Delays in delivery

Delays in delivery can have serious consequences for shippers. It may be reassuring to find that, in some circumstances, compensation may be obtained from a defaulting carrier. However it may be more valuable to develop agreed operational practices to deal with delays when they do occur, involving the notification of the shipper and decisions on a course of action to minimise the disruption. Such best practice may be encouraged when there is also some sanction for failures in performance by the carrier.

Typical bill of lading term concerning delay

"The carrier does not undertake that the goods or any documents relating thereto shall arrive or be available at any point or place at any stage during the carriage or at the port of discharge or the place of delivery at any particular time or to meet any particular requirement of any licence, permission, sale contract or credit of the merchant or any market or use of the goods and the carrier shall under no circumstances whatsoever and howsoever arising be liable for any direct, indirect or consequential loss or damage caused by delay".

If the carrier should nonetheless be held legally liable for any such alleged delay, such liability shall in no event exceed the freight paid for the carriage".

Position under international conventions

The Hague Rules of 1924 do not preclude the recovery of consequential losses such as those arising from delay in delivery. The original Hague Rules do not normally apply to outward shipments from the UK.

In the UK such losses must, however, be shown to be contemplated under the second rule in the case of Hadley v Baxendale if they are to be recoverable. This case allows recovery of damages arising from special circumstances communicated to the carrier at the time of making the contract of carriage and which he could reasonably be expected to have foreseen as probable consequences of his breach of contract. In other words, if the carrier is not specifically warned of the adverse consequences for the shipper of a failure to deliver on time at or before the contract is made, no claim may usually be pursued.

The Hague-Visby Rules have unfortunately made the shipper's position substantially more difficult with regard to delays. Delay is not specifically dealt with but it has been argued that, by defining the value of goods without any reference to delay in Article 4(5)(b), only those values, and not any loss from delay, are recoverable. There is some ambiguity about this, which carriers have not especially sought to clarify in the courts, so scope may exist for negotiating settlement of individual claims. Only where the carrier was aware of the special risks at the time of making the contract would there be any chance of success.

The Hamburg Rules remove ambiguity by expressly admitting claims for delay, but limiting compensation to two and one half times the freight payable for the goods delayed. This is a helpful but arbitrary figure, which may be much less than the provable loss incurred. In cases where the carrier intentionally causes the delay or acts recklessly and with knowledge that delay would probably result, the limit ceases to have effect and the whole loss will be recoverable. This may be easier to prove against the carrier than equivalent proof in the case of intentional physical damage, which is very rare. In practice it is likely that wider application of the Hamburg Rules would strengthen the everyday position of shippers in delay claims by giving a simply enforced right to compensation.

Protective measures by shippers

Contract stage

Bill of lading clauses excusing delay are very often upheld for a variety of reasons. However, the Hague, Hague-Visby and Hamburg Rules all allow the carrier to increase its liability beyond that provided for in the respective conventions, and there is therefore nothing in theory to prevent specific terms being agreed in relation to the consequences of delay, including compensation terms. Shippers might wish particularly to minimise the effects of delay at an operational level by requiring prompt notification to named persons or to a class of persons of an anticipated delay before it actually arises. A best practice agreement might then contain procedures for the giving of instructions for alternative arrangements to be made to avoid the delay and setting out who should be responsible for the extra costs incurred. Finally, where the delay is occasioned through carrier fault, a system for agreeing compensation could be devised.

Claim stage

Even where a sophisticated contractual agreement is not put in place, the ordinary shipper can safeguard its position in the event of later delay claims, by always furnishing the carrier with as much information as possible about the reasons for requiring timely delivery prior to the making of the contract. Most legal claims against carriers have failed because there was no surviving evidence that the carrier appreciated the risks to the particular shipper if he failed to deliver on time. Such notification may have the added benefit of making it less likely that cargo will be delayed in the first place, where the carrier has any discretion in the matter.

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