VIENNA CONVENTION. A Contracting State is a country that has signed on to the V convention

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1 VIENNA CONVENTION Art 1(1) - VC applies to contracts of sale of goods between parties whose places of business are in different States: a) when the States are Contracting States; or b) when the rules of private international law (or conflict of law) lead to the application of the law of a Contracting State A Contracting State is a country that has signed on to the V convention Place of business explained in art 10. Do not look at the nationality of the parties or commercial nature of parties: art1(3) just focus on location of buyer and seller For there to be a relationship we need to have a contract between a seller and buyer, which exists if there is Offer and Acceptance: art 23 The offer is an offer if it is: art 14(1) 1. addressed to one or more specified person(s) limited to a group of ppl cannot be an invitation to the whole world 2. sufficiently definite need description; and the quantity that the person wants to offer; and price o However, art 55 says if there is a MP, its fine if the price is not determined bc the parties are assumed to want to trade at that particular price. The price will be the prevailing market price. (Intention of Convention is to uphold contract) 3. indicates the intention of the offeror to be bound in case of acceptance offeror wants to be bound by his promise - art 8 it is a binding promise ie definite promise is made Art 14(2) A proposal other than one addressed to one or more specific persons is to be considered merely as an invitation to make offers, unless the contrary is clearly indicated by the person making the proposal. Not an offer if: If info has just disseminated no intention to be bound Eg: Pamphlets, brochures, catalogues, display of goods are these are merely enticements/invitations to the recipients of the pamphlets to make an offer the seller is showing that they want to do business but the buyer has not made an offer there is no promise made; it is merely inviting When is the offer effective? An offer is effective when it reaches the offeree: art 15(1) Reaches when it is made orally (instantaneous) or delivered by any other means including personally, to place of business of the offeree or mailing address: art 24

2 If an offer is sent through , the offer reaches when enters mailbox of the offeree and is ready to be read. Does not have to be read but theres an expectation that it will be read soon. Can the offeror change his mind? Under the CISG there a two chances for the offeror (buyer) to take back an offer 1. WITHDRAWAL (all offers) - art 15(2) Withdrawal applies when the offer has not yet reached the offeree (seller) Ie can withdraw the offer before offer reaches offeree Offeree does not even know theres an offer there timing is before the offer reaches Any offer applies ie both revocable and irrevocable 2. REVOCATION (For revocable offers) - art 16(1) Only applies to revocable offers does not apply to irrevocable offers so need to figure out if the offer is irrevocable an irrevocable offer can never be taken back - irrevocable offer cannot be revoked Once the offer has reached, there is still an abiity to take back Ie can revoke an offer after offer reaches offeree but before acceptance is dispatched Offeree s response to the offer 1. Acceptance: art 18 Offeree is happy with all the terms that the offeror has made and does not want to change anything there is absolute agreement 2. Modified acceptance: art 19 Have to determine whether the change by the offeree is a material change or a minor change Eg instead of the delivery being at 4 pm instead of 5 pm this is a minor change so we can consider it as a modified acceptance as to what the offeree wants However, changing the date from the 4 th to the 5 th is a major change. If there is a significant material alteration ie something requires extra work, it is a rejection of the original terms and the offeree now becomes the offeror bc either need to change some terms (counter-offer) or need a new contract now as don t want the old contract (rejection) 3. Counter-offer: art 19 Rejection of the original terms so the offeree becomes the offeror. Offeree is willing to change (some of) the terms still want to to business with the offeror (buyer) but the seller (who is making changes to the offer ie seller becomes the offeror. Note offeror is not the buyer here) wants to change some things 4. Rejection: art 17 Big fat no to changing the terms - don t wanna do business with the offeror/buyer seller rejects the offer outright rejection without new terms being mentioned 5. No response (by the offeree/seller) Might give hope to the offeror. Offeror cannot take silence as amounting to acceptance by the offeree

3 Modified acceptance (minor tweak to the original terms of the offer theres still a contract) v Counter-offer art 19 No material alteration and no objection by offeror, who is the seller as the seller makes modification to the offer the buyer made. Contract is concluded with additional non-material term. If alteration is material, it is a counter-offer which is a rejection of original offer. What is a material change? Remember were looking at what the offeree (seller) says. Examples of material change If offeree says no refunds allowed/no guarantees/warrantees CISG dictates that refunds must be given if there is a fundamental breach so saying no refunds means they re changing their liability, saying they re not gonna be liable anymore, this is an eg of material change seller cannot exclude themselves Examples of additions that are material are stated in art 19(3) this tells you what is meant by material Extent of liability (no refunds allowed, no warranties), Settlement of dispute (settled by arbitration, as opposed to going to court, exclusive forum clause, location of settlement - normally the location is in the sellers or buyers country or somewhere else so if one of the party says the location can only be in one country this is an change in the expectation material alteration of the expectation between the parties so becomes a counter offer - it has to be accepted for it to be binding on the parties or a rejection) What happens if the offeree s (seller) response contains a term which is a minor change or a material change? If seller made a minor change, that amounts to modified acceptance. There is still a contract If seller made a material change, offeree has made a counter-offer and original offeror (buyer) has to accept either by words or by conduct. Look at 19(3) for what is meant by material If seller has not made a counter-offer, ie does not want to make any changes and does not want to contract based on that contract, he is rejecting the offer. When there is an outright rejection, there needs to be a new offer bc original offer is off. Original offer is extinguishes once it has been rejected An offer that has been rejected cannot be accepted later on. There needs to be a new offer made by either party absolute rejection Documents used in carriage of goods by S E A CARRIER S LIABILITIES AND PROTECTIONS

4 Duties of the carrier - Art 3(1) Art 3(1) states that the carrier shall be bound before and at the beginning of the voyage to exercise due diligence (ie take reasonable care) to: a) make ship seaworthy b) properly man (no of crew), equip (equipment that will be needed for safe journey) and supply ship (there is enough food/equipment that may be specialised eg hire extinguishers) c) make the parts of ship fit and safe for reception, carriage and preservation of goods carried o talking about taking care of the cargo if cargo needs to be refrigerated, the cargo has a special place for that so that it does not encounter those problems Focus on a) and c) Art 4(1): Carrier not liable for loss from breach of art 3(1), unless caused by want of due diligence. o Unless you can show that the carrier had not taken reasonable care, carrier is not liable. There must be a failure by the carrier to meet the standards of other carriers in that situation. Great China Metal Industries Co Ltd v Malaysian International Shipping Corporation explains the standard of care that a carrier has to take in regards to the ship ie a) Duty to make ship seaworthy include the following: 1. it is not an absolute warranty; the obligation is to exercise due diligence; 2. seaworthiness is to be assessed according to the voyage under consideration; there is no single standard. Seaworthiness is judged having regard to the conditions the vessel will encounter. If bad weather obvi, have more safeguards Act of Agent or Employee Remember, acts of the agent are the acts of principle Anything agent does wrong, makes the principle, ie carrier, liable similarly with employees and employers vicarious liability Leesh River Tea Co v British India Steam Navigation Co (the Chyebassa) At the transit point, the stevedores, when unloading goods from the ship, removed the brass cover plate from one of the ship s storm valves. As a result, water entered the hold and damaged the tea. The lack of storm valves was the cause of damage Held: s 3(1)(a) not breached as the fault had developed during the voyage. Storm valves were not a problem at the start of the voyage, so the carrier cannot be liable.

5 In any event, the carrier is only liable for the acts of their employees that are within their (employees) course of employment The stevedores had acted outside their course of employment, ie did something which is not within the power given by the carrier. (See art 4(2)(q) defence) ie if the Stevedores does a bad job loading and unloading cargo which causing the ship to be unseaworthy at the brining of the voyage, then the carrier could be liable The Muncaster Castle Here there were storm valves present but they were defective There was failure to take due diligence at the start of the journey by the carrier s employee (the fitter) o The covers had been removed for inspection shortly before the vessel started on her voyage o An employee of the firm appointed to carry out the inspection had negligently failed to tighten the nuts holding the covers o A fitter is actually appointed to look after the Storm valves covers ie within the course of his employment so 4(2)(q) defence would not apply Defective storm valve covers had let the seawater enter the hold. Held: Carrier liable as employee had been negligent. Due diligence required not only in acts of ship owner but acts of those to whom he may have committed the work of fitting the vessel for sea delegation in relation to responsibility vicarious liability employee and employer The Hellenic Dolphin Here talking about the ship begin seaworthy at the start of the voyage Cargo shipped in good order and condition was destroyed as a result of ingress of sea water through an indent in the ship s plating. Held: The owner of the goods (buyer) failed to prove that the leaking and indent existed at the commencement of the voyage. Carrier relied on Certificate of inspection There was a certificate of inspection by independent body which provided a strong presumption of seaworthiness at the beginning of the voyage. If there was damage, the damage could not have been there at the beginning of the voyage bc there is this certificate damage may have occurred during the journey but not at the start of the journey, which is what is required to make the carrier liable However, a certificate will be inadequate to establish seaworthy state, if the defect is apparent on a reasonable inspection of the ship: The Amstelslot Now looking at art 3(1)(c) more important that a) The Komninos S about cleaning out the hold

6 Cargo of steel coils was damaged by corrosion probably caused by seawater entering into the cargo spaces and failure to pump the bilge. Held: Hold was NOT safe to allow for the reception of the cargo, so there was a breach of 3(1)(c) Ship owner had negligently failed to clean the hold (which was used for carrying salt) and to pump the bilge. Omissions rendered the vessel unfit for carrying the goods at the beginning of the voyage always at the beginning of the voyage when talking about 3(1) Tattersall v National Steamship similar to case above Ship hired for carrying cattle was held unseaworthy, because it had not been disinfected despite the fact that there had been a warning of an outbreak of foot and mouth disease. Bc the hold has not been disinfected, it is not safe for the reception of the cargo there was a failure at the beginning of the voyage Duty of properly and carefully dealing with goods Art 3(2) states that the carrier shall properly and carefully load, handle, stow, carry, keep, care for, and discharge the goods carried. 3(2) is about duty of the carrier in regards to the cargo; not in regards ship there is a continuing duty to look after the cargo Properly means in accordance with a sound system or in an appropriate manner to make sure the cargo will be safe during the entire journey Carefully means with reasonable care due diligence Ø When protecting the cargo when there is heavy weather, not looking at 3(1) Ø It d be a breach of 3(2) improper storage bc it does not meet the standard must carefully store the goods Shipping Corp of India Ltd v Gamlen Chemical Co (A sia) Pty Ltd important There were two reasons why there was damage to the cargo 1. Breach art 3(2) 2. Vessel encountered heavy weather (unusual weather) Improper stowage and heavy weather (perils of the sea defence: 4(2)(c)) were concurrent causes of the damage o The carrier is still liable even if the defences apply A carrier is not allowed to rely on the exemption of perils of the sea, if his negligence contributed to the damage. Meaning of stowage depends on all the circumstances, including: o the nature of the particular goods, o established commercial practices (what do other ships do when it comes to this particular type of cargo), o the contract terms, and

7 o the conditions of the weather and of sea likely to be encountered on the voyage. Evidence of damage of the goods Art 3(3) - Carrier shall issue Bill of Lading showing: a) leading marks necessary for identification of the goods b) either the number of packages or pieces, or the quantity, or weight, as furnished in writing by the shipper. c) The apparent order and condition of the goods. If carrier gives a clean BOL then that means that the goods are perfectly fine, so the seller has done its job Starting point for imposing liability is it the seller liable or is it the carrier? Information in Bill of lading and damage Art 3(4) states that the bill of lading is prima facie evidence of receipt of goods in that condition for the carrier against the shipper. However, proof to the contrary is not admissible against third party acting in good faith. Ø Between the carrier and the shipper, the bill of lading is prima facie evidence/proof of condition of goods against the shipper: art 3(4) o The carrier can contradict the shipper and produce contrary evidence Ø Between the carrier and third party, the bill of lading is conclusive: art 3(4) Amended Hague Rules. o Third party = buyer/consignee/endorsee/holder (subsequent holders of the BOL who are going to receive the cargo); NOT the shipper/seller o The subsequent holders never saw the condition of the cargo, hence why it is conclusive o The carrier can never produce contrary evidence ie what the captain writes = what the condition it is. o Subsequent holders of the bill can use this as great evidence to show that if it is a clean BOL, if the goods are damaged, goods must have been damaged during the journey, so sue the carrier Ø If there is damage at the end of the journey and there is a clean BOL, under art 3(4), the consignee can auto conclude that the damage must have occur during the journey bc it BOL is conclusive evidence, (but you must still show that its bc of a breach of 3(1) or (2)) Ø See if damage to goods is reflected by description in Bill of lading if no, then the Bill of lading is clean Defences available to carrier: art 4(2)

8 If carrier can fall within one of these defences, then not liable think about insurance the seller must make sure that if one of these defences apply, he will be paid by the insurance co, bc cant recover from the carrier bc carrier is not liable Art 4(2)(a) Act, neglect, or, default of the master (in the open ocean), mariner, pilot or the servants of the carrier in the navigation, or in the management of the ship which causes damage o Default = failure/omission, ie you havent done anything Talking about the ppl who are in charge of the ship if they do something wrong, the carrier is not liable Navigation meaning how the ship is steered though the journey if there is damage caused bc of that navigation, the carrier is not liable Mismanagement of the ship relates to ship; NOT cargo management of the cargo is covered under 3(2). Leval & Co v Colonial Steamships Ltd Ship collided with the bank of Canal. After collision, diver examined the ship and did not find any damage. The master of the vessel informed the shipowner s marine superintendent of the accident. The marine superintendent ordered the ship to proceed. On arrival, cargo was damaged as a result of water in the hold o There must have been a break which allowed water to get in Held: The diver didn t do his job properly The ship master was negligent by just accepting the word of the diver and in failing to detect the hole in the vessel after the collision The marine superintendent was also negligent didn t ask for a second dive to make sure ie didn t do anything further Owner ie carrier is protected under art 4(2)(a) Carrier excused as conduct related to mismanagement of ship and navigation. Here there was negligence in the navigation the navigation caused the problem, so there is no liability for the carrier