The Gazette 1991

GAZETTE

JANUARY/FEBRUARY 1991

obtains only special property in the

goods, general property passing

directly to the buyer once the docu-

ments are forwarded to the bank by

the seller:

Sewe/I -v- Burdick.

Therefore banks dealing in

commercial credits are unable to

rely on Section 1 of the Bills of

Lading Act 1855 to ground an

action against a carrier.

The requirement as t o a Bill of

Lading

Section 1 of the Bills of Lading Act

1855 is restricted to transactions

involving a bill of lading and no

other document will suffice such as

a ship's delivery order. In particular

this would be the case where part

of a bulk was being purchased,

where the purchaser will at best

have a delivery order and some-

times no documents at all.

Con t r ac ts imp l i ed at c ommon

l aw

Parties not covered by Section 1 of

the Bills of Lading Act 1855 must

rely on the common law to imply a

contractual relationship between

the carrier and themselves. This

implication will arise where a bill of

lading or ship's delivery order is

presented and the goods are

delivered on foot of it. The implica-

tion is that there is a contract on

the terms contained in the docu-

ment, be it a bill of lading or a ship's

delivery order.

The leading case in this area is

Brandt -v- Liverpool, Brazil & River

Plate S.N.

In that case goods

were shipped damaged but the

shipowner nevertheless issued a bill

of lading stating that they were

shipped in apparent good order and

condition. Subsequently, the cargo

had to be unloaded

and

reconditioned, at a cost of £748

and reshipped on another vessel,

being f o rwa r ded late to its

destinatiaon. The bill of lading was

indorsed in favour of the plaintiff

pledgee (a bank), who advanced

money on it in good faith. When the

second vessel arrived at its

destination, the indorsees pre-

sented the bill of lading, paid the

freight and, under protest, the sum

of £748, which the shipowners

demanded, and took delivery of the

cargo. The indorsee bank sued the

shipowners for damages due to

delay (the general value of the

cargo having fallen) and repayment

of the £748. It was held that while

they had no grounds under Section

1 of the Bills of Lading Act 1855,

the acts of presenting the bill of

lading, payment of freight and the

delivery of the cargo, gave rise to

an implied contract between the

indorsee and the shipowners.

While the point has not been

judically considered in Ireland,

con t r ac ts have been implied

between parties originally outside

the bargain (see

Fox -v- Higgins

)

and there is no apparent reason

why the doctrine in

Brandt -v-

Liverpool

would not be followed.

In all the cases in which the

doctrine has been successfully

relied on by a receiver of a cargo,

he has paid the freight or de-

murrage and this is the considera-

tion for the implied contract.

However, the consideration for the

implied contract need not be of a

financial nature. The mere pre-

sentation of the bill of lading can be

sufficient consideration for the new

con t r ac t

2 0

since its delivery

relieves the carrier from further

obligations regarding the goods and

therefore confers an advantage on

him and amounts to good con-

sideration. Irish courts would

accept this proposition provided

the consideration was sufficient. In

Kennedy -v- Kennedy,

Ellis J

summarised the position in the

following terms:

"once there is consideration, its

adequacy . . . is irrelevant to its

validity and enforceability"

The doctrine in

Brandt -v-

Liverpool

does not depend on the

transfer of the bill of lading, or on

the passing of property, and so

avoids the difficulties inherent in

bulk consignments.

In the case of

Peter Cremer,

Westfaelische Central SA; The Dona

Man

it was held that the fact that

property did not pass would not

prevent the principle in

Brandt -v-

Liverpool

from operating and that a

contract will be implied where the

purchaser presents a ship's delivery

order and not a bill of lading. How-

ever, if the delivery order is not

issued by the shipowner no contract

will be implied.

Where, as in

Brandt -v- Liverpool

the damage occurs before ship-

ment, the basis of the shipowner's

liability is that he is estopped from

so pleading, because he has issued

a clean bill of lading. Since the

statements in the bill of lading or

ship's delivery orders are not con-

O F F I C E S TO L E T

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tractual promises by the carrier

is essential that an indorsee relies

to his detriment on such repre-

sentations in order to bind the

carrier in estoppel. The absence of

reliance is fatal.

The necessity of

reliance in the doctrine of estoppel

is established in Irish case law (see

for example

McCambridge

-v-

Winters

The doctrine in

Brandt -v-

Liverpool

is, however, subject to

certain limitations. Firstly the

contract is implied on delivery of

the cargo so obviously it has no

application where goods are totally

lost at sea and, secondly, the

principle does not operate where

the documents are not issued by

the ship's owners.

Terms of Imp l i ed con t r ec ts bet-

ween buyer and carrier

Where a con t r act is implied

between a purchaser and the

carrier the terms are those set out

in the bill of lading or delivery order.

This is not the case between the

shipper and the carrier, since in that

case the terms will be contained in

the contract of carriage which will

have been negotiated prior to

loading. Thus, where the bill of

lading or the delivery order do not

contain the same terms as the

contract of carriage, the bill of

lading or the delivery order will

prevail as the terms of the implied

contract.

A difficulty arises where an

indorsee of the bill of lading is also

the charterer of the ship. The

problem that arises in such a

situation is which contract is to

prevail, the charterparty contract or

the bill of lading contract. Since the

charterparty will invariably have

been made before the bill of lading

is indorsed to the charterer it is

logical that it should prevail in this

instance.

This will not be the

case, however, with subsequent

purchasers as they will not have

been party to the original contract

and will not normally have notice of

its terms

and therefore these

terms would not form part of the

contract.