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Lloyd's Maritime and Commercial Law Quarterly

THE DEMISE CLAUSE AGAIN

Carling O’Keefe Breweries of Canada Ltd. v. C.N. Marine Inc.
(The Newfoundland Coast)
The decision of the Federal Court of Canada, Trial Division, in Carling O’Keefe Breweries of Canada Ltd. v. C.N. Marine Inc. (The Newfoundland Coast) 1 has been affirmed by the Federal Court of Appeal.2 The court held that a demise clause in a bill of lading was ineffective to displace the liability of the time charterer, C.N. Marine, with whom the shipper had dealt, where the bill was signed by or on behalf of C.N. Marine’s terminal superintendent on behalf of C.N. Marine, which was thus identified by name, and where a space on the bill of lading for the name of the vessel was left blank, so that there was no indication that the goods would be carried on board a ship other than one owned by C.N. Marine. It was then held, perhaps superfluously, that the clause was caught by Art. III. 8 of the Hague Rules, which renders null and void clauses which relieve the carrier or the ship from liability under the basic regime of the Rules.
As such, the decision reinforces the hostility to the clause (the origin of which was described recently by Lord Roskill in the Law Quarterly Review 3) shown by Canadian courts, though not by courts in Australia or England. As Mr Anthony Diamond, Q.C., recently suggested, however, and as the judgment in this case also implies, the problems of the clause may not be susceptible of simple solutions. As between shipper and issuer of the bill of lading, such a clause may be inconsistent with prior negotiations and dealings in a way that cannot always be solved by treating the bill of lading as an offer to create a new contract between the parties who are indicated by its terms (including the clause). This is the more obvious in this case, where there was no indication of the carrying vessel, let alone that chartered vessels might be used. When the bill comes into the hands of a third party, however, the situation is different, for the bill is the contract: see The Jalamohan.4 The objection to the clause is then rather that it is easily overlooked and its existence may come as a surprise when negotiations start. There may also be problems as to authority to insert it into the bill of lading. Although there seems in some quarters to be a war against the clause, it is unlikely that blindly striking it down is the correct solution: and that is not what the court did in this case.

F.M.B. Reynolds


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