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    Customary Trade Allowance and The Importance of Accuracy in Bills of Lading

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    KASHAN
    1) Carriers often assume they benefit from a customary trade allowance (CTA) of 0.5% for bulk cargo shortages, but relying on this could jeopardize insurance coverage if the bill of lading is inaccurate. 2) Masters must ensure bills of lading accurately represent the loaded quantity to avoid liability, as signing an incorrect bill may lead to penalties. 3) To defend potential shortage claims and ensure the CTA applies, Masters should carefully measure and record cargo quantities loaded and discharged.

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    Customary Trade Allowance and The Importance of Accuracy in Bills of Lading

    Uploaded by

    KASHAN
    120 views2 pages
    1) Carriers often assume they benefit from a customary trade allowance (CTA) of 0.5% for bulk cargo shortages, but relying on this could jeopardize insurance coverage if the bill of lading is inaccurate. 2) Masters must ensure bills of lading accurately represent the loaded quantity to avoid liability, as signing an incorrect bill may lead to penalties. 3) To defend potential shortage claims and ensure the CTA applies, Masters should carefully measure and record cargo quantities loaded and discharged.

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    1) Carriers often assume they benefit from a customary trade allowance (CTA) of 0.5% for bulk cargo shortages, but relying on this could jeopardize insurance coverage if the bill of lading is inaccurate. 2) Masters must ensure bills of lading accurately represent the loaded quantity to avoid liability, as signing an incorrect bill may lead to penalties. 3) To defend potential shortage claims and ensure the CTA applies, Masters should carefully measure and record cargo quantities loaded and discharged.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    120 views2 pages

    Customary Trade Allowance and The Importance of Accuracy in Bills of Lading

    Uploaded by

    KASHAN
    1) Carriers often assume they benefit from a customary trade allowance (CTA) of 0.5% for bulk cargo shortages, but relying on this could jeopardize insurance coverage if the bill of lading is inaccurate. 2) Masters must ensure bills of lading accurately represent the loaded quantity to avoid liability, as signing an incorrect bill may lead to penalties. 3) To defend potential shortage claims and ensure the CTA applies, Masters should carefully measure and record cargo quantities loaded and discharged.

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    © All Rights Reserved
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    of 2

    BULLETIN

    Customary Trade Allowance and the importance of accuracy


    in Bills of Lading
    Claims for loss of or damage to cargo are one of the most reasonably believes does not accurately represent the
    common categories of claims dealt with by P&I Clubs. A goods actually loaded.
    common feature of such claims is the debate around
    whether or not any cargo shortage falls within the ‘trade Further, under English law if a bill of lading contains the
    allowance’. This article briefly reviews the origins of the wording “weight/quantity unknown” in the printed form as
    defence, the extent to which it can be relied upon, and many standard bills of lading, such as Congenbills, do, the
    some important points to remember regarding Club cover. carrier can maintain that the bill does not represent that
    any quantity was loaded, even if wording stating a quantity
    A dangerous assumption has been inserted into the bill as is common)

    It is often assumed by carriers of goods that they benefit It is important to note that signing a bill of lading
    from a “customary trade allowance” (CTA) in relation to bulk which contains a representation as to quantity which
    cargoes. Under this CTA, it is assumed, there can be no the Master knows or has good reason to suspect is
    claims for short cargo if the shortage does not exceed 0.5% incorrect could lead to criminal and/or civil penalties
    of the loaded figure recorded in the bill of lading. for the Master/carrier and may jeopardise Club
    cover.
    The basis for the assumption of a CTA is two-fold:
    Assuming that a bill of lading does represent a quantity
    (1) a historic practice by cargo underwriters to apply a loaded and there is a shortage, one common way for the
    depreciation of 0.5% to their goods-in-transit policies and carrier to defend the claim is by demonstrating that the
    (2) a traditional practice in the crude oil industry to ignore cargo quantity reduced due to an inevitable inherent vice
    shortages of up to 0.5% and only claim for the amount of of the cargo, such as natural shrinkage or moisture
    shortage that exceeds 0.5%. evaporation. This defence is allowed by Article 4(2)(m) of
    the Hague/Hague-Visby Rules.
    The need for accuracy in bills of lading
    Practical steps
    It is therefore important that the Master of the loaded
    vessel ensures that the bill of lading states an accurate As a result of the above, it is vital that a Master accurately
    loaded quantity (or, at least, ensures that it is claused to records the quantity of goods that are loaded onto the
    reflect the Master’s view of the actual quantity loaded). This vessel, which can be done by:
    is not always easy, as the Master is often pressured by the 1. Measuring/recording the moisture content of the cargo
    shipper into signing bills of lading with figures that differ at the load and discharge ports.
    from the amount the vessel has recorded as being loaded,
    if this occurs a Club correspondent/lawyer should 2. Conducting joint draft surveys at the load and discharge
    immediately be contacted. It is vital to resist such pressure ports, preferably involving a Club surveyor.
    in order to protect the carrier in the event of a short cargo
    claim and to ensure that Club cover is not prejudiced. 3. Taking measurements of the hold volume and stowage
    factor.
    In this regard it is worth noting that, if the Hague/Hague-
    Visby rules apply to the relevant charter, Article 3(3) states 4. Jointly sealing/unsealing the holds upon both departure
    that no Master is bound to sign a bill of lading which he and arrival.
    BULLETIN
    Customary Trade Allowance and the importance of accuracy
    in Bills of Lading
    5. Clausing the bill of lading if the declared weight is not Contact the Club for further information:
    accurate.
    London
    6. Preparing mate’s receipts that record the quantity of St Clare House
    loaded cargo as recorded by the vessel. 30–33 Minories
    London EC3N 1BP
    7. Maintaining accurate records of (i) the quantity of bilge
    T +44 207 488 0911
    water pumped out (ii) ventilation timings/duration and (iii)
    F +44 207 480 5806
    temperatures.
    E [email protected]
    8. Using the same methods at both the load and discharge
    ports for measuring cargo. Singapore
    6 Temasek Boulevard
    A vessel which performs the above checklist should be in a #36–05 Suntec Tower 4
    much better position to defend any short cargo claims Singapore 038986
    from receivers and apply the CTA.
    T +65 6593 0420
    If Members do encounter a cargo shortage which they feel F +65 6593 0449
    falls within a customary trade allowance, the matter should E [email protected]
    still be reported to the Club as soon as possible. The Claims
    Handler dealing with the file will then be able to advise, or
    obtain advice for, Members on the applicability of the
    defence in relation to the particular cargo or jurisdiction.

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