Ponting has to transport goods and load onto the nominated vessel so therefore Vaughn must nominate vessel and inform the seller which that can conform to duty immediately. Problems associated within the substitution of the Hurricane is that if the substitution can be made in terms of contract. If the substitution is allowed it would be argued on who’s responsibilities for the extra cost incurred. The seller (Ponting) would argue that they are not liable for the vessel (HURRICANE) colliding with a tanker outside the port, as the goods were ready to load as planned. The seller can also say the buyer is to blame due to the condition of the vessel in question.
The seller can claim that seaworthiness comprises two equally important aspects. Firstly, the ship must be structurally fit, properly manned, equipped, bunkered and fitted out to face what can likely to be encountered on the agreed voyage. Secondly the ship must be suitable for the carriage of the agreed cargo to its destination (i.e. the ship is ‘cargo-worthy’).
The first part of the obligation includes an obligation to ensure that the vessel is not only in adequate physical condition for the voyage but that is has competent crew, adequate stores of fuel and all the necessary legal documents for the cargo, vessel and crew which will be needed for the successful prosecution of the contractual voyage.
The second part of the obligation requires that the carrier must be sure that the vessel is in a fit state to receive the cargo intended to be carried under the contract. For instance, in Cargo per Maori King v. Hughes [1895] the cargo to be shipped was a consignment of frozen meat. The vessel in which it was to be shipped had a defect in its refrigeration system. Its was held that the vessel was not in a fit state to carry the particular cargo contemplated by the contract, hence the carrier had not complied with his obligation to provide a vessel that was seaworthy.
In the other hand the buyer (Vaughan) could argue that the vessel (HURRICANE) colliding with a tanker is no fault of theirs. Vaughan can say it’s the responsibility of the carrier which owns the vessel. The carrier could try to use the article IV of the act “neglect or default of master, mariner, pilot, or the servants of the carrier in the navigation or management of the ship”. Could be considering as a negligence of the ship owner. This is only possible when the provision refers to the act. If we look on “Carrier’s carriage by sea”, they say that the negligence by a ship owner will usually but not necessarily be in connection with unseaworthness.
In this scenario the difficulty that arises is the replacement by the JOLLY ROGER
What of Insurance Cover, Fleming would have notified insurers of the change, if he had he known bout it, pointing should have made enquiries into the change, If no, would there be any claim for damages for the buyers loss
In the law of contract, any breach of condition by the seller (Ponting) (unless so small it would not be a breach by virtue) gives the buyer (Vaughan) the right to reject the goods and to treat the contract as repudiated by the seller. This remains the position for a buyer who 'deals as a consumer.' However, for non-consumer buyers, new S15A in the Sale of Goods Act provides that if a breach of a term in S13,14 or 15 is 'so slight that it would be unreasonable for them to reject them, the breach is not to be treated as a breach of condition but may be treated as a breach of warranty.' This is the position unless a contrary intention appears in, or is to be implied from, the contract. A 'contrary intention' inserted by the buyer would not be subject to the Unfair Contract Terms Act 1977. The new provision applies only to breaches of certain conditions, namely that the seller should deliver the correct contract quantity and fulfils the conditions in S13,14 and 15 of the Sale of Goods Act.
The new S15A in certain cases takes away from the non-consumer buyer the right to terminate a contract for breach of condition. The continuance of strict rejection rights in consumer cases will encourage a seller to cure a defective tender when faced with a buyer willing to keep the goods or accept a replacement. However, it may equally be said that the undermining of strict rejection rights in s15A will encourage buyers to be reasonable in accepting an offer of cure. Section 15A is confined to the implied terms in sections 13-15 of the Sale of Goods Act and should not overrule those authorities that state that the time of delivery in contracts is normally the essence of the contract.
Looking at the effect of Bunge v Tradec 1981 were Lord Denning gave interesting arguments in this case. It outlines that if there is no fixed period then must look at reasonable time.
Looking at Ponting and Fleming, were the nomination of vessel was made by Fleming which an insurance cover was taken out on the nominated vessel. The owner of the ship then informed Ponting of a substitution of vessel with a different one. After loading goods on to vessel, the ship set off. After a week the vessel (which was substituted) sank and Fleming insurers do not tend to meet his claim on the insurance policy.
In this case it was held that the warranty given by the carrier that the vessel was a seaworthy one was a warranty only as to the condition of the vessel at the particular time of sailing. It was not a “continuing” warranty whereby the vessel had to continue to be seaworthy throughout the duration of the voyage. However the carrier changed the vessel without informing Fleming about the current change.
The definition of seaworthiness under English Law is the section 39 of the Marine Insurance Act 1906, which states:
“Warranty of seaworthiness of a ship:
- In a voyage policy there is an implied warranty that at the commencement of the voyage the ship shall be seaworthy for the purpose of the particular adventure insured......
- A ship is deemed to be seaworthy when she is reasonably fit in all respects to
encounter the ordinary perils of the seas of the adventure insured.
- In a time policy there is no implied warranty that the ship shall be seaworthy
at any stage of the adventure, but where, with the privity of the assured, the ship is ent to sea in an unseaworthy state, the insurer is not liable for any loss attributeable to unseaworthiness.”
Section 39 makes it clear that if the vessel is sent to sea when “the assured” knows that it is unseaworthy, insurers will not be liable for any loss attributable to the unseaworthiness.
What does an unseaworthy state mean? And who is “the assured” ? Both questions were argued in this case. The case had been the subject of a constructive total loss as a result of the ship sinking due to vessel running into difficulties. Which shows the wrong vessel was selected by carrier and its therefore unseaworthy. The assured may have been negligent, but it was not enough to defeat the claim.
However, if one attempts to define who the assured is, it could include two parties who should have the full knowledge of the condition of the vessel. If the vessel declared to be unseaworthy when it was sent to sea, that could make “the assured” “privy” to the unseaworthiness.
In one case, Frangos v. Sun Insurance Office, the fact of the unseaworthiness of the vessel was held to be inconsequential because perils of the sea was held to have proximately caused the loss. This decision is contrary to the later case reached upon by the House of Lords in Monarch Steamship v. Karlshams Oljefabriker, where a vessel, which was delayed by reason of the unseaworthy condition was subsequently caught by a British Government restraint, was a loss caused by unseaworthiness.
The test to determine to see whether a particular loss was caused by perils of the sea or the unfit and unseaworthy condition of the vessel was introduced in the case of Merchants’ Trading Co. v. The Universal Marine Insurance Co. This case was tried on the fact “whether the leak was attributable to injury and violence from without or to weakness from within?” The case was decided in favour of the insurer as the vessel was lying quietly at anchor and was unable to keep it afloat in still water. The court was left with no alternative but to hold that the unfit condition of the ship was the cause of the loss.
Although the question of a vessel's seaworthiness is not in dispute in voyage policies, the situation would be different when some fortuitous happenings take place within the vessel during the journey. These fortuitous happenings, if consequently renders its unseaworthy thus allowing seawater to enter resulting in a loss, such a loss is undoubtedly a peril of the sea. Even though the action of the water is inevitable by that occurrence and the weather remains calm.
If the vessel is not maintained in a seaworthy condition, even if the assured made all reasonable efforts to maintain it, then insurers would be able to reject any claim made by the assured under the policy, as the assured would be in breach of warranty and insurers would have been off risk since the date of breach. In any event under this policy any claim that was caused by the unseaworthy condition of the vessel would be excluded.
The documentary credit system in the international trade transactions as a method of payment is particularly useful where when the goods of seller who entered into a sales contract with an overseas buyer, will want to be sure that he will received the contract price for shipped goods, and the buyer on the other hand must pay the contract price until the seller has complied with his contractual obligations.
The general procedure is that the bank (the issuing bank, Vanilla Bank) undertakes the payment made to the beneficiary the seller (REM company) only the presentation of the documents(including the invoice, the bill of lading, the insurance policy etc) by the seller are accordance with the terms of letter of credit which has already been opened by the applicant(the buyer) in time.
Letters of Credit are generally governed by the Uniform Customs and Practice for Documentary Credits( hereafter referred to as the UCP 500), which is a body of articles regulating the implementation and operation of the documentary credit issued by the International Chamber of Commerce. When the terms of the UCP 500 are incorporated into a documentary credit, the parties’ respective rights and duties are regulated by its terms. The rules do not apply under English law unless expressly incorporated by the parties to the credit.
A standby credit is a special type of letters of credit activated by the tender of documents in accordance with the terms of the credit. In short to say that a standby credit is a form of guarantee for the beneficiary’s protection in case of default of the other party to the underlying contract. The standby credit is subject to the UCP 500 in the international trade transaction.
The credits (including a standby credit) are separate from and independent of the underlying contract of sale between the Applicants(the buyer/seller)and the Beneficiaries(the seller/buyer).Thus, the applicant is not entitled to prevent payment for the beneficiary under the letter of credits.
In this case when the seller tenders the documents to the bank, the bank must examine all documents with reasonable care to determine whether or not they conform with the credit(s).The bank also undertakes to look for the correct documents which are consistency between all the documents and that the content of each document is correct. There are two bills of lading that are issued between the (carrier) and (shipper) in this case. This document has three functions: a receipt for goods shipped; evidence of the contract of carriage; a document of title.
The contract between the shipper of goods and the carrier of which the bill of lading is evidence will be governed Rules that have been incorporated into the law by the Carriage of Goods by Sea Act 1971. The Rules will only apply to contracts of carriage “covered by a bill of lading or a similar document of title” where the bill of lading or that document of title regulates the relations between the shipper and the carrier.
So there fore the strict compliance affects banks rights and duties; however the bank pays as long as the terms of credit are satisfied. Documents non/conforming fraud and non compliance with instructions to the bank – breach of made at authority given by buyer. 1000 bales of silk opposed to 100 bales of Haipaing Silk. Looking at Bank Melli Iran v Barclays internation (1951) were no expertise was shown.
Forgery and the burdern of proof was not shown, however there were some sort of suspicion. Buyer may refuse to pay credit where fraud has evident and the bank pays against the forgeries e.g. the GAIN Singh v Banque De L’Indochine (1974) case.
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