Lecture 1 introduction:
Pyrene v Scindia
Plaintiff: Pyrene (seller)
Defendants: Scindia (shipowners)
Facts:
The plaintiffs (sellers= Pyrene), sold 6 fire tenders to the Government of India for
delivery FOB London. The buyers nominated a ship belonging to the defendants.
Through their forwarding agents they made all arrangements for the carriage of the
goods to Mumbai. While one of the tenders was being lifted into the vessel by the ship’s
tackle, the mast broke. The tender, which had not crossed the ship’s rail, was damaged.
As per the contract of sale between the parties, the possession of the property had not
passed at this stage. It was repaired at a cost of £966 and later shipped in another
vessel.
A bill of lading had been drawn up but was not issued.
The sellers sued the owners of the ship for the cost to repair the tender
The sellers claimed the cost of the repair the defendants. The defendants admitted
negligence but pleaded that, being carriers, their liability was limited under the Hague
Rules article 4 (5) then in force. Their L was limited to £200.
Plaintiff’s reasoning/ question:
1. The sellers of the tender claimed that as the goods had not crossed the rail of the
ship, The Hague Rules did not extend to the stage of loading before the goods
had crossed the ship’s rail. The loading operation as in article II of the rules has
to be interpreted according to article I (b). This article uses the wording “loaded
on”. Therefore, this situation falls not within the scope of the Hague Rules and
thus, there is no limited L for the carrier.
2. Because the bill of lading had not been conveyed, these terms had not been
included in the contract between the parties. The application of the Rules is
conditional to the issuance of a B/L.
3. Lastly, the seller argued that even if the term had been included in the contract,
they could not be applied in the agreement between the ship-owners and
themselves
Ruling by the court:
1. The court held that limited liability under the Hague Rules did extend to the
loading of the cargo on to the ship. Art. II of the HR is essential. The carrier
enjoys rights and immunities “in relation to the loading”. The wod Loading needs
to be interpreted. Art I(b) and (e) and art II of the Rules are applicable when
there is a contract of sale by the sea. These articles do not constitute a limit of
time. Especially article I(b) is there to identify the first operation of the contract
of carriage by the sea. The words “loaded on” are not there to identify a specific
moment of time. “Loading” in art. II is to be interpreted as the whole loading
operation undertaken by the carriers, and not only that stage of the loading
occurring after the goods crossed the ship’s rail. Loading and discharging are an
essential part of the COG. The rules apply to the whole contract of carriage. It is
left to the parties to decide the extent to which loading and discharging are
, brought within the carriers obligations. David J. gave judgement for the sellers
for £200.
2. Bill of lading not being issued is irrelevant. Contract of carriage is “covered” by a
B/L. This means that the COG is naturally concluded before the issuance of the
B/L. That COG was from its creation covered by a B/L.
3. It was the intention of all three parties that the sellers, although not parties to
the contract of carriage by sea (which was concluded between the buyers and
the defendants), participated in the contract so far as it affected them and took
the benefits of the contract, which appertained to them. But the sellers are also
subject to the qualifications imposed by the terms of the contract ( the contract
embodies the Rules) i.e. subject to the maximum limits of liability.
Contract of Sale:
Aluminium Industrie Vaassen B.V. v. Romalpa Aluminium ltd.
Facts:
Plaintiffs: Aluminium Industrie Vaasen BV (seller)
Defendants: Romalpa Aluminium Ltd (buyer)
Aluminium Industrie Vaasen BV (seller) was a Dutch supplier of aluminium foil.
Romalpa Aluminium Ltd (buyer) processed it in their factory.
In the contract of sale, it said that ownership of the foil would only be transferred to
Romalpa when the purchase price had been paid in full (first part clause 13 contract)
and products made from the foil should be kept by the buyers as bailees (the contract
referring to the Dutch expression ‘fiduciary owners’) separately from other stock on
AIV’s behalf as ‘surety’ for the rest of the price. But it also said Romalpa had the power
to sell the manufactured articles in the course of business. On the condition that — if
A.I.V. so requires — purchaser, as long as he has not fully discharged his debt to A.I.V.
shall hand over to A.I.V. the claims he has against his buyer emanating from this
transaction.”
Romalpa went insolvent (owing 122, 000 to AIV) , and the receiver and manager of
Romalpa's bank, Hume Corporation Ltd, wanted the aluminium to be caught by its
floating charge. Receiver certified that £35,152 was held in an account in his name with
the defendants' bankers, representing the proceeds of sale of aluminium foil supplied by
the plaintiffs which the defendants had sold to third parties.
Question:
Plaintiff (AlV) contended that its contract was effective to retain title to the goods, and
so it did not need to share them with other creditors in the liquidation.
Defendant ( Romalpa): clause 13 was to make them bailees of the material supplied by
the plaintiffs until all debts were paid, but contended that once they had resold the
material to bona fide purchasers the relationship between them and the plaintiffs was
purely that of debtor and creditor and that, in the absence of an express or constructive
trust, the plaintiffs were not entitled to avail themselves of the equitable remedy of
tracing the money.
Ruling By the court of appeal:
, High Court: the purpose of clause 13 was to protect the plaintiffs as far as possible.
There is an implied term in the first part of the clause that in order to give affect to that
purpose, that there is an obligation on the defendants to account in accordance with the
normal fiduciary relationship of the principal and agent, bailor and bailee. Following
this they are entitled to trace the proceeds of the sub-sales and recover them.
Appeal:
Three grounds:
1. Clause 13 as a part of general terms of the contract of sale did not apply
2. Plaintiffs are not entitled at law to trace sums of money
3. Judge did not follow ratio decendi decidendi in re Hallett's Estate, 13 Ch.D. 696
(principles cannot be applied).
Judges Roskill, Goff, Megaw dismisses appeal and affirm decision of Mocatta.
Cehave NV v Bremer Handels GmbH (The Hansa Nord) (1975)
Plaintiff: Bremar Handels
Defendant: Cehave NV
Facts:
Cehave NV agreed to purchase for GBP 100,000 from B a quantity of citrus pulp pellets
c.i.f. Rotterdam for use as animal feed. A term of the contract was "shipment to be made
in good condition." When the cargo arrived at Rotterdam the market price of the goods
had fallen and it was found that part of it was damaged. Cehave rejected the whole cargo
on grounds that shipment was not made in good condition.
Bremer rejected the claim. The whole cargo was bought by an importer for GBP 30,000
and resold on the same day for the same sum to Cehave who used it for animal feed.
Mocatta, J. upheld the finding of the arbitration tribunal in favour of Cehave holding that
the term "shipment to be made in good condition" was a condition of the contract,
breach of which justified rejection and that the goods were not of "merchantable
quality" within s. 14 (2) of the SGA.
Bremer appealed.
Ruling of the court of appeal:
Court allowed the appeal:
1) The term was no condition, but an intermediate stipulation:
“The term ‘Shipped in good condition’ was not a condition strictly so called nor was it a
warranty strictly so called. It was one of those intermediate stipulations which gave no
right to reject unless the breach went to the root of the contract, which it did not do in
the present case.”
2) The goods were of merchantable quality within s. 14 of the SGA.
