had no knowledge of the deviation. On learning of the deviation, Tate and Lyle, the endorsees, commenced an action to recover the deposit they had paid toward general average contributions. The House of Lords held that the consignees could rely on the deviation. The waiver of the deviation by the charterers did not affect their right to repudiate, since waiver could not take place in ignorance.

Where a ship deviates after the cargo is lost or damaged, it is unclear whether the carrier loses the benefit of the exception clauses with regard to the damage or loss that occurred before the deviation. In Internationale Guano v MacAndrew,49 the judgment of Pickford J suggests that the shipowner cannot take advantage of the exclusion clauses in the contract even where the damage or loss occurred before the deviation. However, in Hain v Tate and Lyle,50 there are dicta to suggest that the cargo owner can treat the contract at an end only from the date of deviation, which means that the exclusion clauses will be operative in respect of those damages that occurred before the deviation. The opinion expressed in Hain v Tate and Lyle is perhaps the better one since it is difficult to see how rights that have accrued prior to a deviation can be displaced by that deviation.

The view that the shipowner loses the benefit of exclusion clauses in the contract of carriage is the subject of some debate since the decision in Photo Production v Securicor.51 Even though Lord Wilberforce stated in Photo Production that deviation cases must be preserved as a body of authority sui generis, legal and academic opinion, however, seem to favour the view that the extent to which exclusion clauses apply to the contract of carriage upon deviation should be treated as a matter of construction.52

Negligence

There is an implied obligation in every contract of affreightment, according to Lord Mcnaghten in The Xantho,53 that the shipowner will ‘use due care and skill in navigating the vessel and carrying the goods’ (at p 515). There is also a duty, according to Willes J in Notara v Henderson,54 on the part of the master representing the shipowner ‘to take reasonable care of the goods entrusted to him, not merely in doing what is necessary to preserve them on board the ship during the ordinary incidents of the voyage, but also in taking reasonable measures to check and arrest their loss, destruction or deterioration, by reason of accidents’ (p 235).

The shipowner can exclude liability for damage or loss caused by negligence but these clauses, like the clauses exempting liability for deviation and unseaworthiness, need to be express, pertinent and apposite.

Implied obligations on the part of the shipper

Common law implies an obligation on the shipper to inform the shipowner of the dangerous nature of the goods. Notification, however, is not required where the carrier or a member of the crew knows or should have been reasonably aware of the dangerous nature of the cargo. In Brass v Maitland,55 the

49[1909] 2 KB 360.

50The effect of fundamental breach on exclusion clauses was discussed in a number of cases prior to Photo Production and referred to in Photo Production.

51[1980] AC 827.

52See also Chapter 8, pp 229–32.

53[1887] 12 AC 503.

54(1872) LR 7 QB 225.

55(1856) 26 LJ QB 49.

shipowner was expected to know of the dangerous character of chloride of lime since the cargo was described as bleaching powder.

The concept of dangerous goods has been widely construed. It not only includes intrinsically dangerous substances (e.g., radioactive materials, explosives, petroleum), but also what apparently is safe cargo, which in appropriate circumstances may create a hazardous situation. The dangerousness of the cargo is determined in the light of the overall nature of the situation.56 Goods are regarded as dangerous not only where they endanger the safety of the ship and the cargo, but also where they detain the vessel. In Mitchell, Cotts v Steel Bros and Co Ltd,57 a cargo of rice was held to be dangerous since the charterer knew of the need for permission from the British government to unload the cargo but did not inform the shipowner of this.

It is unclear whether or not the undertaking implied at common law is an absolute obligation. There is authority to support both views. In Brass v Maitland, bleaching powder containing chloride of lime was shipped in casks. The fumes from the powder escaped and corroded goods that had been stowed alongside the casks. The shipper had shipped the goods on acquiring them from a third party without inspecting the consignment. Lord Campbell and Wightman J were of the view that the shipper’s liability is an absolute one so that he is liable, even where he is unaware of the dangerous nature of the goods. Crompton J, however, doubted the wisdom of this view; first, there was no authority to support the view that the undertaking not to ship dangerous goods was an absolute one on the part of the shipper, and, second, although expedient, it had the unfortunate result of making an ignorant shipper liable. He felt that the warranty extended only to ‘cases where the shipper has knowledge, or means of knowledge, of the dangerous nature of the goods when shipped or where he has been guilty of some negligence as shipper, as by shipping without communicating danger, which he had the means of knowing, and ought to have communicated’ (p 57). The subsequent case of Mitchell, Cotts v Steel Brothers, however, suggests that the guarantee provided by the shipper is a guarantee that it is not dangerous to his knowledge and that he has taken reasonable care to assure himself of that fact. The much more recent case of The Athanasia Comninos58 may have resolved the ambiguity to some extent. It supports the strict liability approach put forward in

Brass v Maitland.

The shipowner has the burden of proving lack of notification regarding the dangerous nature of the goods.

Shipowner’s immunities

The shipowner is free to negotiate the terms of sea carriage. It is not unusual for bills of lading not governed by Carriage of Goods by Sea Act 1971 to include an extensive list of exception clauses that operate in the shipowner’s favour. In the absence of express exemption clauses in a bill of lading, common law implies a number of exclusions that operate in favour of the shipowner. These common law exceptions are also available to common carriers59; hence, shipowners whose contracts have been repudiated can also take advantage of these exceptions, provided they can show that the damage would have occurred even if they had not deviated. In Morrison v Shaw Savill,60 the ship deviated from

56Ministry of Transport v Lamport and Holt [1952] 2 Lloyd’s Rep 371.

57[1916] 1 KB 610.

58[1990] 1 Lloyd’s Rep 277.

59A common carrier, unlike a private carrier, holds himself willing to carry goods for anyone for reward. Tyly v Morrice (1699) Carth 485; 90 ER 879; Bennet v Peninsular and Orient Steamboat Co (1848) 6 CB 775; (1848) 136 ER 1453; Liver Alkali v Johnson (1874) LR 9 Ex 338. See Lord Mansfield’s judgment in Forward v Pittard (1785) 1 TR 27, at p 33. See also Chapter 13.

60[1916] 2 KB 783.

the contract route. It was sunk by an enemy ship. The carrier could not take advantage of the common law exception of act of the King’s enemies since the carrier could not establish that the vessel would have sunk even if there had been no deviation.

Common law exceptions

In the absence of express stipulations in the contract of carriage, common law implies the following exclusions:

•act of God,

•act of Queen’s enemies and

•inherent vice.

Act of God

The carrier is not liable for loss or damage where it is the result of natural causes independent of human intervention and which could not be prevented by the exercise of foresight and reasonable care.61

Act of queen’s enemies

The carrier is not liable for loss or damage that has occurred because of acts committed by states or their subjects with whom the Sovereign is at war. This exception does not, however, cover acts perpetrated by pirates or robbers.62

Inherent vice

The carrier is not liable for loss or damage to goods where it is caused by defects that are inherent in the goods. Loss or damage includes wastage in bulk or weight. Inherent vice has been construed as the unfitness of the goods to withstand the ordinary incidents of the voyage despite the exercise of care required of the carrier.63 So, where goods are damaged due to rust, evaporation or defective packing, they have been regarded as constituting inherent vice.

Contractual exceptions

The parties, as stated earlier, under English law, are free to negotiate the terms of carriage. It is not unusual to find a long list of exemption clauses that relieve the shipowner of liability – for instance, in the event of negligence of the ship’s crew, collision, strikes, perils of the sea and strikes.The exclusion clauses will be effective in protecting the shipowner only if they are clearly worded. Where the clauses are ambiguous, they are construed contra proferentem following the general principles of English contract law.64 As for s 2 of the Unfair Contract Terms Act 1977, which requires exclusion clauses to fulfil the requirements of reasonableness, para 2 of Sched 1 to the Act specifically states that ss 2–4 (excepting s 2(7)) do not extend to any contract of carriage of goods except in favour of a person dealing as a consumer. A party deals as a consumer where he neither makes the contract

61Nugent v Smith (1876) 1 CPD 423.

62Russell v Niemann (1864) 17 CB (NS) 163.

63The Carcore [1896] 65 LJ Ad 97.

64See Furmston, Cheshire, Fifoot and Furmston’s Law of Contract, 16th ed. 2012 OUP, for an account of the construction of exclusion clauses in English contract law.

in the course of business nor holds himself out as doing so and the other party makes the contract in the course of business, according to s 12(1)(a) and (b). It is, therefore, unlikely that the Unfair Contract Terms Act 1977 has a major impact on exclusion clauses in bills of lading.

Since the list of exception clauses is inexhaustible, it will not be possible to look at all of them. Therefore, only some of the more commonly found contractual exception clauses will be considered in this chapter.65

Perils of the sea

Where the contract expressly excludes liability for perils of the sea, the courts have interpreted it to refer to any damage that has been caused by storms, sea water, collision, standing or perils that are peculiar to the sea or to ship at sea and which could not have been avoided by the exercise of reasonable care.66 This exception does not protect the shipowner from damage or loss from events that are not peculiar to the sea or a ship at sea. So, where goods are destroyed because of rats on board a ship67 or by cargo being dropped on them during loading,68 the shipowner will be unable to invoke this exception. Neither do perils of the sea extend to the inevitable action of the wind and the waves,

which results in wear and tear.69

Arrest or restraint of princes

An exclusion clause in a bill of lading excluding liability for loss or damage due to arrest or restraint of princes, rulers and peoples has been interpreted to apply to a number of situations. It has been successfully invoked where the government of a country takes possession of the goods through embargo, arrests or blockades70; where there is a prohibition against importation of the goods71; or where the goods cannot be discharged because of quarantine restrictions. It does not, however, apply to situations where there is restriction imposed on sea routes for the safety of shipping or to any political disturbances.72

Hostilities and riots

Bills of lading normally contain an exclusion clause relieving the shipowner of liability in the event of damage caused by riots or other commotion. The reason for such a clause is that the common law exception of ‘act of Queen’s enemies’ does not cover civil war, riots or other disturbances. The common law exception only extends to cover acts of war committed by states with whom the Sovereign is at war.

Strikes

It is common to find clauses exempting liability in the event of strikes. The word ‘strike’ was interpreted by Lord Denning in The New Horizon73 and refers to a concerted stoppage of work by men done with a view to improving their wages or conditions. The strike exception clause not only covers

65See Scrutton on Charterparties, 20th edn, 1996, Sweet & Maxwell for an extensive list of contractual exceptions.

66Canada Rice Mills v Union Marine [1941] AC 55.

67Hamilton v Pandorf (1887) 12 App Cas 518.

68Scott v Marten [1916] 1 AC 304.

69The Xantho (1887) 12 AC 503.

70Geipel v Smith (1872) LR 7 QB 404.

71Stringer v English and Scottish Marine Insurance Co (1870) LR 5 QB 599.

72Nesbitt v Lushington (1792) 4 TR 783.

73[1975] 2 Lloyd’s Rep 314, at p 317.