[1994] 2 Lloyd's Rep. 541
Court of Appeal
The Houda is authority for the proposition that time charterers have no general right to order owners to deliver cargo otherwise than to the holders of a bill of lading.
It is implicit in the issue of a bill of lading to order that under the bill of lading contract, the shipowner will deliver only to a lawful holder of the bill (per Leggatt L.J. in The Houda).
When charterers direct the shipowner to issue an order bill of lading, that implies (per Millett L.J.) "an instruction, not merely to sign bills of lading, but to deliver the cargo to the persons who provided evidence of their entitlement thereto by producing the bills of lading."
In The Houda, there was no express contractual provision entitling the charterers to demand delivery without production of the bills of lading, and one would not be implied from the existence of an indemnity, but Millett L.J. suggested that the position would have been different if there were an express contractual term:
"In the absence of express contractual provision entitling them to do so, it was in my judgment thereafter no longer open to the Charterers to countermand or vary their instructions by directing the Owners to deliver the cargo otherwise than against presentation of the bills of lading, thereby depriving the Owners of the protection to which their original instructions had entitled them."
This is also consistent with Sze Hai Tong Ltd. v. Rambler Cycle Co. [1959] A.C. 576 , a case on a bill of lading contract, where Lord Denning observed of shipowners who had delivered without production of a bill of lading that:
"They are, therefore, liable for breach of contract unless there is some term in the bill of lading protecting them."
Presumably, this implies that they could have been protected by an express contractual provision (although that case also makes clear that very clear words would be required).
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These notes were last updated on 11 May 97.
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