Source: https://www.rcvs.com.cn/bencandy.php?fid-67-id-155275-page-1.htm
Timestamp: 2019-04-22 04:41:34+00:00

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(A) 95% FREIGHT LESS COMMISSIONS ON B/L(S) INTAKEN WEIGHT SHALL BE PAYABLEWITHIN 3 BANKING DAYS AFTER SIGNING & RELEASING BILL(S) OFLADING MARKED "CLEAN ON BOARD" AND"FREIGHT PAYABLE AS PERC/P".
(B) IN CASE "FREIGHT PREPAID" BILLS OF LADING ARE REQUIRED, AGENTS ATLOADING PORT TO BE IN CUSTODY OF BILL(S) OF LADING. BILL(S) OF LADING ARE TO BEIMMEDIATELY RELEASED UPON RECEIPT OF CHARTERER'S BANK CONFIRMATION THAT 100%FREIGHT, LESS COMMISSIONS HAS BEEN IRREVOCABLY REMITTED TO OWNER'S DIRECT BANKACCOUNT.
Refer to theemail on 30 MAY 2018 sent by Hongda regarding the delayed cause by vessel hatchand we have incurred the penalty from our buyer.
So we haveto claim back from owner back to back as follow.
0.25% perday x USD278 x 6,599.972MT x 3 days.
Duly noted charterers’ last, but regret that Owners are unable to agree the charterers to make any deduction from freight payment.
First of all, It’s well established that not every cross claim could be deducted from freight payment. Charterers may refer to The “Brede”, 2 Lloyd's Rep. 333 ( H.L) and The “Aries”, 1 Lloyd’s Rep.334(H.L), Where House of Lord upheld decision of The “Brede” case.
The freighter will not be entitled to make deductions from the freight for the damage.
Now we think the proper rule is such as the present is this: Where two parties have made a contract which one of them has broken, the damages which the other party ought to receive in respect of such breach of contract should be such as may fairly and reasonably be considered either arising naturally,i.e., according to the usual course of things, from such breach of contract itself, or such as may reasonably be supposed to have been in the contemplation of both parties, at the time they made the contract, as the probable result ofthe breach of it. Now, if the special circumstances under which the contractwas actually made where communicated by the plaintiffs to the defendants, andthus known to both parties, the damages resulting from the breach of such acontract, which they would reasonably contemplate, would be the amount of injury which would ordinarily follow from a breach of contract under thesespecial circumstances so known and communicated. But, on the other hand, ifthese special circumstances were wholly unknown to the party breaking thecontract, he, at the most, could only be supposed to have had in his contemplation the amount of injury which would arise generally, and in the great multitude of cases not affected by any special circumstances, from such a breach of contract. For such loss would neither have flowed naturally from the breach of this contract in the great multitude of such cases occurring under ordinary circumstances, nor were the special circumstances, which, perhaps,would have made it a reasonable and natural consequence of such breach of contract, communicated to or known by the defendants. The Judge ought,therefore, to have told the jury, that, upon the fats then before them, they ought not to take the loss of profits into consideration at all in estimatingthe damages. There must therefore be a new trial in this case.
Charterers’ alleged claim which are wholly unknown to Owners, not in Owners’ contemplation before fix this shipment.Therefore this alleged claim is remoteness.
Hope above are clear and will be acceptable by the charterers.
For good order sake, Charterers are called upon to arrange remittance before arrival.
The question for us to consider is, whether a charterer whose cargo has been damaged by the fault of the master and the crew so as uponarrival at the port of discharge to be worth less than the freight, is entitled to excuse himself from payment of freight by abandoning the cargo to the shipowner. We think not: and we should not have taken time to consider, but for the general importance of the subject, and of its having been suggested thatour law was silent upon this question, and that the plea was warranted by the usage and law of other maritime countries, which, it was said, we ought to adopt .
It ought to be borne in mind, when dealing with suchcases, that the true test of the right to freight is the question whether the service in respect of which the freight was contracted to be paid has been substantially performed; and, according to the law of England, as a rule,freight is earned by the carriage and arrival of the goods ready to be delivered to the merchant, though they be in a damaged state when they arrive.If the shipowner fails to carry the goods for the merchant to the destined port, the freight is not earned. If he carry part, but not the whole, nofreight is payable in respect of the part not carried, and freight is payable in respect of the part carried unless the charterparty make the carriage of the whole a condition precedent to the earning of any freight �Ca case which has not within our experience arisen in practice . . .
Little difficulty exists in applying the above test where the cargo upon arrival is deficient in quantity. Where the cargo, without lossor destruction of any part, has become accidentally swelled (Gibson v Sturge 10 Exch 622), or, perhaps, diminished, as, by drying (Jacobsen’s Sea Laws, Book 3, ch 2, p 220), freight (usage of trade apart) ispayable upon the quantity shipped, because that is what the contract refers to. . .
In the case of an actual loss or destruction by sea-damage of so much of the cargo that no substantial part of it remains; as,if sugar in mats, shipped as sugar and paying so much per ton, is washed away,so that only a few ounces remain, and the mats are worthless, the question would arise whether practically speaking any part of the cargo contracted to be carried has arrived .
Where the quantity remains unchanged, but by sea-damage the goods have been deteriorated in quality, the question of identity arises ina different form, as, for instance, where a valuable picture has arrived as apiece of spoilt canvas, cloth in rags, or crockery in broken shreds, iron allor almost all rust, rice fermented or hides rotten.
In both classes of cases, whether of loss of quantity orchange in quality, the proper course seems to be the same, viz, to ascertain from the terms of the contract, construed by mercantile usage, if any, what was the thing for the carriage of whichfreight was to be paid, and by the aid of a jury to determine whether that thing, or any and how much of it, has substantially arrived.
If it has arrived, though damaged, the freight is payableby the ordinary terms of the charterparty; and the question of fortuitous damage must be settled with the underwriters, and that of culpable damage in adistinct proceeding for such damage against the ship captain or owners.There would be apparent justice in allowing damage of the latter sort to be set offor deducted in an action for freight; and this is allowed in some (at least) ofthe United States, Parsons on Mercantile Law, 172, n.
But our law does not allow deduction in that form; and,as at present administered, for the sake perhaps of speedy settlement of freight and other liquidated demands, it affords the injured party a remedy bycross-action only: Davidson v Gwyne 12 East 381; Stinson v Hall 1 Hurlst & N 831; Sheels(or Shields) v Davies 4 Campb 119, 6 Taunt 65; the judgment of Parke B in Mondel v Steel 8 M & W 858; The Don Francisco 32 LJ Adm 14, per Dr Lushington. It would be unjust, and almost absurd that, without regard to the comparative value of the freight and cargo whenuninjured, the risk of a mercantile adventure should be thrown upon the shipowner by the accident of the value of the cargo being a little more than the freight; so that a trifling damage, much less than the freight, would reduce the value to less than the freight; whilst, if the cargo had been much more valuable and the damage greater, or the cargo worth a little less than the freight and the damage the same, so as to bear a greater proportion to the whole value, the freight would have been payable, and the merchant have been putto his cross-action. Yet this is the conclusion we are called upon by the defendant to affirm in his favour, involving no less than that that damage,however trifling, if culpable, may work a forfeiture of the entire freight,contrary to the just rule of our law, by which each party bears the damage resulting from his own breach of contract, and no more.
It is evident enough from this review of the law that there is neither authority nor sound reason for upholding the proposed defence.The plea is naught, and there must be judgment for the plaintiff.
The freight to be paid in transferable Pounds Sterling in London to Hambros Bank Ltd.,London, for account of Henriksens Rederi A/S, Oslo, as follows:- 80% within 7days of signing BS/L non-returnable ship and/or cargo lost or not lost and the balance within 17 days of right and true delivery.
Any dispute arising under this charter party or out of any Bills of Lading issued under this charter party shall be referred to arbitration in London.
The Owners' liability under this charter party shall be governed by the terms of the Hague Rules contained in the International Convention for the unification of certain rules relating to Bills of Lading, dated Brussels, 25th August, 1924.
.. . In any event the carrier and the ship shall be discharged from allliability in respect of loss or damage unless suit is brought within one year after delivery of the goods or the date when the goods should have beendelivered.
First: When the cross-claim goes directly in diminution or extinction of the claim. Such ascases where goods are sold with a warranty, and by reason of the breach of warranty the goods are worth less than the contract price. Or, cases where workand labour are expended on a building and, by reason of defects, the workactually done is worth less than the contract price.
It is competent for the defendant not to set-off, by a proceeding in the nature of across-action, the amount of damages which he has sustained by breach of the contract but simply to defend himself by showing how much less the subject-matter of the action was worth, by reason of the breach of contract.
Second: Whenthe cross-claim does not reduce the value of the goods sold or the work done but causes other damage. Such as cases where goods are delayed in delivery andthe buyer has a cross-claim for damages for delay: or where a contractor who isemployed to clean windows negligently breaks the leg of a chair. In former times such damages could only be claimed in a separate action, see Mondel v.Steel, (1841) 8 M. & W.at p. 872, and would no doubt be subject to a time bar, where appropriate.Since the Judicature Act 1873, however, these damages can be set up by way ofan equitable set-off in diminution or extinction of the claim - leaving anyover-plus to be the subject of a counterclaim. The scope of equitable set-offwas considered by Lord Lyndhurst, L.C., in Rawson v. Samuel, (1841) Craig &Phillips 161, at p. 178, and recently by this Court in Morgan & Son v.Martin Johnson & Co.,  1 K.B. 107, and Hanak v. Green,  2 Q.B.9. It is available whenever the cross-claim arises out of the same transaction as the claim; orout of a transaction that is closely related to the claim.
Although itis often described as an "equitable set-off", it would, I think, bemore accurately stated to be an "equitable defence" see sect. 24 (2),(3) of the Judicature Act 1873, and sects. 38 and 39 of the Judicature Act,1925. When the contractor sues for the contract price, the employer can say tohim: "You are not entitled to that sum because you have yourself broken the very contract on which you sue, and you cannot fairly claim that sum unlessyou take into account the loss you have occasioned to me". It is on a par with the case of a defendant who says that the plaintiff has repudiated the contract by an anticipatory breach, or that the plaintiff has been guilty of a breach going tothe root of the contract. On accepting it, the defendant is discharged from further performance and can set up the breach as a defence. So also with any breach by the plaintiff of the self-same contract, the defendant can inequity set up his loss in diminution or extinction of the contract price. It isin the nature of a defence. As such it is not subject to a time bar.
That a claim in respect of cargo cannot be asserted by way of deduction from the freight, is a long established rule in English law. It dates atleast from Sheels v. Davies, (1814) 4 Camp. 119: it received authoritativeapproval in 1864 from an eminent Court in Dakin v. Oxley, (1864) 15 C.B.(N.S.) 646, and again from the sameCourt in Meyer v. Dresser, (1864) 33 Law J. Rep. C.P. 289, where the rule was called "settled law". As a rule it has never been judicially doubtedor questioned or criticised; it has received the approval of authoritative textbooks. It could have been attacked, but was not, by eminent commercial counsel in Bede Steam Shipping Co. Ltd. v. Bunge y Born, (1927) 27 Ll.L.Rep. 410(incidentally a case of a time bar). It was reaffirmed after full consideration by the Court of Appeal in The Brede (u.s.),and though it has not the full authority of this House, it was referred to by Lord Atkinson as the law in Kish v. Taylor,  A.C. 604 atp. 612.
Nor does it follow, in the case of a legal system such as ours, that a principle can be said to be truly a part of the law merely because it would be a more perfect expression of imperfect rules which, though imperfect, are well established and well defined.
To do thiswould be macro-architecture of the law and would be for a particular type ofreformer.
But beyondall this there is a decisive reason here why this House should not alter therule approved in The Brede by reversing it. That is that the parties in thiscase have, I think beyond doubt, contracted upon the basis and against thebackground that the established rule is against deduction.
This rule of law which was fathered by such masters of the law as Baron Parke, Baron Alderson, Chief Justice Erle and Mr.Justices Willes and Byles has been generally accepted for well over 100 yearsand never judicially questioned.It has been confirmed in the original and every succeeding edition of Scruttonon Charterparties and Carver, Carriage of Goods by Sea. It was adopted in Lord Atkinson's speech, with which Lord Macnaghten and Earl Loreburn, L.C.,concurred in Kish v. Taylor  A.C. 604, and recently by the Court of Appeal in The Brede  2 Lloyd's Rep. 333;  1 Q.B. 233. A rule of law, particularly a rule of commercial law which has stood so long and upon the faith of which many thousands of contracts of carriage have been made and are daily being made containing a provision that the contract shall be governed by the law of England, cannot now be successfully challenged in our Courts.
16. Freightshall be prepaid within five days of signing and surrender of final bills of lading, full freight deemed to be earned on signing bills of lading,discountless and non-returnable, vessel and/or cargo lost or not lost and to be paid to [a named bank in the Piraeus].
Under acontract for the carriage of goods by sea, such as the voyage charter-party in the present case, freight is the monetary consideration payable by the cargo-owner to the shipowner for the carriage of the goods. The time when the freight is payable depends upon the terms of the contract. It may be payable on delivery of the goods at the port of discharge, in which case it is called "freight" without any qualifying epithet; or it may be payable at anearly stage of the voyage, such as on completion of the signing of bills oflading, in which case it is called "advance freight"; or part of itmay be payable at an early stage of the voyage and the balance on delivery.
It is a long established rule of English law, dating at least from the early part of the19th century, that a cargo-owner is not entitled to set up, as a defence to a claim for freight, damage suffered by him by reason of some breach of contractby the shipowner in relation to the carriage, causing for instance partial loss of or damage to the goods, but must enforce any right which he has in respect of such breach by a cross-claim. The effect of the rule before the coming into force of the Supreme Court of Judicature Acts, 1873-1875 was that a cargo-owner sued by a shipowner for freight could only recover his damage by bringing a separate cross-action against the shipowner; the effect of the rule since the coming into force of those Acts has been that the cargo-owner, instead of having to bring a separate cross-action, has been able (though not bound) toraise his cross-claim by way of counterclaim in the shipowner's action. The rule applies equally to freight payable on delivery of the goods and to advance freight payable at some earlier stage of the voyage.
The rule of law referred to differs from that prevailing in many other countries and has been subjected to a considerable amount of criticism in various quarters from time to time. The continued existence of the rule was, however, affirmed by theCourt of Appeal in Henriksens Rederi A/S v. T.H.Z. Rolimpex (The Brede), 2 Lloyd's Rep. 333;  Q.B. 233, in which the earlier authorities were fully examined. That decision of the Court of Appeal was unanimously approved by your Lordships' House in Aries Tanker Corporation v. Total Transport Ltd.(The Aries),  1 Lloyd's Rep. 334;  1 W.L.R. 185. It follows that the rule concerned (which I shall from now on call "the rule against deduction"), whatever its merits or demerits may be, is not open to challenge.
We have to apply the well-established principle that there is no right of set-off for claims for damages for breach of charter,whether for loss of or damage to goods or for alleged failure to prosecute avoyage with reasonable dispatch or otherwise, against a claim for freight.
There arecertain observations which I would make with regard to the passages from the speeches of Lord Wilberforce and Lord Simon of Glaisdale quoted above. First,the cross-claim of the charterers which they held could not operate as adefence by way of legal set-off to a claim for freight was, as I indicated earlier, a cross-claim based on a non-repudiatory breach of contract, namely,short delivery of cargo.
The speeches of Lord Wilberforce and Lord Simon of Glaisdalein The Aries make it clear that,when an owner's breach of charter-party is of a non-repudiatory character, such as partial loss of or damage to cargo, it does not give rise to an equity in favour of the charterers sufficient to override the established rule against deduction. The question for decision in the present case is whether, where anowner's breach of charter-party is of a repudiatory character, it does giverise to such an equity.
Once the three arguments discussed above are rejected, as I think on the grounds which Ihave given that they should be, it is possible to state a number of good reasons for holding that a repudiatory breach of a voyage charter-party is nomore capable of giving rise to a defence by way of equitable set-off than is a non-repudiatory breach.I shall set out those reasons shortly first and then develop them.The first reason is that a repudiatory breach of a charter-party by an owner does not necessarily cause more damage to a charterer than a non-repudiatorybreach; it may cause less. There is, therefore, no justification based on quantum of damage for applying the rule against deduction to the latter breachbut not to the former. The second reason is that the application of the rule against deduction only works to the ultimate disadvantage of a charterer whenthe owner's financial situation makes it impossible for a counterclaim to beenforced against him. That risk, however, exists whether the breach is repudiatory or non-repudiatory. The third reason lies in the manner in whichthe legislation has treated the premature termination of a voyage charter-partyby frustration.
For the reasons which I have given I would answer question (3) by saying that, if the owners had not assigned their right to freight to the bank, the charterers would not have been entitled to set off against such right the damage suffered by them as a result of the owners' repudiation of the charter-party.
I would, therefore, answer question (4) by saying that the charterers are no more entitled to rely on their counterclaim for damages as a defence by way of equitable set-off against the bank than they would have been entitled to rely on it, but for the assignment, against the owners.
"…a claim in respect of cargo cannot be asserted by way of deduction from the freight is a long established rule in English law. As a rule, it has never been judicially doubted or questioned or criticised. It has received the approval of authoritative text books. It is said to be an arbitrary rule and so it may be in the sense that no very clear justification for it has ever been stated but this does not affect its status in the law. It is said to be inconsistent with the rule laid down in relation to the sale of goods and contracts for work andthere are two answers to this. First, the two rules have been running in parallel for over a Century without difficulty.
"As the argument for inconsistency with the rule prevailing in relation to the sale ofgoods, it is no part of the functions of this House or the judges to alter awell established rule or, to put it more correctly, to say that a differentrule is part of our law for the sake of harmonisation with a rule operating in a different field.
"But beyond all this, there is a decisive reason here why this House should not alter the rule approved in The Brede by reversing it; that is that the parties in this case have, I think, beyond doubt contracted upon the basis and against the background that the established rule is against deduction."
I understand that my conclusion is one which the defendant will struggle to accept, given the fact that goods were not delivered within the time frame he specified and he does not see why he should pay for a service which he did not receive. However, this ruling does not affect his ability to bring a claima gainst the claimant for the failures which he says occurred. I note that the defendant had been given an opportunity to bring a counterclaim but for reasons which do not need to be recited in this judgment he was not in a position tobring a counterclaim prior to this matter being decided today. It is, however,still open to him to bring a claim should he choose to do so after this has been dealt with.
Accordingly,for all the reasons set out, I find that the common law freight rule which provides that there can be no set off against freight does extend to carriage by air.
The freighter will not be entitled to make deductions from the freight for the damage, but will have a separate cause of action for the damage unless caused solely by excepted perils or by the vice of the goods themselves.
It ought to be borne in mind, when dealing with such cases, that the true test of the right to freight is the question whether the service in respect of which the freight was contracted to be paid has been substantially performed; and, according to the law of England,as a rule, freight is earned by the carriage and arrival of the goods ready tobe delivered to the merchant, though they be in a damaged state when they arrive. If the shipowner fails to carry the goods for the merchant to the destined port, the freight is not earned. If he carry part, but not the whole,no freight is payable in respect of the part not carried, and freight is payable in respect of the part carried unless the charterparty make the carriage of the whole a condition precedent to the earning of any freight �Cacase which has not within our experience arisen in practice.
The ordinary rule, in the absence of express or implied provision to the contrary, is that freight under a voyage charter is not payable until the cargo is delivered or tendered for delivery. That rule, which is reflected in the language of the printed form of the Gencon charter-party and elsewhere, does not depend onconsiderations which are in any way peculiar to voyage charters. It is common to all types of contract where the consideration is entire. The shipowner promises to deliver the goods at the contractual destination. If he fails to doso he has failed to earn his contractual freight. It matters not that the vessel and cargo have been lost by an excepted peril.
13.2 In order to earn freight, the shipowner must, unless otherwise agreed, carry the cargo to the destination provided forin the charterparty and be ready to deliver it there. If he fails to deliverany cargo, no freight is payable; if he delivers part of the cargo loaded, itis payable only the part delivered.

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