Law of Carriage of Goods

Definition of o Contract of Carriage and Classification of Carriers :

In the commercial life of any country, the need for carrying goods from one place to another cannot be overemphasised. Also, goods are to be moved from one country to another. For these purposes, a contract of carriage is to be entered into. The persons, organisations or associations which carry goods are known as carriers. Goods may be carried by land (including inland waterways), sea or air. Accordingly, the law relating to carrying of goods is contained in the following enactments:

1. In case of carriage of goods by land: (i) The Carriers Act, 1865. (ii) The Railways Act, 1989. 2. In case of carriage of goods by sea: (i) The (Indian) Bills of Landing Act, 1856. (ii) The Carriage of Goods by Sea Act, 1925. (iii) The Merchant Shipping Act, 1958. (iv) The Marine Insurance Act, 1963. 3. In the case of carriage of goods by air: The Carriage by Air Act, 1972.

Wherever there is no specific provision for a particular matter in these statutes, then the Indian Courts resort to English Common Law.

Definition of a Contract of Carriage. A contract of carriage of goods is a contract of bailment for reward, or locatio operis faciends. However, the contract of bailment is modified by the different statutes mentioned above in the case of carriage of goods by land, sea or air.

Classification of Carriers. Generally speaking carriers are classified into (i) common carriers, (ii) private carriers and (iii) gratuitous carriers.

Common Carriers. The Carriers Act, 1865 defines a common carrier as any individual, firm or company (other than the government, who or which transports goods as a business, for money, from place to place, over land or inland waterways, for all persons (consignors) without any discrimination between them. A carrier must carry goods of the consignor for hire and not free of charge in order to be called a common carrier. Further, he must be engaged in the business of carrying goods for

others for money from one place to another. A person who carries goods occasionally or free of charge is not a common carrier. Furthermore he is bound to carry goods for all persons (consignors) without any discrimination provided:

(i) the freight chargeable by him is paid to him; (ii) there is accommodation on his conveyance; and (iii) there is nothing objectionable or illegal about the carrying of goods of a particular consignor.

If, in spite of the above conditions being satisfied, a carrier reserves to himself the right to accept or reject an offer, he is not a common carrier. It is worth noting that the Carriers Act, 1865 covers only common carriers of goods and not passengers.

Private Carriers A private carrier is one who does not transport goods from one place to another regularly; he may engage in some casual jobs of carrying goods for certain selected persons between certain terminals. In fact, he carries his own goods and thats why he is known as a private carrier and not a common carrier. Also, he does not make a general offer to carry goods for any one from one place to another for hire. However, he may enter into a contract with someone to carry goods on the terms agreed upon between them. In such a situation, it is a contract of bailment. Therefore, such transactions are not covered by the Common Carriers Act, 1865.

Gratuitous Carrier. When a person carries goods of another free of charge, he is a gratuitous carrier. Similarly a person may give lift in his transport to another person voluntarily without any compensation. Thus a gratuitous carrier may carry not only goods but persons also free of charge.

Responsibility of Common Carrier and Bailee. We know that a bailee is responsible only when the goods entrusted to him are lost or damaged due to his fault or negligence. But the responsibility of a common carrier is more onerous; he is to deliver the goods safely. Therefore, in the case of a common carrier, it is immaterial whether the loss or damage to the goods is due to his or someone elses negligence.

Distinction between a Common Carrier and a Private Carrier.

The distinction between the two is as follows: (i) A common carrier publicly undertakes to carry from place to place the goods of

any person who chooses to employ him. A private carrier does not carry regularly from place to place but is an occasional carrier. (ii) A common carrier is bound to carry the goods of any person provided certain conditions are satisfied. A private carrier is free to accept or reject the goods for carriage. (iii) The liabilities of a common carrier are determined by the Common Carriers Act, 1865. A private carriers liability is not determined by the Common Carriers Act, 1865. He is liable as a bailee as given in the Indian Contract Act, 1872.

Carriage of Goods by Land

As mentioned above, the following two statutes govern the carriage of goods by land: (i) The Carriers Act, 1865. (ii) The Railways Act, 1989. The Carriers Act, 1865. This Act defines the term common carrier and provides for his rights, duties and liabilities. As regards matters not covered by this Act, the rules of English Common Law will apply.

Rights of a Common Carrier. His rights are: (i) He is entitled to the settled remuneration and in case no remuneration was settled, to a reasonable remuneration. (ii) He has a right to refuse to carry goods under certain circumstances (as enumerated under the duties of a common carrier). (iii) He has a lien on the goods for his remuneration. He can refuse to deliver them until his charges are paid. (iv) If the consignee refuses to take delivery of the goods, when tendered, the common carrier has a right, to deal with the goods as he thinks reasonable and prudent under the circumstances. (v) He has a right to recover reasonable expenses incurred by him as a result of the consignees refusal to take delivery. After giving notice to the consignee, the common carrier may even sell perishable goods. (vi) He can recover damages from the consignor if the goods are dangerous or are loosely packed and the carrier suffers injury therefrom. (vii) He can limit his liability subject to the provisions of the Carriers Act.

Duties of a Common Carrier. His duties are: 1. A common carrier is bound to carry goods of all persons who choose to employ

him. He can, however, refuse to carry goods under the following circumstances: (a) if there is no accommodation in the carriage; (b) if the person employing him is not willing to pay reasonable charges for the carriage of goods; (c) if the goods are such which he is not accustomed to cany; (d) if the goods are to be carried over a route which is not his regular route; (e) if the goods are-dangerous and as such subjecting him to extraordinary risk; (f) if the consignor refuses to disclose the nature of the goods to be carried; and (g) if the goods are not properly packed. If a carrier refuses to carry the goods of a person for any reason other than those mentioned above, he may be held liable for damages.

2. He must carry the goods over the usual and customary route and take all reasonable precautions for their safe carriage. He must not deviate from the usual route unless rendered necessary by exceptional circumstances.

3. He must deliver the goods at the agreed time and if no time had been fixed, within a reasonable time.

4. At Common Law, he is an insurer of the goods in the sense that he warrants to carry the goods safely and securely.

Liabilities of a Common Carrier : The liability of a common carrier of goods is laid down in the Carriers Act, 1865. For this purpose, the Act has classified the goods into two categories: (i) Scheduled goods and (ii) non-scheduled goods.

The scheduled goods are those which are enumerated in a Schedule to the Act. They are valuable articles like gold, silver, precious stones and pearls, bills and hundis, currency and bank notes, glass, china silk, articles of ivory, time pieces, musical and scientific instruments, etc. All other goods are non-scheduled.

For scheduled articles exceeding Rs. 100 in value, the carrier is liable for loss and damage only: (i) if the value and the description of the goods are disclosed by the consignor to the carrier; or (ii) if the loss or damage is due to a criminal act of the carrier, his agent or servant.

The carrier can charge extra for carrying scheduled articles, but he cannot limit his statutory liability by any special agreement.

As regards non-scheduled articles, a common carrier can limit his liability by special agreement with the consignor. But even in this Section case he will be liable under 8 of the Act (explained below).

In case of loss or damage, the claimant must notify the carrier within six months of the date of knowledge of the loss or damage.

Carriage of Goods by Rail

Summary of More Important Provisions The carriage of goods by rail is regulated by the Railways Act, 1989. Some of the more important provisions contained in the Act are summarised below:

1. Maintenance of rate books, etc., for carriage of goods (Section 61). Every railway administration shall maintain, at each station and to such other places where goods are received for carriage, the rate books or other documents which shall contain the rate authorised for the carriage of goods from one station to another and make them available for the reference of any person during all reasonable hours without payment of any fee.

2. Provision of rate risks (Section 63). Where any goods are entrusted to a railway administration for carriage, such carriage shall, except where owners risk rate is applicable in respect of such goods, be at railway risk rate. Any goods, for which owners risk rate and railway risk rate are in force, may be entrusted for carriage at either of the rates and if no rate is opted, the goods shall be deemed to have been entrusted at owners risk rate.

3. Forwarding note (Section 64). Every person entrusting any goods to a railway administration for carriage shall execute a forwarding note in such form as may be specified by the Central Government. The consignor shall be responsible for the correctness of the particulars furnished by him in the forwarding note. He shall indemnify the railway administration against any damage suffered by it by reason of the incorrectness or incompleteness of the

particulars in the forwarding note.

4. Railway receipt (Section 65). A railway administration shall issue a railway receipt in such form as may be specified by the Central Government: (a) in a case where the goods are to be loaded by a person entrusting such goods, on the completion of such loading; or (b) in any other case, on the acceptance of the goods by it.

A railway receipt shall be prima facie evidence of the weight and the number of packages stated therein. 5. Carriage of dangerous or offensive goods (Section 67). No person shall take with him on a railway or require a railway administration to carry such dangerous or offensive goods, unless (i) he gives a notice in writing of their dangerous or offensive nature to the railway servant authorised in this behalf; and (ii) he distinctly marks on the outside of the package containing such goods their dangerous or offensive nature.

6. Liability of railway administration for wrong delivery (Section 80). Where a railway administration delivers the consignment to the person who produces the railway receipt, it shall not be responsible for any wrong delivery on the ground that such person is not entitled thereto or that endorsement on the railway receipt is forged or otherwise defective.

Responsibility of a Railway Administration as a Carrier of Goods. Sections 93 to 112 of the Railways Act, 1989 contain provisions on this subject. These provisions are summarised below.

1. General responsibility of a railway administration as carrier of goods (Section 93). A railway administration shall be responsible for the loss, destruction, damage or deterioration in transit, or non-delivery of any consignment (goods entrusted to a railway administration for carriage), arising from any cause except the following, namely: (i) an act of God; (ii) an act of war; (iii) an act of public enemies; (iv) arrest, restraint or seizure under legal process; (v) orders of restrictions imposed by the Central Government or a State Government or by an officer or authority subordinate to the Central Government or a State

Government authorised by it in this behalf; (vi) act of omission or negligence of the consignor or consignee endorsee or the agent or servant of the consignor or the consignee or the endorsee; (vii) natural deterioration or wastage in bulk or weight due to inherent defect, quality or vice of the goods; (viii) latent defects; (ix) fire, explosion or any unforeseen risks.

Liability of a common carrier vis-a-vis the liability of a railway administration. The liability of a railway administration is the same as that of a common carrier. In other words, even where any loss, destruction, damage, deterioration or non-delivery is proved to have arisen from any one or more of the aforesaid nine cases, a railway administration shall not be relieved of its responsibility unless it further proves that it has used reasonable foresight and care in the carriage of the goods [Union of India v Orissa Textile Mills, AIR (1979) Ori. 165]. A railway administration, like a common carrier, is bound to carry the goods of every person who is willing to pay the freight and comply with other requirements.

2. Delay or retention in transit (Section 95). A railway administration shall be responsible for the loss, destruction, damage or deterioration of any consignment proved by the owner to have been caused by the delay or detention in their carriage. The railway administration can, however, avoid liability if it proves that the delay or detention arose for reasons beyond its control or without negligence or misconduct on its part or on the part of any of its servants. 3. Owners risk rate or railway risk rate (Section 97). A consignment may be carried by a railway administration either at owners risk rate or railway risk rate. Owners risk rate is a special reduced rate whereas railway risk rate is an ordinary tariff rate. Owners risk rate is lower than the railway risk rate for the simple reason that the goods in this case are carried at the owners risk. In case of owners risk rate, the railway administration is not responsible unless it is proved that any loss, destruction, damage or deterioration or non-delivery of goods arose from negligence or misconduct on the part of the railway administration or its servants.

4. Liability for damage to goods in defective condition or defectively packed (Section 98). Goods tendered to a railway administration to be carried by railway may be (a) in a defective condition or (b) defectively packed. As a result of these, goods are

liable to damage, deterioration, leakage or wastage. If the fact of such condition or defective or improper packing has been recorded by the sender or his agent in the forwarding note, the railway administration is not responsible for any damage, deterioration, leakage or wastage unless negligence or misconduct on the part of the railway administration or of its servants is proved.

5. Liability after termination of transit (Section 99). Whether the goods are carried at owners risk rate or railway risk rate, the liability of the railway administration for any loss of goods within a period of seven days after the termination of transit is that of a bailee under Sections 151, 152 and 161 of the Indian Contract Act, 1872. But where the goods are carried at owners risk rate the railway administration is not liable for such loss, destruction, damage, deterioration or non-delivery of goods except on proof of negligence or misconduct on the part of the railway administration or any of its servants. After seven days from the date of termination of transit the railway administration is not liable in any case for any loss of such goods. Notwithstanding this provision, the railway administration is not responsible after the termination of transit for the loss, destruction, damage, deterioration or non-delivery of articles of perishable goods, animals, explosives and other dangerous goods.

6. Responsibility as carrier of luggage (Section 100). A railway administration shall not be responsible for the loss, destruction, damage, deterioration or non-delivery of any luggage unless a railway servant has booked the luggage and given a receipt therefor. Also it is to be proved that the loss, etc., was due to the negligence or misconduct on the part of the railway administration or on the part of any of its servants. In the case of luggage which is carried by the passenger in his own charge, the railway administration shall not be responsible for the loss, etc., unless it is proved that the loss, etc., was due to the negligence or misconduct on the part of the railway administration or on the part of any of its servants.

7. Responsibility as a carrier of animals (Section 101). A railway administration shall not be responsible for any loss or destruction of, or injuries to, any animal carried by railway arising from fright or restiveness of the animal or from overloading of wagons by the consignor.

8. Exoneration from liability in certain cases (Section 102). A railway administration

shall not be responsible for the loss, destruction, damage or deterioration or nondelivery of any consignment (i) when such loss, etc., is due to the fact that a materially false description of the consignment is given; or (ii) where a fraud has been practised by the consignor or the endorsee, or by an agent of the consignor, consignee or the endorsee; or (iii) where it is proved by the railway administration to have been caused by, or to have arisen from (a) improper loading or unloading by the consignor, or the consignee or the endorsee, or by an agent of the consignor, consignee or the endorsee; (b) riot, civil commotion, strike, lock-out, stoppage or restraint of labour from whatever cause arising whether partial or general; or (iv) for any indirect or consequential loss or damage or for loss of particular market.

Carriage of Goods by Rail Contract of Affreightment* A contract to carry goods by sea is called the contract of affreightment and the consideration or charges paid for the carriage is called the freight. A contract of affreightment may take either of the two forms, namely (i) a charter party, where an entire ship, or a principal part of a ship is placed at the disposal of merchant (known as a charterer); or (ii) a bill of lading where the goods are to be carried in a general ship and the person consigning the goods is known as a shipper.

In both these contracts, the ship owner (the carrier) undertakes the responsibility of carrying the goods of a consignor (i.e., either the charterer or the shipper) safely and securely to the destination. A contract of affreightmentwhether in the form of a charter party or a bill of lading is governed by the (Indian) Bills of Lading Act, 1856 and the Carriage of Goods by Sea Act, 1925.

Conditions Contained in a Contract of Carriage by Sea. The terms included in a contract of carriage by sea are of two kinds. These are: (i) Express terms, and (ii) Implied terms.

Express terms are those which the parties have specifically agreed to and embodied

in the contract. Implied terms are those which law implies in every contract of carriage by sea unless excluded specifically. There are four implied terms:

(i) Implied warranty of seaworthiness. The ship owner, when he enters into a charter party for a voyage impliedly warrants that the ship is seaworthy. This is an assurance by the ship owner, at the time of entering into the charter party, that (a) the ship is fit to encounter the ordinary perils of navigation during voyage and (b) to carry the specific cargo. This warranty of seaworthiness extends only to (a) seaworthiness at the time of sailing and (b) fitness at the time of loading the cargo. Once the ship has sailed or the goods are on board, this warranty ceases to operate. But in case the voyage is divided into stages, the ship must be seaworthy at the commencement of each voyage.

(ii) Implied warranty of commencement of voyage. Another implied warranty is that the ship shall be ready to commence the voyage and shall carry out the same with all reasonable dispatch and diligence.

(iii) Non-deviation of voyage. Also there is an implied condition that there shall be no unnecessary deviation. Deviation means the going off from the settled or the usual or customary course of voyage between the two termini.

(iv) Shipper not to ship dangerous goods. The shipper (i.e., the consignor of goods in case the charterer undertakes to carry goods of others under bills of lading) shall not ship dangerous goods. If the shipper ships dangerous goods and if on account of it the charterer suffers any damage, he can recover it from the shipper.

Bill of Lading. A bill of lading is a document acknowledging the shipment of goods, signed by or on behalf of the carrier and containing the terms and conditions on which it has been agreed to carry the goods. It is a quasi-negotiable instrument. It is a document of title and can be transferred by endorsement and delivery. It is generally used for the carriage of goods on a general ship, i.e., a ship which is used for the carriage of the goods of several merchants who wish to have them conveyed by her and which is not employed for the carriage of a charterers goods only. Lord Blackburn says, a bill of lading is a writing, signed on behalf of the owner of the ship in which goods are embarked, acknowledging the receipt of the goods and

undertaking to deliver them at the end of the voyage, subject to such conditions as may be mentioned in the bill of lading. It is sometimes an undertaking to deliver the goods to the shipper by name, or his assigns, sometimes to order of assigns, not naming any person which is apparently the same thing and sometimes to a consignee by name or assigns, but in all its usual forms it contains the word assigns.

A bill of lading may be issued even where the ship is chartered. In such a case charter party will be the document evidencing the contract of affreightment, while the bill of lading would only operate as a mere acknowledgement of the receipt of the goods.