Section 4 of the The Carriage of Goods by Sea Act 2025 No implied absolute undertaking in contracts to which applicable rules apply

Section 4 of the The Carriage of Goods by Sea Act 2025 No implied absolute undertaking in contracts to which applicable rules apply

Visual Summary

Executive Summary

This section makes a simple but important change to the law of shipping goods by sea. It clarifies that there is no longer an automatic, unwritten guarantee from the shipping company (the carrier) that their ship is 100% perfect and seaworthy. In the past, this ‘implied absolute promise’ could hold a carrier responsible for issues they couldn’t possibly have known about. Now, their responsibilities are clearly defined by the specific ‘applicable rules’ set out in the Schedule of this Act, creating a fairer and more predictable standard.

In-Depth Analysis of the Section

Introduction

Section 4 addresses a long-standing principle in maritime law known as the ‘implied absolute undertaking of seaworthiness’. Historically, courts assumed that every sea carriage contract included an unspoken, absolute promise by the carrier that their vessel was perfectly fit for the voyage in every respect. This section modernizes the law by removing this implied, strict promise and replacing it with a more practical standard of care.

Breakdown of the Section

The key phrase is ‘no implied absolute undertaking’. Let’s break this down:

• Implied: This means a promise that is not written down in the contract but is assumed to exist by law.
• Absolute Undertaking: This means a strict, 100% guarantee. If the ship was unseaworthy in any way, even due to a hidden defect the carrier could not have found, the carrier would have broken this promise.

By removing this, the law no longer holds carriers to an impossible standard of perfection. Instead, their duty is now governed by the ‘applicable rules’ mentioned in the Act’s Schedule. These rules (specifically in Article III) require the carrier to exercise ‘due diligence’—meaning they must take all reasonable steps—to make the ship seaworthy before and at the beginning of the voyage. This shifts the focus from an absolute outcome (a perfect ship) to a reasonable process (taking proper care).

Practical Example

Imagine a company, ‘Oceanic Transport’, is hired to ship a container of furniture. Before the voyage, Oceanic Transport conducts all standard inspections, maintenance, and checks on the ship. However, a tiny, undetectable metal fatigue crack exists deep within the ship’s hull. During a storm, the crack worsens, causing a small leak that damages the furniture.

• Under the old law (with an implied absolute undertaking): Oceanic Transport would likely be automatically liable because the ship was, technically, not perfectly seaworthy when it sailed.
• Under Section 4 of this Act: A court would not assume an absolute promise. Instead, it would ask if Oceanic Transport exercised ‘due diligence’ as required by the applicable rules. Since they performed all reasonable inspections and the defect was undiscoverable, they would have a strong defense and might not be held liable for the damage.

Conclusion

Section 4 is a crucial clarification that brings fairness and predictability to sea carriage contracts. It replaces a vague and overly strict unwritten rule with the clear, written standards of care detailed in the Act’s Schedule. This ensures that carriers are held responsible for their negligence or failure to take reasonable care, but not for unforeseeable and undiscoverable defects.

Related Provisions

Understanding Section 4 requires looking at other parts of the Act that give it context. The following sections are particularly relevant:

• Section 3: Application of Schedule – This section is vital because it defines which shipping contracts are covered by the ‘applicable rules’. Section 4 only applies to contracts where these rules are in effect.
• Section 5: Statement as to application of Schedule to be included in bills of lading – This provision ensures that the contract document itself (the bill of lading) explicitly states that it is subject to the rules mentioned in the Schedule, making it clear to all parties what standard of care applies.

Learning Aids

Mnemonics

• SEA: Seaworthy Expectation Adjusted. This helps remember that the expectation of a seaworthy ship is adjusted from an absolute promise to the standard in the rules.
• NO-GO: No Outright Guarantee Obligation. This reminds you that the automatic, absolute guarantee obligation is gone.

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