CMI - SINGAPORE

8.1 For the purpose of this Chapter 8 ‘freight’ shall include deadfreight.

8.2

(a) Freight is deemed to be earned upon delivery of the goods to the consignee in accordance with 9.1, unless the parties have agreed that the freight shall be earned, wholly or partly, at an earlier point in time or at an earlier occasion.

(b) Unless otherwise agreed, no freight will become due for any goods which are lost before the freight for these goods is earned.

This provision follows the main rule that the carrier must have performed duly before its remuneration becomes due. Obviously, this provision is not of mandatory nature. Practice may differ. In the various modes of inland transport (at least in Europe) this main rule is usually followed. In maritime container trade, however, it is customary that bills of lading include the provision that the freight is already earned upon receipt of the goods by the carrier. In maritime charterparty trade a lot will depend on the usages of the particular trade. It is not uncommon that charterparties include that the larger part of the freight is earned and payable at some point in time in the beginning of the voyage (e.g. upon shipment of the goods, on the third day after issue of the bill of lading, etc.) and the balance somewhere at the end of the voyage (e.g. when opening hatches, three days after delivery of the goods to the consignee, etc.).

No provision is included in the draft that the freight should be stated in the transport document. Unless national law requires otherwise, parties should be left free in that respect. By nature, freight is of confidential character and it is up to the parties how they want to evidence their agreement on freight. This may be different if the transport document is negotiable. (see 8.5 below)

8.3

(a) Freight is payable when it is earned, unless the parties have agreed that the freight is payable, wholly or partly, at an earlier or later point in time or at an earlier or later occasion.

(b) If subsequent to the moment that the freight has been earned the goods will be lost, damaged, or otherwise not delivered to the consignee in accordance with the terms and conditions of the contract of carriage, freight shall remain payable irrespective of the cause of such loss, damage or failure in delivery.

(c) Unless otherwise agreed, payment of freight is not subject to set-off, deduction or discount on the grounds of any counterclaim that the contractual shipper or consignee may have against the carrier, [the indebtedness or the amount of which has not been agreed or established otherwise yet.]

8.3(a) states the main rule that the freight is payable when it is earned. Parties may agree otherwise. Often, parties do not make the distinction between freight earned and freight payable. Whether they do or not, is a matter of interpretation of the contract, which interpretation may be influenced by the corresponding provisions in other contracts such as the contract of sale relating to the same goods. It is thought that in an international instrument of general nature no rules of interpretation of certain freight provisions in contracts of carriage should be given.

The usual exception to the main rule is that parties agree that the freight is payable before it is earned. It is not excluded, however, that parties for some reason or another agree that the freight will become payable at a later moment than it is earned.

8.3(b) includes the generally accepted principle that events, which occur after the moment that the freight is earned, are irrelevant to the obligation to pay the freight to the carrier. It may be questioned whether this principle also should apply if the goods get lost, etc. through default of the carrier for which he may be held liable by the consignee. The draft answers this question in the affirmative. In such case the freight should form part of the damage to the goods, which may be claimed from the carrier.

Further, freight payment should be without prejudice to any claim against the carrier. Normally, at the moment that the freight is payable, it is still open whether a valid counterclaim exists and, if so, the amount of such claim. Therefore, in 8.3.c the rule is given that, in principle, a set-off is not allowed.

8.4

(a) Unless otherwise agreed, the contracting shipper is liable to pay the freight and other charges incidental to the carriage of the goods.

(b) If the contract of carriage provides that the liability of the shipper, wholly or partly, will cease upon a certain event or after a certain point of time, such cessation is only valid if and to the extent that all the amounts payable to the contracting carrier under the contract of carriage may actually be satisfied through the contracting carrier enforcing its rights as referred to in 8.6. or otherwise.

It may be expected that the parties to the contract of carriage have agreed which person(s) is/are liable to pay the freight, demurrage, damages for detention, etc.: the shipper, and/or the consignee, and/or any third party. This liability may be joint, several, or joint and several. The first paragraph of this article, therefore, has a limited character. It is only meant to provide a fall back in case no (clear) agreement exists as to who will have to pay the freight and other charges.

Normally, if a shipper is liable to pay the freight and other charges, such liability will not cease upon certain events, e.g. after he has parted with the bill of lading or after the cargo has been shipped. However, parties may agree on a cesser clause. The second part of this provision, which is of mandatory nature, limits the validity of such a clause.

8.5

(a) If a negotiable transport document contains the statement ‘freight prepaid’ or wording of similar nature, such statement will have the effect that a holder of such transport document, other than the first holder, shall not be liable for the payment of the freight.

(b) If a negotiable transport document contains the statement ‘freight collect’ or wording of similar nature, such statement has the effect that the consignee may be liable for the payment of the freight.

In the explanatory note on 8.3 it is said that the new instrument should refrain from giving contract interpretations in respect of freight. An exception should be made, however, in respect of the usual statements ‘freight prepaid’ and ‘freight collect’ in bills of lading. Reason for this is the protection of the third party holder of a negotiable transport document. A third party holder must be able to learn from the contents of the document whether he might be held liable in personam for the freight.

On purpose, 8.5(a) is drafted in such a way that it is left open whether ‘freight prepaid’ also means that the freight is earned upon shipment. Again, that would be a matter of interpretation of the contract of carriage.

Also, 8.5(a) does not exclude that another person than the shipper may be liable for the freight. It is only meant to say that later holders than the shipper do not run the risk of becoming liable in personam for the freight.

8.5(b) is drafted in similar way. It does not say that in the event of ‘freight collect’ the freight is payable at destination or that the consignee shall be the (only) person liable for the freight. Usually, in these cases, if the consignee does not pay the freight, a carrier is entitled to address again to the shipper for payment of the freight.

Whether the consignee actually is liable for the payment of the freight, will depend on the terms of the contract of carriage. In practice, a carrier usually does not accept a freight collect booking without first having requested the (intended) consignee whether he agrees to pay the freight.

8.6

(a) Notwithstanding any agreement to the contrary, if and to the extent that the consignee is liable for the payments referred to below, a carrier is entitled to retain the goods until payment of

(i) the freight, demurrage, damages for detention and all other reimbursable costs incurred by the carrier in relation to the goods,

(ii) any damages due to the carrier under the contract of carriage,

(iii) any contribution in general average to the carrier relating to the goods

has been effected, or adequate security for such payment has been
provided.

(b) If the payment as referred to in the previous paragraph will not, or not fully, be effected, the carrier is entitled to sell the goods (according to the procedure, if any, as provided for in the applicable national law) and to satisfy the amounts payable to it (including the costs of such recourse) from the proceeds of such sale. Any remainder of the proceeds of such sale shall be made available to the consignee.

Again, it is a general principle that, when necessary, ‘the goods must pay for its costs and freight’. National law differs in respect of the legal basis for this principle. Also national law works out this principle in various ways. The common denominator, however, seems to be a right of the carrier to retain the goods until payment and to seek recourse against the goods if no payment will be effected. Usually, such recourse will be effected through a sale of the goods in accordance with the applicable local rules and regulations. The second part of this provision provides for that.





		8 Freight 8.1 For the purpose of this Chapter 8 ‘freight’ shall include deadfreight. 8.2 (a) Freight is deemed to be earned upon delivery of the goods to the consignee in accordance with 9.1, unless the parties have agreed that the freight shall be earned, wholly or partly, at an earlier point in time or at an earlier occasion. (b) Unless otherwise agreed, no freight will become due for any goods which are lost before the freight for these goods is earned. This provision follows the main rule that the carrier must have performed duly before its remuneration becomes due. Obviously, this provision is not of mandatory nature. Practice may differ. In the various modes of inland transport (at least in Europe) this main rule is usually followed. In maritime container trade, however, it is customary that bills of lading include the provision that the freight is already earned upon receipt of the goods by the carrier. In maritime charterparty trade a lot will depend on the usages of the particular trade. It is not uncommon that charterparties include that the larger part of the freight is earned and payable at some point in time in the beginning of the voyage (e.g. upon shipment of the goods, on the third day after issue of the bill of lading, etc.) and the balance somewhere at the end of the voyage (e.g. when opening hatches, three days after delivery of the goods to the consignee, etc.). No provision is included in the draft that the freight should be stated in the transport document. Unless national law requires otherwise, parties should be left free in that respect. By nature, freight is of confidential character and it is up to the parties how they want to evidence their agreement on freight. This may be different if the transport document is negotiable. (see 8.5 below) 8.3 (a) Freight is payable when it is earned, unless the parties have agreed that the freight is payable, wholly or partly, at an earlier or later point in time or at an earlier or later occasion. (b) If subsequent to the moment that the freight has been earned the goods will be lost, damaged, or otherwise not delivered to the consignee in accordance with the terms and conditions of the contract of carriage, freight shall remain payable irrespective of the cause of such loss, damage or failure in delivery. (c) Unless otherwise agreed, payment of freight is not subject to set-off, deduction or discount on the grounds of any counterclaim that the contractual shipper or consignee may have against the carrier, [the indebtedness or the amount of which has not been agreed or established otherwise yet.] 8.3(a) states the main rule that the freight is payable when it is earned. Parties may agree otherwise. Often, parties do not make the distinction between freight earned and freight payable. Whether they do or not, is a matter of interpretation of the contract, which interpretation may be influenced by the corresponding provisions in other contracts such as the contract of sale relating to the same goods. It is thought that in an international instrument of general nature no rules of interpretation of certain freight provisions in contracts of carriage should be given. The usual exception to the main rule is that parties agree that the freight is payable before it is earned. It is not excluded, however, that parties for some reason or another agree that the freight will become payable at a later moment than it is earned. 8.3(b) includes the generally accepted principle that events, which occur after the moment that the freight is earned, are irrelevant to the obligation to pay the freight to the carrier. It may be questioned whether this principle also should apply if the goods get lost, etc. through default of the carrier for which he may be held liable by the consignee. The draft answers this question in the affirmative. In such case the freight should form part of the damage to the goods, which may be claimed from the carrier. Further, freight payment should be without prejudice to any claim against the carrier. Normally, at the moment that the freight is payable, it is still open whether a valid counterclaim exists and, if so, the amount of such claim. Therefore, in 8.3.c the rule is given that, in principle, a set-off is not allowed. 8.4 (a) Unless otherwise agreed, the contracting shipper is liable to pay the freight and other charges incidental to the carriage of the goods. (b) If the contract of carriage provides that the liability of the shipper, wholly or partly, will cease upon a certain event or after a certain point of time, such cessation is only valid if and to the extent that all the amounts payable to the contracting carrier under the contract of carriage may actually be satisfied through the contracting carrier enforcing its rights as referred to in 8.6. or otherwise. It may be expected that the parties to the contract of carriage have agreed which person(s) is/are liable to pay the freight, demurrage, damages for detention, etc.: the shipper, and/or the consignee, and/or any third party. This liability may be joint, several, or joint and several. The first paragraph of this article, therefore, has a limited character. It is only meant to provide a fall back in case no (clear) agreement exists as to who will have to pay the freight and other charges. Normally, if a shipper is liable to pay the freight and other charges, such liability will not cease upon certain events, e.g. after he has parted with the bill of lading or after the cargo has been shipped. However, parties may agree on a cesser clause. The second part of this provision, which is of mandatory nature, limits the validity of such a clause. 8.5 (a) If a negotiable transport document contains the statement ‘freight prepaid’ or wording of similar nature, such statement will have the effect that a holder of such transport document, other than the first holder, shall not be liable for the payment of the freight. (b) If a negotiable transport document contains the statement ‘freight collect’ or wording of similar nature, such statement has the effect that the consignee may be liable for the payment of the freight. In the explanatory note on 8.3 it is said that the new instrument should refrain from giving contract interpretations in respect of freight. An exception should be made, however, in respect of the usual statements ‘freight prepaid’ and ‘freight collect’ in bills of lading. Reason for this is the protection of the third party holder of a negotiable transport document. A third party holder must be able to learn from the contents of the document whether he might be held liable in personam for the freight. On purpose, 8.5(a) is drafted in such a way that it is left open whether ‘freight prepaid’ also means that the freight is earned upon shipment. Again, that would be a matter of interpretation of the contract of carriage. Also, 8.5(a) does not exclude that another person than the shipper may be liable for the freight. It is only meant to say that later holders than the shipper do not run the risk of becoming liable in personam for the freight. 8.5(b) is drafted in similar way. It does not say that in the event of ‘freight collect’ the freight is payable at destination or that the consignee shall be the (only) person liable for the freight. Usually, in these cases, if the consignee does not pay the freight, a carrier is entitled to address again to the shipper for payment of the freight. Whether the consignee actually is liable for the payment of the freight, will depend on the terms of the contract of carriage. In practice, a carrier usually does not accept a freight collect booking without first having requested the (intended) consignee whether he agrees to pay the freight. 8.6 (a) Notwithstanding any agreement to the contrary, if and to the extent that the consignee is liable for the payments referred to below, a carrier is entitled to retain the goods until payment of (i) the freight, demurrage, damages for detention and all other reimbursable costs incurred by the carrier in relation to the goods, (ii) any damages due to the carrier under the contract of carriage, (iii) any contribution in general average to the carrier relating to the goods has been effected, or adequate security for such payment has been provided. (b) If the payment as referred to in the previous paragraph will not, or not fully, be effected, the carrier is entitled to sell the goods (according to the procedure, if any, as provided for in the applicable national law) and to satisfy the amounts payable to it (including the costs of such recourse) from the proceeds of such sale. Any remainder of the proceeds of such sale shall be made available to the consignee. Again, it is a general principle that, when necessary, ‘the goods must pay for its costs and freight’. National law differs in respect of the legal basis for this principle. Also national law works out this principle in various ways. The common denominator, however, seems to be a right of the carrier to retain the goods until payment and to seek recourse against the goods if no payment will be effected. Usually, such recourse will be effected through a sale of the goods in accordance with the applicable local rules and regulations. The second part of this provision provides for that.