SSO Contract Types & Administration 3 — Questions and Answers
Question 1: Under the Hague-Visby Rules, what is the carrier's primary obligation regarding the vessel before and at the beginning of a voyage?
- To insure the cargo at market value
- To exercise due diligence to make the ship seaworthy (Correct answer)
- To guarantee delivery within a fixed time
- To provide the cheapest available freight rate
Correct answer: To exercise due diligence to make the ship seaworthy
Under the Hague-Visby Rules, the carrier must exercise due diligence to make the ship seaworthy before and at the commencement of the voyage.
Question 2: What does 'FIOST' stand for in charter party freight terms?
- Freight Including Oil, Storage, and Tankers
- Free In and Out, Stowed and Trimmed (Correct answer)
- Fixed Insurance on Sea Transport
- Freight Inclusive of Shore Terminal charges
Correct answer: Free In and Out, Stowed and Trimmed
FIOST means the freight rate includes no loading, discharging, stowage, or trimming costs—those expenses fall on the charterer.
Question 3: In a contract of affreightment (COA), what is the primary feature that distinguishes it from a single voyage charter?
- It covers a series of voyages over a period of time (Correct answer)
- It applies only to tanker trades
- It requires a fixed vessel assignment
- It eliminates all laytime provisions
Correct answer: It covers a series of voyages over a period of time
A COA obliges the shipowner to carry a specified total quantity of cargo over multiple voyages during a defined period, without nominating a specific vessel upfront.
Question 4: Which international convention governs liability for oil pollution damage caused by ships and requires shipowners to maintain insurance?
- SOLAS 1974
- CLC 1992 (Civil Liability Convention) (Correct answer)
- MARPOL 73/78
- ISM Code
Correct answer: CLC 1992 (Civil Liability Convention)
The 1992 Civil Liability Convention (CLC) establishes strict liability for oil pollution damage and requires shipowners to carry compulsory insurance (P&I cover).
Question 5: What is the significance of the 'cesser clause' in a voyage charter party?
- It allows the master to stop the voyage if cargo is dangerous
- It releases the charterer from liability once cargo is loaded and freight is paid (Correct answer)
- It suspends laytime during bad weather
- It terminates the charter if the ship is sold
Correct answer: It releases the charterer from liability once cargo is loaded and freight is paid
The cesser clause extinguishes the charterer's personal liability once the cargo is shipped, provided freight and demurrage are secured by the shipowner's lien on cargo.
Question 6: Under US law, which act governs the carriage of goods by sea for imports into the United States?
- Carriage of Goods by Sea Act (COGSA) 1936 (Correct answer)
- Harter Act 1893
- Jones Act 1920
- Shipping Act 1984
Correct answer: Carriage of Goods by Sea Act (COGSA) 1936
COGSA 1936 (incorporating Hague Rules) governs contracts for carriage of goods by sea to or from US ports in foreign trade, setting liability limits and carrier obligations.
Question 7: What does 'General Average' require of cargo interests when a voluntary sacrifice is made to save the ship and cargo?
- They must abandon their cargo claim entirely
- They must contribute proportionately to the loss based on their cargo's salved value (Correct answer)
- They must pay the full cost of repairs
- They are exempt if they hold marine insurance
Correct answer: They must contribute proportionately to the loss based on their cargo's salved value
General Average requires all parties whose property was saved to contribute proportionally to the sacrifice or expenditure made for the common safety.
SSO Contract Types & Administration 3
Under the Hague-Visby Rules, what is the carrier's primary obligation regarding the vessel before and at the beginning of a voyage?