Related topics

Advance Freight

Dead freight

Freight, Deduction and Set off

Freight Pro Rata Itineris Peracti

Full and Complete Cargo

Lump Freight

Sailors’ Wages


Law and Sea.
Freight.

Freight is primary payment obligation arising under a voyage charter. This obligation represents a fixed price for carriage of a particular cargo or cargoes on a particular voyage. Such price normally includes the owner’s operating costs, the cost of fuel consumed on the passage between ports and the owner’s profit margin. Under a charterparty contract freight is paid by the charterer to the owner as a remuneration for the service provided, therefore no obligation to pay freight arises when shipowner fails to provide such service, namely, transportation of the goods by sea.
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Freight
Last updated: 28-Nov-2015

Per Lord Mansfield in Abernethy v Landale (1780) 2 Doug 539 at p.542:

…freight is the mother of wages, and the safety is the mother of freight.

Per Lord Ellenborough in Hunter v Prinsep (1808) 10 East 378 at p.394:

The principles which appear to govern the present action are these: the ship owners undertake that they will carry the goods to the place of destination, unless prevented by the dangers of the seas, or other unavoidable casualties: and the freighter undertakes that if the goods be delivered at the place of their destination he will pay the stipulated freight: but it was only in that event, viz. of their delivery at the place of destination, that he, the freighter, engages to pay any thing. - If the ship be disabled from completing her voyage, the ship-owner may still entitle himself to the whole freight, by forwarding the goods by some other means to the place of destination; but he has no right to any freight if they be not so forwarded; unless the forwarding them be dispensed with, or unless there be some new bargain upon this subject. If the ship-owner will not forward them, the freighter is entitled to them without paying any thing. One party, therefore, if he forward them, or be prevented or discharged from so doing, is entitled to his whole freight; and the other, if there be a refusal to forward them, is entitled to have them without paying any freight at all. The general, property in the goods is, in the freighter; the ship-owner has no right to withhold the possession from him, unless he has either earned his freight, or is going on to earn it. If no freight be earned, and he decline proceeding to earn any, the freighter has a right to the possession. The captain’s conduct in obtaining an order for selling the goods, and selling them accordingly, which was unnecessary, and which disabled him from forwarding the goods, was in effect declining to proceed to earn any freight, and therefore 'entitled the plaintiff to the entire produce of his goods, without any allowance for freight.

Domett v Beckford (1833) 5 B & Ad 521 per Parke J at p.524:

As soon as these goods (which were the property of the defendant) were shipped in the plaintiffs’ ship, to be carried from Jamaica to London, the defendant, even before any bills of lading were signed, became liable by law to pay freight, unless that liability be controlled by special custom, and of that there is no proof. From the fact, that the goods were laden on a ship to be conveyed from Jamaica to London, the law will imply a contract by the owner of those goods to pay for the carriage.

By Lord Kingsdown in Kirchner v Venus (1859) 12 Moo PCC 361 at p.390:

Freight is the reward payable to the carrier for the safe delivery; if the goods are lost on the voyage, nothing is payable. On the other hand, if the goods are safely carried, the Master of the ship has a lien on the goods for the amount of the freight due for such carriage, and cannot be compelled to part with the goods till such freight be paid. These incidents to freight exist by rule of law, without reference to any bill of lading, or other written contract between the parties.

Dakin v Oxley (1864) 15 C.B. (N.S.) 646 per Willes CJ at pp.664-665, 667:

…the true test of the right to freight, is, the question whether the service in respect of which the freight was contracted to be paid has been substantially performed; and, according to the law of England, as a rule, freight is earned by the carriage and arrival of the goods ready to be delivered to the merchant, though they be in a damaged state when they arrive. If the ship-owner fails to carry the goods for the merchant to the destined port, the freight is not earned. If he carries part, but not the whole, no freight is payable in respect of the part not carried, and freight is payable in respect of the part carried unless the charterparty makes the carriage of the whole a condition precedent to the earning of any freight — a case which has not within our experience arisen in practice.

It would be unjust, and almost absurd that, without regard to the comparative value of the freight and cargo when uninjured, the risk of a mercantile adventure should be thrown upon the ship-owner by the accident of the value of the cargo being a little more than the freight; so that a trifling damage, much less than the freight, would reduce the value to less than the freight; whilst, if the cargo had been much more valuable and the damage greater, or the cargo worth a little less than the freight and the damage the same, so as to bear a greater proportion to the whole value, the freight would have been payable, and the merchant have been put to his cross-action.

In Reynolds v Jex (1865) 7 B & S 86 per Shee J:

In Devoett v Moxon 1 Taunt. 391 Mansfield C. J., in giving judgment, says, pp. 395-6:

In this case the words "on payment of freight" are printed, and in the common form; the word ‘Franco’? was especially inserted, and it is very difficult to imagine any other meaning to the word than that the goods should go free of freight. The question is, whether the plaintiff, having obtained the use of the owner’s ship without his consent, the owner is not entitled to a quantum meruit for freight? There was no consideration given for the bill of lading, the deals were not consigned to the owner of the ship.

And Lawrence J. adds:

Suppose a butcher’s servant should give away his owner’s mutton to persons who dress it and eat it, would not the butcher be entitled to payment?

In Abbott on Shipping, p. 95, 10th ed., we find, "It seems also, that the master of a trading ship, entrusted to his command for the purpose of procuring goods on freight, cannot bind the owners by an engagement to carry goods free of freight. Such an engagement certainly will not be within the scope of his authority as above described."

Per Lord Diplock in Federal Commerce and Navigation Co Ltd v Tradax Export SA (The Maratha Envoy) [1978] A.C. 1 at p.7:

[T]he freight market for chartered vessels still remains a classic example of a free market. It is world-wide in coverage, highly competitive and sensitive to fluctuations in supply and demand. It is a market in which the individual charterers and ship-owners are matched in bargaining power and are at liberty to enter into charterparties in whatever contractual terms they please.


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