Employment and agency clause – master’s negligence in failing to clause mate’s receipt absolving charterers from liability
Wire rods were shipped from Caen to Tampa under a bill of a lading signed by the ship’s agent.
The master neglected to clause the mate’s receipt to record that the metal cargo showed signs of rust. Clean bills of lading were presented by the charterers to the ship’s agent who signed them in this form.
Upon arrival at Tampa the damage was discovered and the shipowners held liable.
The charterparty contained a clause that the vessel was to be responsible “for the number of
bundles/coils shipped, but not for the condition in which the iron is shipped.”
The shipowners sought an indemnity from the charterers on the basis that the bills of lading imposed more onerous obligations than the charterparty.
A panel of three arbitrators found that the master’s neglect precluded reliance on the indemnity ordinarily implied in this situation.
Their finding was upheld by the Commercial Court (Staughton J) whose decision was affirmed by the Court of Appeal (Sir John Donaldson MR, Mustill and Nicholls LJJ).
Both the Commercial Court and the Court of Appeal analysed the line of cases beginning with Moel Tryvan Ship Co. v Kruger & Co. in the process of arriving at their conclusion. Lord Justice Mustill remarked, that none were of assistance because the case turned on its own facts.
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