which the principal debtor is released or by any act or omission of the creditor, the legal consequence of which is the discharge of the principal debtor. Illustrations (a) A gives a guarantee to C for goods to be supplied by C to B. C supplies goods to B, and afterwards B becomes embarrassed and contracts with his creditors

(including C) to assign to them his property in consideration of their releasing him from their demands. Here B is released from his debt by the contract with C, and A is discharged from his surety ship. (b) A contracts with B to grow a crop of indigo an As land and to deliver it to B at a fixed rate, and C guarantees As performance of this contract. B diverts a stream of water which is necessary for irrigation of As land and thereby prevents him from raising the indigo. C is no longer liable on his guarantee. (c) A contracts with B for a fixed price to build a house for B within a stipulated time, B supplying the necessary timber. C guarantees as performance of the contract. B omits to supply the timber. C is discharged from his surety ship. 135. Discharge of surety when creditor compounds with, gives time to, or agrees not to sue, principal debtor. 135. Discharge of surety when creditor compounds with, gives time to, or agrees not to sue, principal debtor.-A contract between the creditor and the principal debtor, by which the creditor makes a composition with, or promises to give time to, or not to sue, the principal debtor, discharges the surety, unless the surety assents to such contract. 53.136. Surety not discharged when agreement made with third person to give time to principal debtor. 136. Surety not discharged when agreement made with third person to give time to principal debtor. Where a contract to give time to the principal debtor is made by the creditor with a third person, and not with the principal debtor, the surety is not discharged. Illustration C, the holder of an overdue bill of exchange drawn by A as surety for B, and accepted by B, contracts with M to give time to B. A is not discharged. 137. Creditors forbearance to sue does not discharge surety.

137. Creditors forbearance to sue does not discharge surety.- Mere forbearance on the part of the creditor to sue the principal debtor or to enforce any other remedy against him does not, in the absence of any provision in the guarantee to the contrary, discharge the surety. Illustration B owes to C a debt guaranteed by A. The debt becomes payable. C does not sue B for a year after the debt has become payable. A is not discharged from his surety ship. 138. Release of one co-surety does not discharge others. 138.Release of one co-surety does not discharge others.-Where there are co-sureties, a release by the creditor of one of them does not discharge the others; neither does it free the surety so released from his responsibility to the other sureties. 139. Discharge of surety by creditors act or omission impairing suretys eventual remedy. 139. Discharge of surety by creditors act or omission impairing suretys eventual remedy.-If the creditor does any act which is inconsistent with the rights of the surety, or omits to do any act which his duty to the surety requires him to do, and the eventual remedy of the surety himself against the principal debtor is thereby impaired, the surety is discharged.

Lesson 8 TORT - NEGLIGENCE IN SHIPPING AND DEFENSES AGAINST TORTUOUS LIABILITIES

Tort law is the name given to a body of law that addresses, and provides remedies for, civil wrongs not arising out of contractual obligations. A person who suffers legal damages may be able to use tort law to receive compensation from someone who is legally responsible, or "liable," for those injuries. Generally speaking, tort law defines what constitutes a legal injury and establishes the circumstances under which one person may be held liable for another's injury. Torts cover intentional acts and accidents.

For instance, Alice throws a ball and accidentally hits Brenda in the eye. Brenda may sue Alice for losses occasioned by the accident (e.g., costs of medical treatment, lost income during time off work, pain and suffering, etc.). Whether or not Brenda wins her suit depends on if she can prove Alice engaged in tortious conduct. Here, Brenda would attempt to prove Alice had a duty and failed to exercise the standard of care which a reasonable person would render in throwing the ball. One of the main topics of the substance of tort law is determining the "standard of care" - a legal phrase that means distinguishing between when conduct is or is not tortious. Put another way, the big issue is whether a person suffers the loss from his own injury, or whether it gets transferred to someone else. Going back to the example above, if Alice threw the ball at Brenda on purpose, Brenda could sue for the intentional tort of battery. If it was an accident, Brenda must prove negligence. To do this, Brenda must show that her injury was reasonably foreseeable, that Alice owed Brenda a duty of care not to hit her with the ball, and that Alice failed to meet the standard of care required. In much of the western world, the touchstone of tort liability is negligence. If the injured party cannot prove that the person believed to have caused the injury acted with negligence, at the very least, tort law will not compensate them. Tort law also recognizes intentional torts and strict liability, which apply to defendants who engage in certain actions. In tort law, injury is defined broadly. Injury does not just mean a physical injury, such as where Brenda was struck by a ball. Injuries in tort law reflect any invasion of any number of individual "interests." This includes interests recognized in other areas of law, such as property rights. Actions for nuisance and trespass to land can arise from interfering with rights in real property. Conversion and trespass to chattels can protect interference with movable property. Interests in prospective economic advantages from contracts can also be injured and become the subject of tort actions. A number of situations caused by parties in a contractual relationship may nevertheless be tort rather than contract claims, such as breach of fiduciary duty. Tort law may also be used to compensate for injuries to a number of other individual interests that are not recognized in property or contract law, and are intangible. This includes an interest in freedom from emotional distress, privacy interests, and reputation. These are protected by a number of torts such as infliction, privacy torts, and defamation. Defamation and privacy torts may, for example, allow a celebrity to sue a newspaper for publishing an untrue and harmful statement about

him. Other protected interests include freedom of movement, protected by the intentional tort of false imprisonment. The equivalent of tort in civil law jurisdictions is delict. The law of torts can be categorized as part of the law of obligations, but unlike voluntarily assumed obligations (such as those of contract, or trust), the duties imposed by the law of torts apply to all those subject to the relevant jurisdiction. To behave in 'tortious' manner is to harm another's body, property, or legal rights, or possibly, to breach a duty owed under statute. One who commits a tortious act is called a "tortfeasor". Torts is one of the American Bar Association mandatory first year law school courses.

Categories of torts Torts may be categorized in a number of ways: one such is to divide them into Negligence Torts, and Intentional Torts. The dominant action in tort is negligence. The tort of negligence provides a cause of action leading to damages, or to injunctive relief, in each case designed to protect legal rights, including those of personal safety, property, and, in some cases, intangible economic interests. Negligence actions include claims arising primarily from automobile accidents and personal injury accidents of many kinds, including clinical negligence. Product liability cases may also be considered negligence actions, but there is frequently a significant overlay of additional statutory content. Among intentional torts may be certain torts arising out of the occupation or use of land. One such is the tort of nuisance, which connotes strict liability for a neighbor who interferes with another's enjoyment of his real property. Trespass allows owners to sue for incursions by a person (or his structure, for example an overhanging building) on their land. There is a tort of false imprisonment, and a tort of defamation, where someone makes an unsupportable allegation represented to be factual which damages the reputation of another. Workers' compensation laws were a legislative response to the common law torts doctrine placing limits on the extent to which employees could sue their employers in respect of injuries sustained during employment. Negligence

Negligence is a tort which depends on the existence of a breach of duty of care owed by one person to another. One well-known case is Donoghue v. Stevenson where Mrs. Donoghue consumed part of a drink containing a decomposed snail while in a public bar in Paisley, Scotland and claimed that it had made her ill. The snail was not visible, as the bottle of ginger beer in which it was contained was opaque. Neither her friend, who bought it for her, nor the shopkeeper who sold it was aware of its presence. The manufacturer was Mr. Stevenson, whom Mrs. Donoghue sued for damages for negligence. She could not sue Mr. Stevenson for damages for breach of contract because there was no contract between them. The majority of the members of the House of Lords agreed (3-2) that Mrs. Donoghue had a valid claim, but disagreed as to why such a claim should exist. Lord Macmillan thought this should be treated as a new product liability case. Lord Atkins argued that the law should recognize a unifying principle that we owe a duty of reasonable care to our neighbors. He quoted the Bible in support of his argument, specifically the general principle that "thou shalt love thy neighbor." The elements of negligence are:

Duty of care Breach of that duty Breach being a proximate or not too remote a cause, in law Breach causing harm in fact

Statutory torts A statutory tort is like any other, in that it imposes duties on private or public parties; however they are created by the legislature, not the courts. One example is in consumer protection, with the Product Liability Directive in the European Union, where businesses making defective products that harm people must pay for any damage resulting. Liability for defective products is strict in most jurisdictions. The theory of risk spreading provides support for this approach. Since manufacturers are the 'cheapest cost avoiders', because they have a greater chance to seek out problems, it makes sense to give them the incentive to guard against product defects. Another example is the Occupiers' Liability Acts in the UK whereby a person, such as a shop owner, who invites others onto land, or has trespassers, owes a minimum duty of care for people's safety. One early case was Cooke v Midland Great Western Railway of Ireland, where Lord MacNaughton felt that children who were hurt whilst looking for berries on a building site, should have some compensation for their unfortunate curiosity. Statutory torts also spread across workplace health and safety laws and health and safety in food produce.

The concept of statutory torts is not held throughout all common-law countries, however. Courts in both the United States and Canada have rejected the concept that a statutory duty can be the basis of a private cause of action, absent a specific provision in statute authorizing such a cause of action. Nuisance Legally, the term nuisance is traditionally used in three ways: (1) to describe an activity or condition that is harmful or annoying to others (e.g., indecent conduct, a rubbish heap or a smoking chimney); (2) to describe the harm caused by the before-mentioned activity or condition (e.g., loud noises or objectionable odors); and (3) to describe a legal liability that arises from the combination of the two. The law of nuisance was created to stop such bothersome activities or conduct when they unreasonably interfered either with the rights of other private landowners (i.e., private nuisance) or with the rights of the general public (i.e., public nuisance). The tort of nuisance allows a claimant (formerly plaintiff) to sue for most acts that interfere with their use and enjoyment of their land. A good example of this is in the case of Jones v Powell (1629). A brewery made stinking vapors which wafted onto neighbors' property, damaging his papers. As he was a landowner, the neighbor sued in nuisance for this damage. But Whitelocke J, speaking for the Court of the King's Bench, said that because the water supply was contaminated, it was better that the neighbor's documents were risked. He said "it is better that they should be spoiled than that the common wealth stand in need of good liquor." Nowadays, interfering with neighbors' property is not looked upon so kindly. Nuisance deals with all kinds of things that spoil a landowner's enjoyment of his property. A subset of nuisance is known as the rule in Rylands v. Fletcher where a dam burst into a coal mine shaft. So a dangerous escape of some hazard, including water, fire, or animals means strict liability in nuisance. This is subject only to a remoteness cap, familiar from negligence when the event is unusual and unpredictable. This was the case where chemicals from a factory seeped through a floor into the water table, contaminating East Anglia's reservoirs. Vicarious liability The word 'vicarious' derives from the Latin for 'change' or 'alternation' or 'stead' and in tort law refers to the idea of one person being liable for the harm caused by another, because of some legally relevant relationship. An example might be a parent and a child, or an employer and an employee. You can sue an employer for the damage to you by their employee, which was caused 'in the course

of employment.' For example, if a shop employee spilled cleaning liquid on the supermarket floor, one could sue the employee who actually spilled the liquid, or sue the employers. In the aforementioned case, the latter option is more practical as they are more likely to have more money. The law replies "since your employee harmed the claimant in the course of his employment, you bear responsibility for it, because you have the control to hire and fire him, and reduce the risk of it happening again." There is considerable academic debate about whether vicarious liability is justified on no better basis than the search for a solvent defendant, or whether it is well founded on the theory of efficient risk allocation. Defenses A successful defense absolves the defendant from full or partial liability for damages. Apart from proof that there was no breach of duty, there are three principal defences to tortious liability. Consent This is Latin for "to the willing, no injury is done". It operates when the claimant either expressly or implicitly consents to the risk of loss or damage. For example, if a spectator at an ice hockey match is injured when a player strikes the puck in the ordinary course of play, causing it to fly out of the rink and hit him or her, this is a foreseeable event and spectators are assumed to accept that risk of injury when buying a ticket. A slightly more limited defense may arise where the defendant has been given a warning, whether expressly to the claimant or by a public notice, sign or otherwise, that there is a danger of injury. The extent to which defendants can rely on notices to exclude or limit liability varies from country to country. This is an issue of policy as to whether (prospective) defendants should not only warn of a known danger, but also take active steps to fence the site and take other reasonable precautions to prevent the known danger from befalling those foreseen to be at risk. Contributory negligence This is either a mitigatory defense or, in the United States, it may be an absolute defense. When used as a mitigatory defense, it is often known in the U.S. as comparative negligence. Under comparative negligence a plaintiff/claimant's award is reduced by the percentage of contribution made by the plaintiff to the loss or damage suffered. Thus, in evaluating a collision between two vehicles, the court must not only make a finding that both drivers were negligent, but it must also apportion the contribution made by each driver as a percentage, e.g. that the blame between the drivers is 20% attributable to the plaintiff/claimant: 80% to the defendant. The court will then quantify

the damages for the actual loss or damage sustained, and then reduces the amount paid to the plaintiff/claimant by 20%. While contributory negligence retains a significant role, an increasing number of jurisdictions, particularly within the United States, are evolving toward a regime of comparative negligence. All but four US states now follow a statutorily created regime of comparative negligence. Contributory negligence has been widely criticized as being too draconian, in that a plaintiff whose fault was comparatively minor might recover nothing from a more egregiously irresponsible defendant.. Comparative negligence has also been criticized, since it would allow a plaintiff who is recklessly 95% negligent to recover 5% of the damages from the defendant, and often more when a jury is feeling sympathetic. Economists have further criticized comparative negligence, since under the Learned Hand Rule it will not yield optimal precaution levels. Illegality Ex turpi causa non oritur actio is the illegality defence, the Latin for "no right of action arises from a despicable cause". If the claimant is involved in wrongdoing at the time the alleged negligence occurred, this may extinguish or reduce the defendant's liability. Thus, if a burglar is verbally challenged by the property owner and sustains injury when jumping from a second story window to escape apprehension, there is no cause of action against the property owner even though that injury would not have been sustained "but for" the property owner's intervention. Remedies The main remedy against tortious loss is compensation in 'damages' or money. In a limited range of cases, tort law will tolerate self-help, such as reasonable force to expel a trespasser. This is a defence against the tort of battery. Further, in the case of a continuing tort, or even where harm is merely threatened, the courts will sometimes grant an injunction. This means a command, for something other than money by the court, such as restraining the continuance or threat of harm. Usually injunctions will not impose positive obligations on tortfeasors, but some Australian jurisdictions can make an order for specific performance to ensure that the defendant carries out their legal obligations, especially in relation to nuisance matters.

Lesson 9 BILLS OF LADING

DEFINITION In this Bill of Lading Carrier means ANL Container Line Pty Limited trading as ANL;

Goods means the articles of other cargo accepted from the Shipper for transportation and/or forwarding and includes any Container(s) not supplied by or behalf of the Carrier; Hague Rules means, unless alternative provisions are made by national legislation, the provisions of the International Convention for the Unification of Certain Rules relating to Bills of Lading signed at Brussels on 25th August, 1924 and includes the amendments by the Protocol signed at Brussels on 23rd February, 1968, but only if such amendments are compulsorily applicable to this Bill of Lading. (It is expressly provided that nothing in this Bill of Lading shall be construed as contractually applying said Rules as amended by said Protocol.); Vessel means the intended Ocean Vessel (if any) and any vessel, craft, lighter or other means of conveyance by water which may be substituted in whole or in part for such intended Ocean Vessel or onto which Goods may otherwise be loaded for the purpose of being transported thereon in furtherance of the carriage covered by this Bill of Lading or any part thereof; Conveyance means any vehicle, rail truck, aircraft, conveyance or other means of transportation by land or air onto which Goods may be loaded for purpose of being transported in furtherance of the carriage covered by this Bill of Lading; Merchant means the Shipper, the Consignee and any person who is or becomes an endorsee or holder of this Bill of Lading or owner or receiver of Goods or entitled to have possession thereof from the Carrier; Container means any container, flat, pallet or other form of cargo carrying unit or equipment referred to on the face hereof or in or on which any Goods may be unitized or otherwise packed or stowed either when received by the Carrier for carriage hereunder or at any subsequent time prior to delivery in accordance with Clause 19(3); Place of receipt means the Carriers sea terminal at the Port of Loading (Ocean Vessel) unless a Place of receipt is nominated in the space provided for that purpose on the front hereof in which case Place of receipt shall mean the Place of receipt so nominated; Place of delivery means the Port of Discharge (Ocean Vessel) unless a Place of delivery is nominated in the space provided for that purpose on the front hereof in which case Place of delivery shall mean the Place of delivery so nominated, subject however to Condition 6; Combined Transport arises if the Place of receipt and/or the Place of delivery are indicated on the face hereof in the relevant spaces and may include carriage by more than one mode of transport; Port to Port arises if the Carriage is not Combined Transport. CONTRACTING PARTIES

In agreeing to and accepting the terms of this Bill of Lading the Shipper acts for himself and on behalf of each Merchant. The Shipper Warrants to the Carrier that he is entitled and is duly authorized by every other person who owns or is entitled to possession of the Goods or this Bill of Lading to agree to and accept this Bill of Lading and to deliver the Goods to the Carrier on the terms hereof. Without prejudice to the foregoing each Merchant who accepts this Bill of Lading from the Carrier or accepts endorsement or delivery hereof from the Shipper, Consignee or any other prior endorsee or holder who presents this Bill of lading to the Carrier or receives delivery of any Goods from the Carrier hereunder by such action on his part accepts and shall be deemed to confirm, ratify and agree irrevocably with the Carrier to be bound by all of the stipulations, exceptions and conditions stated herein whether written, printed, stamped or otherwise incorporated on the front or back hereof including the provisions of the Carriers applicable tariff which are referred to in Clause 21(3) and that the contract contained or evidenced herein shall be fully binding between the Carrier and such merchant in all respects as though it had been made between them. All agreements and freight arrangements previously made for the carriage of the goods are superseded by this Bill of Lading and the contact contained or evidenced herein. The Bill of Lading The international trade involving goods transport by sea couldnt have been existed without the transport documents, the most important of them being the bill of lading. The bill of lading represents recognition of the goods received by the carrier and an evidence of the contract of the transport by sea, but mostly represents a warehouse receipt of the transported goods. The first chapter Overview on Trade Securities is structured in three sections. In the first section (What are securities?) there are presented the differences between payment and credit instruments, between civil and commercial proof of debts and, the characteristic features of securities as well as their evolution from the legal point of view. A payment instrument is a mechanism assuring the fulfillment of a payment obligation. A credit instrument is a mechanism which postpones in time the payment of a debt, assures the mobility of the credit and gives the opportunity to the owner to acquire a security in order to assure the debt fulfillment at the due date. Securities are documents consisting in commercial debts which postpone in time the debt payment and can circulate easily being negotiable. Security possession is needed to exercise the right arising from the ascertained credit operation and to have been invested with this right any other person obtaining it. Unlike the civil proofs of debts the trade securities of debts present some features arising from the necessity of assuring the stability of the credit, to facilitate the circulation of these titles and avoiding the displacement of goods and money. Credit securities are negotiable and, circulating from the legal

point of view, by a simplified procedure avoiding the formalism of the Cession of the civil law. If in the civil law, the legal position can be separated from the document which establishes it, in the case of the credit proofs of debts there is a connection between law and document so that the law cant be pleaded and fulfilled but only by the person having a certain connection with the document. The document giving expression to credit proof of debt has a constitutive character, meaning the right it includes is incorporated in the title and it doesnt exist without it. Also, the credit proofs of debts are formal, literal and autonomous. The classification of the trade securities in terms of circulation and their content is presented in the second section. The negotiable notes have been created and have been improved in order to facilitate debts circulation, being due to their form an excellent circulation instrument. Their form determines their circulation way and from this point of view we can sort them in Negotiable bearer notes, certificates to order and registered notes. According to the features of their provision or their content, the credit proofs of debts can be sorted in proper proofs of debts (bill of exchange, promissory note, check), warehouse receipts (bills of lading, warrant receipts and warehouse warrant) and equity interests. There are also acts or documents called unsuitable credit proofs of debts, either by their aspect either their external structure or by their circulation way, they have some proper, derogatory features which dont allow them to be considered credit proofs of debts. There are so called unsuitable titles, the identification documents and apparent titles. The bill of lading has been assimilated generally to the commercial document, and especially to the bill of exchange. The similitude and distinctions between the bill of exchange and the bill of lading are presented in the last section of this chapter. The bill of exchange can be transmitted by a simple and specific method called endorsement which gives autonomous and abstract rights, transferring to the endorser the property of the title with all its intrinsic rights. The possibility of endorsing the bill of exchange results even from the character of this title which can be issued as non - transferable by endorsement with not to order provision included.. The transfer modality of the bills of lading to order is similar to that of transmitting the bill of exchange but in order to be considered a title to order to be transmitted by endorsement it should include deliberately the clause to order. The possibility of circulation by endorsement of the bill of lading doesnt assimilate it totally with a real title to order defined mainly by its abstract feature, detached from the reason element. So the bill of lading presents this special feature only when it is to order. In order to use it, the owner of the bill of lading, similar to the owner of the bill of exchange has to identify himself by a continuous series of endorsements.

As a result, when the bill of lading is to order, the endorsement of the document follows the rules and develops the effects of the endorsement of a commercial document. The bill of exchange is a literal title, meaning is has value even by its presence. The bill of lading is also a literal title. Issued and signed by a carrier gives him the quality of a debtor for the obligations included into the title. But, the bill of exchange is a complete proof of debts, meaning its content cant be completed with other documents and the signatory can not oppose to the person who obtained the bill of exchange with sole exceptions resulting form its content. As regards the bill of lading, the situation is different, according to the conditions of the transport contract included totally or partially in it. Therefore, when the bill of lading mentions deliberately the chartering contract, other exceptions resulting from this one can be opposed to the person who obtains the right. As regards bill of exchange, in case that payment at due date is refused to the possessor he has the right of recess against any of the signatories unlike, those who endorse a bill of lading and dont pledge themselves personally in front of the next possessor, they are not guarantors, that meaning the legitimate owner of the bill of lading would not be able to lay a claim to any signatories the fulfillment of the carrier obligation. From the point of view of the content, the bill of exchange is included in the category of commercial documents, respectively of those documents which give to the legitimate owners the right of payment of a certain amount of money, expressing in money the value they included. According to its functions the bill of lading belongs to another category, the one of warehouse receipts, defined as documents which give the right on certain goods located in certain warehouses or loaded on board of the ship with the purpose of transportation and allows the taking over of the object mentioned in the title. The right of the bill of exchange holder is totally autonomous as concerns the fundamental report. The situation is different for the bill of Lading, which usually is a causal title? The Bill of Lading-loading bill includes ten sections, as follows: In the first section is presented the historical evolution of the bill of lading. At the beginning of its existence the bill of lading represented only a receipt issued by the carrier (transporter), not negotiable and making evidence that the goods it described in it have been loaded or have been delivered in order to be loaded on a certain ship, with a certain destination. Gradually the bill of lading has begun to include also, terms of the sea transportation contract, and when the necessity of legal mechanism was felt by which to be fulfilled order documents upon the goods before these ones to reach the destination, the bill of lading acquired the feature of a warehouse receipt; The recognition of the bill of lading in the municipal law (section 2).

On the internal level the bill of lading is settled by the Code of Mercantile Law and in the Romanian uniform regulations (The United Nations Convention concerning the goods transportation by sea, 1978, known as Hamburg Rules).Among these there are differences in settlement referring mainly to the content of the bill of lading content, reason for which this study is based in the main on the provisions settled by Hamburg Rules and only as completion and to compare we refer to the provisions in Code of Mercantile Law and of the other international regulations, The parties involved in concluding the bill of lading (section 3), Meaning the carrier, the loader and the recipient. According to Hamburg Rules: carrier is any person which or in whose name a contract of goods transport by sea was concluded with a loader; loader means any person by who or in whose name or of whose authorization a contract of goods transport by sea was concluded with the carrier; this contract includes any person to whom or on whose name or by his authorization the goods are effectively delivered to the carrier in connection with the contract of goods transportation by sea; recipient being the entitled person to take the goods; The role and the importance of the bill of lading for the goods sea transport and for the international trade is based on the functions this one has (section 4) The first function of the bill of lading is that of a receipt for the delivered goods, containing in the same time also some details about the quantity and the quality of the loaded or delivered to be loaded goods. The bill of lading cant continue to be only a receipt to recognize the delivered goods. In this case, even it contains all the details asked by law; it wouldnt be able to prove totally the conditions of transport. This is the reason for which, overleaf the bill of lading there are printed the general conditions based on which the transport will be done. Hence the second function of the bill of lading meaning the proof of the previous contract between the carrier and the loader. Any other document which identifies enough the goods and which contains the transport clauses and the conditions could fulfill the first two functions of the bill of lading. Instead, this document would not be able to represent the goods only as far as its transmission will be equivalent with the writ of possession of the recipient by the mediated way of possessing the goods by the captain. As a result, the bill of lading has a much more important role, representing exactly the goods to be transported. The bill of lading represents a negotiable note, a credit proof representing the goods and having the role to facilitate the sale or the pledging of the goods along the travel, without being delivered effectively. The legal aspect of the bill of lading. The warehouse receipt Bill of lading of the transported goods (section 5).

Without denying its probation function, the bill of lading is fundamentally a title, it represents the described goods in it, the regime of its transfer between persons is the common regime of titles, and the rights arising from it are literal and autonomous. The content of the bill of lading (section 6) Is determined by the Legislation of different states, the differences being rather rare and this due on one hand to some standard blanks, and on the other hand to the uniform regulations in the field. According to Hamburg Rules the bill of lading should contain: details about the goods; details about the voyage (the loading port, the destination port and the identification of the ship making the voyage); the date or the delivery term of the goods delivery in the destination port; details about the freight; a note resulting of which the transport is submitted to Hamburg Rules; number of original samples; the carriers or his representative signature. Beside the obligatory notes, the bill of lading can also contain some special clauses, referring either to the situation of the loaded or taken to be loaded goods (quantity and quality reserves), either to the ways of transport. The main effect of these notes, called reserves is the change of the bill of lading from a clean bill of lading in an unclean bill of lading. But for a loader is an advantage to get a clean bill of lading, without reserves, which will prove the goods has been loaded in a good condition. Otherwise, the notes mentioned in the bill of lading can have an influence on its quality of a payment document. This is the reason for the carriers dont accept notes in the bill of lading; quite often the carrier is asked to issue a clean bill of lading in exchange of a guarantee. As concerning the possibility of issuing the letter of guarantee, Hamburg Rules stipulate that any agreement by which the loader pledges himself to indemnify the carrier for any loss result of issuing by the carrier of a clean bill of lading regarding the notes of the loader to be included in the bill of lading or regarding the apparent goods condition is null and without any effects to any other third party, including a recipient to which the bill of lading was transmitted; Types of bills of lading (section 7). The main classification of the bills of lading is mentioned in Hamburg Rules which from the point of view of the person entitled to take the goods in the destination port settle between nominative, to order and to bearer. From the point of view of goods delivery, the issued bill of lading can be loaded on board or a bill of lading bearing the note received the goods to be loaded, the difference being that the latest dont prove the goods has been shipped but only has been delivered for this purpose. The bill of lading issued in exchange of the loaded goods should be a clean bill of lading. If the bill of lading includes notes about the inadequate condition of the goods or of the

package, the issued bill of lading would be unclean; the situation would have an influence upon its quality as a payment document. The goods can be transported to the destination on one ship or many ships having different ship-owners or by various means of transportation of which at least one is by sea. From this point of view, the bills of lading can be: through bills of lading, delivery order or bill signed under protest. The development of the sea transport by containers imposed the necessity of some changes in the feature of documents on account of the participation of many carriers to the transport. Under these circumstances the chosen solution was either to issue a through bill of lading or a multimodal or combined bill of lading, if the transport supposes to use different means of transport. This because the reason of the using containers is based on door to door transport, directly from the producer to customer using only one transport document. Of course, the combined transports dont include necessarily using containers, but the development of containers usage increased significantly their importance. The existence of different carriers involves first difficulties concerning the settlement of the responsibilities for losses and damages of the goods transported in containers. The identification of the responsible carrier means to determine the moment when the goods were damaged. The usage of containers increases this difficulty because the containers generally are not opened before the destination. So that, if the responsibility cant be located, it is often chosen the solution as every carrier in the transport activity to contribute to indemnify proportionally with the received sum of money. The second difficulty is connected with the transport documents they use. Generally, it is considered not to be suitable to exist separate documents for every stage of what we call a combined transport. If it would go on like this, the documents issued this way couldnt have been negotiated up to the transport final stage. In this case it is considered to be ideal the first carrier who sign and issue the bill of lading to answer for the whole operation. This solution is stipulated in Hamburg Rules which settle carriers responsibility including the stage of transport fulfilled actually by the carrier. Also in the sea practice there are also used standard bills of lading issued by the international delivery companies FIATA, the line standard bills of lading issued and approved by BIMCO, the bills of lading used for the goods transportation in containers, the electronic bills of lading and house bills of lading; Few procedural aspects concerning the concluding and the fulfillment of the contract of goods transport by sea based on bill of lading (section 8) The correlation between letter of credit and bill of lading. The bill of lading, warehouse receipt represents a payment document, getting this feature due to the clause payment document or

acceptance document mentioned in the international sale contract. The letter of credit being an independent transaction, separated from other contracts is based only on documents and instructions by which it was initiated. For this reason, the bill of lading as a payment document should meet certain conditions referring especially to the loaded goods condition and its delivery term. The correlation between the bill of lading data, goods delivery term time of validity of the letter of credit. As a transported goods warehouse receipt, the bill of lading facilitates the sale because the possession of the bill of lading means the symbolic possession of the transported goods. The transmission of the bill of lading is equivalent to the transmission of the sold thing, so that the seller has the opportunity to pretend the price when the document was handed over. The seller needs the bill of lading to negotiate it or to transmit it to the buyer through the bank, receiving the equivalent value of the sold goods based on the letter of credit. Considering the data and the notes written on the bill of lading are real, the buyer will pay the equivalent value before getting the bill of lading that would be transmitted to him after that by the bank and he will pretend the captain to deliver him the goods in full accord with their description in the bill of lading. For this reason, beside the obligatory notes, the bill of lading should include the date of effective end of the loading of the goods mentioned in it and to be issued only after the loading was finished. This note is important because it conditions the opening of the documentary credit. In the letter of credit there are always conditions concerning the bill of lading date. The delivery term settled by parties by the contract will be found in the letter of credit as a limit term up to which the bill of lading can be handed. The responsibility of the parties in the fulfillment of the Contract of goods Transport based on bill of lading (section 9). The international situation referring to the uniformity of the rules which lead the responsibilities system in goods transportation based on bills of lading is complex. Now, in many countries, the law concerning the responsibility conditions is still represented by Haga Rules and Haga-Visby which protect mainly the carriers interests. As a reaction to the lack of balance maintained by these conventions, favoring the carriers, who are, mainly, from the industrialized countries, the international community has decided to find a more equitable system to share the responsibility. These efforts have been materialized in Hamburg Rules which have settled the carriers responsibility is based on the fault principle or the presumed negligence. The carrier answers for the prejudice result of the loss or the damage of the goods as well for the delay in goods delivery. For the loss or for the damage of the goods or for the delay caused by a fire, the carrier would answer if the claimant proves the fire resulted as carriers fault or negligence, officials in charge or his mandatory. In the situation of living animals transport, the carriers responsibility would be taken into consideration only if he doesnt follow the instructions given by the

loader. The carrier answers also for the goods transported on deck without loaders agreement or contrary the practice of that traffic. If the transport was totally or partially entrusted to other person, the carrier would answer also for the transport stage did by that one. Excepting the situations of common damage, the carrier doesnt answer for the losses, prejudices or delivery delays resulting from actions of human lives rescue or reasonable actions to save goods on the sea. In all these situations the right to act belongs to the legitimate owner of the bill of lading who will have the obligation to announce the damages, the prejudices and the delays under the sanctions settled by law. The evaluation of the compensations would be done according to Hamburg Rules. For other situations resulting from the international sea transport activities not settled in Hamburg Rules, the responsibility of the carrier is established according to the international conventions or the national laws referring to the limitation of the responsibilities of the ship-owners. As concerning the responsibility of other parties involved in the fulfillment of the sea transport contract based on bill of lading, Hamburg Rules settle the loaders responsibilities for the prejudice the carrier had to pass through as well as the obligations of this one in the situation of dangerous goods transport. In this case, the carrier will have the quality of claimant who has the same obligation to announce in writing the loader about the loss or the prejudice. As concerning the recipients responsibility in the hypothesis the freight would be paid by this one, in the absence of special instructions included in Hamburg Rules, we consider applicable the instructions in the Romanian Code of Mercantile Law. Any action referring to goods transport is lost by limitation in two years term, whatever the claimant will be the carrier or the goods recipient. Between tradition and modernity. Actual tendencies concerning the Bill of lading improvement (section 10). Traditionally, the bill of lading has been written on the paper and represented a negotiable title. Its development as a warehouse receipt for the transported goods and as a payment document in the international transactions facilitated the international sale. Under the actual circumstances, very often the loader (consigner) transports his own goods, so that the bill of lading on which the traditional payment mechanism by the bank letters of credit has begun to loose its utility. In the same time the speed increase in the maritime industry by using containers and other improvement means concurs with the increasing of the delays in the bank services and with the agglomeration of the post services, and, as a consequence, an important number of situations when the ship reaches the destination before the transport documents. From this point of view, the system based on bill of lading seems not to meet any more the actual exigencies.

This system is reproached to be to slow in comparison with the actual transport conditions because it involves numerous movements, signatures and impediments. The difficulty of the system determines delays or, the bill of lading essence is the fact it reaches to the destination before the goods arrival and not inversely as often happens. On the other hand, by its usage modality, it facilitates fraud, this one being the price paid by all the formalist systems in which the transactions are reduced to documents. In order to be adapted to the actual situation the practice has created new transport documents which, with certain limits can replace the traditional bills of lading, meaning the waybill and the electronic bill of lading. The maritime waybill represents a receipt for the loaded goods and a proof of the contract concluded by the loader and the carrier, but it loses the most important function of the bill of lading, the negotiability. On the other hand, the development of electronic commerce based on the implementation of the electronic data interchange which has changed the way of negotiating and concluding the contract at distance has raised the problem of automation the bill of lading. In the maritime industry, this system has been developed in order to replace the traditional paper documents, especially the bills of lading with electronic messages. This way a new type of bill of lading appeared, the electronic bill of lading, the most recent being Bolero bill of lading which also fulfills the role of the traditional bill of lading, the negotiability. The technical automated enough complicated procedure of the electronic bills of lading presented in this section proves that in the problem of the forgery, an electronic bill of lading presents shows more security than a traditional one. Only in the situation when the forger can read the cryptographic code, and that from the mathematical point of view is impossible, could forge the electronic bill of lading. About the law conflict concerning the bills of lading includes four sections. In the first section there are presented general aspects concerning the conflict norm and the laws conflicts. The sea transport contract implies usually an international aspect, so that any litigation connected with the transported goods involves problems about the stability of the applicable laws. Most of the standard bill of lading forms include clauses which designate applicable law and the competent instance to solve the possible litigation. The ways of establishing the applicable law in the absence of such clauses, referring to the Romanian law (Law 105/1992) and to the Romanian and foreign jurisprudence in the filed are analyzed in the second section. The law applicable to the bill of lading according to the principle lex voluntatis is the law chosen by agreement by both parties. In the absence of an explicit clause, concerning the law applicable to the contract, this one would be lead by that legislation to which the parties intended to submit or, when this intention cant be deduced from the circumstances of the cause, by the law with which the contract has the closest connections. The

applicable law, either is settled by the contract parties, or by the judgment instance based on the subsidiary but obligatory conflict norms, it settles the validity conditions and the effects of the contract, the fulfillment of the obligations and the responsibility for not fulfilling or late or inadequate or fulfillment. As concerning the jurisdiction competence, Hamburg Rules, though, unlike the previous conventions settle the possibility of the parties to choose a certain instance, dont settle the fundamental conditions of the jurisdiction attributive clause, the way in which the agreement of both parties should be expressed and the unique situation of the recipient, of that resulting different practices in the field. As an alternative, the parties can chose the arbitration way to solve the possible litigations (section 4). The arbitration clause is settled, usually in the shipping contracts and rarely in the bills of lading, excepting the situation when are issued based on the shipping contracts. This clause is valid in the relations between the shipping contract parties. Instead, if in the bill of lading there is no reference about the arbitration clause of the shipping contract this is not opposable the third parties getting the bill of lading. The necessity of correspondence of the national legislation with the community one in the field of goods sea transports. The sea highways. The complexity of transport services and their distinct features imposed special provisions which settle at the community level the opportunity of delivering services, the free access to the sea transport market and the practices of prices settlement in this filed. As concerning the community acquis and its transfer, Romania agreed Chapter 9, The policy in the transport field and obliged itself to take the necessary measures to be actually established up before becoming a member. The European Union policy follows by developing the maritime commerce not last to find a competitive alternative for the land transport. Thus, it is considered the maritime transport in the community and the river transport are two elements which combined can solve the agglomerated road and railway structure. Their development is step forward to create the sea highways and to offer simple and performing services. Romania, as a riparian country and connection between East and West, future member of the European Union should follow permanently the conditions and the realities concerning the international transports not only from the legislation point of view, but also a contract practice. Though in present there is a legislation base concerning the electronic commerce, compatible with the European one, the bills of lading used in transactions are still the traditional ones and not the modern ones, the electronic bills of lading. Practically, there are no reasons not to use these new forms of bills of lading by the Romanian tradesmen as long as the internal legislation allows that. In the general frame of the preoccupations to modernize the Romanian legislation the changing of provisions of the Code of Mercantile Law concerning the transport generally and

especially to the bill of lading should be an objective. On the other hand, similarly to the countries with tradition in the filed, which under the influence of the international rules have modernized their legislation, including the maritime commercial law in independent codes, also in Romania the project of the Maritime Code should not be forever a simple project, but to be adopted, and all the maritime commercial law specific institutions to be modernized to the actual most advanced standards to be included in the new Maritime Cod.

Lesson 10 HAGUE RULES, GOVERNING LAW AND JURISDICTION

(1) This Bill of Lading shall have effect subject to the provisions of any legislation giving effect to the Brussels Convention for the incorporation of certain rules relating to Bills of Lading dated 25th August 1924 (which rules as set out in the said Convention are herein called the Hague Rules) or to similar effect which is compulsorily applicable to the contract contained or evidenced herein

(including the Carriage of Goods By Sea Act 1936 of the United States of America where so applicable). Without affecting the generality of the foregoing, this Bill of Lading shall have effect if issued in Australia subject to the provisions of the Rules contained in Schedule 1 of the Carriage of Goods by Sea Act 1991 of Australia and the Carriage of Goods by Sea Regulations 1998 as applied by that Act, and if issued in Hong Kong subject to the provisions of the Carriage by Sea Under Bill of Lading Rules made under and as applied by the Carriage of Goods by Sea Ordinance of Hong Kong. (2) In performing the contract contained or evidenced in this Bill of Lading insofar as it relates to the carriage of goods by sea within the meaning of the Hague Rules the Carrier shall be subject to the responsibilities and liabilities and entitled to the rights and immunities set forth in the Hague Rules. (3) Subject to Clause 3(5). (a) This Bill of Lading and the contact contained or evidenced herein shall be construed and apply according to and be governed by the laws of the State of Victoria, Australia; and (b) No Action or proceeding in respect of a dispute or claim arising under or in connection with this Bill of Lading or the contract contained or evidenced herein (including a claim against the Carrier for loss or damage to or in connection with Goods) shall be brought before any court or tribunal except an Australia court save that the Carrier alone may at its option bring any such action or proceeding in some other jurisdiction. (4) No provision of this Bill of Lading shall in any way deprive the Carrier of or derogate from the rights, immunities or protection, or increase the responsibilities or liabilities which, in the absence of such provision, the Carrier would have under laws made applicable by the foregoing provisions or any other applicable laws in any place where any action or proceeding is brought by or against the Carrier in respect of a dispute or claim arising as aforesaid, or elsewhere; (5) If any provision of this Bill of Lading be to any extent repugnant to legislation hereby made applicable ot other applicable laws in force in a place where any such action or proceeding is brought that provision shall to the extent only to which it is repugnant to such legislation and not further, be deemed not to form part of this Bill of Lading or the contract contained or evidenced herein, but in all other respects this Bill of Lading and such contract shall continue in full force and effect. SUB-CONTRACTORS, SUB-AGENTS and AGENTS

(1) In addition to all other liberties given to the Carrier hereunder, the Carrier shall be entitled to sub-contract on any terms to any person (hereinafter called a sub-contractor) ant/or to entrust to any servant or agent (including and independent contractor employed at any time by the Carrier) the whole or any part of the carriage covered by this Bill of Lading, including any loading, unloading, storing, warehousing, and handling of Goods and/or any duties and functions whatsoever in relation to Goods undertaken or authorised to be undertaken by the Carrier under the terms hereof or otherwise expedient in the Carriers opinion for or in connection with the carrying out of the contract contained or evidenced herein. In Clause 4(2), (3), (4) and (5) Carriers employee means any person who is a subcontractor, servant or agent of the Carrier (including and independent contractor at any time employed by the Carrier) and any servant or agent of any person and includes, without affecting the generality of the foregoing, very person to whom any part of the carriage covered by this Bill of Lading or any duties or functions are sub-contracted or entrusted by the Carrier pursuant to this clause. (2) It is herby expressly agreed that no Carriers employee shall in any circumstances whatsoever be under any liability whatsoever to the Shipper, Consignee or any other Merchant for any loss or damage or delay of whatsoever kind arising or resulting directly or indirectly from any act neglect or default on his part in connection with the Goods or otherwise howsoever in connection with the carriage covered by this Bill of Lading. (3) Without prejudice to the generality of clause 4(2), every exception, limitation, condition and immunity of whatsoever nature applicable to the Carrier or to which a Carrier is entitled under the provisions of this Bill of Lading shall also be available and shall extend to protect every Carriers employee. (4) For the purpose of all of the provisions of Clause 4(2) and (3), the Carrier in making the contract contained or evidenced herein is and shall be deemed to be acting as agent or trustee on behalf of and for the benefit of all persons who are or might be Carriers employees and all such persons shall to this extent be or be deemed to be parties to the contract contained or evidenced in this Bill of Lading. (5) In consideration of the Carrier accepting the liabilities and responsibilities provided under the terms of this Bill of Lading, each Merchant hereby undertakes to the Carrier to make no claim of any description against any Carriers employee for or in respect of any loss of or damage to or in connection with Goods or any other loss damage or delay whatsoever which occurs during or by

reason of any act neglect or default whatsoever on the part of any Carriers employee in connection with the Goods or otherwise howsoever in connection with the carriage covered by this Bill of Lading, and to indemnify the Carrier against and pay to the Carrier any amount which the Carrier may pay to any Carriers employee upon demand made upon the Carrier by that Carriers employee for indemnity against or reimbursement of any amount recovered by that Merchant under a claim brought against that Carriers employee contrary to the undertaking hereinbefore contained (whether or not the Carrier was legally liable to make such payment upon such demand being made upon it). SCOPE OF CARRIAGE AND CARRIERS LIBERTIES (1) Goods may be transported and/or forwarded by the Carrier from the place of receipt to the place of delivery by any route or routes whatsoever (whether or not the customary or intended or advertised or shortest route or routes) via any place or places whatsoever (whether or not including the Port of Loading (Ocean Vessel) if that is not the place of receipt, or the Port of Discharge (Ocean Vessel) if that is not the place of delivery). Any Vessel or Conveyance may at any time and for any reason and without any notice to any Merchant proceed and carry Goods to and call and remain for any length of time at any place or places whatsoever (whether in or out of the advertised or customary or shortest route or order and although in proceeding thereto such Ve ssel or Conveyance may proceed and carry Goods beyond the place of delivery or in a direction contrary thereto or back to the place of receipt or any other place) once or more often in any order. Any Vessel may before or after proceeding towards its intended destination or port of discharge adjust compasses and other navigational instruments, dry dock, go on ways or repair yards, shift berths, take fuel or stores, embark or disembark any person, carry contraband, explosives, munitions, warlike stores, hazardous goods, remain in port, sail with or without pilots, tow and be towed, and save or attempt to save life or property. (2) Whether arranged beforehand or not, and without limiting the generality of Clause 5(1), the Carrier shall be at liberty without notice to any Merchant to perform the whole or any part of the carriage covered by this Bill of Lading by transporting and/or forwarding the whole or any part of the Goods at any time or place by the intended Ocean Vessel or any other vessel(s), craft, lighter(s) and/or other means of water transportation and/or any means of transportation by land or air, whether owned or operated by the Carrier or others and whether departing, arriving or scheduled to depart or arrive at any place before or after the intended Ocean Vessel. The Carrier may also at any time and from time to time without notice to any Merchant and as may be considered by Carrier in its absolute discretion to be necessary or expedient in connection with the carriage covered hereby trans-ship,

land or otherwise unload Goods at any port or place for any purpose and store Goods by any means of storage either on shore or afloat at any port or place for any purpose. (3) The Carrier shall have liberty to comply with any directions or recommendations a s to loading, departure, arrival routes, ports of call, stoppages, discharge, destination, delivery or otherwise howsoever given by any person acting or purporting to act with the authority of any government, international organization or any department thereof, or by any committee or person having, or purporting to have, under the terms of any insurance on a Vessel or Conveyance the right to give such directions or recommendations. (4) Anything done or occurring within the terms of rights, powers and liberties provided in Clause 5(1), (2), (3) (which rights, powers and liberties shall not be deemed to be restricted by any provision appearing elsewhere in this Bill of Lading or by any other matters or circumstances whatsoever) and any delay arising there from shall be deemed to form part of the carriage covered by this Bill of Lading and shall not constitute a deviation or otherwise render the Carrier liable for any resulting loss or damage suffered by any Merchant or other person. ALTERNATIVE DISCHARGE (1) If by reason of or in compliance with, any directions or recommendations as aforesaid in Clause 5(3) a Vessel or Conveyance does not proceed to any port or place to which it was originally intended to proceed the Vessel or Conveyance may proceed to any other port or place which the Carrier or the Master of the Vessel or person in charge of the Conveyance at its or his discretion may select and there discharge the Goods. (2) If in the opinion of the Carrier or Master of a vessel or person in charge of a Conveyance the performance of the carriage covered hereby or any voyage or journey undertaken or proposed to be undertaken in furtherance thereof is or threatens to be unsafe, unlawful, impracticable or inadvisable by the imminence or existence of war, warlike operations or hostilities, or sanctions imposed by or against any Government or State or cessation or prohibition of intercourse commercial or otherwise between any nations, Container(s) may be devanned and/or Goods may be discharged at any port or pl ace whatsoever (including the port or place of loading of such Vessel or Conveyance) at the discretion of the Carrier or of such Master or person, at the risk of the Merchant. (3) If on account of actual or threatening epidemics, blockade, quarantine, ice, riots, strikes, lockouts, labour troubles, interdict, port congestion, civil commotions, difficulties in loading or discharge, need of repair of a Vessel or disability and/or unseaworthiness of a Vessel, or any other

cause or event whatsoever, the Carrier or the Master at any time is in doubt as to whether such Vessel can safely and without delay or detention, reach, enter or leave, its intended port of loading or reach or enter its intended destination or port of discharge or there discharge in the usual manner, or proceed thence on its intended voyage safely or without delay or detention, Container(s) may be devanned and/or Goods may be discharged at such Vessels intended port of loading or at other port or place discretion, at the risk of the Merchant. (4) In any events referred to in Clauses 6(1), (2) and (3) the Carrier may retain the Goods at the port or place at which they are discharged and postpone the carriage of the whole or any part thereof hereunder until some later date. Whilst Goods are so retained they shall be entirely at the Merchants risk and the Carrier shall not be responsible for them in any way. (5) The carrier shall be entitled to reasonable extra compensation in the event of diversion, delay or detention of a vessel carrying Goods under any of the circumstances hereinbefore provided, and in respect of discharge and/or retention of Goods as hereinbefore provided and any services rendered thereto during or in connection with any such diversion, delay, detention, discharge and/or retention, and shall have a lien on such Goods for such compensation. In addition the Carrier may, upon Goods being discharged as hereinbefore provided or at time thereafter, elect without notice to any Merchant to treat the contract contained or evidenced herein as at an end, whereupon the port or place at which such Goods have been discharged or are situated when such election is made shall be deemed to be the place of delivery and the Merchant shall take delivery of such Goods thereat and pay all additional costs and expenses of such delivery and all of the Carriers obligations and responsibilities in respect of such Goods shall be discharged upon the Carrier making such election and delivery or making such Goods available for delivery at such port or place as foresaid. In the event that after making such election the Carrier makes arrangements to store any of the Goods at and/or trans-ship and/or forward any thereof to the place of delivery or the Port of Discharge (Ocean Vessel), it shall do so as agent only for and at the sole risk of the Merchants without any liability whatsoever in respect of such agency and each Merchant shall be liable to recompense the Carrier forthwith upon demand for all extra freight charges and extra expenses thereby incurred. MISLAID GOODS In case Goods cannot be found at the place of delivery or if they be mis -carried, they, when found, may be forwarded to the place of delivery at the Carriers expense but the Carrier shall not be

responsible for any loss, delay, depreciation or damage arising from such mis -carriage and/or forwarding. CARRIERS RESPONSIBILITY (1) The Carrier is not a common carrier and reserves the right to accept or refuse articles for carriage in its sole discretion. (2) Except as otherwise provided herein, the Carriers responsibility for Goods shall commence at the time when such Goods are received by the Carrier at the sea terminal at the Port of Loading and shall terminate when such Goods are delivered by or on behalf of the Carrier in accordance with Article 19 at the intended Port of Discharge. (3) Notwithstanding the preceding paragraph, where the space(s) entitled Place of receipt and/or Place of delivery on the face hereof are completed the contract contained in or evidenced by this Bill of Lading is for through transportation from and/or to the place(s) so named and the Carriers responsibility shall then commence at the time when the Goods are received at the Place of receipt so named (if any) and/or terminate when the Goods are delivered in accordance with Article 19 at the Place of delivery so named (if any). (4) The Carrier shall not under any circumstances be liable for loss or damage arising or resulting from fire, unless caused by the actual fault or privities of the Carrier, Act of God, act of war, act of public enemies, arrest or restraint of princes rulers or people or seizure under legal process, quarantine restrictions, act or omission of a Merchant or the agent or representative of a Merchant, strikes or lock-outs or stoppage or restraint of labour from whatever cause, whether partial or general, riot and civil commotions, saving or attempting to save life or property, wastage in bulk or weight or any other loss or damage arising from inherent defect, quality or vice of goods, insufficient packing, insufficiency or inadequacy of marks, latent defects in any vessel, vehicle, conveyance, container, cargo carrying equipment or other plant or equipment, terminal, store or premises whatsoever, not discoverable by due diligence. The Carrier shall not be responsible for any direct or indirect loss or damage, which is caused through delay. (5) Subject to paragraph (4) above, the Carrier shall be liable for loss or damage of whatsoever nature and howsoever arising to the extent following but no further:

(i) Upon proof that the loss or damage arose out of a part of a part of the carriage covered by this Bill of Lading, which is subject to the Hague Rules, in which case the Hague Rules shall apply, or (ii) Upon proof that loss or damage to Goods not falling within (i) above, arose out of the handling or carriage of the Goods by a sub-contractor or agent of the Carrier in which case the liability of the Carrier shall be limited to that amount at the time of such proof recoverable by the Carrier from the sub-contractor or agent in respect of such loss or damage, provided that if such loss or damage to Goods is proved to have arisen in the course of inland transportation by the subcontractor or agent, the Carrier shall not in any event have any greater liability to any Merchant(s) than that which such sub-contractor or agent would have had if it had made a separate and direct contract with such Merchant(s) in respect of such inland transportation, except that if any part of such inland transportation is by water, the liability of the Carrier in respect thereof shall be in accordance with the Hague Rules, or (iii) in case of any loss or damage to Goods not falling within (i) or (ii) above in which case the loss or damage shall be deemed to have arisen at sea and the Carrier shall be responsible according to the Hague Rules. CONTAINER PACKED BY MERCHANT (1) Where any Goods are received by the Carrier in or on any Container(s), the contract contained or evidenced herein, so far as it relates thereto, is and shall be deemed to be for the carriage of such Container(s) and the contents thereof and the following provisions of this Condition shall apply. (2) The acknowledgment of receipt by the Carrier o n the front hereof is confined to the number and apparent order and condition of the Container(s) received, and any statements on this Bill of Lading relating to marks and numbers, number and kind of packages or pieces, description, quantity, condition, weight, measure, nature, kind, value or other particulars of the Container(s) are as furnished by the Shipper and are unknown to the Carrier and the Carrier accepts no liability in respect thereof. Each Merchant shall be deemed to have warranted to the Carrier the accuracy of those particulars and undertakes to indemnify the Carrier on demand against all loss, damage, expenses, penalties and fines arising or resulting from any inaccuracy thereof.

(3) Each Merchant accepts complete responsibility for the packing and stuffing of the contents of the Container(s), the closing and sealing thereof and the fitness of the Container(s) and the contents thereof for carriage in accordance with the terms of this Bill of Lading including Condition 13. Each Merchant shall be liable and hereby undertakes to indemnify the Carrier against any kind of loss, damage, expenses, liabilities, penalties and fines directly or indirectly suffered by the Carrier arising from any improper or inadequate packing, stuffing, closing or sealing or unfitness of the Container(s) or the contents thereof. (4) The Carrier shall be entitled (but under no obligation) to open any of the Container(s) and to inspect the contents or any part thereof without notice and at any time or place. (5) Each Container shall be properly sealed and the seal identification reference as well as the Container reference shall be shown herein, in case the seal of any Container is broken by the customs or other authorities for inspection of such Container or the contents or part thereof, the Carrier shall not be liable for any loss or damage or any other consequences arising or resulting there from. CONTAINER PACKED BY CARRIER (1) Where Goods are received by the Carrier not in or on any Container(s) the following provisions of this Condition apply. (2) The Carrier shall be at liberty to pack and transport and/or forward the Goods in or on any Container(s). (3) Any statements on this Bill of Lading relating to marks, numbers, description, quantity, quality, weight, measure, nature, kind, value or other particulars of the Goods are as furnished by the Shipper and are unknown to the Carrier and the Carrier accepts no liability in respect thereof. Each Merchant shall be deemed to have warranted to the Carrier the accuracy of those particulars and shall indemnify the Carrier against all loss, damage, expenses, penalties and fines arising and resulting from inaccuracy thereof. CARRIERS CONTAINERS

(1) The Shipper shall inspect Container(s), which are lent, leased or howsoever otherwise furnished by or on behalf of the Carrier before packing Goods into or onto them, and any such Container(s) packed by the Shipper shall be deemed to have been accepted by the Shipper as being in sound and suitable condition for the purpose of the carriage covered by this Bill of Lading and no Merchant shall have any rights whatsoever against the Carrier for or in respect of any loss of or damage to Goods due to insufficient or unsound condition of Container(s) howsoever arising. (2) Each Merchant shall assume full responsibility and indemnify the Carrier for any loss of or damage to any Container or other equipment furnished by or on behalf of the Carrier which occurs while such Container or equipment is in the possession of any servant(s) or agent(s) of or inland carrier(s) engaged by or on behalf of any Merchant. (3) The Carrier shall not in any event be liable for and each Merchant shall be severally liable to indemnify and hold the Carrier harmless from and against any loss of or damage to property of other persons or injuries to other persons caused by Container(s) furnished by or on behalf of the Carrier or contents thereof during handling by or while in the use or possession of any Merchant or any servant(s) or agent(s) of or inland carrier(s) engaged by or on behalf of any Merchant. (4) Where Goods are delivered in Container(s), which the Carrier owns or to the possession of which the Carrier is otherwise entitled the Merchant taking delivery shall return such Container(s) promptly. SPECIAL CONTAINERS (1) The Carrier shall not undertake to carry Goods in refrigerated, insulated, ventilated and other special Container(s) (hereinafter called special Containers) and all Goods (including Goods received in special Containers packed by or on behalf of the Shipper) shall be treated and carried as ordinary Goods, unless special arrangements for the carriage of those Goods as special cargo have been previously agreed to between the Carrier and the Merchant and the Carriers undertaking to carry the said Goods as special cargo is stated on the face hereof and extra freight as required by the Carrier has been paid. (2) Where the Carrier agrees to the carriage of Goods as special cargo and the Shipper requests a particular temperature range and it is accepted by the Carrier, the Carrier will if requested by the Shipper to do so, set thermostatic controls within the requested temperature range, but the

Carrier does not undertake that such temperature will be maintained within the special Container(s) and shall not be liable for any loss or damage to or in connection with Goods resulting from failure to carry Goods at the requested temperature range. (3) Where the Carrier agrees to the carriage of Goods as special cargo, all of the provisions of this Bill of Lading shall continue to apply and have full effect with respect to such carriage except only to the extent that the contrary is specifically provided in the special arrangements agreed as aforesaid and such contrary provision is expressly stated on the face hereof. STOWAGE, DECK CARGO, LIVE ANIMALS (1) Unless prior to or at the time of booking the Goods the Carrier receives a written instruction from the Shipper to carry Goods below deck, the Carrier has the right to stow and carry Goods under this Bill of Lading on or above deck of any Vessel. (2) When Goods are or are intended by the Carrier to carried on or above deck of any vessel the Carrier shall not be required to note, mark or stamp hereon any statement of on deck carriage, any custom to the contrary notwithstanding. When Goods not being live animals are carried on deck and this Bill of Lading contains no note, mark or stamp stating such on deck carriage, such Goods shall be deemed to be stowed under deck for all purposes including general average, and the Hague Rules and legislation applicable as provided in Condition 3 hereof shall apply accordingly. (3) The Carrier shall not under any circumstances be liable in any capacity whatsoever for any non-delivery, mi s-delivery, loss, delay or damage of whatsoever nature arising howsoever to or in connection with Goods carried on or above deck on any Vessel and herein stated to be so carried, subject to any legislation applicable as provided in Condition 3 hereof. (4) Any live animals received by the Carrier hereunder shall remain at all times at the sole risk of the Merchants, and may be carried on above or under deck as the Carrier determines, and the Carrier shall not under any circumstances be liable in any capacity for any non-delivery, mis-delivery, loss, delay or damage of whatsoever nature arising howsoever to or in connection with such live animals. DANGEROUS GOODS AND CONTRABAND

Goods of an inflammable, explosive, radioactive, corrosive, damaging, noxious, hazardous, poisonous, injurious or dangerous nature must not be tendered for carriage Hereunder unless written notice of their nature, name, label, classification and the method of rendering such Goods innocuous, with the names and addresses of the Shipper and Consignee, has been previously given to the Carrier and the nature of the Goods is distinctly marked on the outside of the Container(s), package(s) or piece(s) as required by applicable statutes or regulations. Every such notice shall bear the certificate required by applicable statutes or regulations to certify that the Goods are properly described, packed and marked, and in proper condition for transportation according to the regulations prescribed by the competent authority. If any Goods tendered for carriage without previous written declaration and arrangement are or at any time become of the above mentioned nature or are or become contraband or prohibited by any law or regulations of any place or port of loading, discharge or call during transit, whether any Merchant is aware thereof or not, such Goods, upon discovery of their nature or at any time thereafter, may be rendered innocuous, thrown overboard or discharged or left at any port or place, or be otherwise surrendered or disposed of at the discretion of the Carrier or of the Master of the Vessel or person in charge of the Conveyance without any liability attaching hereto and without prejudice to the Carriers right to freight and any other charges payable hereunder. The foregoing provisions shall also apply to any such Goods tendered for carriage with such previous declaration and arrangement and which in the opinion of the Carrier or any servant, agent or sub-contractor of the Carrier have or are likely to become dangerous to the Carrier, or any Vessel, Conveyance, or cargo or property or person. Each Merchant shall be separately liable to indemnify the Carrier against any kind of loss, damage, expenses, fines or liability directly or indirectly incurred by the Carrier which may be caused by or result from such Goods or arising out of the same being tendered. The Carrier reserves the right but shall have no obligation, to devan Container(s) in which any such Goods have been packed by or on behalf of a Merchant and examine the contents thereof and arrange for re-stowage, recooperage or reconditioning at the discretion of the Carrier or any Master or person in charge as aforesaid but at the Merchants risk and expense.

VALUABLE GOODS The Carrier shall not be liable to any extent for any loss of or damage howsoever arising to or in connection with platinum, gold, silver, jewellery, radioisotopes, precious metals, precious stones, precious chemicals, bullion, specie, currency, securities, negotiable instruments, writings, documents, pictures, embroideries, works of art, curios, heirlooms, collection of very nature or any other valuable Goods whatsoever including goods having particular value only for the Merchant, unless the true

nature and value thereof have been declared in writing by a Merchant before receipt of the Goods hereunder by the Carrier and inserted in this Bill of Lading, and unless ad-valorem freight has been fully prepaid thereon. GENERAL AVERAGE, NEW JASON CLAUSE In respect of any part or parts of the carriage covered by this Bill of Lading which are or may be intended by the Carrier to be performed by sea on board any Vessel general average shall be adjusted, stated and settled in Melbourne, Australia, or any other port or place at the Carriers option, according to the York-Antwerp Rules 1974 as amended, and as to matters not provided for by those Rules according to laws and usage of the port or place of adjustment, and in the currency selected by the Carrier. The general average statement shall be prepared by the adjusters appointed by the Carrier. Average agreement or bond and such cash deposit as the Carrier may deem sufficient to cover the estimated contribution of the Goods, and any salvage and special charges thereon, and any other additional securities as the Carrier may require shall be furnished to the Carrier by the Merchant to whom Goods are to be delivered hereunder before delivery thereof is made to such Merchant by the Carrier. In the event of accident, danger, damage or disaster, before or after commencement of a voyage, resulting from any cause whatsoever, whether due to negligence or not, for which or for the consequence of which the Carrier is not responsible by statute, contract or otherwise, the Goods and the owners thereof shall contribute with the Carrier in general average to the payment of any sacrifice, losses or expenses of a general average nature that may be made or incurred and shall pay salvage and special charges incurred in respect of the Goods. If a salving ship is owned or operated by the Carrier, salvage shall be paid for as fully and in the same manner as if such salving ship or ships belonged to strangers. Each Merchant shall be separately liable for the whole of the contribution of the Goods and the owners thereof under the foregoing provisions.

BOTH TO BLAME COLLISION If a Vessel comes into collision or contact with another ship as a result of the negligence of the other ship, and any act, neglect or default of the Master, mariner, pilot or the servants of the Carrier or of the owner of the Vessel in the navigation or in the management of the vessel each Merchant will be separately liable to pay to the Carrier or Where the Carrier is not the owner of the Vessel, to pay to

the Carrier (as trustee for itself and the owners or demise charterer of the Vessel) a sum sufficient to indemnify the Carrier and the owners or demise charterer of the Vessel against all loss or liability incurred directly or indirectly by the Carrier the Vessel and/or the owner or demise charterer thereof to the other or non-carrying ship or her owners insofar as such loss or liability represents loss of or damage to or any claim whatsoever of any Merchant paid or payable by the other non-carrying ship or her owners to such last mentioned Merchant and set-off, recouped or recovered by the other or non-carrying ship or her owners as part of any claim by them against the Carrier or the Vessel or owners or demise charterer thereof. The foregoing provisions shall also apply where the owners, operators or those in charge of any ship or ships or objects other than, or in addition to, the colliding ships or objects are at fault in respect of a collision or contract. MARKS, SWEEPINGS AND SEPARATION Each Container, package, piece or unit comprised in the Goods shall be clearly and durably marked or stamped in letters and numbers not less than five centimeters high, together the name of the Port of Discharge (Ocean Vessel) and such marks shall correspond with the particulars appearing on the front of this Bill of Lading and shall also in all respects comply with the laws and regulations in force at either the port or the place of delivery. Otherwise the Carrier shall not be liable for delay in or failure of delivery in accordance with marks. In no circumstances will the Carrier accept responsibility for delivery in accordance with other than leading marks. All goods and cargo which cannot be identified as to leading marks, goods out of or separated from their Containers or packages, cargo sweepings, liquid residue and any unclaimed goods and cargo not otherwise accounted for sale be allocated for completing delivery to the various consignees and deliveries of goods and cargo of like character. In proportion to any apparent shortage loss of weight or damage and such goods and cargo or parts thereof shall be accepted as good delivery. Loss of or damage to Goods in bulk without separation from other goods or cargo in bulk of like quality, shipped by either the same or another Merchant, shall be divided in proportion among the several shipments. If any bagged or baled Goods are discharged slack or torn the Merchant to whom delivery is made shall accept his proportion of the sweepings. The Carrier shall not be responsible for loss of weight in bags or bales torn, mended or with holes. NOTIFICATION AND DELIVERY

(1) The Carrier shall have a right to deliver Goods at any time from a Vessels side, Conveyance, craft, custom-house, warehouse, wharf, quay or other place or point designated by the Carrier at or in the vicinity of the place of delivery. (2) Any mention herein of parties to be notified of the arrival of Goods is solely for information of the Carrier and failure to give such notification shall not involve the Carrier in any liability nor relieve any Merchant of any obligation hereunder. (3) Delivery of Goods to a holder of this Bill of Lading duly presenting the same or another person assuming or entitled to possession of such Goods or this Bill of Lading or to an agent, servant, inland carrier or other designee of such holder or other person at the Carriers terminal or elsewhere designated by the Carrier at or in the vicinity of the place of delivery as provided in Clause 19(1) shall constitute complete and final discharge of the Carriers obligations here irresponsibility for and in respect of such Goods shall thereupon cease entirely. (4) If Goods are delivered to or taken into custody of customs or other government officials, such action shall constitute complete and final discharge of the Carriers obligations here under. (5) If Goods are not claimed immediately upon being made available by the Carrier at the place at which they are to be delivered hereunder, the Carrier shall not thereafter have any further responsibilities or liability in respect of those Goods. However, the Carrier shall be entitled to recover from the Merchant all storage charges becoming due under the Carriers applicable tariff in respect of any time for which such Goods may be held by the Carrier at such place for delivery and shall also be entitled at its absolute discretion, and subject to the Carriers lien, to store, sell by public auction or private treaty, abandon, or otherwise dispose of or deal with such Goods as it thinks fit at the sole risk at all times of the Merchant(s) owning and/or entitled to possession of such Goods. If any such Goods are delivered into store, storage costs shall be to the Merchants account and the Carrier shall be under no liability therefore but the Carrier shall be entitled to recover from any Merchant on demand any costs of such storage which it may elect to pay on the Merchants behalf. (6) If Goods have been packed or stowed into Container(s) by any Merchant(s) or any agent(s) servant(s) or consolidator(s) or inland carrier(s) on behalf of any Merchant(s), the Carrier shall not be required to separate or deliver according to brands, marks, number, size or type of articles or pieces contained in such Container(s) but only to deliver the total number of Container(s) shown on the face hereof.

(7) Optional delivery shall only be granted if arranged at the time of receipt of the Goods by the Carrier and expressly provided for herein and a Merchant entitled and desiring to avail himself of any option so arranged and provided for must exercise the same by notice in writing given to the Carrier or its agent at the first optional port or place of delivery named herein at least 48 hours prior to the arrival of the Goods thereat, otherwise the Goods may be landed at any of the optional ports or places of delivery at the Carriers option and the Carriers responsibility shall then cease. EXPENSES Each Merchant shall be severally liable for and to indemnify the Carrier and hold it harmless against all expenses for coopering, repairing, fumigation, repacking or reconditioning Goods, any payment, expense, fine, dues, toll, duty, tax or impost, loss damage, detention, demurrage or liability whatsoever nature sustained or incurred by or levied upon the Carrier in connection with Goods or because of failure by any Merchant to procure consular, Board of Health or other permits or any papers that may be required at any port or place in connection with Goods or to supply information or otherwise to comply with all laws and regulations in connection with Goods, or from any other act or omission of any Merchant, and also all proceedings of any description against Goods by third parties or any proceedings by way of interpleader or otherwise which the Carrier may bring to determine the right of ownership or possession in or to Goods and also any expenses or charges for regaining or attempting to regain possession of Goods. Each Merchant authorizes the Carrier to pay and/or incur all such charges, expenses and to do any matters mentioned above at his expense and as his agent and engage other persons to regain or seek to regain possession of Goods and do all things deemed advisable for the benefit of Goods. Every Merchant and the Goods shall be separately liable for the payment of any s ums due to the Carrier hereunder by any Merchant.

FREIGHT AND CHARGES (1) The freight payable hereunder has been calculated and based on particulars of the Goods furnished by or on behalf of the Shipper. The Carrier shall be entitled at any time to reweigh, remeasure or revalue Goods and for this purpose to open and remove and examine the contents of

any Container(s) and if particulars furnished are found to be incorrect, the freight shall be adjusted accordingly and the Shipper and every other Merchant shall be severally liable for and bound to pay to the Carrier all expenses incurred in examining, reweighing, remeasuring or revaluing the Goods together with the excess (if any) of the adjusted freight over the amount previously paid. (2) Freight shall be deemed earned on receipt of the Goods by the Carrier and shall be paid and retained by the Carrier under all circumstances whether any Goods, Vessel and/or Conveyance be lost or not lost. Full freight shall be paid on damaged or unsound Goods. (3) Except to the extent (if any) to which they are inconsistent with any of the express terms of this Bill of Lading, the provisions of the Carriers applicable tariff current at the time when the Goods were received by the Carrier for transportation and/or forwarding under this Bill of Lading which relate to freight contingencies, demurrage and charges payable in respect of the carriage covered hereby and matters associated herewith are incorporated into this Bill of Lading and form part of the contract contained or evidenced herein. Details of the relevant provisions of the applicable tariff may be obtained by any Merchant from the Carrier on request. LIEN The Carrier shall have a lien, which shall survive delivery, on all Goods and documents relating thereto for all freight and all charges and sums whatsoever payable by or chargeable to or for account of the Goods or any Merchant(s) under this Bill of Lading and for all costs of recovering such freight charges and sums (including costs of sale under right of sale hereinafter provided). For the purpose of such lien the Carrier shall have the right to sell Goods and documents by public auction or private treaty without notice to any of the Merchants. LIMITATIONS OF LIABILITY (1) All claims for which the Carrier may be liable shall be adjusted and settled on the basis of the Shippers net invoice cost plus freight and insurance premium paid, and in no event shall the Carrier be liable for delay or for loss of profit or consequential loss of any description, subject to any legislation applicable as provided in Condition 3 hereof. (2) Subject to any contrary provisions of the Hague Rules or of any legislation applicable as provided in Condition 3.

(a) the Carrier shall not under any circumstances whatsoever be liable for any loss or damage to or in connection with Goods in an amount exceeding Two hundred Australia dollars, or the equivalent of that amount in any other currency, for each Container, package, piece or unit of goods received hereunder by the Carrier as shown in the space marked *** on the front hereof unless a value of the Goods higher than this amount has been declared in writing by the Shipper before receipt of the Goods by the Carrier and expressly stated in this Bill of Lading and extra freight has been paid as required by the Carrier; and (b) if the actual value of any such Container, package, piece or unit exceeds any value so declared, the value shall nevertheless be deemed to be the declared value and the Carriers liability, if any, in respect thereof shall not exceed the declared value and any partial loss or damage shall be adjusted pro rata on the basis of such declared value, provided however that the Carrier shall not be liable or responsibility in any event to pay any compensation for loss or damage to or in connection with Goods if a declared value thereof is shown herein which has been knowingly mis-stated by the Shipper. Where Goods have been packed or stowed into Container(s) by or on behalf of any Merchant(s) it is expressly agreed that the number of Container(s) shown on the face hereof shall be considered as the number of packages, pieces or units for the purpose of application of limitation of liability under the Hague Rules legislation applicable as aforesaid, a nd/or the provisions of this Bill of Lading. This condition applies in addition to and shall not be construed as derogating from any defence or exclusion, restriction or limitation of liability available to the Carrier under the terms of this Bill of Lading or otherwise. PERIOD OF CLAIMS Subject to the Hague Rules, any claim by any Merchant in respect of loss or damage against the Carrier must be notified in writing to the Carrier within seven days from the delivery of the Goods or the date when the Goods should have been delivered and any claim not so notified shall be deemed to be waived and absolutely barred. Further all liability whatsoever of the Carrier shall in any event cease unless suit is bought within one year after delivery of the Goods or the date when the Goods should have been delivered. ON BOARD ENDORSEMENT

The words Shipped on Board appearing on the front hereof have no force or effect, and shall not be construed as an acknowledgment or endorsement by or on behalf of the Carrier, unless they are or have been dated and signed by a person duly authorized by the Carrier in that behalf. Where the said words are so dated and signed they shall stand as an acknowledgment on behalf of the Carrier of the Goods having been received on board a Vessel on the date shown, upon and subject always to all of the terms and conditions appearing on the front and back hereof. TIMBER Any statement hereon that timber has been shipped in apparent good order and condition does not involve any admission by the Carrier as to the absence of stains, warps, shakes, splits, holes or broken pieces, and this clause shall be deemed to constitute express notice to all persons taking delivery of the terms of this Bill of Lading that such timber does o r may contain pieces so affected.

Lesson 11 SHIPMANAGEMENT AND THE ISM CODE

Managing your asset Websters New World Dictionary defines the word manage as to succeed in accomplishing. People who aim at succeeding in achieving their business goals must manage their assets for growth for which good, effective management is the key. Management in different types of industry faces different strategic, organizational and operational problem, even in the same industry it occurs. Many businesses involve the movement of goods from one place to another and shipping plays an important role in transporting, as ships provide relatively inexpensive means of transportation when commodities need to be carried across expanses of water. Ship-owners and operators are also business persons and their aims are in all probability, profit for themselves and their shareholders. This should not be at the expense of safety and environmental pollution and senior management should wish to consider whether their first priority should be the generation of profit or the reduction of wastage. Good ship management, vital to safe, efficient and profitable ship operations, comprises two main elements, namely, technical management and crew management. Technical management is the element that ensures that the ship is maintained for optimum performance with minimum breakdowns and delays and includes maintaining the ship in accordance with applicable requirements, such as flag State legislation, international conventions and classification rules. Crew management involves employment of crew in accordance with applicable national rules, international rules, regulations and codes. The crew of a ship contributes towards technical management in that they are responsible for ship maintenance, cargo operations and safe navigation. Basic concept of the ship management is very similar for most ship types. Ships, however, operate under wide range of conditions. The cargo carried, the trade in which the ship is engaged and the background of the crew all have effect on ship management and consequently, management styles vary with the Company. In todays highly competitive markets, shipping companies need efficient and cost effective ways of operation. Safe, pollution-free and efficient operations are essential to good ship management and profits may be increased by reducing accidents, stoppages and wastage through adopting and implementing a structured management system that focuses on safety and environmental-protection. If the system is to work and the goal for growth is to be achieved, the Company should have a structured and sound policy and employ personnel with a combination of the right skills, knowledge and experience. The direct involvement of decision-making in these matters is vital, its attitude being reflected in the Company policy and thus directly in the work of all the Company employees.

The maritime community at the beginning has introduced the culture of compliance by setting up rules, regulations, guidelines and codes relating to the construction of ships and the equipment to be carried onboard from the angles of engineering and human technology views. It is not fortunate enough to reduce the accidents, as analysis shows that 80% of the accidents are caused by human error and 75% out of human related accidents are lack of or poor management. To improve the safety standard the maritime community has recognized that the quality assurance as a good system for preventing the problems and quality management as the method by which it is carried out to achieve the goal. The community has introduced the new approach, which can be named as the culture of selfregulation. The culture of self-regulation is the one that goes beyond the setting the externally imposed compliance as before. It concentrates on the internal commitment/management and organisation for safety and encourages individual industries and companies to establish targets for safety and protection of environment especially the marine environment. The process has emphasized the need for the company and individual to be responsible for the actions taken to improve the safety, rather than seeing them imposed from outside, which requires the development of company specific safety management system. The process is to mean that the safety is organised by those who are directly affected by the implications of failure. The most important element of the good management is the commitment from the top. The preamble of the ISM Code states:The cornerstone of a good management is commitment from the top. In matters of safety and pollution prevention it is the commitment, competence, attitudes and motivation of individuals at all levels that determines the end result. Operational costs and manning risks in ship owning and management The operational costs in general consist of dydocking, maintenance, spares, repairs, services etc., which these costs are for compliance with the national and international conventions. Some of which may misinterpret this cost to extra expenditure, in reality these are the investments in asset maintenance. Investment in asset maintenance is that maintaining the assets value and market attractiveness during the assets commercial life. The most important means of preventing maritime casualties and pollution of the seas from the ships is to design, construct, equip and maintain ships and to operate with properly trained seafarers in compliance with international conventions and standards relating to maritime safety and pollution prevention such as:1 International Convention for the Safety of Life at Sea (SOLAS);

2 International Convention for the Prevention of Pollution from Ships (MARPOL); 3 International Convention on Load Lines (LL); 4 Convention on the International Regulations for Preventing Collisions at Sea (COLREG); 5 International Convention on Standards of Training, Certification and Watch-keeping for Seafarers (STCW); 6 ILO Convention 147 {Merchant Shipping (Minimum Standards) Convention}. The shortage of the qualified seafarers and the inexperienced seafarers entering the industry has caused the manning risk in the ship management sector. The shortage of qualified seafarers is caused by the seafarers for the traditional maritime countries become expensive and they feel that the profession becomes less attractive. The closing down of the maritime institutions in the traditional maritime countries is another factor of shortage. To solve the problem of the inexperienced seafarers employment International Maritime Organisation has adopted the International Convention on Standards of Training, Certification and Watch-keeping for Seafarers, 1978 (STCW). International Convention on Standards of Training, Certification and Watch-keeping for Seafarers, 1978 (STCW) as amended 1995 lays down training, certification and qualification requirements for Officers (Deck, Engine and Radio) and ratings forming part of a watch (Deck and Engine) in the Seafarers Training and Watch-keeping (STCW) Code. The Code is in two parts. Part A containing mandatory standards and part B containing guidance on the implementation interpretation, application and enforcement of the Convention. All such seafarers are required to have a certificate, endorsed in a uniform manner. It is also specifies basic principles to be observed in keeping deck and engine watches and special qualification requirements for personnel on oil, chemical and liquefied gas tankers. IMO resolution A.890 (21) and A.955 (23) (on principles of safe manning) recommended that all Administrations provide each of their registered ships with a document specifying the minimum number and grades of qualified seafaring personnel required to be carried from the safety standpoint. It gives basic principles and detailed guidance to be observed by Administrations when assessing the safe manning of ships. ILO Convention 147 {Merchant Shipping (Minimum Standards) Convention 1976} requires the Administrations to have effective legislation on safe manning standards, hours of work, seafarers competency, and social security. It also sets employment standards equivalent to those contained in a range of ILO instruments (covering e.g. minimum age, medical care and examination, social security, training).

Complying with the ISM Code The International Management Code for the Safe Operation of Ships and for Pollution Prevention {International Safety Management (ISM)Code} was adopted as Resolution A741(18) by the International Maritime Organisation (IMO) in order to provide an international standard for the safe management and operation of ships and for pollution prevention. At the SOLAS Conference of IMO held in May 1994, the Code was formally incorporated in Chapter IX of the International Convention for the Safety of Life at Sea (SOLAS). ISM Code has been developed by IMO in response to the pressure applied by society in general as a result of loss of life and environmental pollution associated with reported accidents. ISM Code was amended by MSC Resolution 104(73). The requirement of the ISM Code has come into force for the following vessel since 1 July 1998:1 passenger ships including high speed passenger craft; 2 oil tankers; 3 chemical tankers; 4 gas carriers; 5 bulk carriers; and 6 High speed cargo craft of 500 gross tonnage and over. The requirements of the ISM Code will become mandatory to the following vessels by 1 July 2002:1 other cargo ships of 500 gross tonnage and over; and 2 mobile off-shore drilling units (MODU) of 500 gross tonnage and over. When the ISM Code is in force, all affected ships and the companies (offices) that control them must have appropriate ISM Certification, that is, Document of Compliance (DOC) for companies (offices) and Safety Management Certificate (SMC) for ships. A good Safety Management System can not be taken place overnight or without any costs. ISM Code is mandatory, without it the Company can not operate the shipping, taking an advantage of it, effective implementation can convert the costs into investments, as investments in achieving safety, pollution prevention, less claims, less breakdowns and of course accident free operation. The benefits of a good safety management system are many and include: 1 compliance with national and international requirements; 2 motivated personnel who works towards the establishment in the Company of a system that reduces loss of life, property and protection of the environment especially the marine environment; 3 increase of profits through reduced losses and claims;

4 favourable insurance terms; 5 planned and controlled operations; and 6 controlled management of assets for growth. Wishing all the ship owners and ship managers in achieving the IMOs aim Safer shipping and cleaner oceans through the effective implementation of the ISM Code.