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Affreightment Bills Of Lading And Insurance Outline

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Affreightment, Bills of Lading and Insurance


Rules for any mode of transportation
Rules of transportation at sea
(or inland waterways)
FAS (port of departure)

Free Alongside

FOB (port of departure) Free On Board
CFR (port of destination) Cost and
CIF (port of destination)

Cost, Insurance
and Freight

EXW (place of delivery)

Ex Works

FCA (port of shipment)

Free Carrier

CPT (place of

Carriage Paid To

CIP (place of destination) Carriage and
Insurance Paid To
DAT (terminal at port or
place of destination)

Delivered At

DAP (place of

Delivered At

DDP (place of

Delivered Duty

a. Carrier Basics
i. Common Carrier: holds itself out to the general public as
engaged in the business of transportation
1. E.g., Fedex, Amtrak

ii. Contract Carrier: provides transportation services only for
certain clients, can refuse to serve certain clients [called public
carrier in the UK!]
iii. Private Carrier: provides transportation just for the particular
instance but their regular business is something else.
b. Moving Goods From Seller to Buyer:

Moving Goods fromSeller to Buyer

Seller (shipper)




c. Governing Law: Air
i. Convention for the Unification of Certain Rules for
International Carriage by Air (Montreal Convention)
1. Entered into force 2003
2. Liability limit: 17 SDR per kilogram (unless shipper
declares actual value of the good)
3. Defenses of carrier:
a. Inherent defect of cargo
b. Defective packaging
c. Act of war
d. Act of public authorities…
d. Governing Law
i. Sea
1. Domestic law
a. US:
i. Jones Act
ii. US Shipping Act of 1984 (for NVOCC
and VOCC)
iii. Carriage of Goods by Sea Act
(COGSA): liability limit of $500 per
1. COGSA may be applicable to a
more than just transport by sea

where its application is chosen in
a clause paramount (choice of
law clause). See, e.g., Fruit of
the Loom (TWEN).
2. COGSA Provisions:
§ 1301 Definitions.
When used in this chapter -(a) The term "carrier" includes the owner or the charterer who enters into a contract of
carriage with a shipper.
(b) The term "contract of carriage" applies only to contracts of carriage covered by a
bill of lading or any similar document of title, insofar as such document relates to the
carriage of goods by sea, including any bill of lading or any similar document as
aforesaid issued under or pursuant to a charter party from the moment at which such
bill of lading or similar document of title regulates the relations between a carrier and
a holder of the same.
(c) The term "goods" includes goods, wares, merchandise, and articles of every kind
whatsoever, except live animals and cargo which by the contract of carriage is stated
as being carried on deck and is so carried.
(d) The term "ship" means any vessel used for the carriage goods by sea.
(e) The term "carriage of goods" covers the period from the time when the goods are
loaded on to the time when they are discharged from the ship.
§ 1302 Duties and rights of carrier.
Subject to the provisions of section 1306 of this title, under every contract of carriage
of goods by sea, the carrier in relation to the loading, handling, stowage, carriage,
custody, care, and discharge of such goods, shall be subject to the responsibilities and
liabilities and entitled to the rights and immunities set forth in sections 1303 and 1304
of this title.
§ 1303 Responsibilities of carrier and ship.
[1] Seaworthiness.
The carrier shall be bound, before and at the beginning of the voyage, to exercise due
diligence to:
(a) Make the ship seaworthy;
(b) Properly man, equip, and supply the ship;
(c) Make the holds, refrigerating and cooling chambers, and all other parts of the ship
in which goods are carried, fit and safe for their reception, carriage, and preservation.
The carrier shall properly and carefully load, handle, stow, carry, keep, care for, and
discharge the goods carried.
[3] Contents of bill.
After receiving the goods into his charge the carrier, or the master or agent of the
carrier, shall, on demand of the shipper, issue to the shipper a bill of lading showing
among other things :

(a) The leading marks necessary for identification of the goods as the same are
furnished in writing by the shipper before the loading of such goods starts, provided
such marks are stamped or otherwise shown clearly upon the goods if uncovered, or
on the cases or coverings in which such goods are contained, in such a manner as
should ordinarily remain legible until the end of the voyage.
(b) Either the number of packages or pieces, or the quantity or weight, as the case may
be, as furnished in writing by the shipper.
(c) The apparent order and condition of the goods: Provided that no carrier, master, or
agent of the carrier, shall be bound to state or show in the bill of lading any marks,
number, quantity, or weight which he has reasonable ground for suspecting not
accurately to represent the goods actually received, or which he has had no reasonable
means of checking. [This is how COGSA treats the situation in Distribuidora
Internacional Alimentos v. Amcar Forwarding, Inc. (CB 214).]
[4] Bill as prima facie evidence.
Such a bill of lading shall be prima facie evidence of the receipt by the carrier of the
goods as therein described in accordance with paragraphs (3)(a), (b), and (c), of this
section: Provided, That nothing in this chapter shall be construed as repealing or
limiting the application of any part of sections 81 to 124 of Title 49. [COGSA will
defer to Federal Bill of Lading Act where there is a conflict.]
[5] Guaranty of statements.
The shipper shall be deemed to have guaranteed to the carrier the accuracy at the time
of shipment of the marks, number, quantity, and weight, as furnished by him; and the
shipper shall indemnify the carrier against all loss, damages, and expenses arising or
resulting from inaccuracies in such particulars. The right of the carrier to such
indemnity shall in no way limit his responsibility and liability under the contract of
carriage to any person other than the shipper.
[6] Notice of loss or damage; limitation of actions.
Unless notice of loss or damage and the general nature of such loss or damage be
given in writing to the carrier or his agent at the port of discharge before or at the time
of the removal of the goods into the custody of the person entitled to delivery thereof
under the contract of carriage, such removal shall be prima facie evidence of the
delivery by the carrier of the goods as described in the bill of lading. If the loss or
damage is not apparent, the notice must be given within three days of the delivery.
Said notice of loss or damage may be endorsed upon the receipt for the goods given
by the person taking delivery thereof.
The notice in writing need not be given if the state of the goods has at the time of their
receipt been the subject of joint survey or inspection.
In any event the carrier and the ship shall be discharged from all liability in respect of
loss or damage unless suit is brought within one year after delivery of the goods or the
date when the goods should have been delivered: Provided, That if a notice of loss or
damage, either apparent or concealed, is not given as provided for in this section, that
fact shall not affect or prejudice the right of the shipper to bring suit within one year
after the delivery of the goods or the date when the goods should have been delivered.

In the case of any actual or apprehended loss or damage the carrier and the receiver
shall give all reasonable facilities to each other for inspecting and tallying the goods.
[7] "Shipped" bill of lading.
After the goods are loaded the bill of lading to be issued by the carrier, master, or
agent of the carrier to the shipper shall, if the shipper so demands, be a "shipped" bill
of lading: Provided, That if the shipper shall have previously taken up any document
of title to such goods, he shall surrender the same as against the issue of the "shipped"
bill of lading, but at the option of the carrier such document of title may be noted at
the port of shipment by the carrier, master, or agent with the name or names of the
ship or ships upon which the goods have been shipped and the date or dates of
shipment, and when so noted the same shall for the purpose of this section be deemed
to constitute a "shipped" bill of lading.
[8] Limitation of liability for negligence.
Any clause, covenant, or agreement in a contract of carriage relieving the carrier or
the ship from liability for loss or damage to or in connection with the goods, arising
from negligence, fault, or failure in the duties and obligations provided in this section,
or lessening such liability otherwise than as provided in this chapter, shall be null and
void and of no effect. A benefit of insurance in favor of the carrier, or similar clause,
shall be deemed to be a clause relieving the carrier from liability.
§ 1304 Rights and immunities of carrier and ship.
[l] Unseaworthiness.
Neither the carrier nor the ship shall be liable for loss or damage arising or resulting
from unseaworthiness unless caused by want of due diligence on the part of the carrier
to make the ship seaworthy, and to secure that the ship is properly manned, equipped,
and supplied, and to make the holds, refrigerating and cool chambers, and all other
parts of the ship in which goods are carried fit and safe for their reception, carriage,
and preservation in accordance with the provisions of paragraph (1) of section 1303 of
this title. Whenever loss or damage has resulted from unseaworthiness, the burden of
proving the exercise of due diligence shall be on the carrier or other persons claiming
exemption under this section.
[2] Uncontrollable causes of loss.
Neither the carrier nor the ship shall be responsible for loss or damage arising or
resulting from:
(a) Act, neglect, or default of the master, mariner, pilot, or the servants of the carrier in
the navigation or in the management of the ship;
(b) Fire, unless caused by the actual fault or privily of the carrier;
(c) Perils, dangers, and accidents of the sea or other navigate] waters;
(d) Act of God;
(e) Act of war;
(f) Act of public enemies;
(g) Arrest or restraint of princes, rulers, or people, or seizur under legal process;
(h) Quarantine restrictions

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