This article is written by ALAN MATHEWS,GOVERNMENT LAW COLLEGE ERNAKULAM during his internship with Le Droit India.
Introduction
A contract of carriage is a contract that is created between a carrier and a shipper for the transportation of goods or passengers. The carrier is the medium which transports goods or people for any person or company. The person or company for whom the carrier carries the weight is called the shipper. The shipper is also known as the consignor, i.e., the person who sends the goods.When the contract is established between a carrier and the person entering the goods, the ultimate is called the consignee. A contract of carriage may be due to payload through air, water or road. The legal liabilities of the carrier and the stoner are defined in a carriage contract. The stoner can be either the consignor or the consignee, and the carrier is either a freight trucking carrier, an air weight carrier or an ocean carrier.
International conventions made standardisation for the carrying of products in transnational freight shipments. These norms ensure that rules and laws are applied constantly. The standardised contract of carriage, which is included in all carrier contracts and mentioned in freight forwarders contracts, establishes minimal norms for carrier liability and duty, similar as in the event of loss or damage.
Significance of making a contract of carriage
The contract of carriage is important as it assigns rights and arrears to the parties involved when certain weight is being transported. These aspects of a contract of carriage of goods are significant because they help in the identification of the goods that are to be transported. Further, the contract of carriage gives detailed information about the consignor, the carrier, the consignee, and the mode of transportation. They also spell out all of the contract’s legal liabilities. The contract of carriage contains the terms and conditions to which the carrier and shipper are fairly bound. It takes effect once you, the shipper, subscribe the air waybill upon extending your payload.
Purpose of a Contract of Carriage
To establish a clear and fairly binding agreement between a carrier and a shipper for the transportation of goods. This contract is abecedarian to icing that the movement of goods is carried out easily, efficiently, and in agreement with agreed terms. Then are the main purposes of a Contract of Carriage Define liabilities Carrier The contract specifies the carrier’s scores to transport the goods safely, handle them duly, and deliver them to the designated destination within the agreed timeframe. Shipper It outlines the shipper’s duties, including accurate quilting, labeling, and furnishing complete and correct information about the payload. Set Terms and Conditions Establishes the terms of transportation, including delivery schedules, routes, and modes of transport(road, rail, ocean, air). figure Payment Arrangements Details the cost of transportation, payment terms, and conditions for any fresh freights or charges. This ensures that both parties are clear about the fiscal aspects of the service.
Allocate threat and Liability Specifies the extent of the carrier’s liability for loss, damage, or detention of the goods during conveyance. It may also cover insurance conditions or content. give disagreement Resolution Mechanisms Includes vittles for resolving any controversies that may arise between the parties, icing a structured approach to addressing conflicts. insure Legal Compliance Complies with applicable legal and nonsupervisory conditions, icing that the transport of goods adheres to applicable laws and norms. grease Effective Operations Helps in the smooth prosecution of logistics operations by easily defining the processes and liabilities involved, which aids in minimizing misconstructions and functional dislocations. Overall, the Contract of Carriage aims to produce a clear frame for the transport of goods, guarding the interests of both the carrier and the shipper and icing that the logistics process is conducted in an orderly and predictable manner.
In India, the execution and legal implications of a Contract of Carriage are governed primarily by statutory regulations, judicial precedents, and principles of contract law. Here’s how these aspects are addressed under Indian laws:
Execution of Contract of Carriage in India
- Formation of Agreement:
1.Negotiation and Agreement: Parties negotiate terms such as scope of services, cost, delivery conditions, and other obligations. The contract must reflect these agreements clearly. - 2.Written Agreement: While verbal contracts can be valid, a written agreement is highly recommended to provide clarity and evidence. Documents such as bills of lading or consignment notes are commonly used in India to formalize the contract.
- Signatures and Documentation:
1.Signatures: The contract is executed when authorized representatives from both parties sign it, making it legally binding.
2.Documentation: Relevant transportation documents (e.g., bill of lading, waybill) are prepared and signed. These documents act as evidence of the contract and receipt of goods. - Performance:
1.Carrier’s Duties: The carrier must adhere to the terms outlined, including proper handling, transport, and timely delivery of goods.
2.Shipper’s Duties: The shipper must fulfill their responsibilities, such as proper packing, accurate description of goods, and timely payment of charges.
Legal Implications under Indian Laws- Enforceability:
1. Legal Binding: Under the Indian Contract Act, 1872, a Contract of Carriage is enforceable if it meets the essential elements of a valid contract (offer, acceptance, consideration, and lawful object).
2.Jurisdiction: The contract may specify the jurisdiction for resolving disputes. Indian courts will enforce the contract according to the agreed-upon jurisdiction and applicable laws. - Liability and Risk:
1.Carrier’s Liability: The carrier is liable for loss, damage, or delay of goods under the contract. The extent of liability is often defined in the contract and must comply with the Carriage by Road Act, 2007, for road transport, and Indian Carriage of Goods by Sea Act, 1925, for sea transport.
2.Insurance: Contracts may require insurance coverage to mitigate risks. Failure to provide or comply with insurance requirements can lead to financial liability. - Dispute Resolution:
1.Arbitration and Mediation: Contracts may include dispute resolution clauses specifying arbitration or mediation as methods for resolving conflicts. The Arbitration and Conciliation Act, 1996 governs arbitration proceedings in India.
2.Litigation: If disputes cannot be resolved through alternative means, they may be pursued through Indian courts, following procedural rules set out in the Civil Procedure Code, 1908. - Regulatory Compliance:
1.Compliance with Laws: The contract must comply with relevant Indian laws, such as the Indian Contract Act, 1872, and sector-specific regulations like the Carriage by Sea Act, Carriage by Air Act, 1972, and Indian Railways Act, 1989.
2.Customs and Duties: The contract should address customs procedures and duties. Non-compliance can result in penalties or delays in delivery. - Amendments and Termination:
3.Modification: Changes to the contract must be mutually agreed upon and documented. Unauthorized modifications may not be legally binding.
4.Termination: The contract may outline conditions for termination, whether by mutual consent or due to breach. Legal remedies for wrongful termination or breach are available under the Indian Contract Act. - Key Legislation and Regulations
• Indian Contract Act, 1872: Governs the general principles of contract law in India.
• Carriage by Road Act, 2007: Regulates road transport and carriage of goods by road.
• Carriage by Sea Act, 1925: Governs the carriage of goods by sea.
• Carriage by Air Act, 1972: Regulates the carriage of goods by air.
• Arbitration and Conciliation Act, 1996: Governs arbitration and conciliation procedures.
In summary, under Indian law, the execution of a Contract of Carriage involves formalizing the agreement through written documentation and signatures, while the legal implications cover enforceability, liability, dispute resolution, compliance with regulations, and provisions for amendments and termination. Understanding these aspects ensures that the contract is effectively managed and legally sound. - Sample of Contract of Carriage–SHIPPER & CARRIER AGREEMENT
This Agreement shall govern the services provided by
____________________________, a licensed motor carrier
under Docket No. MC‐_ (hereinafter referred to as “Carrier”)
&____ __________________________ (hereinafter
referred to as “Shipper”).
The carrier agrees to transport a series of interstate shipments for Shipper
under carrier load confirmation sheet(s) included herewith or subsequently incorporated by reference.
Shipper shall pay Carrier for services rendered in an amount equal to the
rates and accessorial charges agreed to on Shipper’s load confirmation
sheet or other signed writing. Carrier must submit proof of delivery with
invoices to Shipper. Payment terms shall be thirty (30) days from receipt.
Carrier warrants to Shipper that it meets the following criteria:
1.Carrier shall maintain all risk cargo insurance in the amount of not less than Rs.000,000.00 per shipment;
2.Carrier shall maintain public liability insurance in the amount of not less than Rs.000,000.00 as required by central regulation (BMC- on file);
3. Carrier shall maintain workers’ compensation insurance as required by state law;
4. Carrier shall agree to provide certificates of insurance upon request;
5. Carrier shall maintain satisfactory safety ratings and are otherwise authorized to provide the proposed services; and
6. Carrier shall be in compliance with all applicable laws.
Governing Rules.
The following rules shall apply:
a)The terms of the standard truckload bill of lading and Carrier’s Service Conditions (see www._.com);
b) Standard claims rule otherwise applicable to common carriers;
c) Cargo claims liability as set forth as per the Amendment;
d) Destination market value for lost or damaged cargo, no special or
consequential damages unless by special agreement; and
e) Claims will be filed with the Carrier by the Shipper.
5.Release Rates. All shipments shall be subject to a maximum cargo liability
of ____ (Amount) per pound, subject to a __(Amount) per truckload maximum, unless by special written agreement.
Shipping Document Execution. Carriers will be named on the bill of
lading as the “carrier of record.” In no event will Carrier broker services
under this Agreement to any other carrier without prior written approval
from Shipper.
Indemnification. Carrier agrees to indemnify and hold Shipper harmless
from any claims or loss caused solely by any act or omission of Carrier, its employees or agents in the performance of this Agreement or the services
provided hereunder.
Law and Integration. This written Agreement and governing rules,
together with any load confirmation, contain the entire agreement between the
parties and may only be modified by signed written agreement. General
principles of federal transportation law shall apply.
This Agreement shall be for the period of one (1) year and shall be
automatically renewed unless canceled. Either party may terminate this
Agreement upon fifteen (15) days written notice.
CARRIER: ________________ SHIPPER:
By: __________________________ Its: _______
By: __________________________
Its: ____________________
Conclusion
It’s pivotal to outline the rights and duties of the shipper and carrier through a contract of carriage. With the changing geography of the shipping and carriage assiduity, there’s a pronounced need to move from strict to much further flexible agreements. But these contracts should contain certain abecedarian clauses, like those for rights and arrears, force majeure, act of god, etc. for maximum effectiveness. Care must be taken to insure that the agreement is not too one- sided. A balance must be struck, icing that both parties are inversely served from the agreement. Following these guidelines would lead to the creation of further cost-effective and effective contracts of carriage.
References
ogoport.com/en-IN/knowledge-center/resources/shipping-terms/contract-of-carriage-7
https://www.freightos.com/glossary/contract-carriage/
