An agent's authority to sign bills of lading


  • Date: 07/05/1998
  • Source: Clifford Chance Maritime Review

Very few bills of lading are signed by the contractual carrier personally. They will almost invariably be signed either by the master, or by the agent of the ship or charterer at the load port (or by sub-agents on their behalf). For this reason, before the holder of the bill can sue the carrier for loss or damage to the goods, he will need to answer two related questions: firstly, who appears from the face of the document to be the contractual carrier under the bill; and secondly, is that carrier in fact bound by the signature of the agent who has signed it? The first of these questions was considered in our article on "The Identity of The Carrier under Bills of Lading" in Issue 11 of the Maritime Review (October 1992). The purpose of the present article is to consider the second question - namely, in what circumstances is the carrier bound by the signature of an agent.

As has been seen from our previous article, the question of who has signed the bill of lading is likely to be relevant to the issue of identifying the contractual carrier. For example, where the bill is signed by the master, it is likely under English law to constitute an "owner's" contract, as opposed to one with the charterer. Plainly, therefore, the two questions referred to above are inextricably linked. Nevertheless, from a legal viewpoint they are distinct; and it is perfectly possible to envisage a situation where a party on whose behalf the bill of lading has purported to be signed argues that the agent had no authority to sign it, so that he is not bound by it.

 

A. THE NATURE OF THE AGENT'S AUTHORITY

In broad terms, a carrier is likely to be bound by a bill of lading signed on his behalf in four main situations:

(i) Express Actual Authority

The carrier will be bound where the agent has been given express authority to sign on his behalf. Thus either the ship owner or the charterer may send a message to the master expressly instructing him to sign bills of lading which will bind him as carrier. Similarly, the charterer (or his agent) may be expressly empowered by the terms of the charterparty to sign bills of lading which bind the registered owner as carrier. Where this is the case, disputes about authority should seldom arise, but difficulties occur where the agent's express authority is subject to restrictions or conditions (e.g. as to the form or clausing of the bill of lading) and the relevant conditions are not complied with. This problem is considered further below.

(ii) Implied actual authority

In the absence of express authorization, actual authority may still be implied where the circumstances justify this. Indeed, such authority may be a natural incident of the position or office held by the particular agent in question. Thus, if the master is ordered by the ship owner to proceed to the load port and load a cargo, it may well be implicit in this instruction that he is to issue bills of lading in the owners' usual form in respect of that cargo, even if he has not been expressly instructed to do so. This form of authority will often overlap with the master's ostensible authority which is discussed further below. It is, however, quite different in principle. In the present situation, the master has actual authority, implied from the circumstances of the case. In the case of "ostensible authority", the agent does not in fact have authority at all, but the carrier is, as against a third party, precluded by his conduct from saying so.

It is theoretically possible (but less usual) for the charterer or his agent to have implied actual authority. Generally, the charterer's authority will stem from the terms of the charter, and will therefore be dealt with expressly. Since there is no employer/employee relationship between owner and charterer, implied authority is unlikely to arise simply from the relationship between the two parties. Implied authority may, however, be inferred from the circumstances surrounding the issue of the bills themselves.

(iii) Ostensible or apparent authority

Even if the agent does not have actual authority by virtue of (i) or (ii) above, he may still have ostensible (sometimes called apparent) authority to bind the carrier, on the basis that the carrier has held him out to third parties as having such authority. There has been much academic debate as to whether the basis of this rule is simply an application of the doctrine of estoppel but, whether or not this is the case, the principle itself is well established. As will be seen, the master may well have ostensible authority to sign bills of lading on behalf of the owner, even if his actual authority has been restricted by some instruction from the owner.

(iv) Ratification

Finally, even if the agent did not have any authority (whether actual or ostensible) at the time when the bill of lading was signed, the carrier can of course ratify the agent's acts by his subsequent conduct. If he does so, he will again be bound by the agent's signature. Generally speaking, in order to ratify the act of his agent, the carrier must have had full knowledge of the relevant facts. Provided that that is the case, however, ratification can be express or implied. In some cases, provided that the carrier knows that the bill of lading has been issued, the mere performance of the voyage without protest may itself be sufficient to amount to ratification. Again, however, difficulties arise where the carrier is unaware that the bills have been put into circulation at all (particularly where, for example, there are two sets of bills in circulation for the same goods); or, more importantly, where he is unaware that the bills which have been put into circulation contain unusual or onerous terms or do not conform with any specific restriction imposed by him on his agent's authority.

Having considered the general principles relating to an agent's authority, it is now necessary to consider the specific situations where the bill of lading has been signed by the master or the charterers, or their respective agents.

B. SIGNATURE BY THE MASTER

(i) Where the owner is the contractual carrier

In many cases, the master will have express or implied actual authority to sign bills on behalf of the owner. Where, however, the vessel is chartered, he may have no actual authority to vary the charterparty contract or to issue bills of lading which are inconsistent with it. There are numerous 19th Century cases which deal with the extent to which the master's authority to sign is restricted by the existence of a charter, and the related question of when the master may refuse to sign bills presented by the charterers. Some of these are discussed in more detail in Section D below. The importance of many of these cases, however, is now much reduced as a result of more recent decisions of the courts, changes in trading practice, the use of more detailed bill of lading clauses in modern charterparty forms and, most importantly, the existence of the master's ostensible authority, which we now turn to consider.

It has long been established that, unless the ship is demise chartered, the master is usually the servant of the ship owner and, in that capacity, is likely to have either implied actual or ostensible authority to sign bills of lading on the owner's behalf. It is for precisely this reason that the master's signature may itself be taken as an indication that the owner is to be regarded as the contractual carrier. In Sandeman v. Scurr (1866) LR 2QB 86 the shippers of a cargo of wine arranged the contract of carriage through the charterers' agents, but they received a bill of lading signed by the master. The cargo leaked as a result of improper stowage and the cargo interests sued the owners in respect of the loss. Cockburn C.J. held that they were liable. He stated that

"... So long as the relation of owner and master continues, the latter, as regards parties who ship goods in ignorance of any arrangement whereby the authority ordinarily incidental to that relation is affected, must be taken to have authority to bind the owner by giving bills of lading."

This is so even if the person bringing the claim is aware that the vessel has been chartered. In Manchester Trust -v- Furness [1895] 2 QB 539, owners chartered their vessel to the charterers on terms that "the captain and crew, although paid by the owners, shall be the agents and servants of the charterers for all purposes .... In signing bills of lading it is expressly agreed that the captain shall only do so as agent for the charterers.". The bill of lading referred to the charterparty but did not, so far as relevant, incorporate its terms. It was signed by the master without any qualification as to the capacity in which he did so. The cargo was damaged and cargo owners brought a claim against the owners in respect of their loss. It was held that, even though the plaintiffs knew of the existence of the charterparty, they did not know its terms. Accordingly, the owners were bound by their master's signature. Plainly, if the holder of the bill had been aware of an actual restriction in the master's authority, the position would have been different. There are numerous other 19th Century decisions to the same effect.

There are, however, some restrictions on the master's ostensible authority. Generally speaking the master cannot certify the quality or grade (as opposed to the condition) of the goods shipped. Furthermore, until recently, under the rule in Grant v. Norway (1851) 10 CB 665, a master was considered to have no authority to sign a bill for non-existent goods, so that the owner was not bound if the bill of lading signed by the master related to goods which had never been placed on board. This decision has been much criticised, and has given rise to considerable theoretical difficulty. If the master has ostensible authority to issue a bill of lading at all, a third party should be entitled to rely on such a document without further enquiry, save in respect of matters which can be seen from the face of the document to be beyond the master's powers. But if the master's authority to sign is limited to goods which were actually shipped, how can an innocent endorsee know whether this is the case or not?

In the case of bills of lading to which the Hague Visby Rules applied, the Rule was partly mitigated by Article III Rule 4 which provided that the bill was "prima facie evidence of the receipt by the carrier of the goods therein described" but that, more importantly, "proof to the contrary shall not be admissible when the bill of lading has been transferred to a third party acting in good faith". This provision, which is part of an international convention, was not of course drafted to deal with the specific peculiarities of Grant v. Norway. It has, however, been argued that it had the effect of overruling the decision, even in cases where no goods were shipped (as opposed merely to cases of short shipment). The contrary argument, however, is that if no cargo has been shipped, the bill is issued wholly without the owners' authority, so that he cannot be regarded as the contractual carrier and the Rule cannot apply to him at all. This question has never been satisfactorily resolved. The problem has now been substantially addressed, in relation to bills issued after 16th September, 1992, by Section 4 of the Carriage of Goods by Sea Act 1992 (COGSA 92) (which is considered in greater detail below). This provides, so far as relevant, that "A bill of lading which represents goods to have been shipped on board ... and ... has been signed by the master ... shall, in favour of a person who has become the lawful holder of the bill, be conclusive evidence against the carrier of the shipment of the goods ...". It is clear from the Law Commission's report that this provision was specifically designed to overrule the decision in Grant v. Norway. Generally speaking, therefore, where an owner's bill of lading has been signed by the master and has been transferred to a lawful holder, questions of authority are now unlikely to arise.

(ii) Where the charterer is the contractual carrier

(a) Demise Charters

As stated above, the courts have drawn a distinction between the position where the ship is subject to an ordinary time or voyage charter; and where she is demise chartered. In the case of a demise charter, the master is likely to be an employee of the demise charterer, and not the registered owner. Thus, a signature by the master is likely to bind the demise charterer to the bill. In Baumwoll v. Gilchrest [1892] 1 QB 253 owners had chartered their vessel to the charterers and the master had signed the bills of lading. The case was primarily concerned with the issue of whether the charter was, in effect, a demise charter or not. Having concluded that it was, Lord Esher MR observed as follows:

"... If the captain was the captain of [the owner], then I think that any shipper who takes a bill of lading signed by the captain without knowledge of any charter-party, which hands over the right to make a bill of lading to the charterer, and to the captain as his agent, would have a right to assume against the owner that the captain had the ordinary authority to sign bills of lading and would have a right to sue the owner. I think that is right law; but it only applies when the captain is the captain of the owner."

Since the charter was a demise charter, a claim against the owner in respect of the master's conduct failed.

This rule of course produces some difficulty for a holder of the bill of lading, who may well be unaware whether the vessel is demise chartered or not. Notwithstanding this, the rule is now well established.

(b) Time or voyage charters

The master is not of course the servant or employee of a time or voyage charterer, and he is unlikely, therefore, to have any implied actual authority to bind the charterer, arising simply from his capacity as master. Authority may however arise in a number of ways. Plainly, if a charterer's bill is presented to him by the charterer for signature, the master is likely to have express actual authority to sign it on the charterer's behalf. Similarly, authority may be derived from the provisions of the charterparty itself. Implied actual authority may also arise from the circumstances in which the bills come to be issued at the load port, or simply by implication from the charterer's voyage instructions. Finally, the charterer may have held the master out to third parties as having ostensible authority to sign on his behalf.

 

C. SIGNATURE BY THE SHIPOWNERS' AGENT

The question of the shipowners' agents authority to sign bills of lading has seldom arisen in practice. Generally speaking the owner is unlikely to challenge the authority of the agent appointed by him at the load port to issue bills if the master has not signed them himself. The question did, however, arise in The SAUDI CROWN [1986] 1 Lloyd's Rep. 261. In that case, it was admitted that the owners' agents were authorised to issue and sign bills. What they actually did, however, was to backdate the bills so as to represent that the goods had been shipped at a time when they had not. The endorsees sued the owners for misrepresentation, and the owners, relying by analogy on the decision in Grant v. Norway, argued that their agents had had no authority to misdate the bills on their behalf. Sheen J rejected this argument. He concluded that, since the agents were admittedly empowered to issue bills in the first place, "putting the correct date on a bill of lading [was] a routine clerical task" which fell within the agents' ostensible authority. It was the owners, and not the innocent endorsee who had to bear responsibility for the agents' conduct. (A similar line of reasoning was adopted in the "NEA TYHI", discussed below).

D. SIGNATURE BY THE CHARTERERS OR THEIR AGENTS

(i) Where the owner is the contractual carrier

Many of the recent cases concerning the authority of an agent to sign bills have involved disputes where time or voyage charterers or their agents have purported to sign bills of lading for or on behalf of the ship or the master. Unlike the master, the charterer is not an employee of the owner, and he will not have any general implied authority to sign bills on his behalf. The bill of lading holder will therefore usually have to establish that the charterer had express actual authority; or that the owner held him out as having ostensible authority; or that the owner has, in any event, ratified the charterer's signature.

(a) Actual Authority

The starting point for identifying the charterer's actual authority will of course be the express terms of the charterparty. For example, if the charter provides that the charterers are to issue and sign bills of lading for the owners, they will have actual express authority to do so (subject of course to any restrictions as to the form of such a bill contained in the charter itself).

Plainly, the precise scope of the charterers' authority will depend upon the exact words used in the charter, and the provisions of a time charter are likely to be more generous to the charterers in this respect than those of a voyage charter. Most of the cases have, in fact, involved time charters and, in particular, two forms of wording which are frequently found in such documents. The first is that the master is to "sign bills of lading as presented" by the charterers, and the second is that "the master is to be under the orders and directions of the charterers as regards employment". The latter of these provisions may also go on to provide that the charterers are to indemnify the owners against the consequences of compliance with their orders.

Where the charter contains both of these provisions, it would appear that the charterer may either present a bill to the master for signature or may short circuit the procedure and sign the document himself. In Tillmans -v- SS Knutsford, Limited [1908] 1 KB 185 [1908] AC 406 the charterparty provided that the master was to be under the charterers' orders and directions, and that the charterers should indemnify the owners from all consequences of the master signing bills by order of the charterers. The charterers signed one of the bills of lading themselves "for the Captain and the Owners". It was held that they had authority to do so. The owners had argued that only the master could bind them by signing bills of lading but it was held by Channell J that:

"... the time charterers, instead of directing, as they were entitled to do, the captain to sign, signed themselves. I am of opinion that the effect of their so signing is exactly the same as if they had directed the captain to put his name to the bill of lading and he had accordingly signed it."

Similarly, in the BERKSHIRE [1974] 1 Lloyd's Rep.185, the vessel was chartered on the NYPE form. Under clause 8 the captain was "under the orders and directions of the charterers" and was "to sign bills of lading for cargo as presented, in conformity with Mate's or Tally Clerk's receipts". The bill of lading which was issued was in fact signed by the charterers' agent, but contained a demise clause which provided expressly that the owners were to be regarded as the carriers. Brandon J held first of all that the demise clause should be given effect, so that the bill was an owner's bill. He then went on to consider the question of the agent's authority. Having referred to the provisions of Clause 8, he concluded:

"The effect of such a clause in a charter-party is well settled. In the first place, the clause entitles the charterers to present to the master for signature by him on behalf of the shipowners bills of lading which contain or evidence contracts between the shippers of goods and the shipowners, provided always that such bills of lading do not contain extraordinary terms or terms manifestly inconsistent with the charterparty; and the master is obliged, on presentation to him of such bills of lading, to sign them on the shipowner's behalf. In the second place, the charterers may, instead of presenting such bills of lading to the master for signature by him on behalf of the shipowners, sign them themselves on the same behalf. In either case, whether the master signs on the directions of the charterers, or the charterers short-circuit the matter and sign themselves, the signature binds the shipowners as principals to the contract contained in or evidenced by the bills of lading."

 

Where the charterparty merely provides that the master is to sign bills as presented, but there is no general employment clause such as described above, the cases suggest that the position is less clear. The reason for this appears to be that, if the charter contains no general employment clause, there is nothing which entitles the charterer to instruct the master to authorise him (the charterer) to sign on his (the master's) behalf! Notwithstanding this, some of the cases suggest that, so long as the bill is in a form which complies with the charter, the charterer should still be able to short circuit the procedure and sign himself. However, the wording of the clause, taken on its own, requires the master and the master alone to sign bills, and the charterer would certainly be more prudent to obtain specific authority before doing so himself. This is particularly relevant in the case of voyage charters, where general employment and indemnity provisions are, of course, unlikely to be found.

(b) Restrictions on the charterers' actual authority

Even where the charter contains wording similar to that described above, there are of course restrictions on the form of the bill which may be issued; and these restrictions apply whether the charterer presents the bill to the master for signature; or whether, in accordance with the above rules he short circuits the procedure and signs himself. While much may depend upon the precise wording of the charter, as a broad proposition, the master will be entitled to reject (and the charterer will have no authority to sign) a bill of lading which is either "manifestly inconsistent" with the terms of the charterparty or which contains "extraordinary" terms. Thus, in Krüger v. Moel Tryvan [1907] AC 272 the Earl of Halsbury said:

"When it is said that the master must sign any bill of lading submitted to him, I cannot agree. If the bill of lading tendered is manifestly inconsistent with the charterparty, I think that it would be his duty to refuse, but if there is nothing to excite his suspicion it is, of course, his duty to sign the bill of lading tendered to him ..."

Likewise, in Knutsford v. Tillmans [1908] AC 406, Lord Dunedin said:

"Had the bill of lading contained stipulations of such an extraordinary character that the master might have refused to sign, then that defence [that the owners were not bound by the bill of lading] would have been equally open upon the question of whether the signature of the charterers bound the owners".

What is, however, less clear, is in what circumstances a bill will be regarded as manifestly inconsistent or as containing extraordinary terms. A direct and positive inconsistency between the express terms of the charter and those of the bill may be easy to identify. What, however, is the position where a right of the owner contained in the charter is simply omitted from the bill of lading? Many of the cases on this subject concern the master's entitlement to refuse to sign, rather than the charterers' authority to sign and, while it is not possible to review all of these cases, a number of examples may serve to illustrate the problem. In the BERKSHIRE, discussed above, Brandon J did not consider that the presence of a "demise" clause in the bill was an extraordinary term, the effect of which would be to deprive the charterers of actual authority to sign. Similarly, in the VIKFROST (considered below) where the head charter was governed by Norwegian law, the Court of Appeal did not consider that the issue of a bill of lading governed by English law exceeded the charterers' authority. There was nothing inconsistent between the jurisdiction clause in the charterparty requiring disputes under that document to be referred to arbitration in Oslo, and the clause in the bill which provided for the resolution of disputes under a different contract between different parties to be resolved under English law before the English courts. In the NANFRI [1979] 1 Lloyd's Rep. 201, the House of Lords held that a master could not refuse to sign a bill simply because it was endorsed "freight prepaid" and did not expressly incorporate the terms of the time charter, even where, on owner's case, time charter hire was owing; (see also the ANWAR AL SABAR [1980] 2 Lloyd's Rep. 261 - insertion of an additional clause in the bill referring to owners' lien for voyage charter demurrage or deadfreight; the GARBIS [1982] 2 Lloyd's Rep. 283 - bills in a form specifically prescribed by the charter, but with the details of the actual charter in question left blank; and Jones v Hough (1879) 5 Ex. D. 115 -insertion of words in the bill providing for the ship not to be liable for additional import duties). These cases suggest that a charterer may have greater freedom to dictate the form of the bill in the case of a time charter than in a voyage charter, although this conclusion may simply be the result of construing the wider forms of employment and indemnity wording usually found in time charters.

(c) Delegation of the right of signature

Once it is established that the charterer has a right to sign, and that the bill of lading is not manifestly inconsistent or extraordinary, it would appear that authority to perform the physical act of signature is one which can be delegated without further restriction. In the BERKSHIRE, once Brandon J had concluded that the charterers had authority to issue bills in the relevant form, he held that the placing of the signature on the document was a "ministerial act" which did not have to be performed personally. It followed that the charterers were entitled to appoint their agents or sub-agents to sign on their behalf.

The question of delegation to sub-charterers was raised in the VIKFROST [1980] 1 Lloyd's Rep.560. In that case the head charterparty provided as follows:

"The master ... shall be under the orders and directions of the charterers ... The master to sign bills of lading as presented. The charterers to indemnify the owners against all consequences and liabilities which may arise from the master signing such bills of lading ... It is agreed that bills of lading issued for voyages under this charterparty may be signed on behalf of the master by the charterer's agents and may contain the demise clause ....".

It was also provided that the charterers had the option to sub-let the vessel, which they duly did. The sub-charter was also on terms that "the master to be under the orders of the charterers as regards employment, agency ... the charterers to indemnify the owners against all consequences and liabilities arising from the master, officers or agents signing bills of lading ...". The head charter was governed by Norwegian law with Oslo arbitration. The sub-charter by English law with London arbitration.

In due course, a cargo of frozen meat was loaded and bills of lading were issued and signed "for the master" by the sub-charterers' agents. The bills were governed by English law with English High Court jurisdiction, and they contained an "identity of carrier" clause which identified the registered owner as the carrier. The cargo was damaged and the cargo owners sued the shipowner. The owners contended that, at no time had the sub-charterers' agents had any authority to sign bills of lading for the master and, furthermore, that they had had no authority to sign bills of lading containing an English jurisdiction clause (bearing in mind that the head charter was governed by Norwegian law). These contentions were rejected both in the Commercial Court and on Appeal. It was held

(i) that the head charter authorised the charterers both to issue bills of lading and to sublet the vessel;

(ii) the head charterers were entitled to delegate their power to sign to the sub-charterers, which they did by the terms of the sub-charter;

(iii) the sub-charterers therefore had authority to sign bills of lading on behalf of the owners and (because the ship was trading worldwide) they could delegate the physical task of doing so to an agent;

(iv) both the agents in fact had authority to sign bills as agents of the sub-charterers;

(v) accordingly, by virtue of this chain of delegated authority the sub-charterers' agents' signature bound the owners;

(vi) finally (as dicussed above), there was nothing "manifestly inconsistent" with the charter in providing that disputes under the bill of lading were to be resolved in England. The significance of the passage in brackets in (iii) above, relating to "worldwide trading" is unclear and no further explanation is given in the judgment. In view of the comments by Brandon J in the BERKSHIRE, it is submitted that the trading limits of the vessel should be irrelevant to the question of a charterer's entitlement to appoint agents to perform the ministerial act of signature on his behalf.

(d) Ostensible authority

If the charterer does not have actual authority to sign, the bill of lading holder may seek to argue that he had ostensible authority to do so. This question arose in the NEA TYHI [1982] 1 Lloyd's Rep. 606. The time charter again provided that the master was "to sign bills of lading for cargo as presented". It also provided that "the charterers hereby agree to indemnify the owners against all consequences of liabilities that may arise from the charterers or their agents including the master signing bills of lading .... inconsistent with the charter".

Bills of lading were signed by the charterers' agents in respect of a cargo of plywood which stated that the goods were "shipped under deck". These in turn were negotiated to the endorsees. At the discharge port, it was discovered that the cargo had in fact been shipped on deck, where it had been damaged by rainwater. The owners denied liability on the basis that the charterer's agents had had no authority to issue "under deck" bills for "on deck" cargo. Sheen J, however, rejected this argument. It was correct that the charterer's agents had no actual authority to sign such bills of lading. He concluded that they did, however, have ostensible authority to sign bills on the master's behalf. In reaching this conclusion, the judge appears to have accepted as correct a passage in Wilford on Time Charters which suggests that "owners who time charter their ships and put them on the charterers' berths without taking positive steps to indicate the contrary must be taken to have held out the charterers and their agents as having authority to make bill of lading contracts on their behalf".

Certainly no other representation by the owners as to the charterers' authority appears to have been relied on in the judgment. If that is right, it would appear to have potentially far reaching consequences. The onus is placed on the owner to advise cargo interests that the charterer does not have unlimited authority to issue bills of lading on his behalf (even if he does not know who they are); and, if he fails to do so, he will be bound. The judge was plainly impressed by an argument that, where one of two "innocent" parties (i.e. the shipowners and the endorsees) must suffer loss as a result of the default of the charterers' agent, he had "no hesitation in saying that there is more reason that he who contracts with the charterer and puts trust and confidence in him to the extent of authorising the charterers' agent to issue and sign bills of lading should be a loser, than a stranger". It is unclear how far this reasoning could be applied where, for example, the vessel has been sub-chartered and the sub-charterers sign the bills, particularly where the sub-charterer himself is directly involved in the sale contracts relating to the cargo. In such a case, the sub-charterers may have closer commercial links with the endorsee of the bill than the shipowner.

Depending upon how far the courts are prepared to go, this decision could substantially reduce the importance of the cases relating to a charterers' actual authority since, in many cases, the bill of lading holder will simply be able to rely on the charterers' ostensible authority.

(e) The REWIA [1991] 2 Lloyd's Rep. 325

The most recent case in which the question of an agent's authority to sign was considered is the REWIA which came before the Court of Appeal in 1991. This case was primarily concerned with the rules relating to the identity of the carrier, and is for this reason discussed in some detail in our previous article. However, questions as to the authority of the charterers' agents and ratification of their signature by owners inevitably arose as well. The owners of the REWIA time chartered her on an amended NYPE form which provided that the master was to sign the bills of lading as presented (in conformity with Mates' or Tally Clerks' Receipts). An additional clause provided "It is understood that the master will authorise charterers, or their agents, to sign bills of lading on his behalf". The time charterers sub-chartered the vessel to a company which operated a container line. Cargo was loaded and liner bills were issued on the sub-charterers' standard form. These bore the name of the sub-charterers at their head but contained no identity of carrier clause. They were signed "In witness whereof the master ... has signed ..." and the bills were then signed above the printed words "for the master". The person who actually signed was the local agent of either the charterer or sub-charterer (there was no evidence as to which). Cargo owners claimed against the owners and/or sub-charterers for loss or damage to their cargo and, in determining that the shipowner was the carrier, the Court had to consider the question of whether the agent who had signed the bill of lading had had authority to do so on their behalf. In deciding this in the affirmative, Leggatt L.J. stated:

"... in the present case the master was required to sign bills of lading as presented, and the understanding was that with his authority the charterers or their agents would sign them on his behalf ... The bills of lading ... were signed for the master by agents to whom he was empowered to give authority and must be taken to have done so, since he was required to sign them as presented. The master was in fact the servant of the Ship owners."

The judge also touched upon the question of ratification as follows:

"In any event, even had there been no prior authorisation, since with knowledge of the bills of lading the master proceeded to carry the goods, there was the plainest possible case of ratification ..."

(ii) Where the charterer is the contractual carrier

Plainly, if the charterers are expressly named as the carriers, and sign the bills personally, they will be bound by them. More commonly, of course, it is their agents at the load port who sign the bills on their behalf. For understandable reasons, cases where the charterers have been held to be the carrier but have then sought to deny the authority of their agents have been relatively rare. The most usual situation where the charterers are regarded as the contractual carrier is where they operate a liner service and use their own form of bill of lading. Their agents at the load port will often have been appointed to arrange for the booking of space, the loading of the cargo and the issue of the relevant shipping documents. In those circumstances, it is highly likely that they will have the charterer's express authority to issue bills. Even if they do not, they may well have implied authority to do so, and, failing that, they may have ostensible authority. In any event, a charterer who wishes to go on operating a liner service is perhaps unlikely to try to disclaim bills signed by his own local agent!

(iii) The Carriage of Goods by Sea Act 1992 (COGSA 92)

As stated above, Section 4 of COGSA 92 tackles the question of a master's authority to sign negotiable bills of lading for cargo which has not been shipped. The section does, however, go somewhat further than this. It also addresses the issue of signature by agents other than the master. The full text of the section is as follows:

"4. A bill of lading which -

(a) represents goods to have been shipped on board a vessel or to have been received for shipment on board a vessel; and

(b) has been signed by the master of the vessel or by a person who was not the master but had the express, implied or apparent authority of the carrier to sign bills of lading, shall, in favour of a person who has become the lawful holder of the bill, be conclusive evidence against the carrier of the shipment of the goods or, as the case may be, of their receipt for shipment."

In the case of a bill signed by someone other than the master, this provision does not take the question presently under discussion very much further. Where the charterer or his agent signs the bill, the "lawful holder" will still have to establish that he had express implied or apparent authority from the carrier to do so. If, but only if, in accordance with the above principles, he is able to do this, may he then avail himself of the benefit of the section. It is unclear how this section will apply to bills endorsed with the words "weight, quantity and contents unknown". It is also to be noted that Section 4 does not apply to sea waybills or other shipping documents.

Industry developments

Polar Shipping

Legal, navigational and environmental resources, news and updates on the development of polar shipping. Read more


US VRP Compliance

With effect from 30th January 2014 non-tank as well as tankships calling at US ports will be required to submit VRPs.  For Club and other resources to assist in compliance click here


International Environmental compliance

Environmental Compliance resource page collates material in respect of International environmental compliance issues affecting our Members. Information from the Club, Loss Prevention and external resources has been collated in one place for ease of reference.


MLC 2006

The Maritime Labour Convention enters into force in August 2013 - resources, news & advice on implementation can be found in this dedicated section.  READ MORE


International sanctions

Recent guidance & corresponding material in respect of international sanctions against various countries has been updated with respect to temporary easing of sanctions against Iran.  READ MORE


Piracy

Essential precautions and preparation against piracy, as well as additional information and resources, loss prevention advisories and useful external web links


Emergency Contacts


If you need to call our offices out of hours and at weekends, click After Office hours for a up to date list of the names of the Duty Executives and their mobile phone numbers. 

Ship Finder


This Ship Finder is updated on a daily basis. Members who need to advise the Club of updates to their recorded ships' details should advise their usual underwriting contact.