Shipping Law Working for Peanuts  Term Paper

  • Length: 11 pages
  • Sources: 7
  • Subject: Business - Law
  • Type: Term Paper
  • Paper: #54414964

Excerpt from Term Paper :

It is also established practice to assume that the date on the bill of lading is the actual date on which the goods were successfully loaded onto the shipping vessel in the absence of any other evidence, and this would at first seem to suggest that the bill of lading must be taken at face value (GAFTA 100). BigNut's agents encountered evidence that loading of the peanuts onto the Al Sudan did not take place until April 1, however, meaning that the bill of lading itself could be a fraudulent document.

There is also substantial incentive for SudanNut to have fraudulently applied the date of March 31, 2011 to the bill of lading: the contract of sale explicitly stated that the peanuts were to be transported during the month of March, and both law and case precedent insist that this be interpreted as a literal interpretation of the calendar month during which the transport of the goods is to take place (Bowes v Shand [1877] 2 App Cas 455; Sale of Goods Act of 1979). Case precedent also deems that a breach of a stated timeframe for the transport of goods can result in the nullification of the contract, voiding the buyer of any responsibility to accept the goods (Bowes v Shand [1877] 2 App Cas 455). If the bill of lading was fraudulently produced by SudanNut due to their knowledge of this provision in the law, the document itself could be grounds for suit by BigNut.

The documentation regarding the quality of the peanuts prior to shipment are a more difficult issue. The contract states that the certificates produced by the SSMO are to be considered the final word on the true quality of the product at the time of loading, and as the buyer agreed to this provision it will be quite difficult to assert otherwise after the fact. That BigNut's agents found evidence of greater humidity levels in the peanuts than reported by the SSMO -- something that cannot be explained by accidents or negligence during transport, but that was either measured or reported incorrectly at the point of origin -- is certainly disturbing, but it is not something that gives BigNut's cuase for action or the seeking of financial damages. The certificate of quality itself must be presumed to be a valid document unless evidence emerges to the contrary; there is some evidence and strong motivation for the fraudulent creation of the bill of lading, but such evidence/motivation has not been established by the SSMO, and the discrepancy could very well be an error rather than a conscious act.

Other documentation not required by the contract was also furnished to BigNut Corp., including an invoice that repeats the basic quality description stipulated in the contract and essentially affirmed by the certificate of quality. This document could provide further evidence of the disparity between the quality of the goods not only as they arrived but also as they were upon loading, in some aspects, yet the document itself is not a cause for action. As this invoice is not described or even mentioned in the sale contract, no duty existed on the part of the seller to furnish it or ensure its accuracy, and the fact that the information is repeated in greater detail on other required documents renders it largely obsolete.

Rights in Respect of Goods

There are clearly damages to the peanuts shipped by SudanNut and purchased by BigNut due to negligence, from the tearing and other damages observable on the Jute bags in which the peanuts were packed to the existence of saltwater in some containers to the uncleanly condition of the cargo areas or containers in which the peanuts were stored. It is far less clear who BigNut can hold responsible for these damages, however, and how the company can go about attempting to collect recompense for these damages. While the purchasing company certainly has many rights in relation to the goods purchased and the seeking of remedies for damages to the goods, whether or not these rights extend to legal capabilities to hold the appropriate parties accountable is somewhat dubious for a variety of reasons.

According to the Hague-Visby Rules, the carrier of goods becomes responsible for maintaining he quality and description of the goods as furnished to the carrier by the shipper, and any discrepancy in quality or description becomes the liability of the carrier after acceptance of the goods onboard the carrying vessel (Article III, par. 5). While proof of gross negligence or outright fraud on the part of SudanNut might enable some action from BigNut against the company, this element of the Hague-Visby Rules would make it fairly easy for SudanNut to acquit itself of any obligations as to the quality and quantity/other description of the goods after their transfer to the carrier. BigNut must therefore seek recompense for the loss of goods and damages to goods from the carrier, which in a simpler case would be the owner/operator of the Al Sudan but which is more complicated in the current scenario.

The owner operator of the Al Sudan was not directly contracted by SudanNut for the transportation of the goods to BigNut in Galveston, but instead the boat was under a time charter to Circle Shipping Line, which was in turn contracted to the loading broker firm of RRS Reliance PLC, which was contracted by SudanNut on bill of lading terms for the transport of the peanuts. This bill of lading contract between SudanNut and RRS Reliance PLC effectively transfers responsibility and liability for the quality of the goods and their safe and secure arrival in the hands of the buyer to RRS Reliance PLC as the carrier of the goods, though RRS Reliance PLC could claim that Circle Line Shipping or even Ishtkar PLC, the UK-based ship-owner of the Al Sudan, is actually the responsible party (Bridge, 1999; Wilson, 2008). No matter where the finger pointing ceases, however, it is not clear under what jurisdiction BigNut could seek recompense nor even what it could seek recompense for.

UK law was used a standard for this international interaction, but is only necessarily and unquestionably applicable in governing the relationship between BigNut and SudanNut as reliance on UK law is specifically mandated in the agreement between these two entities. Because none of the loading, unloading, or even shipping took place in an area in which UK law actually holds dominion, it could be argued that UK laws and case precedents do not apply to any third-party responsibilities to BigNut. As both the ship's operator and the loading broker are British companies, however, it is likely that they will acquiesce to those demands for redress mandated by law. Insurance should cover the lost amount of product, and any damage that can be demonstrated to be the fault of the carrier can also be recovered -- if the damage can actually be proven (Wilson, 2008).

Rights Against SSMO

The Sudanese Standards and Metrology Organization undoubtedly breached its duty in ascribing a lower-than-actual humidity level to the peanuts. It is also possible that the SSMO breached its duty in establishing the percentage of foreign matter found in the shipment of peanuts, however it is also possible (even likely) that the excessive foreign matter is the result of improper handling and storage by the carrier, and fixing definite blame/responsibility for this issue will be much more difficult. The clearest grievance BigNut has with the SSMO, then, is in regards to the humidity readings and certification, and the clearest claim that BigNut could assert is one of negligence on the part of the SSMO for improperly testing the shipment or perhaps using faulty equipment. A case of fraud, while perhaps ultimately more beneficial to BigNut in terms of recoupment, would be much more difficult for the purchaser to prove.

Though negligence could be readily established with appropriate figures from reliable sources demonstrating the impossibility of additional humidity having entered the peanuts during shipment, jurisdiction still presents an issue. As a sovereign nation, neither Sudan nor the Sudanese Standards and Metrology Organization is automatically bound by UK law, and again the reliance on UK law is only established by contract between BigNut and SudanNut. It is not clear whether or not the SSMO is part of the Sudanese government; if…

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