Shipping Lawyer Cargo Claims and Liability 2 — Questions and Answers
Question 1: Which U.S. Act created the Federal Maritime Commission (FMC) to regulate ocean shipping?
- Merchant Marine Act of 1920
- Shipping Act of 1984 (Correct answer)
- Ocean Shipping Reform Act of 1998
- Maritime Transportation Security Act
Correct answer: Shipping Act of 1984
The Shipping Act of 1984 created the modern regulatory framework for U.S. ocean shipping and established FMC oversight of ocean common carriers.
Question 2: What is 'subrogation' in the context of cargo insurance?
- The right of an insurer to pursue the responsible third party after paying a cargo claim (Correct answer)
- Transferring the bill of lading to a new holder
- Substituting one cargo type for another
- Assigning freight rights to a bank
Correct answer: The right of an insurer to pursue the responsible third party after paying a cargo claim
Subrogation gives the cargo insurer who paid the claimant the right to 'step into the shoes' of the insured and pursue recovery from the responsible carrier or third party.
Question 3: What does 'all risk' cargo insurance cover?
- Only total loss of cargo
- All physical loss or damage from any external cause (Correct answer)
- War and strikes only
- Only named perils like fire and sinking
Correct answer: All physical loss or damage from any external cause
All risk cargo insurance covers physical loss or damage from any external cause unless specifically excluded, providing the broadest marine cargo coverage.
Question 4: Under the York-Antwerp Rules governing general average, what is a 'sacrifice'?
- Payment of freight in advance
- An intentional act causing damage to save the common maritime adventure (Correct answer)
- Loss of hire during repairs
- A container devanning charge
Correct answer: An intentional act causing damage to save the common maritime adventure
In general average, a sacrifice is an intentional act, such as jettisoning cargo or cutting away masts, done to preserve the ship and remaining cargo from a common peril.
Question 5: What is a 'booking confirmation' and what legal effect does it have?
- A vessel class certificate
- A document confirming cargo space reservation that may form a binding contract (Correct answer)
- A customs entry document
- A freight invoice
Correct answer: A document confirming cargo space reservation that may form a binding contract
A booking confirmation from a carrier confirms reservation of space and may constitute an enforceable contract for carriage before the bill of lading is issued.
Question 6: What is 'concealed damage' in cargo claims and why is it problematic?
- Damage hidden by the carrier to avoid liability
- Damage not apparent on delivery that is discovered upon unpacking (Correct answer)
- Damage intentionally underdeclared on the manifest
- Structural vessel damage hidden from surveyors
Correct answer: Damage not apparent on delivery that is discovered upon unpacking
Concealed damage is cargo damage not visible at delivery that is discovered later during unpacking, making it difficult to determine when and how damage occurred.
Shipping Lawyer Cargo Claims and Liability 2
Which U.S.
Act created the Federal Maritime Commission (FMC) to regulate ocean shipping?