GRANT V.

NORWAY

Daniel Qayyum Bin Kamalrolzlan

MS20210211201
Table of Contents
Introduction...........................................................................................................................................2
Synopsis of Cases..................................................................................................................................4
Main Problems Involved.......................................................................................................................5
Assumptions for the Solutions...............................................................................................................7
Additional Notes....................................................................................................................................9
Conclusion...........................................................................................................................................10

1
Introduction
An ocean bill of lading is a very important shipping document and the most common form of
maritime contract. In international trade where ocean transport is conducted between ports of
different countries, bills of lading 'assume an international character, making them a fecund
source of conflict of laws. A bill of lading is a standard-form document that is transferable by
endorsement (or by lawful transfer of possession). Most shipments by sea are covered by
the Hague Rules, the Hague-Visby Rules or the Hamburg Rules, which require the carrier to
issue the shipper a bill of lading identifying the nature, quantity, quality and leading
marks[11] of the goods.

A bill of lading (sometimes abbreviated as B/L or BOL) is a document issued by a carrier (or

their agent) to acknowledge receipt of cargo for shipment. Although the term historically
related only to carriage by sea, a bill of lading may today be used for any type of carriage of
goods1.[1] Bills of lading are one of three crucial documents used in international trade to
ensure that exporters receive payment and importers receive the merchandise.[2] The other
two documents are a policy of insurance and an invoice.2[3] Whereas a bill of lading is
negotiable, both a policy and an invoice are assignable. In international trade outside the
United States, bills of lading are distinct from waybills in that the latter are not transferable
and do not confer title. Nevertheless, the UK Carriage of Goods by Sea Act 1992 grants "all
rights of suit under the contract of carriage" to the lawful holder of a bill of lading, or to the
consignee under a sea waybill or a ship's delivery order.

A bill of lading must be transferable3,[4][5] and serves three main functions:

it is a conclusive receipt,[6] i.e. an acknowledgement that the goods have been loaded;[7] and

it contains or evidences[8] the terms of the contract of carriage; and

it serves as a document of title to the goods,[9] subject to the nemo dat rule.

1
The Law Commission Report into "Rights of Suit in respect of Carriage of Goods by Sea" - Law Com No 196,
Scot Law Com no 130), 1991.
2
 In a CIF contract, the buyer is essentially buying three documents, all of which grant rights over the cargo
3
If a so-called "bill of lading" is NOT transferable, it will be merely a sea-waybill or a ship's delivery order

2
A bill of lading is a standard-form document that is transferable by endorsement (or by lawful
transfer of possession).[10] Most shipments by sea are covered by the Hague Rules, the Hague-
Visby Rules or the Hamburg Rules, which require the carrier to issue the shipper a bill of
lading identifying the nature, quantity, quality and leading marks[11] of the goods.

In the case of Coventry v Gladstone, Lord Justice Blackburn defined a bill of lading as "A
writing signed on behalf of the owner of ship in which goods are embarked, acknowledging
the receipt of the Goods, and undertaking to deliver them at the end of the voyage, subject to
such conditions as may be mentioned in the bill of lading." Therefore, it can be stated that the
bill of lading was introduced to provide a receipt to the shipper in the absence of the owners.

Although the term "bill of lading" is well known and well understood, it may become
obsolete. Articles 1:15 & 1:16 of the Rotterdam Rules create the new term "transport
document"; but (assuming the Rules come into force) it remains to be seen whether shippers,
carriers and "maritime performing parties" (another new Rotterdam Rules coinage) will
abandon the long-established and familiar term, "bill of lading".

3
Synopsis of Cases

In that case, the master of a

ship signed a bill of lading
acknowledging that 12 bales of
silk were shipped. The
indorsees of the bill advanced
money on the goods so
represented to have
been shipped. The goods were
never shipped and the
indorsees sued the shipowners
to recover
the amount they had advanced.
The Court of Common Pleas
held that a ship’s master had
no
4
authority to sign a bill of
lading for goods not put on
board. Jervis, C. J., delivering
the judgment
of the court, posed the
question as:
Whether the master of a ship,
signing a bill of lading for
goods which have never been
shipped,
is to be considered as the agent
of the owner in that behalf, so
as to make the latter
responsible.
His Lordship concluded that:

5
If, then, form the usage of
trade, and the general practice
of shipmasters, it is generally
known
that the master derives no such
authority from his position as
master, the case may be
considered as if the party
taking the bill of lading had
notice of an express limitation
of the
authority; and, in that case,
undoubtedly, he could not
claim to bind the owner by a
bill of lading

6
signed, when the goods therein
mentioned were never shipped.
In that case, the master of a
ship signed a bill of lading
acknowledging that 12 bales of
silk were shipped. The
indorsees of the bill advanced
money on the goods so
represented to have
been shipped. The goods were
never shipped and the
indorsees sued the shipowners
to recover
the amount they had advanced.
The Court of Common Pleas

7
held that a ship’s master had
no
authority to sign a bill of
lading for goods not put on
board. Jervis, C. J., delivering
the judgment
of the court, posed the
question as:
Whether the master of a ship,
signing a bill of lading for
goods which have never been
shipped,
is to be considered as the agent
of the owner in that behalf, so
as to make the latter
responsible.
8
His Lordship concluded that:
If, then, form the usage of
trade, and the general practice
of shipmasters, it is generally
known
that the master derives no such
authority from his position as
master, the case may be
considered as if the party
taking the bill of lading had
notice of an express limitation
of the
authority; and, in that case,
undoubtedly, he could not
claim to bind the owner by a
bill of lading
9
signed, when the goods therein
mentioned were never shipped.
In that case, the master of a
ship signed a bill of lading
acknowledging that 12 bales of
silk were shipped. The
indorsees of the bill advanced
money on the goods so
represented to have
been shipped. The goods were
never shipped and the
indorsees sued the shipowners
to recover
the amount they had advanced.
The Court of Common Pleas

10
held that a ship’s master had
no
authority to sign a bill of
lading for goods not put on
board. Jervis, C. J., delivering
the judgment
of the court, posed the
question as:
Whether the master of a ship,
signing a bill of lading for
goods which have never been
shipped,
is to be considered as the agent
of the owner in that behalf, so
as to make the latter
responsible.
11
His Lordship concluded that:
If, then, form the usage of
trade, and the general practice
of shipmasters, it is generally
known
that the master derives no such
authority from his position as
master, the case may be
considered as if the party
taking the bill of lading had
notice of an express limitation
of the
authority; and, in that case,
undoubtedly, he could not
claim to bind the owner by a
bill of lading
12
signed, when the goods therein
mentioned were never shipped.
In the Grant v Norway case, the master of a ship signed a bill of lading acknowledging that
12 bales of silk were shipped. The endorsees of the bill advanced money on the goods so
represented to have been shipped. The goods were never shipped, and the endorsees sued the
shipowners to recover the amount they had advanced. The Court of Common Pleas held that
a ship’s master had no authority to sign a bill of lading for goods not put on board. Jervis, C.
J., delivering the judgment of the court, posed the question as:

Whether the master of a ship, signing a bill of lading for goods which have never been
shipped, is to be considered as the agent of the owner in that behalf, to make the latter
responsible.

His Lordship concluded that:

If, then, form the usage of trade, and the general practice of shipmasters, it is generally
known that the master derives no such authority from his position as master, the case may be
considered as if the party taking the bill of lading had notice of an express limitation of the
authority; and, in that case, undoubtedly, he could not claim to bind the owner by a bill of
lading signed, when the goods therein mentioned were never shipped.

13
Main Problems Involved

This was an action upon the case by the endorsees of a bill of lading, against the owners of a
vessel, to recover the amount of advances made by the former upon the bills of lading, the
goods never having in fact been shipped.

The declaration stated, that, on the 17th of April, 1846, the defendants were possessed of a
certain ship or vessel called the Belle, lying in the river Hooghley, at Bengal, being then
bound for London, for the carriage of goods and merchandise, to be shipped on board, for
freight to be there for paid to the defendants; that thereupon the defendants gave to Messrs
Biale, Koch, & Co, being merchants and traders then in credit and carrying on business in
Calcutta, a bill of lading, signed by the master of the said ship, who was then and there the
[666] servant and agent of the defendants in that behalf, and purporting to state, in the name
of the said master, that Biale, Koch, & Co had shipped, in good order, in the said ship, twelve
bales of silk, marked and numbered as in the margin of the said bill of lading, and that the
same were to be delivered in good condition, &c, unto order or assigns, to wit, to the order of
Biale, Koch, & Co, he or they paying freight at £5 per ton, &c; that, in the margin of the said
bill of lading were certain marks and numbers, purporting to relate to the said goods; that, by
the custom of merchants, bills of lading are commonly pledged and deposited by the holders
with others as a security for the payment of money, as the defendants well knew; that the
defendants, by such delivery of the said bill of lading, enabled Biale, Koch, & Co to deposit
the said bill of lading with other persons as a security for the payment of money, and that, in
fact, Biale, Koch, & Co afterwards indorsed the said bill of lading to, and deposited the same
with, the plaintiffs as a security for the payment of a large sum of money, to wit, the sum of
£1684, being the amount of an unpaid bill of exchange of which the plaintiffs, at the request
of Biale, Koch, & Co, their became and were the endorsees and bona fide holders for value,
and of which Biale, Koch, & Co were the drawers, and which bill of exchange, bearing date
the 18th of April, 1846, was by them the said Biale, Koch, & Co drawn upon Messrs
Johnson, Cole, & Co, London, and whereby they requested the drawees, at ten months’ date,
to pay to them the said drawers, or order, the said sum of £1684, and to place the same, with
or without advice, to account of shipments of silk per Belle, and rice per Castle Eden, and the
said Biale, Koch, & Co then indorsed the said bill of exchange to the plaintiffs; that the
plaintiffs were induced by Biale, Koch, & Co to [667] become the endorsees and holders of

14
the said bill of exchange, and to give value for the same to the amount of £1684, by the
deposit of the said bill of lading, but for which they would not have given value nor become
endorsees and holders thereof; that the plaintiffs, confiding in the truth of the said bill of
lading, and believing, by reason of its contents, that the goods therein described had been and
were shipped on board the said ship, deliverable under the said bill of lading to the order of
Biale, Koch, & Co, consented to, and did, give value for the said bill of exchange; that, if
true, the goods mentioned in the bill of lading would have been, according to the custom of
merchants, deliverable to the plaintiffs as holders thereof; that the said ship sailed, and
arrived in London on, &c, but did not convey or deliver the said supposed goods; that the said
goods in the said bill of lading mentioned never were shipped in and upon the said ship; that
the said bill of exchange was afterwards, when the same became due, duly presented for
payment to the drawees, and dishonoured, and that the plaintiffs were still holders thereof for
value, and unable to procure payment of the said bill of exchange, and the money for securing
the payment of which the said bill of lading was so deposited, still remained due, and the
plaintiffs were unable to procure payment thereof; and that, by reason of the premises, and of
the misconduct of the defendants as aforesaid, the plaintiffs had lost and been deprived of the
said money for the securing the payment of which the said bill of lading was so deposited, to
wit, the said sum of £1684 in the said bill of exchange mentioned, – to the plaintiffs’ damage,
&c.

15
Assumptions for the Solutions

The problems caused by Grant

v. Norway had been
recognized as early as 1855
when the
Bills of Lading Act (“BLA”)
was enacted. Section 3 is often
seen as an attempt to solve
those
problems. It reads as follows:
Every bill of lading in the
hands of a consignee or
endorsee for valuable
consideration
representing goods to have
been shipped on board a vessel
16
shall be conclusive evidence of
such
shipment as against the master
or other person signing the
same, notwithstanding that
such
goods or some part thereof
may not have been shipped,
unless such holder of the bill
of lading
shall have had actual notice at
the time of receiving the same
that the goods had not been in
fact
laden on board: Provided, that
the master or other person so
17
signing may exonerate himself
in
respect of such
misrepresentation by showing
that it was caused without any
default on his part,
and wholly by the fraud of the
shipper, or of the holder, or
some person under whom the
holder
claims.
This section has been found to
be virtually useless to the third
party wronged by a false
statement. The defects in the
section have been succinctly
18
summarized by the British
Law
Commission:
The problems caused by Grant v. Norway had been recognized as early as 1855 when the
Bills of Lading Act (“BLA”) was enacted. Section 3 is often seen as an attempt to solve these
problems. It reads as follows:

Every bill of lading in the hands of a consignee or endorsee for valuable

consideration representing goods to have been shipped on board a vessel shall be conclusive
evidence of such shipment as against the master or other person signing the same,
notwithstanding that such goods or some part thereof may not have been shipped, unless
such holder of the bill of lading shall have had actual notice at the time of receiving the same
that the goods had not been in fact laden on board: Provided, that the master or other person
so signing may exonerate himself in respect of such misrepresentation by showing that it was
caused without any default on his part, and wholly by the fraud of the shipper, or of the
holder, or some person under whom the holder claims.

This section has been found to be virtually useless to the third party wronged by a
false statement. The defects in the section have been succinctly summarized by the British
Law Commission:

Section 3 does not give a cause of action for the non-delivery of goods represented to
have been shipped. Nor does it provide conclusive evidence against the carrier, even where
the carrier’s agent had actual authority to sign. Instead it merely provides conclusive
evidence as against the master or person signing the bill, against whom there is usually no
cause of action since such people rarely contract personally. Even if the master contracted
personally with the shipper, it would often not be practically useful to sue him.

The British Law Commission, therefore, recommends that the rule in Grant v.
Norway be abolished. They suggest that:

A bill of lading, representing goods to have been shipped or received for shipment
and in the hands of the lawful holder in good faith, should be conclusive evidence of such
shipment or receipt as against the carrier.

19
 Section 4 of The Draft Carriage of Goods by Sea Bill which is proposed in
substitution of the BLA reads as follows:

A bill of lading which—

(a) represents goods to have been shipped on board the 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 any person who was not the master
but had the express, implied or apparent authority of the carrier to sign the 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.

If the recommendations ever come to be adopted as law in England, the difficulties posed by
Grant v. Norway will be put to rest at long last. Section 5 of the Civil Law Act will arguably
ensure that the case rests just as peacefully in Singapore. In the case of Grant v
Norway,1 whereby the court held the shipowner not liable for the unshipped 12
bales of silk although it has been signed and assured by the bills, merely on the ground that
the ship’s master had no authority to sign any bills of lading. Hence, he could not be
considered as the agent of the owner in that behalf, to make the latter responsible.

20
Additional Notes

Figure 1 :Sample Bill of lading

21
Conclusion

Grant v Norway (1851) is a case on the Law of Carriage of Goods by Sea; but since 1992 it
has no longer been good law.

This was an action upon the case by the endorsees of a bill of lading, against the owners of a
vessel, to recover the amount of advances made by the former upon the bills of lading, the
goods never having in fact been shipped.

The court held that a statement in a bill of lading that goods have been shipped is of only
prima facie evidential value, and its terms may be rebutted by evidence to the contrary.

The justification for the case was that a carrier should not suffer liability if (as was not
uncommon at the time) the ship's master had fraudulently colluded with a dishonest shipper
and had issued a bill declaring untruthfully that goods had been loaded. (The master would
normally be both an employee and an agent of the carrier but would (in both roles) be acting
in breach of the legal fiduciary duty to his employer/principal).

The Hague-Visby Rules continued with this view, with Article III (4) stating:

"Such a bill of lading shall be prima facie evidence of the receipt by the carrier of the goods
as therein described in accordance with paragraph 3 (a), (b) and (c). However, proof to the
contrary shall not be admissible when the bill of lading has been transferred to a third party
acting in good faith."

Although the UK has adopted the Hague-Visby Rules 4for the purposes of English Law a bill
of lading is now deemed to be conclusive (not merely prima facie) evidence of receipt as a
result of section 4 of the Carriage of Goods by Sea Act 1992. The reason for the change is
that the Law Commission5 deemed that, if international confidence were to be maintained, it
was crucial that a bill of lading should be relied upon as a conclusive statement of fact. It
follows that the main rule Grant v Norway has been rendered void by the 1992 Act.

4
The UK ratified the Hague-Visby Rules in the Carriage of Goods by Sea Act 1971
5
The Law Commission Report into "Rights of Suit in respect of Carriage of Goods by Sea" - Law Com No 196,
Scot Law Com no 130), 1991.

22