Estoppel – demise clause
Cocoa butter was shipped from Apapa, Nigeria to Sharpness. The cargo owners alleged that the cocoa butter was contaminated with brass filings and other foreign matter. It was also, in part, short delivered.
The time charterer and the owner of the vessel, Henrik Sif, were joined as first and second defendants. The Hague Rules, imposing a one year time bar on cargo claims applied.
The bills of lading under which the cargo was shipped, though printed on the time charterer’s stationary, contained a demise clause making the owner liable on the bills.
The cargo owners employed a recovery agent to pursue their claims. The agent assumed that the time charterer was the contracting party liable on the bills.
The recovery agent entered into correspondence with an agent for the time charterer in which the time charterer requested information relating to the merits of the claim.
Not only did the time charterer give the impression that it would contest the claim on merits but it also gave cargo two extensions of time with no indication that it was not party to the contract.
The court inferred that the charterer’s agent, while aware of the demise clause and the misapprehension of cargo’s recovery agent, deliberately refrained from disclosing the true state of affairs.
The court found that it was unconscionable for the charterers to rely on the time bar and they were estopped from denying liability on the bills.
The case contains a careful analysis of the three species of estoppel notionally applicable to the facts, namely, estoppel by silence or acquiescence, promissory estoppel in pais and equitable estoppel not confined to estoppel affecting rights or interests in land.
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