CHAPTER 16

FREIGHT

16.1 Introduction

The rules here are complex and only explicable, if at all, in the terms of their ancient history. Nevertheless, they are for the most part well settled.

16.2 Freight payable on delivery

The prime facie rule is that freight is payable on delivery of the goods. So, if the goods are not delivered, even through an excepted peril, the carrier cannot sue. This was held in Hunter v Prinsep (1808).

On the other hand, if the goods arrive, though damaged, freight is due in full and the claim for damage must be the subject of a separate action (Dakin v Oxley (1864) (see, further, 16.8, below)), but the goods must still be commercially the same as those shipped (Asfar v Blundell (1896)).

16.3 Lump sum freight

If the contract provides for freight in a lump sum, it is not necessary for the full cargo to arrive for freight to be due. It is sufficient that part of the cargo arrives, even though the vessel never completes the voyage (see Thomas v Harrowing (1915)) and even though it is the shipowner’s fault.

16.4 Pro rata freight

Although the ship may fail to complete the voyage and the goods are not delivered, there may be an express or implied agreement to pay all or part of the freight, for example, parties may agree to discharge at a different port as a substituted performance (Christy v Row (1808)), but this is dependent on proof of an agreement (St Enoch Shipping v Phosphate Mining (1916)).

16.5 Advance freight

Where freight is paid, or payable in advance, then it is due even though goods do not reach their destination. In practice, freight is often made payable in advance and, in certain trades, it may be desirable or even essential to obtain bills of lading stamped ‘freight pre-paid’.

225

Principles of Commercial Law

16.6 Back freight

Normal delivery may sometimes be prevented by some cause outside the master’s control. The master may then take reasonable steps to deal with goods and shipowners may charge cargo owners ‘back freight’ to cover expenses so incurred.

16.7 Dead freight

If a charterer fails to keep his contract to provide cargo, the shipowner may have action against him for ‘dead freight’.

16.8 Set-off

The shipowner may have a claim for freight and the cargo owner may have a claim against the shipowner for delivering only part of the cargo, or delivering it in damaged form. One might expect that the cargo owner could set-off his claim against the claim to freight, but it is clearly established that this is not so (see Dakin v Oxley (1864)). This is of considerable practical importance since the time limit for the two claims will frequently be different.

The Aries (1977) involved a voyage charterparty where there was an alleged short delivery. The charterers paid their freight less $30,000. It was held by the House of Lords that the shipowners could sue for the balance. The Hague Rules applied to the claim for short delivery, but that claim was barred after a year. In other words, in such a situation, the cargo owner must pay in full and issue a writ in respect of his own claim within a year.

It is unclear whether these rules apply equally to time charters. In the leading case of The Nanfri (1979), the majority of the Court of Appeal thought that they did not, but the House of Lords expressed no view. Most time charters would include some express power to deduct for off-hire but, it seems probable that, under the general rules of set-off, the charterer can also deduct reasonable claims made in good faith, arising out of conduct by the shipowner which has deprived him of the use of the ship.

16.9 Who is liable for freight?

There may be claims for freight against:

(a)the shipper of the goods;

(b)the consignee or indorsee of the bill of lading;

226

Freight

(c)a seller who stops goods in transitu;

(d)the charterer.

Note that changes are made here by s 3 of the Carriage of Goods by Sea Act 1992.

227

PART IV

INTERNATIONAL SALES