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3.2 Bill of lading as a contract
The Bill of Lading Act 1855 of United Kingdom had made the bill of lading the contract of affreightment.12 But under the common law, the bill of lading is never completely regarded as the contract of carriage, which in normal circumstances will have been concluded between shipper and carrier before the bill of lading is issued. The bill of lading may contain contractual terms but not all terms in the contract of carriage are included in it. In the circumstance, the bill of lading is at most the contract document or the evidence of the contract. However, once the bill of lading is transferred by indorsement to a third party, it becomes the contract between indorsee and carrier.
3.3 Bill of lading as a receipt
The bill of lading will identify the quantity, description and condition of goods put on board.13 So it is very important for the buyer, sub-buyer or pledgee of the goods to hold the bill of lading, which serve
as evidence of goods shipped in good order. Once the bill of lading is signed, the carrier cannot later deny that he has received the goods and that they are also in good order.
4. General average
All kinds of interests are involved in a marine adventure. In a marine emergency, the sacrifice of one or more of the interests concerned with the adventure was deemed necessary to save the rest of interests. The persons whose interests were sacrificed would become entitled to claim a rateable contribution in proportion to the value of the interests that were thereby saved. This is called general average under the maritime law. The people who benefited from the sacrifices will be responsible for general average contributions. The Marine Insurance Act14 is the main law to govern the general average. The general average loss, expenditure and act are defined in the Act. In Pirie v Middle Dock Co,15 the court laid down six principles regarding General Average: (1) danger must be common to both ship and cargo;16 (2) any prudent Master of a vessel would have reasonably thought that there was a reasonable necessity for a sacrifice; (3) the sacrifice must be made voluntarily;17 (4) what has been castaway/sacrificed should not have become lost or pose a danger to the adventure and therefore valueless;18 (5) imperilled property must have been saved as a result of the sacrifice;19 (6) circumstances which made a sacrifice necessary should not have been self-created.20
IV. Marine Insurance
Marine Insurance is a specialised form of insurance contract whereby the insurer undertakes to indemnify the assured, in manner and to the extent thereby agreed, against marine losses incident to marine adventure.21 The United Kingdom statute of 1906 is regard as the most important codifying statute concerning to the marine insurance. The law was ordinarily adopted by the main western countries, such as the United States of America, Canada, Australia, and by some southeast countries, such as Singapore, Malaysia, Brunei and Hong Kong.
1. Insurable interest
Two features are concerned with the marine insurance contract. One is that all insurance contracts are indemnity contracts. The other one is that the assured must always have an insurable interest in the subject matter that he wishes to insure. Failing to do so, the marine insurance contract will be void as a gaming or wagering contract under the Marine Insurance Act 1906, section 4.
The Marine Insurance Act defines the insurable interest in terms of an interest in the marine adventure. As professor Lakshman Marasinghe concluded,22 the specific interest in the goods must provide a benefit to the holder of the legal or equitable interest in the goods by their safe arrival or inflict upon such person or persons a disadvantage by their loss, damage or detention. It is not necessary for an insurable interest to be happening at the time of the policy of insurance issued or at the time of the contract of insurance made. But the insurable interest must exist at the time of the loss. Whether the defeasible, contingent or partial interest are all insurable in marine insurance. In order to maintain the indemnity nature of the insurance contract, the Act also provides certain guidelines for the determination of the insurable value of the insured interest.23 The insurable value includes not only the value of cargo shipped, but also the value of the ship from stem to stern and port to starboard, including freight, wages and other disbursements like the payments made to stevedores and mechanics.
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