Ship Lawyer Cargo Claims and Liability 2 — Questions and Answers
Question 1: What is the 'Himalaya clause' found in many bills of lading?
- A clause requiring cargo to be routed through specified transhipment ports
- A clause extending the carrier's COGSA defenses and liability limitations to its agents, employees, and stevedores (Correct answer)
- A clause limiting carrier liability for cargo transported over mountainous terrain
- A clause mandating English law and London arbitration for dispute resolution
Correct answer: A clause extending the carrier's COGSA defenses and liability limitations to its agents, employees, and stevedores
The Himalaya clause extends the COGSA liability caps and defenses that protect the carrier to third-party servants and independent contractors such as stevedores, longshoremen, and terminal operators.
Question 2: What seaworthiness obligation does a carrier owe under COGSA before and at the beginning of a voyage?
- An absolute warranty that the vessel is seaworthy throughout the entire voyage
- A duty to exercise due diligence to make the vessel seaworthy at the commencement of the voyage (Correct answer)
- A guarantee that the vessel has passed all applicable coast guard inspections
- A duty to maintain seaworthiness only while the vessel is in a US port
Correct answer: A duty to exercise due diligence to make the vessel seaworthy at the commencement of the voyage
COGSA imposes a duty of due diligence—not an absolute warranty—to make the ship seaworthy before and at the beginning of the voyage, covering the hull, equipment, crew, and cargo spaces.
Question 3: What is the doctrine of 'general average' in the context of a cargo claim?
- The average market value of all cargo aboard a vessel used to calculate compensation
- A voluntary sacrifice or extraordinary expenditure made to save the common venture, with losses shared among all cargo interests (Correct answer)
- The standard rate of liability applied uniformly across all cargo damage claims
- The average of freight rates used to determine cargo value for insurance purposes
Correct answer: A voluntary sacrifice or extraordinary expenditure made to save the common venture, with losses shared among all cargo interests
General average is an ancient maritime principle under which a voluntary sacrifice (such as jettisoning cargo to save the ship) is shared proportionally by all parties whose property was preserved.
Question 4: What distinguishes a negotiable 'order' bill of lading from a 'straight' (non-negotiable) bill of lading?
- An order bill of lading can only be used by the original named shipper
- An order bill of lading requires court approval before cargo can be released
- An order bill of lading represents title to the goods and can be transferred by endorsement and delivery (Correct answer)
- An order bill of lading limits the carrier's liability to the face value of the cargo
Correct answer: An order bill of lading represents title to the goods and can be transferred by endorsement and delivery
A negotiable order bill of lading embodies title to the goods and can be transferred to third parties by endorsement, making it a document of title used in trade finance, unlike a straight bill.
Question 5: What are 'excepted perils' under COGSA Section 4, and what is their legal effect?
- Perils that automatically trigger cargo insurance coverage regardless of fault
- Specific causes of loss enumerated in COGSA that relieve the carrier of liability when they are the proximate cause of damage (Correct answer)
- Perils excluded from the carrier's coverage under a standard cargo policy
- Dangerous cargo categories that require special government permits to ship
Correct answer: Specific causes of loss enumerated in COGSA that relieve the carrier of liability when they are the proximate cause of damage
COGSA § 4(2) lists excepted perils—including acts of God, acts of war, inherent vice, and negligence in navigation—that excuse the carrier from liability when they are the proximate cause of cargo damage.
Question 6: What is the legal consequence of an unjustified 'deviation' from the agreed voyage route under COGSA?
- The carrier must pay a deviation surcharge to cargo interests
- The cargo claimant forfeits the right to claim under COGSA
- The carrier may lose its COGSA liability limitations and face unrestricted liability for cargo damage (Correct answer)
- The bill of lading is automatically voided and must be reissued
Correct answer: The carrier may lose its COGSA liability limitations and face unrestricted liability for cargo damage
An unjustified deviation is treated as a fundamental breach of the contract of carriage, stripping the carrier of COGSA defenses and liability caps and potentially exposing it to full cargo value liability.
Question 7: What role does a non-vessel operating common carrier (NVOCC) play in cargo liability?
- An NVOCC is exempt from all cargo liability because it does not own ships
- An NVOCC acts as a carrier to shippers by issuing its own bills of lading while contracting with vessel operators as a shipper (Correct answer)
- An NVOCC is a government-licensed inspector who verifies cargo condition at loading
- An NVOCC only handles documentation and bears no liability for cargo loss
Correct answer: An NVOCC acts as a carrier to shippers by issuing its own bills of lading while contracting with vessel operators as a shipper
An NVOCC issues its own house bills of lading to shippers and is legally treated as a carrier with full cargo liability under COGSA, even though it does not operate a vessel.
Ship Lawyer Cargo Claims and Liability 2
What is the 'Himalaya clause' found in many bills of lading?