2.4 The terms of the charter party and the bill of lading – the tramp bill of lading
When the vessel is on charter, questions may arise as to the relationship between the bill of lading and the charter party. The answer is given in MC Section 325 – which is entitled “Tramp bill of lading”:
“If the carrier [Norwegian: bortfrakteren] issues a bill of lading for goods on the ship, the bill of lading shall govern the conditions for the carriage of and delivery of the goods as between the carrier [bortfrakteren] and a third party holder of the bill of lading. Provisions of the chartering agreement which are not included in the bill of lading cannot be invoked against a third party unless the bill of lading includes a reference to them.
The provisions relating to bills of lading in Sections 295 to 307 also apply to a bill of lading as mentioned in paragraph one. When it follows from Section 253 that the provisions of Chapter 13 apply to the bill of lading, the liabilities and rights of the carrier [bortfrakteren] in relation to third parties are governed by the provisions of Sections 274 to 290, cf. Section 254.”
Here the “carrier” is defined in Section 321 as “the person who, through a contract, charters out a ship to another (the charterer)”, and that may be on voyage or time charter terms.
The background here is that when the charterer delivers goods to the vessel – he is the shipper – he is entitled to demand a bill of lading (Section 338).(1) Here we are clearly outside our practical limitation to liner carriage: it is very unlikely that the line delivers goods to the chartered vessel and demands a bill of lading. But it has been considered useful to include an overview of Section 325, since it throws light on the attitude to the basic bill of lading questions. It is trite law, however, that a bill of lading issued to the charterer does not change the terms of the charter party.(2) Exceptions may arise from clear statements, as in the old Baltimore Form C Berth Grain Charter Party stating that the charter “shall be completed and superseded by the signing of bills of lading”. One qualification is necessary: the bill of lading does have one important function in this con it is an acknowledgement of having received goods in the quantity and condition described in the bill of lading, at the time stated in the document. The evidentiary effect of this information is regulated by MC Section 299: there is a presumption that the information is correct (paragraph one). The non-rebuttable provision in the third paragraph, in favour of a bill of lading holder who has acquired the document “in good faith”, cannot be pleaded by the charterer, unless he is not the actual shipper.(3) He is e.g. a buyer on fob-terms and has paid the purchase price against receipt of the bill of lading; he may then be protected by the third paragraph.
When the charterer transfers the bill of lading(4) E.g., the charterer is a cif-seller who is paid against transfer of the bill of lading., the legal position of the issuing owner maychange dramatically, cf. Section 325. The bill of lading now constitutes a contractual relationship between the issuer and the bill of lading holder.(5) Receiving the bill of lading does not necessarily mean that the holder is bound, but at least on receiving the goods the relationship is changed, see Section 269 paragraph one: “If the goods are delivered against a bill of lading, the receiver becomes liable on receiving the goods for freight and other claims due to the carrier pursuant to the bill of lading.” The terms of the charter party are immaterial (e.g. a limitation of liability or jurisdiction clause), unless there is “a reference to them”.
A simple reference to “all the terms of charter party are incorporated” has been met by courts with scepticism:(6) See Falkanger & Bull, Sjørett (8 ed. 2016) p. 412. As the shipper in most instances has no knowledge of the charter, and the reference may have serious consequences, there has been a tendency to disregard terms that deviate from what could have been reasonably expected – and such terms have not been accepted as “incorporated”. This is the background for adopting the wording “all terms, including exceptions and jurisdiction clauses” or similar. It is surprising that this issue was not commented upon in connection with the preparatory work for the MC 1994.(7) See NOU 1993: 36 p. 61, where one could have expected a discussion.
The cargo may be delivered to the vessel by a party who is not the charterer (typically: a fob-seller). In such a case, the bill of lading issued by the owner of the vessel to this shipper then constitutes a contract between them (Section 325 paragraph one first sentence), and the contents of the charter party are immaterial unless there is a “reference” to those charter party terms.
We should add some remarks here about Section 325 paragraph two, regarding the effects of the bill of lading issued by the owner of the chartered vessel. The second sentence – dealing with the application of the general rules on cargo damage and delay and to what extent the rules are peremptory – requires no comments. It is partially otherwise with the first sentence. This says that Sections 295 to 307 apply. Of these general bill of lading rules, only those in Section 295 are of interest in our context. First, it should be noted that there is no reference to Section 294 concerning the general obligation to issue bills of lading when demanded by the shipper, which is explained in the preparatory works:
“There is no reference to Section 294, which gives the shipper the right to demand a received for shipment bill of lading. In voyage chartering the owner is only obliged to issue an on board bill of lading, cf. Section [338]” (NOU 1993: 36 p. 61).”
This is not quite correct, since Section 294 paragraph two deals with the right to demand an on board bill of lading. The essence, however, is that the shipper can demand an on board bill of lading according to Section 338.
The preparatory works do not comment on the reference to Section 295, which says, as stated above, that the “carrier” is bound by the master’s signature on the bill of lading. The carrier, according to Section 251, is the contracting carrier, while Section 338, as pointed out in 2.5, makes the owner of the vessel liable under the master’s bill of lading.