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THE ELEMENTS OF MERCANTILE LAW 
 
THE ELEMENTS 
 
 OF 
 
 MERCANTILE LAW 
 
 THOMAS EDWARD ^SCRUTTON 
 
 BAEUIST£E-AT-Li.W 
 
 Lecturer in Common Law to the Incorporated Law Society; Author 
 of " Charter-parties and Bills of Lading," etc. 
 
 WILLIAM CLOWES & SONS, Limited 
 
 27, FLEET STEEET 
 
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PEEFACE. 
 
 The contents of this volume were delivered as a 
 Course of Lectures on Mercantile Law by the Author, 
 as Lecturer in Common Law to the Incorporated 
 Law Society., In consequence of suggestions made 
 by students and others, they are now, with the 
 permission of the Council of the Society, published 
 from a shorthand report, which has been carefully 
 revised. This will account for their form, which 
 is that of spoken discourses, though the Lectures 
 have been broken up in chapters. It is hoped that 
 the following pages may be useful to students of both 
 branches of the profession and to men of business, 
 though they make no pretence of dealing with more 
 than the outlines of the subject. 
 
 T. B. S. 
 
 1, Essex Court, Temple, 
 
 Fehmanj 16, 1891. 
 
CONTENTS. 
 
 CHAPTEE I. 
 
 PAGE 
 
 THE LAW MERCHANT AND ITS HISTORY ... 1 
 
 CHAPTEE II. 
 
 GROWTH OF THE LAW MERCHANT ; HISTORY OF NE- 
 GOTIABLE INSTRUMENTS 22 
 
 CHAPTEE III. 
 
 BILLS OF exchange; PROMISSORY NOTES AND CHEQUES 40 
 
 CHAPTEE IV. 
 
 CHARTER-PARTIES AND BILLS OF LADING . .87 
 
CONTENTS. - 
 
 CHAPTER V. '' 
 
 Pies 
 THE BILL OP LADING AS A DOOUMKNT OF TITLE . .147 
 
 CHAPTER VI. 
 
 THE rAOTOES' ACTS ; AND NOTES ON THE CONTRACT OP 
 
 SALE 171 
 
 CHAPTER VII. 
 
 THE POLICY OF MARINE INSURANCE . . . .195 
 
 APPENDIX. 
 
 FORMS OF OHARTEK, BILL OP LADING, AND MARINE 
 
 POLICY . , . . . . fa . 223 
 
 m- ., 
 
 ^'-*'-. 
 
THE ELEMENTS OF MERCANTILE LAW. 
 
 CHAPTER I. 
 
 THE LAW MEECHANT AND ITS HISTOEYj,,, - 
 
 Books recommended. — The best, and almost the only satis- 
 factory sketch of the history of the Law Merchant with which 
 I am acquainted, is the Introduction prefixed by Master 
 Macdonell to the tenth edition of Smith's Mercantile Law. 
 See also the Prefaces to Chalmers on Bills of Exchange, and 
 Lowndes on Marine Insurance ; and Scruttoa on the Influence 
 of the Boman Law on the Law of England, chapters xiii., xiv. 
 
 The Council of tlie Incorporated Law Society have 
 assigned to their Common Law lecturer a wide sphere 
 of subjects. Besides the subjects that are ordinarily 
 treated of in the Queen's Bench Division, the 
 Common Law lecturer is at liberty to range over 
 the miscellaneous class of matters that are dealt 
 with by that Division of the High Court which 
 is popularly described as dealing with "bad wives, 
 bad wills, and bad wessels." He may go further 
 afield and deal with the Law of Bankruptcy, the 
 Orimiijal Law, and with the Ecclesiastical Law. 
 
COMMON LAW. 
 
 Obviously a lecturer must have a perfectly hydraulic 
 power of compression, and his audience must have 
 perfectly ostrich-like powers of digestion if in the 
 course of nine lectures he is to cover anything like 
 
 ^^ the subjects that are assigned to him. 
 
 ^^ I ^gk Jhe fact that so wide a meaning is given 
 J hj - the Gounoil - to the term " Common Law," may 
 properly call your attention to the different meanings 
 that the term " Common Law," itself has. In the 
 first place " Common Law " is used in distinction 
 to " Equity." The Common Law alone was adminis- 
 tered by the King's Courts in this country, and 
 suitors who complained of the i*ules of the law 
 addressed petitions to the King, as the fountain of , 
 justice, asking for "Equity." The King, if he had 
 time or inclination^ dealt with these petitions himself ; 
 but when, as generally happened, he had not time or 
 inclination, he referred them to his Chaaicellor, and 
 the Chancellor dealt out "Equity" to petitioners 
 injured by the stringent rules of the Common Law. 
 The Equity administered at first was variable ; as 
 Selden said, it "varied with the length of the 
 Chancellor's foot," but by degrees Equity itself 
 came to settle down to rigid rules, until with the 
 same case you might know beforehand that you 
 would be successful on the Common Law side of 
 Westminster Hall and unsuccessful on the Equity 
 
TEE LAW MBBOHANT. 
 
 side. At last under the Judicature Act (a) the 
 rules of Equity prevailed over the rules of Oommon 
 Law, and the distinction became abolished except 
 in as far as certain subjects were assigned to the 
 Court of Chancery, and that certain subjects were 
 assigned to the Qaeen's Bench Division. 
 
 A second meaning of the term " Common Law " 
 is when it is used in opposition to " Statute Law." 
 In that sense Common Law is the unwritten law of 
 the kingdom which exists m gremio legis, in the 
 bosoms of the judges, which they bring forth from 
 that mysterious recess when new points have to be 
 dealt with ; while the Statute Law is the written l^w 
 of the kingdom as it has been laid down by the Legis- 
 lature in Acta of Parliament. 
 
 Another sense in which the term " Common Law " 
 as used is when it is distinguished from the "Civil 
 Law," and in that sense the Common Law is the 
 law of England ; the Civil Law is the law of those 
 countries who have founded their system upon the 
 Roman Law. For [instance, if you go north of the 
 Border to Scotland, you find a system administered 
 differing from the Law of England, and founded upon 
 th6 Civil Law. If you cross the Atlantic to the 
 United States you find the States in the North, such 
 as Massachusetts, administering a system founded on 
 
 (a) 36 & 37 Vio. o. 66, § 6, ss. 11. 
 
 B 2 
 
<■ EARLY SISTOBY OF 
 
 Common Law j and if you go to Louisiana, in the 
 Soutt, yoii find a system founded on the old Eoman 
 Law, and known as a Civil Law system. 
 
 There was yet another distinction which leads 
 me to the subject of this course of lecturesy^If 
 you read the law reports of the seventeenth <$entury 
 you will be struck with one very remarkable fact ; 
 either Englishmen of that day did not engage in 
 commerce, or they appear not to have been litigious 
 people in commercial matters, each of which alter- 
 natives appears improbable. But it is a curious fact 
 that one finds in the reports of that century, two 
 hundred years ago, hardly any commercial cases. If 
 one looks up the Law of Bills of Exchange, *'the 
 cases on the subject are comparatively few and un- 
 important .till the time of Lord Mansfield." (6) t- If 
 you turn to Policies of Insurance, and to the work 
 of Mr. Justice Park on the, subject pijblished at 
 the beginning of this century, you find him sa.ying: 
 "I am sure I rather go bi&yond bounds if I assert 
 that in all our reports from the reign of Queen 
 EliEabeth to the year 1766, when Lord Mansfield 
 became Chief Justice of the King's Bench, there are 
 sixty' cases upon matters of insurance." (c) , If you 
 come to Charter Parties and Bills of Lading, which 
 have always been productive of litigation, you find 
 (5) Chalmers, BUIb, Pref. p. 3^ • - (c) Park, I. Pref. 43. 
 
THE LAW MEBCHANT. 
 
 Sir John Davies in the seventeenth century saying 
 that " until he understood the^ difference between the 
 Law of Merchants and the Common Law of England, 
 he did not a little marvel what should be the. cause 
 that in the books of the Common Law of BnglajBtd 
 there should be found so few cases concerning mer- 
 chants and ships, but now the reason was apparent, 
 for that the Common Law did leave these cases to 
 be ruled by another law, the Law Merchant, which 
 is a branch of the Law of Nations." (d) ■ 
 
 The reason why there were hardly any cases 
 dealing with commercial matters in the Reports of 
 the Common Law Courts is that such cases were 
 dealt with by special Courts and under a special law. 
 That law was an old-esta;blished law, and largely 
 based on mercantile customs, Gerard Malynes, who 
 wrote the first work on the Merchant Law in England, 
 called his book, published in 1622, " Consuetudo vel 
 Lex Mercatoria," or the Ancient Law Merchant; and 
 he said in his preface : " I have entituled the book 
 according to the ancient name of Lex Mereatoria, and 
 not Jus Mercatorum, because it is a customary law 
 approved by the authority of all kingdoms and 
 commonwealeSj and not a law established by the 
 sovereignty of any prince." And Blackstone, in the 
 middle of the last century, says : " The affairs of 
 {d) Zouch, Jurisdiction of the'Admiralty (1686), p. 89. 
 
TEE NATimE OF 
 
 commerce are regulated by a law of their own called 
 the Law Merchant or Lex Mercatoria, which all 
 nations tgree in and take notice of, and it is par- 
 ticularly held to be part of the law of England which 
 decides the causes of merchaints by the genera,! rules 
 which obtain in all commercial countries, and that 
 often even in matters relating to domestic trade, 
 as for instance, in the drawing, the acceptance, and 
 the transfer of Bills of Exchange." (e) y Later than 
 Blackstone, Lord Mansfield lays down that "Mer- 
 cantile Law is not the law of a particular country, 
 but the law cf all nations " ; (J)^ while so recently 
 as 1883 you find Lord Blackburn saying in the 
 House ,of Lords that " the general Law Merchant 
 for many years has in all countries caused Bills of 
 Exchange to be negotiable ; there are in some cases 
 differences and peculiarities which by the municipal 
 law of each country are grafted on it, but the 
 general rules 6f the Law Merchant are the same in 
 all countries." (gr) ' 
 
 Now if we follow the growth of this Law Merchant 
 or Mercantile Law, which was two hundred years 
 ago so distinct from the Common Law, we find 
 it in England going through, three stages of develop- 
 
 (fi) Blackstone, Commentaries, I. 273 ; IV. 67. 
 
 (/) iMke V. Lyde, 2 Burr, at p. 887. 
 
 {g) M'Leom v. Ch/desdale BanTe, 9 App. 0, at p. 105. 
 
THE LAW MEBGSANT. 
 
 ment. {h) The first stage may be fixed as ending 
 at the appointment of Coke as Lord Chief Justice 
 in the year 1606, and before that time you will find 
 the Law Merchant as a special law administered by 
 special Courts for a special class of people. 
 
 In the first place as to the special Courts. The 
 greater part of the foreign trade of England, and 
 indeed of the whole of Europe at that time, was 
 conducted in the great fairs, held at fixed places 
 and fixed times in each year, to which merchants 
 of all countries came ; fairs very similar to those 
 which meet every year at the present time at 
 Novgorod in Bussia, and at other places in the 
 East. In England, also, there were then the great 
 fairs of Winchester and Stourbridge, and the fairs 
 of BeSan9on and Lyons in France, and in each 
 of those fairs a Court sat to administer speedy justice 
 by the Law Merchant to the merchants who con- 
 gregated in the fairs, and in case of doubt and 
 difficulty to have that law declared on the basis of 
 mercantile customs by the merchants who were present. 
 You will find this Court mentioned in the old English 
 law books as the Court P&poudrous, so called because 
 justice was administered '^whjle the dust fell froni 
 the feet," so quick were the Courts supposed to be. 
 "This Court is incident to every fair and market 
 (7i) Maodonell, Preface to Smith's Mercantile Law, p. 82. 
 
OOUBTS OF TEE FAIRS. 
 
 ■'be<Jau:ge that iqr coiitrf;Gts and injuries done con.r,iv 
 cernirigthe fair or macket there shall be as speedy . 
 justice done for advancement of trade and traflBo 
 as the dnst can fall ' from ' the feet, ph^ proceeding 
 there being de hora in^noramJ' -{i) Indeed, so far 
 back as Bfacton in .jrhe thirteenth century, it had 
 been recbgnised that there were certain classes of 
 people "who ought Jio have^Swift justice, sum as 
 merchants, to whom justice is given in the* Court 
 Pepoudrous." {j) The records of these Courts are 
 few, for obviously in Courts for Tapid business law 
 reporters were rather at a discount. As, a con- 
 sequence, "^here is no part of the history of ^English 
 law more obscure than that connected with the maxim 
 that, the Law Merchant is part of the law of the 
 land." (&) We are, however, fortunate enojigh to 
 have one^jr two records of the Courts of the Fairs, 
 The Selden Society has succeeded in unearthing the 
 Abbot's roll of the fair of St. Ives held in 1275 and 
 1291, (Z) containing a seiiqs.-of cases which- fhow 
 how the merchants administered the Law Merchant 
 in the Courts of the fair, and why such cases did not 
 come into the King's Court. For instance :— " Thomas, 
 of WellSj complains of Adam Garsop that \q unjustly 
 
 3 (-i) Coke, Inst. IV. 272. / /;,' 
 
 'r 0') Braqton, f. 334. . *^ 
 
 ,^ (hj Slackburn on Sale, 1st ed. p. 207, 
 i^ {I) Selden Society, Vol. II. pp. 130 ei aeq. 
 
THE LAW MEBOEANT. 
 
 detains and deforces from him a coffer which the 
 said Adam sold to him on Wednesday next after 
 Mid Lent last past for sixpence, whereof he paid 
 to the said Adam twopence and a drink in advance" — 
 (it appears to have been a very good mercantile 
 custom, still existing, to "wet a bargain,'' and the 
 drink was a matter to which great importance was 
 attached by the merchants present); "and on the 
 Octave of Easter came and would have paid the rest, 
 but the said Adam would not receive it nor answer 
 for the said coffer, but detained it unconditionally 
 to his damage and dishonour, 2s., and he produces 
 suit. The said Adam is present and does not defend. 
 Therefore let him make satisfaction to the said 
 Thomas and be in mercy for the unjust detainer; 
 fine 6d.; pledge his overcoat." The next defendant 
 was not so fortunate as to have an overcoat. 
 "Reginald Picard of Stamford came and confessed 
 by his own mouth that he sold to Peter Redhood 
 of liondon a ring of brass for 5|c?., saying that the 
 said ring was of the purest gold, and that he and 
 a one-eyed man found it on the last Sunday in the 
 churchyard of St. IveSj near the cross." (One fancies 
 one has heard that tale about the brass ring before.) 
 "Therefore it is considered that the said Reginald 
 do make satisfaction to the said Peter for the 5^d. 
 and be in mercy for the trespass ; he is poor ; pledge 
 
10 dOURTS OV TEE FAlBS. 
 
 his body." The next case introduces the Law Merchant. 
 "Nicolas Legge complains of Nicolas of Mildenhall 
 for that unjustly he impedes him from having, ^coord- 
 ing to the usage of merchants, part in a certain ox 
 which Nicolas of Mildenhall bought in his presence 
 in the village of St. Ives on Monday last past to 
 his damage 2g., .whereas he was ready to pay half 
 the price, which price was 2s. Qd. And Nicolas of 
 Mildenhall defends, and says that the Law Merchant 
 does well allo# that eve^y merchant may participate 
 in a bargain' in the butcher's trade if he claim a 
 part thereof at the time of the sale; -but to prove 
 that the said Nipolas Legge was not present at the 
 time of the purchase nor claimed a pEirt thtereof' 
 he is ready to make law." --fElien they went to the- 
 piroof. The custom of the Law Merchant relied on 
 admitted any merchant standing by to claim a share 
 in any bargain on paying a share of the price. The, 
 defence is, " You were not there, so you cannot claim." 
 The next and last case is one which puzzled the 
 Court, and therefore I omit the details, but it is 
 recited in the Abbot's roll: "And the case is respited 
 till it shall be more thoroughly discussed . by the 
 merchants. And the merchants, of the various com- 
 monalties and others being convoked in full Obutt 
 it is considered" — and then they go on to discuss 
 it. There you see the Merchants' Court at work. 
 
TBH LAW MEBOHANT. ll 
 
 giving quick justice in all mercantile disputes, and 
 in cases of doubt calling upon the merchants present 
 to declare what the Law Merchant is. So much for 
 the fairs. 
 
 In most seaport towns also you would find a similar 
 Court dealing with cases arising out of ships. In 
 the Domesday Book of Ipswich (m\ it is stated^ " The 
 pleas between strange folk that men call '"pypou- 
 drous' should be pleaded from day to day. The 
 pleas in time of fair between stranger and passer 
 should ba pleaded from hour to hour, as well in the 
 forenOoit^s in the afternoon, and that is to wit of 
 plaints begun in the same time of fair, and the pleas 
 given to the law marine for strange mariners passing, 
 and for them that abide not but their tide, should be 
 pleaded from tide to tide." Any ship coming into 
 the port of Ipswich with a dispute about its Charter 
 Party or BUI of Lading may get summary justice at 
 once from this Court at Ipswich between tide and 
 tide. Stress may be laid on the fact that the Courts 
 sat in the afternoon, because at that time the King's 
 Courts only sat from eight in the morning till eleven 
 and then adjourned for the rest of the day. " For 
 in the afternoons these Courts are not holden. But 
 the suitors then resort to the perusing of their 
 writings, and elsewhere consulting with the serjeants- 
 (m.) Black Book of Admiralty, Eolls Series, II. 23. 
 
12 . TME NATURE OF 
 
 at-law and other their counsellors," (n) so that the 
 time, taken ' up in consultation by the Courts in 
 London waS, taken up by the Courts at Ipswich in 
 dealing summarily with cases, and letting the strange 
 mariners go who were only waiting for their tide. 
 
 There were special Courts by statute, of which a 
 number of " grave and discreet merchants " were ne- 
 cessary members, in order that the Mercantile Law 
 founded on the custom of merchants might be duly 
 applied to the case before them, (o) The law which 
 these Courts administered was what was called by 
 merchants the Law Merchant and Law of the Sea, 
 and it was common to nearly every European country. 
 Much of it was to be found in a series of codes of 
 Sea Laws, such as the Laws of Oleron and Wisbury, 
 and the Consolato del Mare, embodying the customs 
 and practices of merchants. of different countries} sand 
 it was not the Common Law of England. Further, 
 it was only for a particular class. , You had to show 
 yourself to be a merchant before you got into the 
 Mercantile Court; and until about two hundred 
 years ago it was still necessary to show yourself to 
 
 (n) Sir J. Fortesoue. 
 -i (o) E.g. the Court established by 43 Bliz. o. 12, of which 
 eight "grave and discreet merchants" were to be members, 
 who were to determine all insurance cases in a brief and 
 summary course, without formalities of pleadings or pro- 
 ceedings. 
 
THE LAW MERCHANT. 13 
 
 be a mercliant in the Common Law Courts before you 
 could get the benefit of the Law Merchant, (p) 
 
 Now the second stage of development of the Law 
 Merchant may be dated from Lord Coke's taking 
 office in 16.06, and lasts until the time when Lord 
 Mansfield became Chief Justice in 1756, and during 
 that time the peculiarity of its development is this : 
 that the special Courts die out, and the Law Merchant 
 is administered by the King's Courts of Common Law,, 
 but it is administered as a custom and not as law, and 
 at first the custom only applies if the plaintiff or 
 defendant is proved to be a merchant. In every 
 action on a Bill of Exchange it was necessary for- 
 mally to plead " secundum usum et consuetudinem 
 Mercatorum" — according to the use and custom of 
 merchants ; (q) and it was sometimes pleaded that the ■" 
 plaintiff was not a merchant but a gentleman, (r) 
 And as the Law Merchant was considered as custom, 
 it was the habit to leave the custom and the facts to 
 the jury without any directions in point of law, with 
 a result that cases were rarely reported as laying 
 down any particular rule, because it was almost im- 
 possible to separate the custom from the Ifacts ; as 
 a result little was done towards building up any system 
 
 ^' {p) Vide post, pp. 29, 30. ; " " 
 
 y (q) Chalmers, Bills, Pref. p. 44 ■ -' " 
 
 I (r) Of. Sarsfield v. Witherby (1692), Oarthew, 82. 
 
14 JjORB MANSFIELD. 
 
 of Mercantile Law in England. The eonstniction 
 of that system began with the accession of Lord 
 MaaSfield to the Chief Justiceship of the King's 
 Bench in 1756, and the result of his administration 
 of the law in the Court for thirty years was to build 
 up a system of law as part of the Common Law, 
 embodying and giving form to the existing customs 
 of merchants. When he retired, after his thirty years 
 of office, Mr. Justice BuUer paid a great tribute to 
 the service that he had done. In giving judgment m 
 Liclcbarrow v. Mason, (s) he said : " Thus the matter 
 stood till-within these thirty years. Since that time 
 the Commercial Law of this country has taken a 
 very different turn from what it did befork Lord 
 Hardwicke himself was proceedin^with great caution, 
 not establishing any general principle, but decreeing 
 on all the circumstances put together. Before that 
 period we find in Courts of Law all, the evidence 
 in mercantile cases was thrown togellner ; they were 
 left generally to the jury, and they produced no estab- 
 lished principle. Prom that time we all know the great 
 study has been to find some certain general principle, 
 not only to rule the particular case under considera- 
 tion, but to serve as a guide for the future. Most 
 of us have heard those principles stated, reasoned 
 upon, enlarged, and explained till we have been lost 
 («) 2 T. R. 73. 
 
TSE LAW MEBOSANT. 15 
 
 in admiration at the strength and stretoli of the human 
 understanding, and I should be sorry to find myself 
 under the necessity of differing from Lord Mansfield, 
 who may truly be said to be the founder of the 
 Commercial Law of this country." Lord Mansfield, 
 with a Scotch training, was not too favourable to the 
 Common Law of England, and he derived many of 
 the principles of Mercantile Law, that he laid down, 
 from the writings of foreign jurists, as embodying the, 
 custom of merchants all over Europe. For instance, 
 in his great judgment in Luke v. Lyde, (t) which raised 
 a question of the freight due for goods lost at sea, he 
 cited the Eoman Pandects, the Consolato del Mare, laws 
 of "Wisbury and Oleron, two English and two foreign 
 mercantile writers, and the French Ordonnances, and 
 deduced from them the principle which has since 
 been part of the Law of England, (m) While he 
 obtained his legal principles from those sources, he 
 took his customs of trade and his facts from Mercan- 
 tile Special Juries, whom he very carefully directed 
 on the law; and Lord Campbell, in his life of Lord 
 Mansfield, has left an account of Lord Mansfield's 
 procedure. He says : (d) " Lord Mansfield reared a 
 body of special jurymen at Gruildhall,, who were 
 
 ^ (0 2 Burr. 883. 
 
 '-" {u) Cf. the judgment of Willes, J., in Bakin v. Oxhy, 15 
 C. B. N. S. 646, for similar authorities. 
 
 >"' {v) Campbell's Lives of the Lord Chief Justices, IL 407, note. 
 
16 LOBD MANSFIELD. 
 
 generally returned on all commercial oases to be tried 
 there. He was on terms o£ the most familiar inter- 
 course with them, not only conversing freely with them 
 in Court, but inviting them to dine with him. From 
 them he learned the usages of trade, and in return he 
 took great pains in explaining to them the principles 
 of jurisprudence by which they were to be guided. 
 Several of these gentlemen survived when I began to 
 attend Guildhall as a student, and were designated 
 and honoured as 'Lord Mansfield's jurymen.* One 
 in particular I remember, Mr. Edward Vaux, who 
 always wore a cocked hat, and had almost as much 
 authority as the Lord Chief Justice himself." 
 
 Since the time of Lord Mansfield other judges 
 have carried on the work that he • began, notably 
 Abbott, Lord Chief Justice, afterwards Lord Tenter- 
 den, the author of " Abbott on Shipping," Mr. Justice 
 Lawrence, and the late Mr. Justice "Willes; and as 
 the result of their labours the English Law is now 
 provided with a fairly complete code of mercantile 
 rules, and is consequently inclined to disregard the 
 practice of other countries. In Lord Mansfield's 
 time it would have been a strong argument to urge 
 that all other countries had adopted a particular 
 rule; at the present time English Courts are not 
 alarmed by the fact that the law they' administer 
 differs from the law of other countries^ V" In a recent 
 
 /^w 
 
THE LAW MERGE ANT. 17 
 
 caae before the Court of Appeal^ Lord Bsher says : (w) 
 "It was urged that even if thejproposition is stated ^ 
 in terms larger than have hitherto been recognised 
 in English Law, yet it ought now to be adopted in 
 order to bring the principle of English Law on the 
 subject into consonance with the laws of all other 
 countries. But to this I cannot agree. It is useless 
 to inquire whether the law is, as stated, the, same 
 in all European countries. For if it is, yet no English 
 Court has any mission to adapt the Law of England 
 to the laws of other countries ; it has,;; authority 
 only to declare what the Law of England %." Lord 
 Mansfield would have found out what the Law of 
 England in mercantile matters was by considering 
 what was the law of other countries, if there was 
 no English decision laying down any clear rule. 
 The Courts of the present day, in the wealth of 
 English commercial law, feel entitled to disregard 
 the law of other countries. 
 
 Further than this, the Law Merchant, which was 
 originally based upon the usage of merchants, can 
 now be extended by new usages which have 
 sprung up, may be constantly added to by proof of 
 fresh usages of the mercantile world. That is very 
 clearly and strongly laid down in the case of Ooodmn 
 
 {w) Svendsen v. Wallace, 13 Q. B. D. 73, cf. per Willes, J.^ 
 in Lloyd v. Guibert, L. E. 1 Q. B. 119, 123. 
 
 c 
 
18 GROWTH OF 
 
 Y. Bobarts. {x) It was a case involving the question 
 wlietlrer a particular form of debenture scrip was 
 negotiabl&j and it was alleged that by the custom 
 of merchants it had been so for the last twenty years. 
 It was answered to- that, relying upon a judgment 
 of Mr. Justice Blackburn, (y) that no addition could 
 be made to the Law Merchant by so recent a usage 
 as twenty years, but that it must be shown to be 
 part of the ancient Law Merchant j but Chief Justice 
 Cockburn, in delivering the judgment of the Court 
 of Ex-chequer Chamber in GoodiJain v. Boharis, said : 
 " Having given the fullest consideration to this 
 argument, . we are of opinion that it cannot pre- 
 vail. It is founded on the view that the Law 
 Merchant is fixed and stereotyped^ and incapable of 
 being enlarged so as to meet the wants and require- 
 ments of trade in the varying circumstances of com- 
 merce. It is true that Law Merchant is sometimes- 
 spoken of as a fixed body of law forming part of the 
 law, and, as it were, coeval with it, but as a matter 'of 
 legal history this view is altogether incorrect. . :%'' 
 The Law Merchant is of compairatively reo^t origin ; 
 it is neither more or less than the usages of merchants 
 and traders in the different departments of trade rati- "^ 
 fied by the decisions of the Courts of Law, which, upon 
 
 {x) L. R. 10 Ex. 346, 352. 
 
 iy) Crouch v. Credit Fancier, L. E. 8 Q. B. 386. 
 
TEE LAW MEBGSANT. 19 
 
 such usages being proved before them, have adopted 
 them as settled law with a view to the interests of 
 trade and public convenience, the Court proceeding 
 herein on the well-known principle of law thatj with 
 respect to transactions in the different departments of 
 trade, Courts of Law, in giving effect to the contracts 
 and dealings of the parties, will assume that the latter 
 have dealt with one another on the footing of any 
 custom or usage prevailing in that particular depart- 
 ment." Thus it is that Courts of Law continually take 
 notice of customs of trade, only to the word " customs " 
 they give a much wider meaning than it bears in the 
 Common Law. A well-known lawyer said rather 
 cynically once that he had heard a good many customs 
 found by juries, but he had never heard one proved 
 yet ; and it is so that the evidence on which a mer- 
 cantile jury, who know a great deal more about the 
 matter than the lawyers or witnesses, very often will 
 find that a custom exists, is such as would n.ot suffice 
 to establish any custom under the strict rules of the 
 Common Law. 
 
 For according to the Common Law a custom mifi|fi . 
 have six attributes. In the first place it must datl^^ 
 from time immemorial, which has been conveniently s, ■ 
 fixed by the Common Law as when our Lord Eichard: 
 returned from Palestine, in 1189. Now, obviously, 
 when our Lord Eichard returned from Palestine, the 
 
 c 2 
 
20 CUSTOM AND 
 
 ^ — — ^^ 
 
 amount of mercantile custom existing in England- wag ' 
 
 of the very slightest description, and if one is to tr&6§ 
 all one's mercantile custom^ back to his return from 
 Palestine, or if a custom is liable to be defeated, by 
 proof of a later origin, very few mercantile customs 
 can possibly be proved. The a(istom must be con- 
 tinuous from that date in the seCond place. In the 
 third place it must be univef sally acquiesced in. In 
 the fourth place it must be reasonable. In the fifth 
 place, it must be certain ; and in the last place it must 
 be binding. Now in ^proving a mercantile custom you 
 can dispense with our Lord Richard at once; it is 
 sufficient for ybu to prove that the custom is certain, 
 so that people know what it is ; that it is reasonable ; 
 that it is fairly universal (of course it is not quite 
 universal, because son^ody is disputing it in the. 
 action in question) ; thai it has existed for some time ■ 
 (five years may suffice) ; and that merchants in the 
 trade consider it binding ; and on' those lines the laW'>'' 
 is continually being added to by the finding of cUSl^ios 
 by special juries. 
 
 The Law Merchant has developed in -this way, 
 and for the remainder of this course of lectures" I<,.^ 
 shall be dealing with the particular instruments 
 used in mercantile circles, and with the incidents-, 
 which the custom of mierchants or the Law Merchant 
 has -attached to those instruments. I shall deal 
 
TEE LAW MEBOEANT. 21 
 
 first of all with negotiable instruments, bills of 
 exchange, promissory notes, cheques, bank notes, 
 and' other instruments, that have been held by the 
 Courts negotiable. I shall then go on to ^hipping 
 documents, charter-parties and bills of lading, con- 
 sidering also the position of a bill of ladipg as a 
 document of title, with the kindred subjects of 
 stoppage vn transitu, delivery orders, dock warrants, 
 and the Factors' Acts. I shall then hope to deal 
 with policies of insurance, and with sold and bought 
 notes and the mercantile contract of sale. 
 
i 
 
 CHAPTER II. 
 
 GROWTH OF a?HE LAW MERCHANT; HISTOET Or NEGOTIABLE 
 INSTRUMENTS. 
 
 For authorities, see the Preface to Mr. Chalmers' work oiy' 
 Bills of Exchange ; the notes to Miller v. Bace in;l. Smith'^ 
 Leading Oases, 9th ed. p. 491 ; an% the judgment of CoGkburD|| 
 C. J., in Goodwin v. Boharts, L.-lClO^x. 346. * 
 
 Many of the rules of Mercantile Law, the Law 
 Merchant, are directed to evade inconvenient rules 
 j of the Common Law/ The Common Law in its 
 ^j^ ancient strictness greatly interferes with i^e free 
 course of commerce, and its first rule, and the rule 
 which has caused the greatest difi&culty to merchants, 
 is apparently a very simple one. The Common Law' 
 says a man cannot give what he has not got j nemo 
 potest dare, quod non habet ; therefore a man who 
 has not got a title to goods cannot give a title 
 to another; and consequently, if you are to be 
 sure when you have bought a thing that you have 
 got a title to it, you must inquire into. the title of 
 that thing back to its remote possessors, to see 
 
GROWTH OF TEE LAW MBEOHANT. 23 
 
 that there is nobody in the chain who stole it, or 
 obtained it by fraud. In the same way, if anybody 
 comes to you with goods which he says .were en- 
 trusted to him by his principal for sale, you must 
 inquire into his authority and his principal's title; 
 because if he has not a title, if he has not authority 
 from his principal to deal with the goods in the 
 way in which he is dealing with them, you will 
 get no title. That is the rule of the Common Law, 
 and that is the rule that the Law Merchant has 
 set itself to rectify, for " commercial business," 
 say commercial men, "cannot be carried on if we 
 have to inquire into the title of everybody who 
 comeB to us with documents of title such as bills 
 of lading or for the sale of goods." In the words 
 of Lord Justice Bowen : {z) " The practice of 
 merchants is not based on the supposition of 
 possible fraud. The object of mercantile usage is 
 to prevent the risk of insolvency, not of fraud ; 
 and any one who attempts to follow and understand 
 the Law Merchant will soon find himself lost, if 
 he begins by assuming that merchants conduct their 
 business on the basis of attempting to insure them- 
 selves against fraudulent dealing. The contrary is 
 the case. Credit, not distrust, is the basis of 
 commercial dealings. Mercantile genius consists 
 (z) SoMders y. McLem, 11 Q. B. D. at p. 343. ■>' 
 
24 MARKET OVERT. 
 
 principally in knowing whom to trust and with 
 whom to deal, and commercial intercourse and com- 
 munication ^ is no more based on the supposition 
 of fraud, than it is on the supposition of forgery." 
 You will find an admirable statement of the 
 difficulties which the Common Law thus puts in 
 the way of merchants in the judgment of Mr. 
 Justice Blackburn in Oole v, The North Western 
 Bank, (a) 
 
 Now, the first inconvenience of the Common 
 Law rule is found in dealing with sales in a market, 
 and the Law Merchant has met this by the doctrine 
 of sale in " market overt," which is now part of the 
 Common Law, but was introduced by the custom of 
 merchants. If you go back as far as Braoton, you 
 find the man who bought in a market goods which 
 had been stolen did not become entitled to them 
 as he would now; (6) the only protection that he 
 Obtained was that he was not liable to be criminally 
 convicted for theft, if lie could show that he had 
 bought them in a recognised market. By the time 
 you get to Lord Coke you find the Law Merchant 
 has established the present rule, and Coke writes : 
 " Sales and contracts of anything vendible in fairs 
 
 (a) L. K. 10 C. P. at p. 362. 
 
 (J) See the historical references in the argument in 
 Benthy v. Vilmont, 12 App. C. at p. 4H.' 
 
GROWTH OF THE LAW MEBOHANT. 25 
 
 or markets overt should not be good only between 
 the parties, but should bind those that had right 
 thereunto." (c) That is the first exception established 
 by the Law Merchant. The Common Law says : " No 
 man can give what he has not got " ; answer by the 
 Law Merchant: "Yes, he can if he sells in a market, 
 because it is for the interest of trade that purchases in 
 markets should be secure even though the person who .^ 
 ofEers the goods for sale in a market has not a title." {d) ^4t/ / 
 
 Now /another rule of the Common Law which '''^^^ 
 is found inconvenient by merchants is the old rule 
 that a "chose in action" is not transferable. A 
 "chose in action" is a right to recover a thing, 
 as distinguished from the thing itself. A bill of 
 lading, as distinguished from the goods it represents, 
 is such a "chose in action." If you had a right 
 to recover property from A^ and wanted to assign 
 that right to B., so that B. xjbiSdrrecover such property 
 from A., you conld'^not do it by the old Common Law. 
 Equity would have Recognised that you had trans- 
 ferred the right to B., but even then B. must bring 
 
 (c) Coke, Inst. II. 713. "%<; 
 
 (i) For a further example of the working,^ pf the Common 
 Law rule see the well-known case of BaHonf -v.' L. N. W. H. 
 24 Q. B. D. 77, The Eule of Market overt is defeated if the 
 true owner ppsecutes the thief, or person who has obtained 
 property by false pretences, to c(3.nviction. Gi. JBeniley v. 
 Vilmont, 12 App. C. 471. "':. ;. 
 
26 CH0SB8 IN ACTION. 
 
 his action in the name of A., who had given him the 
 right; he could not sue in his own name. And 
 farther, when the " chose in action " was transferred, 
 such a transfer passed no better title than the trans- 
 feror had. Now the Law Merchant dealt with many 
 "choses in action/' and it would, have been very 
 inconvenient, for instance, that the man who took 
 a bill of exchange should not be able to, sue on it 
 in his own name, but should have to sue in the name 
 of the man whose name was mentioned as payee in 
 the bill of exchange. It would have been highly 
 inconvenient that the indorsee of a bill of exchange 
 should have to inquire into the title of all previous 
 indorsers, to see that there was no defect in any of 
 their titles. As a result the Law Merchant establishes 
 certain instruments or " choses in action," which were 
 transferable by delivery or indorsement, so that the 
 holder could sue in his own name, and which passed 
 a goo^ title to a transferee who took them in good 
 faith, n-otwithstanding that the transferor or his pre- 
 decessors had no title. These documents- had thus 
 two distinguishing features : they could be sued on 
 by the holder in his own name ; and they were not 
 affected by previous lack of title : and instruments 
 'of fthis\class are called Negotiable Instruments, (e) 
 
 (e) See tte leading case of Miller v. Baee, 1 Smith, L. C. 
 9th ed. 491, and per Bowen, L. J., in Picher v. London and 
 Ooimty Bank, 18 Q. B. D. 519. 
 
GROWTH OF THE LAW MERCHANT. 27 
 
 To illustrate the general doctrine I have been ex- 
 plaining to you, a bill of exchange is by the custom 
 of merchants transferable either by delivery, if it is 
 to bearer, or by indorsement, if it is to order, and the 
 indorsee or person who takes it can sue in his own 
 name, and is not affected by the fact of previous 
 want of title in an indorser if he was not a party 
 to that defect. 
 
 The indorsement of a bill of lading by the custom 
 of merchants passes such property in the goods re- 
 presented by it as it was intended to pass ; (/) but it 
 needed a statute, the Bills of Lading Act, (g) to get 
 a further effect and allow a holder of a bill of lading 
 to sue in his own name on the contract contained in' 
 the bill of lading. Thus the bill of lading obtained 
 a similar position to that of a negotiable instrument 
 by the double effect of the custom of merchants and 
 of the Statute. A policy of insurance does not by 
 assignment pass goods insured under it, although the 
 assignee may by statute sue in his own name, and 
 therefore it is not a complete negotiable instrument. 
 For to make a negotiable instrument you must have 
 two marks ; that the holder gets a title, though his 
 transferor had no title, and that i^e holder can sue 
 in his own name, each of these marks meeting one 
 of the rules of the Common Law already referred to. 
 
 (/) Vide post, p. 153. {g) 18 & 19 Yie. c. Ill, 
 
28 NEGOTIABLE INSTRUMENTS. 
 
 The law of negotiable instruments is, with some 
 few exceptions depending on statutes, entirely built 
 upon the custom of merchants, and the history of that 
 law as applied to particular classes of instruments you 
 will find best stated in the judgment of Lord Chief 
 Justice Cockburn in Ooodwin v. Boharts, {h) which I 
 recommend to your careful reading. The earliest 
 form of negotiable instrument was the bill of ex- 
 change, (i) Originally bills of exchange were used 
 solely for the purpose of foreign trade. It was an 
 instrument by which an English merchant contrived 
 to avoid sending money out of the country or bringing 
 money into the country by giving an order on his 
 foreign debtor to pay a third person, or by accepting 
 an order to pay a third person from his foreign 
 creditor, {j) It was purely a trade transaction for 
 the purpose of avoiding sending money out of the 
 country, and the French Law has adhered to that 
 idea of a bill of exchange to this day, and treats 
 it merely as a trade transaction. The English Law 
 has treated it as an instrument of credit. Bills of 
 exchange seem ^o have been introduced into England 
 by the Venetians or Florentines, and there were bills 
 of exchange for foreign trade known to England as 
 
 (h) L. R. 10 Ex. 346. 
 
 (i) Defined in Bills of Exchange Act, 1882, § 3, and post, 
 pp. 40, 41. 
 
 ij) See Chalmers, Bills, Pref. p. 46. 
 
GROWTH OF THE LAW MEB03ANT. 29 
 
 early as tliB reign of Richard II. The first reported 
 case' in the English Courts is in the year 160.3, (fc) and 
 the CourtSj in developing what was originally simply 
 a bill in a transaction of foreign trade, have followed ' 
 the custom of merchants. Chief Justice Treby, in 
 the case of Bromwioh v. Lloyd, (Z) explained the 
 stages by which a bill of exchange was developed. 
 " Bills of exchange," he said, " at first extended only 
 to merchant strangers trafficking with English mer- 
 chants; and afterwards to inland bills between 
 merchants trafficking, the one with the other in 
 England ; and afterwards to all traders, and then 
 to all persons whether traders or not ; and there was 
 then no need to allege any custom of merchants." 
 So beginning with the necessity to allege an English 
 merchant and a foreign merchant, you dispense with 
 the . foreign merchant and allege two English mer- 
 chants trading; then you dispense with the particular 
 transaction of trade ; then you drop the trader, or the 
 allegation that there is any merchant at all,' and 
 simply produce the bill. But in a case in 1613 (m) 
 there was a plea that an acceptor of a bill of 
 exoiiange was not a merchant, and it was held 
 a good answer. A bill of exchange could not 
 
 (k) Martin v. Boure, Cro. Jao. 6. 
 
 (Z) (1698) 2 Lutwyche's Eeports, p. 1S85. 
 
 (m) Oaste v. Taylor, 1 Cro. Jac. 306. 
 
30 NEGOTIABLE INSTRUMENTS. 
 
 be made at that time by people wlio were not 
 mercEants. In 1692, however, the Courts had got 
 a little further, (w) There was a plea then that the 
 acceptor of a bill of exchange was a gentleman 
 and not a merchant, and the Court of Queen's 
 Bench, following the earlier case, held that a good 
 defence; but the Court of Appeal, the Exchequer 
 Chamber, reversed the decision, "having considera- 
 tion to the inconvenience that might ensue and the 
 suspicion which inight increase among foreign mer- 
 chants," and they laid down very sensibly that if 
 "gentlemen" took upon themselves to accept bills 
 they ought to pay them. The custom of merchants 
 has gone on developing bills of exchange until the 
 law with regard to them is now all but settled ; they 
 pass by indorsement or delivery the right to the 
 indorsee to sue in his own name ; they pass title to a 
 bond fide holder for value though the indorser's title 
 is bad ; and it is not necessary to allege any considera- 
 tion for the bill, for consideration is presumed until 
 the contrary is proved. The only trace of the former 
 history of bills of exchange is the difference between 
 inland and foreign bills of exchange, which is, in the 
 words of Lord Holt, "All the difference between 
 foreign and inland bills is that foreign bills must be 
 protested before a notary before the drawer can be 
 (w) Sa/rsfield v. WUTierhy, Carthew, 82. 
 
GBOWTE OF THE LAW MEBGEANT. 31 
 
 charged; but inland bills need no protest," (o) notice 
 of dishonour being sufficient. 
 
 The next document which obtained the features of 
 negotiability was a promissory note. In a bill of 
 exchange there are, after acceptance, two people 
 who offer security to the holder, the drawer and the 
 acceptor ; in a promissory note there is at first only the 
 single security, that of the person who promises in 
 the note to pay. The first case in which promissory 
 notes were recognised by the Courts as negotiable 
 instruments was the case of Shelden v. Kentley, {jp) 
 in 1680j where the Court held a promissory note to 
 be a negotiable instrument, expressly saying that " it 
 was the custom of merchants that made that good." 
 That decision for some years afterwards was followed 
 in other cases till Holt became Chief Justice. Lord 
 Holt set his face against the custom of merchants 
 and against promissory notes as negotiable instru- 
 ments. In the case of Clarice v. Martin {q) the reporter 
 says: "But Holt, 0. J., was with all his j strength 
 against this action, (on a promissory note), and said 
 that tliis note could not be a bill of exchange j that 
 the maintaining of these actions upon such notes 
 were innovations upon the rules of Common Law, 
 
 (o) Buller v. Gripps, 6 Mod. 29. 
 
 Ip) 2 Showerf3, p. 160. 
 
 Ip) (1702) 2 Lord Eaymond, 758. 
 
32 FB0MIS80BT NOTES. 
 
 and. that it amountedf to setting up a new sort of 
 specialty unknown to the. Common Law, and invented 
 in Lombard Street/which attempted in these matters 
 of. bills of exchange to give laws to Westminster 
 Hall; that the continuing to declare upon these 
 notes upon the'custom of merchants proceeded from 
 obsjiinacy and' opiniaaativeness, since he had always 
 expressed his opinion against them." It appears that 
 Lomb'ard Street and the merchants therein thought 
 that the " obstinacy and opinionativeness " was upon 
 the side of Lord Holt, for they continued to use these 
 documents and to sue upon them; and in the next 
 year, in another case of duller, v. Crispe, (r) Lord 
 Holt again expressed his opinion in strong termSj and . 
 said that these notes were not in the nature of, bills •. 
 of exchange, but were only an invention of the.go^dr-, 
 smiths in Lombard Street, who had a mind to.mafc©^. d>^ 
 law to bind all that did deal with them. "At- another, 
 day Holtj 0. J., declared that he had desired to speak, 
 with two of the most famous merchants in London, to , 
 be informed of the mighty ill-consequences that it was 
 • gretended would ensue by obstructing this form, and 
 they had told him that it was very frequent with, 
 them to make such notes, and that. they looked upon 
 them as bills of exchange, and that they had been 
 used for a matter of thirty years j that not only notes 
 (r) 6 Modern Beports, p. 29. 
 
GROWTH OF THE LAW MERCHANT. 33 
 
 bat bonds for money were transferred frequentlyj and 
 endorsed as bills- of exchange,'^ and the reporter 
 winds up significantly, " the Court at last took the 
 vacation to consider of it." Parliament stepped in and 
 saved them from considering it any further, for by an 
 Act of the year 1704 (s) it was expressly provided that 
 promissory notes should be deemed as negotiable as 
 bills of exchange. The preamble of the Act began : 
 "Whereas it hath been held that promissory notes 
 are not indorsable over, within the custom of mer- 
 chants, therefore to encourage trade and commerce 
 be it enacted." So in this case also the custom of 
 merchants introduced an innovation into the law of 
 Westminster Hall, although it needed the sanction of 
 Parliament to induce Westminster Hall to recognise it. 
 The next step in the history was that bankers and 
 goldsmiths who held money on deposit began to issue 
 promissory notes payable on demand, that is to say 
 they began to issue Bank Notes. To these again 
 the custom of merchants very speedily gave negotia- 
 bility, and in the leading case of Miller v. Bace, {t) 
 Lord Mansfield decided that bank notes also were 
 negotiable instruments, holding that it was necessary 
 for the purposes of commerce that their currency 
 should be established and secured. And by the custom 
 
 (s) 3 & 4 Anne, c. 9. \ 
 
 {t) 1 Smith's Leading Oas^s, 9th ed. p. 490. 
 
34 - BANK NOTJES. 
 
 of mercliants, bank notes have acquired a superior 
 position to promissory notes. They are payable to 
 aaiy holder who may present them without the 
 necessity of his indorsing them. There is a legend 
 that the Bank of England always required persons 
 presenting their bank notes to indorse them, and 
 that on one occasion when the clerk of the Bank 
 behind the counter spoke in rather a cavalier manner 
 to a gentleman who came in, telling .him that he 
 oould not be paid unless he wrote his name on the 
 back, the gentleman with the note walked out and 
 promptly sued the Bank of England for dishonouring 
 their promissory note, and of course sued -^hem 
 successfully, with the result of altering the " custom 
 at the Bank. Bank of England notes are now legal 
 currency and tender, and in the case of country banks 
 their notes may be, under certain circuiffistances, 
 
 treated as curreacyr and payment. : 
 
 The next step was when the. banks, biesides issuing 
 their promissory notes payable., on de^rnnd, or bank 
 notes,- accepted and honoured: bills of exchange draiWn 
 da them by their customers, payable on demand; 
 that is to say when the system of Cheque's eamie into 
 e:xisten<3e, for a cheque is a bill of exchange drawn 
 on a bank by its customer, payable on demand, (w) 
 To cheques^ also, the practice of merphants has affixed . 
 (i*) Bills of Exchange Act (1 
 
GROWTH OF THE LAW MERCHANT. -33 
 
 certain incidents, as for instance the practice of 
 crossing cheques, which originated partly in the 
 usages of commerce and partly in the Clearing 
 House ; and has now been definitely recognised by 
 Act of Parliament. Banks, by the custom of mer- 
 chants, are also bound to honour cheques if they 
 have funds of the customer in their hands ; though 
 a drawee, even though he had funds in his hand, 
 would not be bound to accept a bill of 'exchange. 
 
 So far, the law of negotiable instruments, (bills of 
 exchange, promissory notes, cheques, bank notes), has 
 been codified by Parliament in the Bills of Exchange 
 Act, 1882; "an Act to codify the law relating to 
 bills of exchange, cheques, and promissory notes," (v) 
 and on all matter treated on by that Act the La/rj 
 Merchant is now to be found in its clauses, and not 
 in the cases and customs on which those clauses were^ 
 founded. 
 
 There are, however, other negotiable instruments 
 besides those which have been dealt with by the 
 Act of 1882, and to such instruments the rules of 
 the Common Law and the customs of the Law 
 Merchant are still applicable. Fresh usages may be 
 introduced, or new documents may be proved by 
 the usage of merchants to have the two marks of 
 negotiability already stated, (w) The usage that is 
 (v) 45 & 46 Vic. 0. 61. (w) Ante, p. 26. 
 
 D 2 
 
36 NEGOTIABLE INSTRUMENTS. 
 
 proved must, however, be a usage of English 
 merchants. In the case of PicJcer v. The London and 
 Oounty BanJc, {x) an attempt was made . to treat 
 certain Prussian bonds as negotiable instruments in 
 England; but the only evidence that was offered 
 was that those bonds were negotiable by the 
 custom of Prussian merchants, and the Court 
 unanimously rejected the evidence as insufficient. 
 As it was pointedly put, the fact that in Africa 
 cowries are negotiable instruments does not there- 
 fore bind the English Courts to .accept cowries as 
 negotiable instruments in England, and the same 
 principle has always been applied in any .attempt 
 to prove the negotiability of instruments In England ; 
 the usage proved must be a usage of English mer- 
 chants. It is not necessary that that usage- should 
 be from time immemorial. Mr. Justice Blackburn 
 did, indeed, in one case (y) lay down that such a 
 usage existing as part of the ancient Law Merchant 
 was necessary; but in the later case, Goodwin v. 
 Boharts, (z) both the Court of Appeal and the 
 House of Lords held that to be too narrow a 
 limitg^n, deciding tha'tf th-e Law Merchant might 
 be addfew^-to by proof of recent usage, and thus 
 
 (^)jM%B. B^p.515. 
 
 ilOWrouch Y. Credit Fancier, L. E. 8 Q. B. 374, followed 
 on this by Maiji^ty, J„ in 20 (^.B. T). at p. 239. 
 (z) L, R. id Ex. 'at p. 365 ; 1 App. C. at p. 494 
 
GROWTH OF THE LAW MEBCHANT. 37, 
 
 '•'r ~ 
 that new negotiable instruments might be from time 
 
 to time created. We find in the Reports a series of 
 illustrations of these principles of law in the various 
 documents that have been from time to time proved 
 or not proved to be negotiable instruments. For 
 instance, in the case of Glynn v. Baker, {a) Bast India 
 bonds were held not to be negotiable -in the absence 
 of any evidence that they customarily passed by 
 delivery J but the decision in the Courts was im- 
 mediately remedied by Parliament, who passed an 
 Act giving tp East India bonds the character of 
 negotiability. (6) In Dixon v. Bovill, (c) a document 
 called an " iron warrant," running, ' " I will deliver 
 one hundred tons of iron when required after 
 Sept. 18th to the party lodging this document 
 with me," was held by the House of Lords not 
 to be a negotiable instrument, and not therefore 
 to pass by delivery, there being no evidence before 
 the Court of any mercantile usage affecting such 
 'l' ; documents ; it is, howeve)", yery probable that if 
 the question of iron warrants came before th6 Qpurt 
 at the present day, they could be abundantly proved 
 to be negotiable. ' 
 
 To come to more recent cases, in The, Fine Arts 
 Society v. The Union Bank, {d) it was held that Post 
 
 (a.) 13 Easf, 509. (c) 3 Macqueen's Eeports; p. 1, 
 
 (6) 51 Geo. III. c. 64. (d) 17 Q.. B. D. 706. ' 
 
 ^f. 
 
•38 ■ NEGOTIABLE INSTRUMENTS. 
 
 Office orders crossed for collection by a bank were not 
 negotiable instruments; and in Crouch v. The Credit 
 Fonder, (e) debenture bonds of an English company 
 were held not negotiable because the only proof of 
 usage tendered was one originating in the last twenty 
 years. On the other hand, in Gorgisr- v. Mieville (/) 
 certain foreign bonds were held to b© negotiable 
 instruments on proof that bonds of' that desoriptidn 
 were sold in the English market, and passed from 
 hand to hand daily like Exchequer bills. And that 
 case was followed in Goodwin v. Bobaris., (g) in which 
 certain scrip, which on the payment of all instalments 
 due was to be exchanged for bonds, was held a 
 negotiable instrument on proof of usage of the English 
 Stock Exchange. 4^) There is one other case I wish 
 to mention to you as an illustration of the Common 
 Law maxim I have already reminded you of,, that 
 a man cannot give what he has not got, and there- 
 fore if he has not got a title cannot give ifc' The 
 recent case of Barton v. The London and North 
 Western Eaitway {i) is at the presenBltime exciting 
 rery great a,pj>pehension in commercial circles. Mr. 
 
 . \e) L. K. 8 Q, B..374 (/) 3 B. & G. 45. (g) L. E. 10 Ex. 
 
 (K) For recent cases in which the ^estion of negotiability 
 was raiseii see Lord Sheffield v. London Jowi Stock Sofiik, 
 L. E. 13 App. 0.'333, and Colonial Bank v. Williams, 15 App. 
 C. p. 267. 
 
 (i) L. B. 24 Q. B. D. 77. 
 
GROWTH OF THU LAW MEBGHANT. 3d 
 
 Barton held certain shares in the L. & N. W. 
 Railway which passed to his executors, and one of 
 the executors by forging the signature of the other 
 executor sold those shares some twelve or thirteen 
 years ago. The purchaser took the transfer with 
 the forged signature to the L. ' & N. W. Railway 
 Company, who registered it, and for the twelve or 
 thirteen years the purchaser has been registered for 
 those shares and has received the dividends. The 
 executrix whose signature was forged — for a lady 
 was concerned — did not find out the absence of these 
 shares for the thirteen years, bu^ on finding it out 
 and on proof of the forgery, the L. & N. W. Company 
 were ordered to replace her name on the register, 
 and the unfortunate purchasers have had to give up 
 their shares, and to pay back the dividends which 
 they have received during the thirteen years, .A 
 man cannot give what he has not got. The people 
 who purported to pass these shares had not got them 
 to give. At present agitation, if one may use such a 
 word, is taking place on every English Stock Exchange 
 for an Act which will protect the people whose 
 transfers have been registered by Railway Companies 
 against the rules of the Common Law. ^^-~, 
 
CHAPTER III. 
 
 BILLS OF exchange; peomissoet notes and cheques. 
 
 For authorities, see the Bills of Exchange Act, 1882 (45 & 
 46 Vic. c. 61), and Mr. Chalmers' book on Bills of Exchange ; 
 3rd edition, 1887. 
 
 Feom the history of negotiable instruments we may 
 now pass to the law as it stands at the present day 
 with regard to the most important classes of negotiable 
 instruments, and especially with regard to bills of 
 exchange. The definition of a bill of exchange is 
 contained in the 3rd Section of the Act of 1882, (j) 
 and every word of that definition represents the 
 effect of a series of cases. It reads : — 
 
 "A biU of exchange is an unconditional order in 
 writing, addressed by one person to another, signed 
 by the person giving it, requiring the person to whom 
 it is addressed to pay on demand or at a fixed or 
 determinable future time a certain sum in money to or 
 to the order of a specified person or to bearer." If 
 we consider that again : " A bill of exchange is an 
 0') 45 & 46 Vic. c. 61, § 3. 
 
BILLS OF EXGEANGE. 41 
 
 nnconditional order in writing addressed by one 
 person," who is called the drawer, " to another^" who 
 is called the drawee, "signed by the person giving 
 ifc" — the drawer — "requiring the drawee to pay a 
 certain sum of money at a time and to a person fixed in 
 the instrument." Yon can thus shorten the definition 
 a good deal J the time of payment, and the person 
 to whom the payment is to be made, must be fixed 
 in the instrument. 
 
 The form which a bill of exchange ordinarily 
 takes is as follows : 
 
 £200. London, 1st March, 1890. 
 
 One month after date pay to my order the sum of 
 Two Hundred Pounds for value received. 
 
 John Beoww. 
 To Henst "Wilson, 
 Luton. 
 
 At the top corner there will be the amount (in 
 figures), £200, and the date and place of drawing, 
 "London, March 1, 1890." Now taking the definition 
 again, " A bill of exchange is an unconditional order 
 in writing " — " Pay " — there is the unconditional order. 
 " Addressed by one person," that is John Brown, who 
 signs — the drawer — "to another," to Henry Wilson, 
 Luton, the drawee. "Signed by the person giving 
 it " — there is the signature of John Brown ; " requiring 
 the person to whom it is addressed to pay" — "pay 
 
42 DEFINITION OF 
 
 on demand or at a fixed and determinable future 
 time " ; tMs is a fixed future time ; one month after 
 date, and the date is given — " a certain sum of money " 
 — £200^-" to or to the order of a specified person 
 or to bearer." This is " to my order," to the order 
 of Henry Wilson. Bach part of the definition appears 
 in the bill of exchange. 
 
 Now I propose to go through that definition a 
 little more minutely, because the ingenuity of people 
 who draw bills appears never to be exhausted in 
 finding out how unlike the ordinary form they can 
 get a document and yet have it called a bill of 
 exchange. In the first place a bill must be an 
 order in writing. It must not be a mere request. 
 ''Please let bearer have £100 and you will much 
 oblige me " : — much too polite ! Held a bad bill of 
 exchange because not an order. (&) A certain amount 
 of politeness will be allowed provided you order at 
 the end of it. " Mr. B. will much oblige Mr. A. by 
 paying to the order of C." Held a good bill of 
 exchange; (Z) there is "pay to the order of C," 
 and the previous politeness was not considered in- 
 jurious. In fact the common form of a French bill 
 (rf exchange is : — " II vous plaira payer " : — you will 
 please to pay. A mere authority to pay instead of 
 
 (Ic) Little V. Slackford, 1 M. & M. 171; Chalmers, p. 9. 
 (I) BuffY. Well, 1 Esp. 129. 
 
BILLS OF EXOHANOE. 43 
 
 an order is not a bill of exchange. " We authorise 
 you to pay" has been held to be a bad bill of 
 exchange, (m) 
 
 In the second place the bill must be an un- 
 conditional order ; an order to pay on an event which 
 may not happen is not a bill of exchange, because 
 the order is conditional on the happening of the 
 event, (n) An order to pay out of a particular fund 
 has been held conditional, because if there is no fund 
 there is no order to pay. And thus an order to " pay 
 out of the money in your hands belonging to the X. 
 Company" has been held no bill of exchange, (o) 
 "Out of the money due from X. as soon as you 
 receive it," {p) or, " On the sale or produce when sold 
 of the X. hotel ": {q) — both held bad bills of exchange 
 because conditional. But it does not make a bill 
 bad if, instead of ordering to pay out of a particular 
 fund, the bill merely mentions a fund out of which 
 the payee may repay himself, making the order to 
 pay absolute and suggesting where the payee can get 
 the money from, (r) For instance, a bill of exchange 
 "against cotton, per ship Swallow," has been held 
 
 m) Hamilton v. Spottiswoode, 4 Exoh. 200. 
 (w) Act, § 3, s. 3 ; § 11. 
 (o) Jenney v. Herle, 2 Ld. Eaymond, 1361. 
 (jj) Bamkes v. Lord Beloraine, 2 "W. Bl. 782. 
 (q) milv.Balford,2B.&F.4:13. 
 (r) Act, § 3, s. 3. 
 
44 BE AWE B AND BEAWEE. 
 
 good and not conditional j (s) and you will find a 
 series of other cases collected in Mr. Chalmers' 
 book; {t) for this part of the definition has been a 
 source of great litigation. 
 
 The order to pay in a bill must be addressed by 
 one person who signs it, who is the drawer, and who 
 may sign by his mark, if he cannot write, or by his 
 seal, if he is a corporation, or who may sign by his 
 agent. It must be addressed to another person, 
 the drawee, who must be either specifically named 
 Or must be so described in the bill, that he can be 
 easily found, (w) For instance, an instrument which 
 names no drawee, but is payable at 1, Union Street, 
 London, and is accepted by B., who lives at 1, Union 
 Street, London, is a good bill of exchange, because 
 it is supposed to be drawn on a person who lives at 
 1, Union Street, London, and B. recognises the 
 description by accepting it. [v) In the same way 
 an instrument in the form of a bill, drawn "at 
 Messrs. B. & C.'s," is a good bill addressed to Messrs. 
 B. & C. [w) But an instrument in the form of a bill 
 addressed to nobody is not a bill, even though some 
 one is kind enough to accept it, for there is no 
 
 (s) Inman v. Gh/re, Johns. 769. {t) Pp. 10, 11. 
 
 (m) Act, § 6. 
 
 {v) Oray v. Mihier, 8 Taunt. 739. QucBre, whether before 
 acceptance it can be treated as a good bill. 
 
 (w) Of. Shuttleworth v. Stephens, 1 Camp. 407. 
 
BILLS OF EXCHANGE. 45 
 
 possible means of finding out on the bill wlio it is 
 meant for. (as) A bill may be drawn on two or more 
 drawees, even thougli they are not partners, but it 
 must not be drawn on them in succession ; " A., or 
 if he refuses, B.," will not do, nor will " A. or B." 
 in the alternative suffice, {y) The bill must require 
 the person to whom it is addressed — the drawee — 
 to pay money only. A document which requires him 
 to pay and do something else is not a bill, (s) For 
 -instance, at a time when notes of the Bank of 
 England were not legal tender, a document, "to pay in 
 cash or bank notes" was held a bad bill of exchange, (a) 
 So also an order to "pay £100 and deliver up a 
 wharf " was held a bad bill of exchange, because it 
 required the drawee to do something else besides pay 
 money, (fc) The order must be to'pay a certain sum in 
 money. The sum may be made payable with interest, 
 or at a fixed rate of exchange, or by fixed instalments, 
 but if it goes further it will be a bad bill of exchange, (c) 
 A bill for £100, payable by instalments, without 
 specifying the instalments, is a bad bill because the 
 payments are not certain.[(d) A sum payable "by 
 
 (aj) Peto V. BeynoUa, 9 Exch. 410. 
 
 {y) Act, § 6, s. 2. {z) Act, § 3, s. 2. 
 
 (a) Ex p. Imeson, 2 Eose, 225. 
 
 (6) Martin v. Chauni/ry, 2 Stra. 1271. 
 
 (c) Act, § 9. 
 
 \d) Moffatt V. Edwards, Car. & M. 16. 
 
46 TIME OF PAYMENT. 
 
 ten equal instalments to cease at my death" in- 
 validates a bill^ because it is uncertain how many 
 instalments will become payable, (e) An order " to 
 pay 0. £100 and all other sums that may be due to 
 him " is bad, because it is uncertain what amount 
 is due to him. (/) An order " to pay the balance due 
 to me for building Baptist chapel " is clearly bad ; 
 for it is quite uncertain how much was due for 
 building the Baptist chapel, {g) It not infrequently 
 happens, owing to the carelessness of human nature, 
 that the amount in figures at the top of the bill 
 differs from the amount in words in the body of the 
 bill, and in that case the statute provides that the 
 words shall prevail, and the figures are treated as if 
 they were a mistake. Qi) 
 
 We come next to the time at which the bill is 
 stated to be payable. " On demand," is the first time 
 mentioned in the definition, and a bill has that effect 
 if it is stated to be payable " on demand " or " at 
 sight" or ''on presentation," or if no time for 
 payment is mentioned at all ; or if it is accepted and 
 indorsed when overdue, i.e. after the time named 
 for payment. (*) The second description of time in 
 
 (e) Worley v. Samson, 3 A. & E. 669. 
 (/) Smith V. Nightingale, 2 Stark. 375. 
 {g) Crowfoot v. Gii/rney (1832), 9 Bing. 372. Cf. Chalmers, 
 pp. 23, 24 
 
 (h) Act, § 9, s. 2. (i) Act, § 10. 
 
BILLS OF JEXCHANQE. 47 
 
 the definition is " or at a fixed or determinable future 
 time,'' that is to say either a fixed period after date or 
 sight, or at a fixed period after the occurrence of an 
 event which must happen, although it is uncertain as 
 to the exact time when it will happen. (;) To that 
 extent the time is allowed to be left uncertain ; if the 
 event from which it is calculated must happen, then 
 the resulting date is treated as ascertained. For 
 instance, a bill "payable one year after my death " is 
 good, because unfortunately my death is certain to 
 happen ; (i) but a bill " payable when I marry X." is 
 not a good bill, because unfortunately it is not certain 
 that I shall marry X. (I) Still more is a bill " when 
 I am in good circumstances " bad, the contingency 
 being far too uncertain for any Court to take notice 
 of. (m) A bill " two months after Her Majesty's ship 
 Swallow is paid off" was held good, because it 
 appeared that Her Majesty's ship was paid off 
 whether she went to the bottom or not, and there- 
 fore the event was a certain one ; (n) but a bill " thirty 
 days after arrival of ship Swallow at Calcutta" is 
 bad, because the ship may never arrive, (o) There is 
 
 (j) Act, § 11. (Jc) Clayton v. Qoalmg, 5 B. & 0. 360. 
 
 (V) Pearson v. Garret, 4 Mod. 242. 
 \m) Exp. Tootell, 4 Ves. 372. 
 («) Coleham v. Coc^e, Willes, 393, at p. 399. 
 (o) Palmer v. Praii, 2 Bing. 185. For other cases see 
 Chalmers, pp. 27, 28. 
 
48 PAYEE. 
 
 one case which has been decided in the Oaurt of 
 Appeal, which is diflScult to fit in with any of the 
 definitions. The Court of Appeal have treated a 
 document as a bill of exchange, payable "five years 
 after the opening of the S. Railway." (p) That 
 a railway which is projected will ever be opened 
 would appear as uncertain as that a projected com- 
 pany will ever be floated. 
 
 The order must be to pay to a specified person, {q) 
 That person may be the drawer himself, or he may 
 be an entirely imaginary person. The bill may be 
 payable to a person who has no capacity to make 
 a contract, such as a lunatic, and in this case ib may 
 be treated as a bill payable to bearer, (r) Some 
 curious judge in one of the cases inquired into what 
 would be the effect of a bill drawn on Aldgate Pump 
 as the drawee, and came to the conclusion that it 
 would be treated as a promissory note by the 
 drawer, (r) An-d the Court of Appeal were recently, 
 and now the House of Lords are busily engaged in 
 considering in the now celebrated case of Vagliano v. 
 The Bank of England, {t) whether a firm which has 
 nothing whatever to do with a bill, and never saw 
 it, but whose indorsement has been forged on the 
 
 (p) Ex p. Gihson, L. E. 4 Ch. 662. The point was not 
 taken, but the C. A. treat the docume&t as a good bill. 
 (2) Act, § 7. (r) Act, § 7, s. 3. 
 
 (<) 23 Q. B. D. 243. 
 
BILLS OF EXOEANGE. 49 
 
 bill, is to be treated as a fictitious person where tbe 
 bill is made payable to that firm, with the result 
 that the bill would be payable to bearer and the 
 forged indorsement might be disregarded. 
 
 A bill running simply " Pay X." is treated as a 
 bill to X. or his order ; {u) the effect will be the same 
 if the bill runs' "Pay X." "Pay X. or order," "Pay to 
 the order of X." j all three will have the effect of a 
 bill payable to " X. or order." If the bill appears in 
 the form " Pay ^— or order," and the blank is not 
 filled in before the trial, no evidence is admissible 
 at the trial to fill in the blank ; but the holder of 
 the bill should fill his name in when he gets the 
 bill, {v) A bill may be made payable to two or 
 more payees either jointly or in the alternative, or 
 to the holder of a particular office, as to "the President 
 of the Incorporated Law Society." (w) 
 
 A document which conforms with the definition 
 as I have explained it is a bill of exchange. If 
 undated it is not invalid (as) but irregular, and the 
 date may be filled in by the holder, (y) It is not 
 invalid if it abstains from specifying a consideration : 
 although it is usual to insert in a bill the words 
 "value received," it is not necessary, (z) for a bill is 
 
 (m) Act, § 8, s. 4. («) Act, § 3, s. 4. 
 
 (v) Chalmers, pp. 19, 44 ; Act, § 20. (y) Act, §§ 12, 21. 
 (w) Act, § 7, s. 2. (z) Act, § 3, s. 4, 
 
50 LIABILITIES OF DRAWEE. 
 
 presumed to be for good 'consideration till the con- 
 trary is shown. The bill is not invalid because it 
 does not specify the place where it is drawn or the 
 place where it is payable, (a) 
 
 Whether a bill is accepted or not, the drawer by 
 drawing and putting it in circulation incurs certain 
 legal liabilities. (6) He engages that on due pre- 
 sentment the bill shall be accepted and paid, and 
 that if it be dishonoured he will compensate the 
 holder or any indorser who is compelled to pay it, 
 provided that the requisite proceedings on dishonour 
 be duly taken. And he also is precluded from 
 denying to a " holder in due course " (c) that the payee 
 exists and has capacity to indorse. If, however, an 
 action is brought against a person who appears on 
 a bill of exchange to be the drawer, there are certain 
 defences open to him. He may allege certain kinds 
 of fraud as a good defence, as that he was told that 
 he was signing another document and not a bill of 
 exchange, and that he acted without negligence, (d) 
 He may allege that his name has baea forged j (e) he 
 may allege that there was no consideration for the 
 bill, except against a holder for value ; ^/) or that it 
 was tainted with fraud, except against a holder in 
 
 (a) Act, § 3, s. 4. {d) Chalmers, p. 258. 
 
 (6) Act, § 55. (e) Act, § 24 
 
 (c) Act, § 29, post, (/) Act, § 28, s. 2 ; Chakaers, 
 pp. 66-67. p. 79. 
 
BILLS OF EXCHANGE. 51 
 
 due course, (g) He may allege that lie had no 
 capacity to contract, as that he was a lunatic ; (h) or 
 that he never delivered the instrument as a bill of 
 exchange, as if one were to amuse one's self by 
 writing a bill of exchange and putting it in one's 
 desk, and it was then stolen and circulated ; but this 
 defence would not avail against a holder in due 
 course, (i) But otherwise and unless one of those 
 defences is open to him, the drawer of a bill of 
 exchange has put in circulation a document on which 
 until its acceptance he is the person primarily liable. 
 
 The next step that usually occurs in the history 
 of a bill of exchange, leaving out for the moment 
 the question of indorsement (J), is its presentment 
 to the drawee for his acceptance. Presentment for 
 acceptance is only absolutely necessary in three 
 cases : (&) in the first place where the bill is pay- 
 able a certain time after sight, it must be presented 
 to fix the time of sight and therefore to fix the 
 time when the bill is payable. In the second place 
 it must be presented if there is any express stipu- 
 lation for presentment in the bill; and in the third 
 place it must be presented if the bill is made payable 
 elsewhere than at the residence or place of business 
 
 (g) Act, §§ 29, 30. (f) -Posf, pp. 69-64. 
 
 Ih) Act, § 22 ; Chalmers, p. 54 ih) Act, § 39, 
 (i) Act, § 21. 
 
 E 2 
 
52 FBB8ENTMENT FOB AOOEPTANGE. 
 
 of the drawee. Otherwise it is not necessary to 
 present till payment is due, though it is usual, and 
 desirable for two reasons : in the first place, to get 
 the additional liability of the drawee, for if he accepts 
 a great change takes place in the relations of the 
 parties who are liable on the bill, and if you do 
 not present the bill for acceptance you do not know 
 till you present it for payment whether you have 
 the security of the acceptor's liability or not; and 
 in the second ^aoe presentment for acceptance is 
 desirable in order that, if the drawee refuses to 
 accept, you may obtain immediate recourse to the 
 drawer and any indorsers thereon, instead of haying 
 to wait till the time when the bill is payable. 
 
 There are a series of rules as to the formalities 
 to be gone through in presenting for acceptance (J,) 
 with which I do not propose to trouble you, because 
 compliance with them is only important in case of 
 dishonour, i.e. refusal to accept. If the bill is ac- 
 cepted, it is quite immaterial that it was not presented 
 for acceptance in the proper way. If the bill is not 
 accepted, it is then necessary to charge the drawer 
 or indorser to show that it was presented in ac- 
 cordance with the rules in Section 41 of the Act. 
 
 On presentment for acceptance the object is to 
 obtain the acceptance of the drawee. The acceptance 
 (0 Act, § 41, 
 
BILLS OF EXOHANGE. 53 
 
 of a bill is the signification by a drawee of his assent 
 to the order of the drawer, (m) and on signifying 
 that assent he becomes the acceptor of the bill. 
 He is under no duty to accept the bill, even though 
 he has funds of the drawer in his hands, except in the 
 case of that peculiar bill of exchange drawn on one's 
 banker, a cheque. The acceptance must be by the 
 drawee or one of the drawees. A person who is not 
 named in the bill cannot accept, unless in the special 
 case of acceptance for honour, {n) For instance, 
 when a bill is addressed to B., but X. writes an ac- 
 ceptance on it, X. is not liable as acceptor ; (o) the 
 bill was not addressed to him, and his signature is 
 treated as perfectly superfluous. "When a bill is 
 addressed " to the Directors of the B. Company, 
 Limited," and is accepted by two directors and the 
 manager, the two directors are liable as acceptors, 
 but not the manager, because the bill was not ad- 
 dressed to him. (p) The name or signature of a firm 
 is equivalent to the names, or signatures, of all the 
 partners; thus, if a bill ^addressed to "B. & Oo.'' is 
 accepted by X., a partner in the firm, in his own 
 name, X. is liable as acceptor, {q) because addressin g 
 the bill to B. & Co. is equivalent to addressing it 
 
 (m) Act, § 17, s. 1. (w) Act, § 65. 
 
 (o) Davis V. Clarhe, 6 Q. B. 16. 
 (p) Bult V. Morrell, 12 A. & E. 745. 
 (2) Oiven v. Von Uster, 10 0. B. 318. 
 
54 AOOHPTANGE. 
 
 to all the members of the firm, including X. ; and 
 therefore one of the drawees has accepted the 
 bill. Or, taking it the other way round, where a 
 bill is addressed to B., who is a partner in the firm 
 of X. & Co., and B. accepts in his firm's name, he 
 is personally liable as acceptor, because the firm's 
 name includes the signature of B. (r) 
 
 The signification of assent which constitutes an 
 acceptance must be in writing ; (s) it will not do for 
 the drawee merely to say that he is willing to accept. 
 The writing must be on the bill ; (s) it is not sufficient 
 to write a letter stating that the drawee accepts and 
 give it to the person presenting the bill for payment. 
 It is sufficient if the drawee write his name on the 
 bill; {t) but it is not enough for him merely to write 
 the word " Accepted " without his name ; it is pro- 
 bably sufficient if the acceptance is written on the 
 back of the bill. The acceptance must not vary the 
 terms of the bill as to payment, that is to say the bill 
 must not be accepted payable partly in goods, (w) A 
 bill may be accepted when it is incomplete owing to 
 the absence of drawer's signature, date, or other for- 
 malities ; and it may be accepted when overdue or 
 after it has been once dishonoured, [v), 
 
 (r) NiehoUs v. Diamond, 9 Exoh. 154. See other cases in 
 Chalmers, p. 37. 
 
 (s) Act, § 17, s. 2. if) Ibid. 
 
 («) Act, § 17, s. 2 6. {y\ Act, § 18. 
 
BILLS OF EXGEANGE. 55 
 
 Acceptances on the bill, speaking broadly, are of 
 two kinds. The acceptance may be general, assenting 
 without qualification to the order of the drawer ; or it 
 may be qualified, (w) An acceptance which in express 
 terms varies the effect of the bill as drawn is called a 
 " qualified acceptance/' but it is necessary that the 
 variation should be in express terms. An acceptor 
 must make it clear that he only accepts in a qualified 
 manner. A very instructive instance of that principle 
 has recently been before the Court of Appeal in the 
 case of De Groix v. Meyer, {x) In that case a bill of 
 exchange was drawn by F. payable "to the order 
 of F." It was presented to the drawees for accept- 
 ance ; they struck out the words " to the order of " 
 and accepted the bill " in favour of P. only, payable at 
 the Alliance Bank, London." F. indorsed the bill and 
 the indorsee sued the acceptors, who answered: — "We 
 accepted in a qualified way, in such a way as to pre- 
 vent F. indorsing the bill." The Court of Appeal, in 
 considering the case, said : " In the first place you had 
 no business to alter the bill at all by striking out th^ 
 words ' to the order of ' ; secondly, the alteration 
 which you have made had no effect on the bill because 
 the words 'payable to F.' are by the Act (y) made 
 equivalent to ' payable to F. or order,' and then by the 
 
 (w) Act, § 19. (») L. E. 25 Q. B. D. 343. 
 
 {y\ Act, § 8, s. 4 
 
56 QUALIFIED AOGETTANOES. 
 
 words you used for your acceptance you left the bill in 
 an ambiguous condition. If you had wished to qualify 
 your acceptance you should have done it in express 
 terms ; you have done it in an ambiguous way which 
 must be construed against you, and therefore we hold 
 you liable in the action." 
 
 An acceptance which is qualified, or which varies 
 in express terms the effect of the bill, may be one of 
 three or four kinds. (2) A " qualified acceptance " may 
 be in the first place conditional, as for instance, " Ac- 
 cepted, payable on giving up bills of lading," where 
 the payment by the acceptor is made conditional on 
 the payee's giving up certain bills of lading, (a) A 
 " qualified acceptance " may be partial, that is to say, 
 it may be only for part of the amount for which the 
 bill is drawn, as for instance if a bill is drawn for £100 
 and the drawee accepts it for £50 only. A " qualified 
 acceptance " may be local, that is to say, to pay only 
 at a particular place, but it is necessary that it should 
 clearly appear that the payment is to be at a particular 
 place only ; for instance, " Payable at Union Bank " 
 is not a "qualified acceptance," because it does not 
 restrict the place of payment to the Union Bank. An 
 acceptance "payable at Union Bank only" would be 
 qualified as to place. (6) The acceptance may also be 
 
 {z) Act, § 19. 
 
 (ix) An indorsement cannot be conditional. See p. 61, post. 
 
 (6) Salsiead v. BTcelton, S Q. B. 86. 
 
BILL8 OF EXCHANGE. 57 
 
 qualified as to time ; it may vary tlie time at whicL. 
 the bill is to be paid, as when a bill drawn "three 
 months after sight " or " date " is accepted six mpnths 
 after sight or date ; or the acceptance may be qualified 
 as an acceptance by o'ne only of several drawees. 
 
 Now in the first place, if a general acceptance is 
 given, the acceptor by such an acceptance engages 
 that he will pay according to the tenor of his accept- 
 ance, and is precluded from denying to a holder in 
 due course the existence of the drawer, the genuine- 
 ness of his signature, and his capacity and authority to 
 draw the bill, (c) For instance, in the very recent 
 case of Vagliano v. The Bank of England, {d) the bills 
 of exchange which were the subject of the action pur- 
 ported to be drawn by a drawer who never had anything 
 to do with the bill, and whose signature was forged ; 
 but Messrs. Vagliano had accepted those bills and 
 were therefore precluded from denying to the Bank 
 who had paid them that the signature on the bill was 
 the signature of the drawer, although they were in 
 a better position with regard to the signature of the 
 indorser, the payee, which was also forged, (e) 
 
 The effect of a general acceptance is this : the 
 acceptor becomes the principal debtor on the bill. 
 Up to the time of acceptance the drawer is the 
 principal debtor j by acceptance the acceptor becomes 
 
 (c) Act, § 54. (d) 23 Q. B. D. 243. (e) Act, § 54 c. 
 
58. AGOEFTANCE. 
 
 the principal debtor ; the drawer and the respective 
 indorsers assume a position equiyalent to sureties for 
 the g,cceptor. (/) If the person who presents for 
 payment obtains a general acceptance he must then 
 wait till the bill becomes due for payment. If ha 
 obtains a qualified acceptance, an acceptance, which 
 does not accept the bill generally, he may do one of 
 two things : he may treat it as a valid acceptance,, in 
 which case unless he has the authority of the drawer 
 and the indorser so to treat it they are discharged 
 from, their liability. He may have that authority by 
 their ratification of his act in treating it as a good 
 acceptance ; therefore,, if the holder proposes to 
 treat the qualified acceptance as a good acceptance, 
 he should at once give notice of his intending to do 
 so to the drawer and each indorser. If he does that, 
 unless they expressly dissent, they are treated as 
 approving his act, so. that if he gives them notice of 
 his intending to treat a qualified acceptance as a good 
 acceptance,, and they do not reply expressly repa- 
 diating, they will continue liable as drawer and 
 indorsers. {g), If they reply, repudiating his action, 
 they will be excxised from their liability as drawer or 
 indorser, because the payee has taken a qualified, and 
 
 (/) Chalinears, p. 172.. 
 
 (g), Act,, §, 44. In the case of a partial acceptance,, they 
 will be bound, if notice is given, whether they express dissent 
 or not. Sea subsection 2., 
 
BILLS OF EXOSANGE. 59 
 
 not a general acceptance. But if the holder refuses 
 to take a qualified acceptance, -wliicli is the second 
 thing he may do, or if the bill is not accepted at all, the 
 holder obtains an immediate right of recourse against 
 the drawer and indorsers, which, if he gives to them 
 notice of " dishonour by non-acceptance," is con- 
 verted into an immediate right of action, iji) Thus, 
 if a bill is accepted the holder has to wait till the time 
 comes for payment ; if the bill is not accepted he may 
 obtain an immediate right of action against the drawer 
 and indorser by giving them notice of dishonour, (i) 
 
 Between the drawing of a bill and the time for 
 its payment a bill may have passed through many 
 hands, that is to say a bill, which is a negotiable 
 instrument, may be negotiated. The definition of 
 " negotiation " is contained in Section 31 of the Act : 
 " A bill is negotiated when it is transferred from one 
 person to another in such a manner as to constitute 
 the transferee the holder of the bill." If the bill is 
 payable to "bearer" it is negotiable by delivery 
 without any indorsement; in the same way, if the 
 bill is payable to a fictitious or non-existent person^ 
 such as Aldgate Pump,- as one of the judges suggested, 
 the bill is treated as payable to " bearer," for Aldgate 
 
 Qh) Act, § 43 ; Chalmers, p. 129. 
 
 (i) Tor the rules for giving notice of dishonour on non- 
 aoceptance, see §, 49, et post, p. 73. 
 
60 ' INDORSEMENT. 
 
 Pamp cannob indorse a bill. If the bill ia payable to 
 " order " and not to " bearer " it is negotiated by the 
 indorsement of the holder completed by delivery, the 
 indorsement constituting his order. For instance, in 
 the case of bills which are payable either to " A." or 
 ,to "A. or order" or "to the order of A.," payment 
 must be to " A." or to " A.'s " order as shown by his 
 indorsement. (;■) If it is" not "A." who presents 
 the bill for payment^ "A.'s" indorsement "must appear 
 on the bill as his order to the acceptor to pay. 
 
 Indorsements may be of two kinds. In the first 
 place the indorsement may be im blank, that is to 
 say an indorsement which does not specify any 
 indorsee. For instance, a bill payable to " John 
 Smith or order/' indorsed "John Smith," is indorsed 
 in blank ; there is an order of John Smith on the 
 bill, but he does not specify any particular person 
 to whom the money is to be paid; he leaves the 
 name of his indorsee in blank. The effect of such 
 an indorsement in blank is to make the bill payable 
 to "bearer." {k) Whoever has a bill in his hands, 
 the last indorsement on which is in blank, is the 
 bearer of the bill, and can obtain payment until 
 the bill has been converted again from a bill payable 
 to "bearer" into a bill payable to "order." 
 
 A bill once indorsed in blank remains payable 
 0') Act, § 8, s. 4. (k) Act, § 34 
 
BILLS OF EXOBANQE. 61 
 
 to the bearer until the indorsement in blank is 
 controlled by a special indorsement ; (Z) and where 
 there has been an indorsement in blank which makes 
 a bill payable to "bearer," any transferor or 
 transferee holding it by mere delivery is not liable 
 on the bill when he has parted with it, except to 
 his immediate transferee for value, (m) 
 
 The other kind of indorsement as opposed to an 
 indorsement in blank is a special indorsement, which 
 specifies the person to whom or to whose order the 
 bill is to be payable ; for instance, in the case of 
 a bill, " Pay John Smith or order," an indorsement, 
 " Pay D. or order, John Smith," is a special indorse- 
 ment to D. (n) The bill has the same effect if the 
 indorsement is "Pay to D.," omitting the words 
 " or order," or " Pay to the order of D." In each 
 case it is treated as an indorsement to "D." or 
 " order." (o) 
 
 Other kinds of indorsements are sometimes 
 attempted which may lead to considerable compli- 
 cation. Occasionally a Conditional indorsement is put 
 on the bill, "Pay to the order of 0. if he has passed 
 his Pinal," an indorsement which purports to make 
 payment conditional on O.'s having passed his Pinal. 
 A conditional indorsement is ineffective : the acceptor 
 
 (Z) Act, § 34, s. 4, eipost. (n) Act, § 34, s. 2. 
 
 (to) Act, § 58, ss. 2, 3. (o) Act, § 8, s. 4. 
 
62 RESTBIOTWE INBOBSTIMENTS. 
 
 may entirely disregard it and pay 0. whether he has 
 been fortunate enough to pass his Final or not. (jp) 
 
 Another variety of indorsement which is valid 
 and which leads to considerable complication, is 
 what is known as a ^'restrictive indorsement." (q) 
 There are two kinds of "restrictive indorsements," 
 both of which are fairly common ; there is, first 
 of all, an indorsement which purports to stop the 
 bill being negotiated any further, for instance, " Pay 
 D. only " ; and there is, secondly, a species of indorse- 
 ment which purports to make the payee an agent 
 or trustee of the indorser, as for instance, "Pay D. 
 or order, for my use"; a warning is placed on the 
 bill that the person to whom the bill is indorsed is 
 only an agent for collection, or a trustee for the 
 person who indorses. 
 
 Now the effect of an indorsement like either of 
 those is this : it gives D., the person named therein, 
 a right to receive payment of the bill, and it gives 
 him a right to sue any person whom his indorser 
 might sue, that is to say if D. is not paid he may sue. 
 But in the case of an indorsement, " Pay D. only," he 
 has no power to indorse further. Any attempted 
 negotiation by D. will have no effect because there is 
 on the bill a notice that he cannot indorse; in the 
 second case, " Pay D. or order, for my use," where there 
 (p) Act, § 33. (2) Act, § 35. 
 
BILLS OF EXCHANGE. 
 
 is a restriction of the purpose for whicli the bill is given 
 to D., any subsequent indorsement will impose on a 
 subsequent indorsee exactly the same liability as D. 
 had. The effect of the bill as a negotiable instrument 
 is destroyed to that extent that such an indorsee will 
 get no better title than D. had, and will be under the 
 same liability^ and will hold the proceeds of the bill 
 for the use of the original indorser who put that 
 indorsement on the bill, (r) 
 
 An indorsement, like an acceptance, must be 
 written on the bill, (s) or in the cases of bills drawn 
 in those foreign states which recognise " copies " of 
 the bill, or what are called allonges, strips fastened on 
 to the bill, it may be written on the "copy" or 
 allonge; (t) and sometimes in the case of a foreign 
 bill you may have a long allonge with twenty or 
 thirty signatures thereon accompanying the bill. An 
 indorsement, oddly enough, may be on the face of the 
 bill, though you would expect it to be on the back. 
 An indorsement must be of the whole bill, and an 
 attempt to indorse part of a bill to A. and part to B., 
 for instance in a bill for £100 to indorse it for £50 
 to A. and for £50 to B., is entirely invalid («). If the 
 bill is made payable or is indorsed to two persons, 
 
 (r) See Act, § 35, sa. 2, 3, and cases in Chalmers, pp. 102, 
 103. 
 
 (s) Act, § 32, 8. 1. (t) Ibid. (v.) Act, § 34, s. 2. 
 
64 INDORSEMENT. 
 
 the indorsement of both is necessary to pass a title j 
 the indorsement of one will pass no title^ for it is 
 similar to a partial indorsement of the bill, unless the 
 one person who indorses has by partnership or other- 
 wise the authority to sign, for both, (v) Further, if 
 the payee or indorsee is wrongly described on the bill, 
 e.g. if his name is wrongly spelt, he should indorse the 
 name appearing on the bill, the custom being to add 
 underneath such indorsement his name in its correct 
 designation or spelling, (w) That you will bear in 
 mind in the case of any cheque made payable to you 
 under a wrong spelling, and which as an ''order" 
 cheque it is necessary for you to indorse ; you indorse 
 the name of the payee, as it is spelt on the cheque, 
 and you write your true name under that indorse- 
 ment. 
 
 Now the effect of , indorsement on the liability 
 of the respective parties to the bill is set out in 
 Section 55 of the Act. As to the indorser of a bill, 
 it transfers the bill from him to the indorsee and it 
 makes him liable to subsequent indorsees. For if the 
 bill is dishonoured each indorser becomes liable to 
 subsequent holders of the bill, having in his turn a 
 right of recourse to previous indorsers and the drawer. 
 As regards the indorsee, indorsement gives him a 
 right to present the bill for payment and to sue on 
 (v) Act, § 32, 8. 3. (w) Act, § 32, s. 4 
 
BILLS OF EXCHANGE. 65 
 
 it if dishonoured ; while, if a " holder in due course/' 
 he is not affected by want of title iu previous 
 indorsers. (as) It may happen that the bill is trans- 
 ferred for value without being indorsed, and ia that 
 case the holder is entitled to claim an indorsement 
 from the person who transferred it to him, to require 
 him to indorse it, but until he gets such an indorse- 
 ment he has no better rights than his transferor 
 had. (y) 
 
 It is desirable that the holder of a bill should be a 
 " holder in due course," for a " holder in due course " 
 is a specially favoured being. The term "holder in 
 due course " was inveated by the Act of 1882. Before 
 that Act the description of such a holder was a long 
 and rather roundabout one; he was a "bond fide 
 holder for value without notice." That description, 
 which was perhaps a little redandanfc, was cut down 
 by the draughtsman of the Act of 1882 into "holder 
 ia due course," and the "holder in due course" ia 
 defined in Section 29 of the Act. " A holder in due 
 coarse " is a holder who has taken a bill, complete 
 and regular on the face of it, under the following 
 conditions: 1. That he became the holder before it 
 was overdue, and without notice that it had been 
 previously dishoaoured, if it had beea previously dis- 
 honoured. 2. That he took the bill in good faith and 
 (^) Act, § 29, (2/) Act, § 31, s. 4. 
 
 F 
 
66 HOLDER IN DUB C0UB8K 
 
 for value, and that at the time the bill was negotiated 
 to him he had no notice of any defect in the title of 
 his transferor. Shortly summarised, he is the holder 
 of a regular bill in good faith and for value. Every 
 holder of a bill is presumed to be a "holder in due 
 course "; that is to say, the burden of proof of fraud 
 or absence of value rests upon the persons sued and 
 not upon the holder, (z) Once there has been a 
 " holder in due course " in the history of a bill, sub- 
 sequent holders benefit by his existence whether 
 they have given value or not, provided that they are 
 holders in good faith, i.e. without being parties to 
 any fraud or illegality affecting the bill, (a) Their 
 good faith is essentia], but the value given by the 
 " holder in due course " passes on its beneficial effects 
 to subsequent holders. Now if the "holder in due 
 course " sues on a bill, (and every holder is deemed to 
 be a " holder in due course '' until something further 
 is proved) ; in such an action, if the defendant can 
 give any evidence of fraud or anything affecting the 
 validity of the bill in its origin, the burden of proof 
 will then fall again upon the plaintiff, and it will be 
 necessary for the plaintiff to prove that he is a 
 "holder in due course" by proving the value that 
 has been given for the bill and his good faith; he 
 must prove both. (&) But it only becomes necessary 
 (^) Act, § 30, s. 2. (a) Act, § 29, s. 3. (6) Act, § 30, s. 2. 
 
BILLS OF BXGSANQE. 67 
 
 for him to prove that, if the defendant shows fraud or 
 some other defect at some part of the bill's career. 
 When the defendant has shown that there was fraud 
 connected with a bill somewhere, then the plaintiff is 
 put again upon his proof and must prove the good 
 faith and the value, but having proved that, he is not 
 affected by any previous defect in title. So that a 
 " holder in due course " is not affected by previous 
 defects in title of which he is ignorant, and he is not 
 called upon to prove his ignorance of them or the 
 value given for the bill till the defendant has made 
 a case showing that there is some defect, (c) For 
 instance, the plaintiff brings an action against the 
 maker of a note payable to bearer, and gives evidence 
 of the note. The defendant shows that it was stolen 
 from the person to whom he handed it. That puts 
 the burden of proof again on the plaintiff, who must 
 prove that he gave value for the note and did not 
 know of the theft, {d) 
 
 One of the commonest defences to an action when 
 it is first put before solicitor or counsel is : — "It was 
 an accommodation bill ; I accepted it for the accommo- 
 dation of the drawer; I got nothing out of it, and 
 it is very hard that I should have to pay." Now an 
 
 (c) For a recent case showing the working of this in prac- 
 tice, see Tatam v. Saslar, L. E. 23 Q. B. D. 345. 
 
 {d) Of. Smith V. Braine, 16 Q. B. 244 ; Berry v. Alderman, 
 14 0. B. 95 ; and the cases cited by OUalmers, p. 84. 
 
 F 2 
 
68 AGOOMMODATION BILL. 
 
 "accommodation bill" is one in which the acceptor 
 is security for some other person who may or may 
 not be a party to the bill; and an "accommodation 
 party " is a person who has signed a bill as drawer, 
 acceptor, or indorser, without receiving any value 
 therefor, but for the purpose of lending his name 
 to some other person, (e) For instance, A. draws 
 a bill on B., and asks B. to accept it in order that 
 he. A., may discount it and get money for temporary 
 difficulties in which he. A., is ; and A. always says 
 that he will provide B. with the money when the 
 bill becomes due, and he never does. B. is the 
 "accommodation party," he has accepted the bill 
 for the accommodation of A., the drawer, and has 
 not got any value therefor, and the bill is an 
 "accommodation bill." It is no defence to an acceptor 
 sued by an indorsee to prove that he is an " accom- 
 modation party " ; it does not even fall upon the 
 indorsee to prove that he gave value for the bill, (/) 
 If people accept bills for other persons' accommoda- 
 tion they must pay up, and look to their principals 
 or the people who requested them to put their names 
 on the bill for a recompense. For a person at whose 
 request a man accepts as an " accommodation party " 
 
 (e) Act, § 28; Chalmers, p. 79. A bill signed by an 
 accommodation party is not an acoommodation bill unless 
 that party is the acceptor. 
 
 (/) Act, §28, s. 2; §30; §27,8.2. 
 
BILLS OF EXOEANQE. 69 
 
 undertakes tbat lie will provide fuads for the pay- 
 ment of the bill at maturity, or that if owing to 
 his failing to do so the " accommodation party " 
 has to pay, he will indemnify him ; and consequently 
 the fact that an acceptor is an "accommodation 
 party," though no defence to an actiou by another 
 person, entitles the acceptor to what he would not 
 usually have, a recourse to the drawer he accom- 
 modated, {g) You will see, therefore, that the defence 
 of an accommodation bill or accommodation party is 
 very rarely one which gets beyond the solicitor or 
 counsel when they are first consulted, because it is 
 rarely any use to bring such a defence into Court. 
 
 The next step in the history of a bill, now that we 
 have dealt with its negotiation by the people into 
 whose hands it comes, is the arrival of the time for 
 its payment. A bill payable "on demand" or "at 
 sight " or " on presentation " or in which no time for 
 payment is named, is payable " on demand " (7i) and 
 no " days of grace " are allowed ; (t) that is to say it 
 is payable when the money is demanded and not a 
 certain number of days afterwards. In the case of 
 bills payable at a determinable future time, unless 
 there is a special exclusion of " days of grace " in the 
 bill (as if the words "without grace" appear), certain 
 
 {g) Ohalmera, p. 185. Qi) Act, § 10. 
 
 (i) Of. Act, § 14 
 
70 'days of obaok 
 
 days of grace are always given by tlie custom of 
 mercliants (_/), though, the number of days varies very 
 much in different countries. In England three days 
 of grace are added from the day on -which the bill 
 according to its tenor becomes payable; that is to 
 say, a bill which according to its tenor is payable on 
 the 1st of March, would in fact be payable on the 
 4th of March, three days of grace being added. That 
 calculation is obviously very simple, but there are 
 such things as Sundays and Bank Holidays which 
 have a way of getting in the way of the days of grace,, 
 and rules had to be added to provide for the last 
 day of grace being a Sunday or Bank Holiday. If 
 the last day of grace is Sunday, Christmas Day, or 
 Good Friday, Christmas Day and Good Friday being 
 Common Law holidays, the bill is payable on the day 
 before; so that only two days of grace are in fact 
 given instead of three when the last day is Sunday, 
 Christmas Day, or Good Friday. If the last day is a 
 Bank Holiday, such as the August Bank Holiday or 
 Easter Monday, the bill is payable on the day after. 
 If the last day of grace is a Sunday, the bill is payable 
 on the day before ; but suppose the day before is 
 Bank Holiday, then of course the ordinary effect 
 would be to make it payable the day after, which is a 
 Sunday, and so you go back again. That ingenious 
 (y) Act, § 14 
 
BILLS OF EXOSANQH. 71 
 
 trap has been provided for by enacting tbat if Sunday 
 is the last day and the Bank Holiday is the day before, 
 the bill is payable on the day after the Sunday, 
 making in that case the rule the same as if the last 
 day was a Bank Holiday. There is only one other 
 point with regard to the calculation of days of grace 
 which need be noted, and that is that "month" means 
 " calendar month," and that for instance bills drawn 
 on the 31st August, payable "one month after date," 
 would be payable on the corresponding day of 
 September, namely the 30th. You will see that if 
 you apply that to bills falling due in February, you 
 may have a number of bills drawn at different times 
 all coming due on the 28th of February. 
 
 The time for payment so calculated having arrived, 
 the bill must be presented for payment. The holder 
 must show the bill to the acceptor, and when the bill 
 is paid must deliver it uf to him. A bill which is 
 accepted generally without any restriction of place, in 
 strict law need not be presented for payment at all, (ft) 
 because in strict law it is the duty of the debtor to 
 find out his creditor and to pay him, and not the duty 
 of the creditor to hunt down his debtor. As a matter 
 of fact the bill always is presented for payment, 
 and the practical effect of the rule is that in the case 
 of a general acceptance the acceptor cannot allege 
 (fc) Act, § 52. 
 
72 PRESENTMENT. 
 
 informalities in presentment for payment, because 
 presentment was not strictly necessary at all. You 
 will find a series of rules for presentment for payment, 
 with the details of which I do not propose to trouble 
 you, in Section 45 of the Act. There are also certain 
 cases in which delay in presentment after the proper 
 time may be excused which are set out — and again I 
 do not propose to trouble you with them — in detail in 
 Section 46 of the Act. In certain cases presentment 
 for payment may even be dispensed with altogether; {T} 
 for instance, if the payee is a fictitious person (as if 
 the bill were payable to the "Griffin," when obviously 
 to present the bill to the Griffin for payment would 
 not be much use), there is no need there to present the 
 bill for payment at all in order to charge the drawer 
 of the bill. Or where with reasonable diligence the 
 bill cannot be presented for payment; for instance, 
 where a note is made payable at Guildford, but the 
 person who ought to pay does not live there, it has 
 been decided that it is enough to present it to two 
 banks at Guildford, and if neither bank knows anything 
 about it that dispenses with further presentment, (m) 
 It is not, however, sufficient to excuse presentment that 
 the holder knows the bill will be dishonoured; you 
 must go through the formality of presentment even 
 
 (I) Act, § 4,6, s. 2. 
 
 (m) Ha/rdy v. Woodroofe, 2 Stark. 319. 
 
BILLS OF EXCHANGE. 73 
 
 though you know it 13 certain to be dishonoured by 
 the acceptor, (n) 
 
 A bill is dishonoured by non-payment when it has 
 been duly presented and not paid^ or when, present- 
 ment having been excused for any of the reasons 
 stated, the bill is overdue and unpaid. (0) As soon 
 as a bill becomes dishonoured by non-payment the 
 holder has immediate right of recourse to previous 
 indorsers and to the drawer, which he can convert 
 into a right of action by giving notice of dishonour 
 in the case of an inland bill, or where there is a 
 foreign bill, by protesting the bill with a notary in 
 addition. But a protest is only necessary in the case 
 of foreign bills. There are again an elaborate series 
 of rules as to the way in which notice of dishonour is 
 to be given, which are important, inasmuch as failure 
 to give due notice of dishonour may discharge the 
 parties against whom you wish to bring your action, 
 the drawer and previous indorsers, the sureties. 
 Those rules are contained in Section 49 of the Act. 
 The most important rales are the third and fourth, 
 which deal with the effect of giving notice ; the fifth, 
 which practically provides that so long as an in- 
 telligible notice is given no particular form of notice 
 of dishonour is necessary ; the notice may be given in 
 
 (to) Act, § 46, s. 2 a. 
 (0) Act, § 47. 
 
74 NOTICE OF BISMONOUB. 
 
 writing or orally, and may be given in any terms 
 ■which sufficiently identify the bill and intimate that it 
 is dishonoured. The sixth rule makes the common 
 practice of banks simply to return a dishonoured bill 
 sufficient notice of dishonour. The two remaining 
 rules of importance are the twelfth and fourteenth, 
 which provide as to the time within which the notice 
 must be given. If the person who is giving the 
 notice and the person who ought to receive the 
 notice live in the same place, it is enough if the 
 person who is to receive the notice gets it the day 
 after the bill is dishonoured. If these two people live 
 in different places, it is enough if the notice is posted 
 the day after the bill is dishonoured. However long 
 it may take to get in the ordinary course of post 
 to the person who ought to receive it, it is enough 
 if the notice is posted the day after dishonour; or in 
 cases where there are mails to go over the sea and 
 there is no mail leaving on the day, by the first post 
 that leaves after that day. 
 
 Under certain circumstances delay in giving notice 
 may be excused or altogether dispensed with, and 
 those circumstances are set out in Section 50 of the 
 Act. One of the grounds which excuses giving notice 
 of dishonour at all is where, after the exercise of 
 reasonable diligence, notice, as required by the Act, 
 cannot be given to or does not reach the person to be 
 
BILLS OF UXOJSANGE. 75 
 
 charged ; (p) .thus the loss of a letter in the post does 
 not in any way affect the indorser's or drawer's 
 liability. The fact that he never receires a notice 
 of dishonour will not discharge him if the person who 
 ought to give it proves the due posting of such a 
 letter, because, if reasonable diligence has been exer- 
 cised in posting and properly addressing the letter^ 
 the fact that it has gone astray cannot be imputed to 
 the person- who posted it. Therefore if, as is a very 
 common defence under Order 14, you find the drawer 
 or indorser defending on an affidavit that he never 
 received notice of dishonour, such an affidavit will be 
 perfectly immaterial if your client can prove that a 
 properly addressed notice of dishonour was posted 
 within the proper time. It is not necessary to give 
 aHy notice of dishonour to the acceptor (q) — he knows 
 all about it already — or to any guarantor of any 
 party to the bill, (r) It is probably necessary to give 
 notice of dishonour to a person who is liable on 
 the consideration for which the bill is given, though 
 he is not liable as a party to the bill itself, but. 
 this has not been conclusively established, (s) And 
 further, if the bill which you are dealing with, and 
 which has been dishonoured, is a foreign bill, it is 
 necessary to do something further, and besides giving 
 
 (j3) Act, § 50, s. 2 a. (r) Chalmers, p. 158. 
 
 (g) Act, § 52, s. 3. (s) Ibid. p. 159. 
 
76 NOTICE OF DISHONOUR 
 
 notice of dishonour, to have the bill protested by a 
 notary, (t) 
 
 The effect of failure to give notice of dishonour 
 may be considered in conjunction with the effect of 
 notice of dishonour if given, (m) If the drawer 
 receives a due notice of dishonour from the holder, 
 such a notice will enable any person .who, if he 
 had given a proper notice of dishonour to the drawer, 
 could have sued him, to sue the drawer if necessary ; 
 that is to say, a notice given to any party to the 
 bill enures for the benefit of parties subsequent to 
 himself. For instance, if A. draws a bill on B. and 
 indorses for value to C, who indorses for value to D., 
 B. accepts, and D., the holder for value, presents it 
 for payment : the bUl is dishonoured. Suppose D. 
 gives notice of dishonour to 0., the previous indorser ; 
 if nothing more is done at all, G. is liable to D., 
 but A., the drawer, is entirely discharged because 
 he has received no notice of dishonour. D. therefore 
 will have his remedy against 0., but neither 0. nor 
 D. will have any remedy against A, for neither of 
 them has given A. any notice of dishonour. But 
 if D. instead of giving notice to C, his previous 
 indorser, gives notice of dishonour to A., the drawer ; 
 D. will then have his remedy against the drawer, 
 
 (t) For the rules as to protesting, see Act, § 51. 
 (u) Act, § 49, ss. 3, 4 
 
BILLS OF EXCHANGE. 77 
 
 but will have no remedy against C, the indorser, 
 because he has given 0. no notice. If D, had given 
 notice to C, as well as giving notice to the drawer, 
 0. would have had a remedy against the drawer 
 without giving him notice of dishonour, because 
 there had been a notice given by D. to the drawer, 
 which 0., the indorser, might avail himself of. For, 
 in the words of the rule : — " When the notice is given 
 by or on behalf of the holder it enures for the benefit 
 of all subsequent holders and all prior indorsers who 
 have a right of recourse against the party to whom 
 it is given " ; C, as a prior indorser, has a right of 
 recourse against A,, the drawer. If a party does not 
 get a regular notice of dishonour he is discharged 
 altogether, except in one of the cases where notice 
 of dishonour has been excused or dispensed with, {v) 
 If a party does not give notice of dishonour to one 
 of the prior parties he loses his remedy against that 
 party, unless some one else subsequent to himself has 
 given such a notice, in which case he gets the benefit 
 of it. 
 
 A bill is discharged, that is to say all rights of 
 action thereon are extinguished, when it is paid to the 
 holder by, or on behalf of, the drawer or acceptor ; (w) 
 the fact that an indorser who is sued on it has 
 to pay because of his indorsement of the bill does 
 {v) Act, § 50. (w) Act, § 59. 
 
78 FOEGEBY. 
 
 not discharge the bill, for it has not been paid on 
 behalf of the drawer or acceptor; on the contrary the 
 indorser has a further right to sue the drawer or 
 acceptor. It is discharged if paid by the acceptor, 
 because the remedy of an accommodation acceptor, a 
 party who has accepted it for the accommodation 
 of the drawer, is not on the bill but on the personal 
 covenant of the drawer to indemnify him implied in 
 such a case. 
 
 The only other provisions in bills of exchange to 
 which I wish to refer you are those dealing with 
 the effect of forgery, which is unfortunately not an 
 infrequent occurrence in connection with bills. The 
 24th Section of the Act provides that where a 
 signature to a bill is forged the forged signature is 
 wholly inoperative, and no title can be acquired 
 through the forgery by any subsequent party unless 
 as against a person who is prevented from saying it 
 is a forgery through some negligence of his own. 
 There is a very important exception to this in 
 Section 60, which provides that in case of biUs 
 payable to order on demand drawn on a banker, or 
 shortly in the case of cheques, the banker paying in 
 good faith has not the duty of inquiring whether 
 each of the indorsers' signatures is forged or not, 
 but is safe in paying even though the indorsements 
 should turn out -to be forgeries. 
 
CHEQUES. 79 
 
 That brings us to the next variety of negotiable 
 instruments, namely cheques. Cheques being, as I 
 have explained, bills of exchange drawn on a banker 
 payable on demand, (x) the great majority of the 
 provisions that I have been stating to you apply to 
 them, and there are in addition provisions in the 
 Act specially applicable to cheques, (y) 
 
 The first distinguishing mark the custom of 
 merchants has attached to cheques, is that cheques 
 are intended for prompt presentment, whereas bills 
 on demand are deemed to be continuing securities. (2) 
 The presentment should be made promptly. The 
 demand in a bill payable to demand need not be 
 made for some time. The consequence is that delay 
 in presenting a cheque may have a prejudicial effect 
 on the holder's rights, (a) though delay in presenting 
 a bill on demand need not. 
 
 Cheques being bills of exchange drawn on bankers, 
 the custom of merchants has defined the relations ■ 
 between bankers and their customers, (b) The or- 
 dinary relation between a banker and his customer 
 is that of debtor and creditor. The bank has a 
 certain sum of money of the customer's in its hands 
 which it owes to the customer; the customer is 
 
 (x) Act, § 73. iy) Act, §§ 73-82." 
 
 {z) Broohs V. Mitchell, 9 M. & W. at p. 18. 
 (a.) Act, § 74 (6) Of. Chalmers, p. 234. 
 
80 BANKER AND OUSTOMEB. 
 
 entitled to draw cheques on the bank to the extent 
 of the debt, and if the bank having funds of the 
 customer's in its hands does not honour those bills of 
 exchange, or cheques, it is liable to its creditor, the 
 customer, in damages for its default, this being the 
 one case in which a drawee is bound to accept bills of 
 exchange drawn. In the absence of special direction, 
 the bank must pay cheques in the order in which 
 they are presented, and must not appropriate them 
 in another order than that in which they are pre- 
 sented; and in the case of banks having several 
 branches, the rights of the customer are only against 
 the particular branch where he has an account, and 
 not against the other branches of the bank. Whilst 
 that is the relation existing between banker and 
 customer so far as cheques are concerned, the bank 
 is probably not bound to accept or to pay bills of 
 exchange other than cheques, (although the drawing 
 of such a bill on a bank is an authority to the bank 
 to pay it), for the relation of banker and customer 
 only extends to the ordinary cheque, or • bill of 
 exchange payable on demand. The protection of 
 the banker in the case of forged indorsements (c) 
 does not extend to forged indorsements to bills of 
 exchange other than cheques. The duty and 
 authority of the bank to pay cheques are determined 
 (c) Act, § 60, and p. 78 above. 
 
GMEQUE8. 81 
 
 or ended by, in the first place, countermand of 
 payment, or wliat is shortly known in mercantile 
 language as " stopping a cheque/^ which prevents 
 the banker from paying the cheque as against his 
 customer, though it may leave the customer liable 
 on the cheque to a "holder in due course." The 
 authority of the banker is also determined by the 
 death of the customer, and notice to the banker 
 of his death. A cheque drawn before the customer's 
 death, presented to the banker after the death 
 and after the banker knows it, cannot be paid by 
 the bankers as against the customer's estate. And 
 thirdly, the authority of the bank is determined by 
 a notice of a Receiving order against or Act of 
 Bankruptcy by the customer, .when all rights in 
 the estate beconie vested in the trustee or official 
 Receiver. 
 
 The most curious mercantile incident attached to 
 cheques has at last been embodied in the statute 
 law of the land, having gone through the usual 
 difficulties that any creation of the Law Merchant 
 undergoes, and that is the operation of crossing 
 cheques. The history of crossing cheques is con- 
 tained in an admirable judgment of Mr. Baron 
 Parke in the case of Bellamy v. Marjoribanhs. (d) 
 The practice of crossing cheques originated in a 
 (d) 7 Exch. at p. 402. 
 
 o 
 
82 GB08SING. 
 
 usage of bankers' clerks in the Clearing House, (e) 
 Crossing was originally the note of the name of his 
 bank, wri]tten on the cheque for the convenience 
 of the clerks of the Clearing House by the clerk 
 of the particular bank who presented the cheque 
 at the Clearing House. That practice was adopted 
 by banks and customers outside the Clearing House, 
 who got in the way of placing the two lines or 
 " crossing " across their cheques, intending originally 
 not to restrict the circulation or negotiability of the 
 cheque, but to provide a means of tracing any lost 
 cheque by compelling the holder to present it through 
 a quarter of known respectability and credit. It 
 acted originally as a caution to bankers not to pay 
 such a cheque except. through a banker, and developed 
 into something more than a caution. The Courts of 
 Law struggled for some considerable time against 
 any rigid interpretation of crossing a cheque which 
 affected its negotiability. The Courts said, in the 
 case of cheques which had become payable to bearer 
 by indorsement in blank : — " it is impossible that any 
 direction by crossing in this way can prevent the 
 banker from paying to the 'holder in due course' 
 who presents the cheque, even though' he does not 
 present it through any bank at all, or through the 
 
 (e) For an early account of the Clearing House, see 
 Bodddngion v. SchlencJeer, 4 B. & Ad. 752. 
 
GHEQTJES. 83 
 
 bank on wMcb the cheque is specially crossed." The 
 judgment of Lord Cairns iu the case of Smith v. Union 
 Bank (/) sets out the view which the Common Law 
 took of the practice of crossing chequeSj and of the 
 effect which the Courts gave to that crossing. Parlia- 
 ment had to step in again in order to ensure that 
 "Lombard Street should give laws to Westminster 
 Hall " ; and by a series of Acts, ending in the Crossed 
 Cheques Act of 1878, (gr) effect was given to the 
 mercantile custom of crossing cheques, and its provi- 
 sions have been embodied with further alterations in 
 Sections 76 to 82 of the Bills of Exchange Act, 1882. 
 Where a cheque is crossed generally, that is to say 
 has two parallel lines on it with or without the words 
 " and Co." written in, the bank on which it is drawn 
 must pay it only through a banker, and if it does 
 not so pay it is liable to the true owner of the 
 cheque for any damage he has sustained by such 
 a payment. For instance, the holder of a cheque has 
 his cheque stolen; it is presented by the thief although 
 crossed to a banker, and the bank pay it to the 
 thief and not through the banker. The bank will 
 be liable to the true owner of the cheque for the 
 value of the cheque. If the cheque is crossed spe- 
 cially, that is to say if it bears, besides the crossing, 
 the name of a bank, or has the name of the bank 
 (/) L. E. 1 Q. B. D. 33. (?) 39 & 40 Vic. o. 81. 
 
 G 2 
 
84 0B0S8BD CHEQUES. 
 
 written without the crossing, the banker must pay- 
 through the particular bank whose name is written 
 on the front of the cheque. A farther security was 
 introduced by the Crossed Cheques Act, 1878, (h) by 
 which it is provided that the words " not negotiable " 
 may be written across the front of the cheque. The 
 effect of that is incorporated in the Act of 1882 
 (Section 81), which provides that any person taking 
 a crossed cheque which bears on it the words ''not 
 negotiable^' shall not have or be entitled to give a 
 better title to the cheque than the person from whom 
 he took it; so that the advantage of negotiable 
 instruments in passing a better title than the trans- 
 feror had is destroyed where the words ''not nego- 
 tiable " appear on the face of the cheque. 
 
 The only negotiable instruments remaining to 
 be dealt with are promissory notes, and these one 
 can also deal with shortly. By Section 89 of the 
 Act, subject to the special provisions contained in 
 the part of the Act relating to promissory notes, 
 which are very few, the rules as to bills of exchange 
 apply, with the necessary modifications, to promissory 
 notes. In applying those provisions, the maker of 
 the note is taken to correspond with the acceptor 
 of the bill; the first indorser of the note to corre- 
 spond with the drawer of an accepted bill payable 
 {h) 39&40Vio. 0. 81. 
 
PB0MI880BY N0TB8. 85 
 
 to drawer's order ] and it is provided that certain 
 provisions, especially as to acceptance, shall not 
 apply to promissory notes, {i) 
 
 A promissory note is defined in Section 83 of 
 the Act. It is " an unconditional promise in writing 
 made by one person to another, signed by the maker, 
 engaging to pay on demand or at a fixed or deter- 
 minable future time a certain sum of money, to or 
 to the order of a specified person, or to bearer." In 
 reading that definition you will note its family like- • 
 ness to the definition of bills of exchange, and many 
 of the cases on the definition of bills of exchange 
 apply equally to promissory notes ; e.g. the cases as 
 to " unconditional promise," as to the " fixed or 
 determinable future time," the cases as to " specified 
 persons," which I dealt with iu the definition of 
 bills of exchange, {j) apply equally to promissory 
 notes. The note must, however, be a promise to 
 pay. A bill of exchange, you will remember, must 
 be an order — politeness will not do. A bill of 
 exchange must be a promise — a mere confession of 
 debt will not do. That interesting document known 
 as an I.O.U. is not a promissory note, for though 
 it contains confession in the shape of an acknow- 
 ledgment of a debt, it does not contain repentance 
 in the shape of a promise to pay. A deposit receipt 
 (i) Act, § 89, s. a (j) Ante, pp. 41-49. 
 
86 FBOMISSOBY NOTE. 
 
 given by a banker is not a promissory note, for 
 though it acknowledges the receipt of money and 
 states that the bank will account on demand, it is 
 obviously on the face of the document not the inten- 
 tion of either party to make it a promissory note. The 
 position of an I.O.TJ. is that it is evidence of an account 
 stated, not necessarily of money lent; and it may be 
 used for the purposes for which an account stated can 
 be usedj but it is not a negotiable instrument. 
 
 The liability of the maker of a promissory note 
 is defined in the 88th Section of the Act. He 
 engages that he will pay according to its . tenor, 
 and he is precluded or estopped from denying to 
 a " holder in due course " the existence of the payee 
 and his capacity to indorse. Presentment for pay- 
 ment of a promissory note is necessary to make an 
 indorser liable on the note, (A-) but it is only necessary 
 in order to make the maker liable in cases where 
 the note expressly makes itself payable at a par- 
 ticular place. (Z) In that case there must be pre- 
 sentment at that place to charge the maker. Further, 
 notes payable "on demand" and indorsed must be 
 presented within a reasonable time, (m) With those 
 differences, the law of promissory notes is the same 
 as the law of bills of exchange with which I have 
 been dealing. 
 
 (h) Act, § 87, s. 2. (T) Act, § 87, s. 1. {m) Act, § 86, s. 1. 
 
CHAPTER IV. 
 
 CHAETBE-PAETIES ANB BILLS 01' LADING, 
 
 Authorities, — The students at tlie lectures were referred to 
 Scrutton on Charter-parties and Bills of Lading (2nd ed.) 
 referred to in the notes as " Ciarters." See also Carver on 
 Carriage by Sea, of which a second edition is now in the 
 press ; Newson's Digest of the Law of Shipping and Marine 
 Insurance (2nd ed.) ; and Abbott on Shipping. 
 
 In passing from bills of exchange to charter-parties 
 and bills of lading, we leave the comparative 
 certainty of the statute law and come to the jungle 
 of the Law Merchant and mercantile usages. A 
 contract of affreightment, or a, contract for the 
 carriage of goods by sea, is contained or expressed 
 in two very common mercantile documents, in a 
 charter-party or in a bill of lading. The forms of 
 charter-parties and bills of lading vary with every 
 firm of ship-owners. Bach ship-owner adds to his 
 form, whenever there is a decision of the Courts, 
 the words that he thinks will protect him against 
 that decision ; and the result is a series of documents 
 
88 OH ABTEB-P ARTIES AND 
 
 of great importance to commerce, but whicli raise 
 ever-varying difficulties of construction. The con- 
 tract of affreightment is a contract to carry goods 
 by sea for a fixed payment, which is called " freight." 
 Where that contract is for the use of the whole 
 ship, it is usually contained in a charter-party, the 
 terms of which are the contract in question. A 
 charter-party is made between two persons : the 
 ship-owner who lets out the ship or contracts to 
 carry, and the charterer who hires the ship or 
 makes a contract for goods to be carried in the 
 ship. A further document may come into existence 
 in connection with the contract of carriage. The 
 ship-owner may not make any contract for the 
 hire or the use of the whole ship, but he may 
 contract with a number of shippers of goods to 
 carry in his ship such goods as each of them furnish, 
 and so one ship on her voyage may be carrying 
 goods under hundreds of contracts. Or the charterer, 
 having hired his ship from the ship-owner, may in 
 turn let out the ship or sublet the ship to a large 
 number of shippers of goods, with each of whom 
 he may have a " contract of affreightment." In 
 each of those cases where either the ship-owner or 
 the charterer makes a number of contracts for 
 carriage of goods in the ship, he is said to put the 
 ship on the berth as a "general ship," and the 
 
BILLS OF LADING. 89 
 
 contract tliat is made with each of the shippers of 
 goods is usually evidenced by the bill of lading 
 which is given to each shipper. Even in cases 
 where the charterer charters the whole ship for the 
 carriage of goods, he usually receives a bill of lading 
 when the goods are shipped] so that whenever a 
 ship carries goods not belonging to her owner, there 
 is frequently both a charter - party and bills of 
 lading. The document known as a bill of lading 
 has two sides. It is a ''contract of affreightment," 
 it is a contract for the carriage of goods, but it is 
 also a document of title to goods, for the indorse- 
 ment of the bill of lading may pass the property 
 in the goods it represents, and to that extent the 
 bill of lading is a negotiable instrument. That part 
 of the law relating to the bill of lading as a document 
 of title I postpone until I have finished the law 
 dealing with the " contract of affreightment." 
 
 You have before you the printed forms of a 
 charter-party and of a bill of lading, {n) which, how- 
 ever, would not usually be found in connection with 
 the same ship. The charter-party is a very common 
 form of coal charter. The bill of lading, as appears at 
 its head, is a form which has been agreed between 
 ship-owners and merchants in the Mediterranean, 
 Black Sea, and Baltic grain trade, and is in very 
 (n) See Appendix. 
 
90 CSARTEB-PABTIE8 AND 
 
 common use at the present time. Those forms you will 
 see leave blanks in a number of places. As they ap- 
 pear in this form with no blanks filled up, they are 
 called in commercial language a " form of charter," or 
 a "form of bill of lading." Whilst their terms are 
 being negotiated the blanks are filled up with the pro- 
 posed terms, and the document ia called in mercantile 
 language "a ^jro/ormd charter"; and when the charter 
 is completed it is " the charter " plain and simple. 
 Each ship - owner usually has his own private, form 
 or forms printed thus, and makes each particular 
 contract by filling in the blahks, by writing in the 
 special provisions that are agreed upon, and some- 
 times, if he is particularly careful, by scratching out 
 such of the printed words as disagree with the written 
 ones that he has inserted, but more usually by 
 omitting to do this. To the peculiar documents con- 
 cocted in this way, certain principles of construction 
 have been applied by the Courts. In the first place, 
 as it is a very common thing to find the print con- 
 tradicting the writing, the Courts have said that they 
 will prefer the writing, as it has obviously been ex- 
 pressly intended by the parties, whereas they probably 
 have simply been careless and forgotten, to strike out 
 the print which contradicts it, or have not noticed that 
 it is contradictory. So that the first rule of construc- 
 tion will be that you prefer the written part of the 
 
BILLS OF LADING. 91 
 
 document to the printed one. (o) And in the second 
 
 place, inasmuch as the writing is filled into the printed 
 
 form it is not necessary in construing the charter or 
 
 bill of lading to give effect to every word in the 
 
 printed document. You may assume that the printed 
 
 document is drafted in wide terms, and possibly some 
 
 words do not apply to the particular contract which 
 
 has been effected. It is not necessary to give a 
 
 meaning to every word in the printed document, 
 
 though you ought to satisfy every word of the 
 
 written part, (p) Another rule of construction which 
 
 is frequently acted on by the Courts is that any term 
 
 of a " contract of affreightment " is to be construed 
 
 most strongly against the party for whose benefit it is 
 
 intended ; that is to say it is the duty of the party 
 
 who inserts a terni in the " contract of affreightment " 
 
 for his own benefit to take care that it is clearly 
 
 expressedj as the words which he may be supposed 
 
 to have very carefully settled will be construed 
 
 against him and not in his favour, {q) 
 
 Another difficulty which occasionally arises, and 
 
 inevitably does so in the circumstance of maritime 
 
 commerce, is as to the law by which the contract is to 
 
 be governed. Should it be the law of the place where 
 
 (o) Scrutton v. CMUs, 36 L. T. 212. 
 
 (p) Per Brett, J., and other judges in Gray v. Carr, L. E. 6 
 Q. B. 622, 636, 560, 567; Charters, § 9. 
 (2) Per Bowen, L. J., 12 Q. B. D. 222. 
 
92 OONSTBUOTION OF 
 
 the contract is made, or where the contract has to be 
 cai'ried out by delivery of the goods, or of the nation- 
 ality to which the ship belongs? For as the laws of 
 maritime nations now vary considerably, it is some- 
 times necessary for the Court in construing these 
 documents to decide what law they will apply. 
 
 The first principle that the Courts will apply to 
 settle the appropriate law is, that if it appears by the 
 document what law the parties intended to be governed 
 by, the Courts will apply that law. Probably also 
 (although a recent decision of the Court of Appeal has 
 rather shaken the proposition that I now want to state 
 to you), in case no clear intention appears on the face 
 of the contract, the law of the Ship's flag will be 
 applied ; that is to say, a contract of carriage in an 
 English ship will be presumed to be governed by 
 English law, a contract of carriage in a ship flying the 
 French flag will be presumed to be governed by 
 French law. The great case upon which the doctrine 
 of " law of the flag " rests is the case of Lloyd v. 
 Guibert. (r) It is a complicated case, for several 
 nationalities were concerned with the ship in ques- 
 tion. A British subject chartered a French ship at a 
 Danish port, for a voyage from Hayti to France or 
 England, and the ship then got into difficulties in a 
 Portuguese port : the problem for the Court was to 
 (r) L. E. 1 Q. B. 115 ; Charters, § 7. 
 
CHABTER-FABTIE8 AND BILLS OF LADING. 93 
 
 find out, under ttose circumstances, whether the 
 English law, or the French law, or the law of Hayti, 
 whatever that might be, or the Portuguese law, 
 or the general law maritime, whatever that might 
 be, was to be applied to the contract, with its 
 resulting rights and duties. The Court held, in 
 the absence of any intention appearing on the 
 charter, that the French law being the law of the 
 ship's flag, was the law to be applied. Some doubt has 
 been thrown upon that as a general principle of con- 
 struction, by a case which excited some discussion 
 at the time it was decided, and is of considerable 
 importance — the case of In re Missouri Steam- 
 ship Company, (s) There was a charter from the 
 United States to England, the ship-owner being an 
 English company, the charterer being a citizen of the 
 United States, and the object of the contract being to 
 carry cattle from the United States to England. The 
 charter contained a clause exempting the ship-owner 
 from liability for negligence of the master. The cattle 
 were lost by negligence of the master. The char- 
 terer claimed against the ship-owners, who replied : — 
 " We are exempted by the terms of the charter, which 
 exclude liability for negligence of the master." " But 
 that provision," answered the charterer, " is illegal by 
 United States law ; it is null and void. This contract 
 (s) 42 Ch. D. 321. 
 
94 CONSTBUGTION OF 
 
 was made in the United States with a citizen of the 
 United States, the voyage to start from the United 
 States ; the provision is void, and if the provision is 
 void you have no defence." Reply by the ship-owner : 
 " We are English, the contract was to be performed 
 in England, and the ship was an English ship." Mr. 
 Justice Ohitty held that the ship-owner's contention 
 was right, that, the ship being an English ship, the 
 law of the flag was to govern, and therefore the pro- 
 vision was a valid one. The Court of Appeal decided 
 the case in the same way, but on the ground that in 
 the absence of expressed evidence of intention, the 
 law of the place where a contract was to be performed 
 was to be followed. This is not a decisive authority 
 against the law of the ship's flag, because the law of 
 the ship's flag and the law of the place where the 
 contract was to be performed were in this case the 
 same, and the Court of Appeal does not expressly 
 overrule or indeed refer to Mr. Justice Chitty's 
 decision in favour of the law of the flag; that 
 decision, however, prevents one from stating the law 
 of the ship's flag as the law of construction with 
 such certainty as was previously the case. 
 
 A farther rule of construction, which is a very 
 general one, i^ that charters and bills of lading are 
 to be construed by the intention of the parties as 
 evidenced in the nature of the adventure they have 
 
CEABTEB-PAETrEB AND BILLS OF LADING. 95 
 
 entered into ; (f) that is to say the Courts are to try 
 and construe the contract from the nature of the 
 contract entered into. Thus a ship was chartered 
 to proceed to a port in a river and there load, the 
 master guaranteeing to carry 3,000 tons dead weight 
 of cargo on a draught of 26 feet of water; that is 
 to say that the ship with 3,000 tons dead weight 
 of cargo on board would draw 26 feet of water 
 and no more. The ship could carry 3,000 tons on 
 a draught of 26 feet in salt water, but could not 
 carry 3,000 tons on a draught of 26 feet in fresh 
 water, the consequence being she could not get up the 
 river, which was fresh water. Action for breach of 
 warranty. Answer : " I complied with the guarantee ; 
 the ship did carry 3,000 tons in salt water." Held 
 by the Court that it was clear both parties contem- 
 plated loading in the river and therefore having a 
 full cargo on board in the river, and that the 
 guarantee must be applied to both fresh and salt 
 water to carry out the intention of the parties, as 
 appeared from the nature of the adventure they had 
 entered into, {u) 
 
 This principle governs also the introduction of 
 customs to construe charter-parties, {v) For instance, 
 if a man contracts to load at a particular port and 
 
 (t) Charters, § 6. («) The Norway,3Moove,F.G.'N..a.24>5. 
 (v) Charters, § 8. 
 
96 GONSTBUCTION OF 
 
 says nothing about the manner of loading, it will be 
 presumed that the parties intended to carry out the 
 loading in the manner customary at that port, and 
 therefore evidence of the custom of the port of load- 
 ing will be admissible to construe the charter^ even 
 though it is not proved that the party affected knew 
 of the custom, indeed though he proved that he was 
 ignorant of it ; the answer being, if he sent the ship 
 to load at a particular port and did not say how 
 she was to be loaded, he must be taken to have 
 meant that she should be loaded in the way customary 
 there, and if he did not know what that was he 
 should have inquired before he sent her ; and in 
 that way evidence of custom which does not contradict 
 the charter is continually admitted. These are the 
 main rules that one applies to construe these docu- 
 ments. 
 
 The next question that arises is, how are you 
 to construe the charter-party and bill of lading in 
 relation to each other, supposing that they contra- 
 dict each other? For you may have to gather the 
 " contract of affreightment " from the two documents, 
 or a man may present himself claiming on a bill of 
 lading and may be answered: — ''But the charter- 
 party says otherwise," 
 
 When a client comes to you in these cases, it is 
 usually in connection with one of three matters : 
 
CHARTER-PARTIES AND BILLS OF LADING. 97 
 
 there is either a claim for freight, or a claim for 
 demurrage, or a claim for damage done to the goods 
 carried. In each of these cases it becomes important 
 to see what the contract is under which the goods 
 were carried, and who is the person who is to be 
 sued ; and each of these questions will depend upon> 
 the relation of the charter-party to the bill of lading. 
 What is the relation of the two documents ? (w) In 
 the first place there is the case where the charterer 
 receives a bill of lading for the goods that he himself 
 has shipped, and where he retains it in his own 
 hands. In that case the bill of lading is treated as 
 no more than a receipt for the goods, {x) a statement 
 of the goods actually shipped, which could not be 
 put into the charter-party because the charter-party 
 is signed before the shipment of the goods com- 
 mences. Therefore, as between the charterer and 
 the ship-owner you will always look for the contract 
 to the charter-party, a;nd not to the bill of lading, 
 though the bill of lading may contradict the terms 
 of the charter. Then there is the case where the 
 charterer having shipped his goods, and having 
 received a bill of lading for them from the ship- 
 owner, indorses that bill of lading for value to a 
 
 (w) Charters, § 18. 
 
 («) Boduaanachi v. Milburn, 18 Q. B. D. 67 ; Ledue v. Ward, 
 20 Q. B. D. 47. 
 
98 CONSTEUGTION OF 
 
 third person; and then the question in -which of 
 the documents the contract is to he found will 
 depend upon the terms of the bill of lading itself ; 
 for the bill of lading, although merely a receipt in 
 the hands of the charterer, is evidence of the contract 
 of affreightment . in the hands of an indorsee for 
 value ; and the indorsee "will not be affected by 
 the terms of the charter-party except in one of 
 two cases. First, if there are words in the bill of 
 lading incorporating the terms of the charter-party; 
 in that case the bill of lading being looked at for 
 evidence of the contract shows that some or all of 
 the terms of the charter-party are incorporated in 
 the contract. That is the more usual case in which 
 an indorsee for value of the bill of lading will be 
 affected by the terms of the charter-party. 
 
 The second case, which is more, unusual, is where 
 the bill of lading is one which the master could not 
 give beoaiuse he is precluded from doing so by the 
 terms of the charter-party. It is an unusual case, but 
 it sometimes happens. The master signs a bill of 
 lading which he is expressly forbidden to sign by the 
 terms of the charter-party, and in that case whether 
 the bill of lading in the hands of an indorsee is a 
 contract binding the ship-owner or not depends upon 
 whether the indorsee for value kaows the terms of 
 the charter-party. If he knows the terms of the 
 
CHABTEE-PARTIE8 AND BILLS OF LADING. 99 
 
 charter-party lie cannot say tliat a document wliich 
 contradicts them — a bill of lading which by the terms 
 of the charter-party the master has no authority to 
 sign — is a contract. If he does not know anything of 
 the charter-party which forbids the ' master to sign 
 such a bill of lading, the bill of lading, if within the 
 master's ordinary authority, will be the contract. So 
 that in the case of bills of lading given to a charterer, 
 they are only a receipt so long as they remain in the 
 charterer's hands; they are evidence of a contract 
 when they come into the hands of an indorsee for 
 value. 
 
 A further case occurs where the charterer does not 
 ship the goods himself, but where, having chartered 
 the ship, he in turn sublets it to a number of shippers, 
 who each put on board their goods and receive a bill 
 of lading for them, signed by the master, or frequently, 
 as in the case of steamships in London nowadays, by 
 the broker. In that case two questions arise. In 
 the first place, whom did the shipper contract with ? 
 and in the second place, what are the terms of his 
 contract? The question what are the terms of his 
 contract will again depend upon whether the bill of 
 lading incorporates in express terms the terms of the 
 charter-party, {y) If it does not he will not be bound 
 by the charter-party though he knows of its existence; 
 
 (2/) Charters, Art. 19, and fo&t, p. 101. 
 
 H 2 
 
100 OONSTBUOTION OF 
 
 while if tlie bill of lading does incorporate tbe terms 
 of the charter-party he will be bound by those terms. 
 The question with whom the shipper has contracted 
 depends upon whether he knows of the charter-party or 
 not. (z) If he does not know of the existence of the 
 charter-party he is taken to have contracted with the 
 ship-owner, and can sue the ship-owner though the 
 ship may be under charter. The authority for that 
 you will find in the leading case of Sandeman v. 
 Scurr, {a) There a ship was chartered to load from 
 the charterer's agent, the master to sign bills of lading 
 for the goods as presented by the charterer. The 
 goods were shipped by people who knew nothing 
 about the charter-party, but who received bills of 
 lading for their goods signed by the master. It was 
 held that they could sue the ship-owner for damage 
 to the goods, inasmuch as they knew nothing of the 
 charter-party, and must therefore be taken to have 
 contracted with the ship-owner, the master signing as 
 the ship-owner's agent. If, on the other hand, the 
 shipper o£ goods knows of the existence of the 
 charter-party, he is taken to have contracted with the 
 charterer, and can sue the charterer, and not the 
 ship-owner, upon the contract evidenced in the bill of 
 lading. I£ the bill of lading so given comes into the 
 hands of an indorsee for value his position is the 
 {z) Charters, Art. 18. (a) L. E. 2 Q. B. 86. 
 
-( 2-y 
 
 OHAUTER-PARTIEa AND BILLS OF La\]N(J. t61 
 
 same; he is not bound by the terms of the charte-p-' 
 party unless they are incorporated in the bill of 
 lading. 
 
 If you will look at the bill of lading I gave you 
 last time (6) you will find very wide words expressly 
 incorporating the charter-party. The goods are to be 
 delivered unto A. or to his or their assigns ; " he or 
 they paying freight and demurrage, if any, for the 
 said goods, and all conditions and exceptions of the 
 charter-party are incorporated herewith." Those words 
 are about the widest that are ever used in a bill of 
 lading. A very usual clause, one which has given 
 rise to a great deal of litigation and which has lately 
 been again under the consideration of the Court of 
 Appeal, is a clause which omits the words "and 
 exceptions," and which reads " all conditions as per 
 charter-party." (c) The Court of Appeal, in a series of 
 cases on this clause, have decided that it incorporates 
 into the bill of lading all conditions in the charter-party 
 applicable to and consistent with the character of 
 the bill of lading, but not inapplicable or insensible 
 conditions, (conditions which would make nonsense 
 of the bill of lading), or clauses which would contra- 
 dict the express stipulations of the bill of lading, (d) 
 The further question which came before the Court ' 
 
 (&) See Appendix. (c) Chatters, Art. 19. 
 
 ((£) Porteus v. Watney, L. E. 3 Q. B. D. 534 
 
102 GHARTEU-PABTIES AND 
 
 of Appeal was whether those words " all conditions 
 as per charter-party " also incorporated the excep- 
 tions — the excepted perils in the charter-party, or 
 whether they only referred to things to be done, 
 conditions to be performed, by the consignee, (e) Mr. 
 Baron Huddleston had decided that the words "all 
 conditions as per charter-party" did not incorporate 
 the excepted perils in the charter-party ; the Court 
 of Appeal have upheld .his decision, and their previous 
 dicta must be read in the light of this decision. 
 
 Having ascertained what the contract appears to 
 be on the face of the bill of lading, a further question 
 may arise, as to whether the master had authority 
 to bind the ship-owner by such a bill of lading ; for 
 in some cases though the master has signed the bill 
 of lading, the ship-owner may not be bound by it, 
 as being beyond the authority of the master. (/) The 
 case which most often occurs in practice, in which 
 a ship-owner is held not bound by a bill of lading 
 signed by a master, is where the master has signed 
 a bill of lading for goods which were not shipped, (gr) 
 Suppose, for example, that the master has signed a 
 bill of lading for 100 tons of iron, and it turns 
 out that only 80 tons were ever shipped, the ship- 
 owner is not bound by the signature of the master 
 
 (e) Serraino v. Gam/phell (1891), 1 Q. B. 283. 
 if) Charters, Art. 30. (g) Grant v. Norway, 10 0. B. 665. 
 
-BILLS OF LADINQ. 1.03 
 
 for the surplus 20 tonSj because it has been held 
 by the Courts that a master has no authority to 
 make a contract or to profess to make a contract 
 for the carriage of goods which were never in fact 
 carried, {h) Mistakes constantly occur in tallying 
 goods into ships, and consequently the amount appear- 
 ing in the bill of lading may differ from the amount 
 actually delivered. The only protection that the 
 shipper, or an indorsee from the shipper, has in 
 such cases is that it lies upon the ship-owner to prove 
 that he has delivered all the goods that were shipped; 
 but when he has proved that, though the unfortunate 
 indorsee may have advanced money on the representa- 
 tion' of the bill of lading that such an amount of 
 goods were shipped, he has no remedy against the 
 ship-owner who says ; — " My master has no authority 
 to sign bills of lading for goods not shipped." The 
 only remedy of a shipper in that case is .the 
 remedy given by the Bills of Lading Act, {i) which 
 makes such a bill of lading conclusive evidence against 
 the person actually signing it; and therefore the 
 indorsee for value, or the shipper, has his. remedy 
 against the master who signs the bill of lading, who 
 is not allowed to say : " True, I signed for a hundred 
 tons, but as a matter of fact only eighty were shipped." 
 
 (fe) Grant v. Norway,, 10 C. B. 665. 
 
 {i) Charters, Art. 21 ; 18. & 19 Vic. c. Ill, § 3. 
 
104 CEABTEB-FABTIES AND 
 
 Bat inasmuch as tlie master is not generally a man 
 of yast wealth, this remedy is better on paper than 
 it is when put into practice. When, however, the 
 bill of lading varies from the express instructions 
 of the master, but is within the master's ordinary 
 authority, the ship-owner will be bound by it if he 
 adopts it at all. (j) If he recognises the contract 
 of carriage at all, he must adopt all its terms, provided 
 that it was within the ordinary authority of a master, 
 and that the shipper did not know of any express 
 instructions to the contrary given to the master by 
 charter-party or otherwise. The ship-owner may how- 
 ever bind himself, and at the present day 'he often 
 does bind himself, to accept the quantity stated in 
 the biU of lading, {k) For an instance of a case 
 where the ship-owner has succeeded in escaping from 
 ^ bill of lading on the ground that it was not within 
 the ordinary authority of the master to make the 
 statements appearing therein, you may refer to the 
 recent case of Cox v. Bruce, (l) There the master 
 was alleged to have certified the mercantile quality 
 of the goods shipped — to state that certain bales of 
 jute were of a particular quality; and it was held 
 that the authority of the master did not extend to 
 
 0') Oharterp, Art. 20, § 11. 
 
 (k) Lishmann v. Christie, 19 Q. B. D. 333. 
 
 {I) 18 Q. B. D. 147. 
 
BILLS OF LADING. 105 
 
 certifying the quality of goods shipped, and that 
 therefore the ship-owner could not be bound by any 
 representations he had made as to their quality. 
 
 So much for the relation of these two documents 
 as they stand. Before, however, we come to the 
 actual performance of the contract one very important 
 question of construction remains, namely, which of 
 the terms of the contract of affreightment are con- 
 ditions precedent? This question is a diflBcult one, 
 and it is rendered more obscure by the use of the 
 term "warranty," about which it is safe to say that 
 no two judges use it in the same sense in two 
 judgments together ; and therefore I do not propose 
 at first to use it at all. (m) Of the terms of a contract, 
 some are of such vital importance to the contract 
 that if they are untrue the contract may be treated 
 as at an end; such terms may be called conditions 
 precedent, (w) Some of these are express ; they 
 actually appear on the face of the charter-party 
 or the bill of lading. Some of them are implietJ, 
 or form part of every contract of affreightment, 
 unless there are express words in the contract ex- 
 cluding them. Whether any particular term of the 
 contract is a condition precedent the untruth of which 
 entitles the other party to repudiate the contract, or 
 
 (m) Vide post, pp. 185, 199. 
 
 (n) Charters, Art. 23 ; Behn v. Burness, 3 B. & S. 751. 
 
106 CONDITIONS TBEOEBENT IN 
 
 whether it is a mere term of the contract the breach 
 of which gives rise to an action for damages only, is a 
 matter to be settled by the judge; but he may obtain 
 information from the jury as to the facts surrounding 
 the particular contract from which he can infer 
 whether it waS a condition precedent or not. The 
 whole law as to the principles of conditions precedent 
 and other terms of the contract is Jlaid down in the 
 leading case (not only on this branch of the law but 
 on all branches of the law of contract) of Behn y. 
 Burness. (o) If you will look at the charter-party 
 which was given you,(p) you will find a blank left in 
 the first two or three lines : " The good screw steamer 
 called . . . now at . . . '' and in the case of Behn 
 V. Burness (o) that blank was filled up " in the Port 
 of Amsterdam," and the ship was chartered "with 
 all possible despatch to proceed to Newport and there 
 load." The charter-party was dated October 19th ; 
 which amounted therefore to a statement that on 
 October 19 th the ship was " in the port of Amsterdam." 
 Pour days before, on October 16th, the ship was, as a 
 fact, at a place called Neuw Dieppe, within sixty miles 
 of Amsterdam, and she could, if the wind had been 
 favourable, have reached Amsterdam in twelve hours ; 
 but the wind being adverse, she did not arrive till the 
 23rd, four days after the charter-party was dated. She 
 (d) 3 Best & Smith, 751. (p) Appendix. 
 
CHABTEB-PABTIES AND BILLS OF LADING. 107 
 
 was not therefore in the port of Amsterdam on the 19th, 
 and the charterers declined to load. They said : " The 
 truth of the statement ' now in the port of Amster- 
 dam ' was vital to the contract ; it was untrue, and we 
 have a right to repudiate the contract." The ship- 
 owner replied : " Any damage you have suffered is 
 amply compensated by a claim for damages." It 
 was held, that the statement as to the ship's position 
 at the time of making the contract, being of vital 
 importance to the charterer in order that he might 
 know when he would be able to load, was a condition 
 precedent, and that its untruth entitled the charterer 
 to throw up the contract. In the judgment in that 
 case you will find, laid down at great length, the 
 general prin-ciples on which documents such as these 
 will be construed with regard to conditions precedent. 
 The particular case, of course, establishes that state- 
 ments in the charter-party as to the position of the 
 ship are in practice almost always conditions prece- 
 dent which must be literally true. If you look at the 
 close of the charter-party given to you, {q) you will see 
 - that the parties here have gone further than that ; 
 they have expressly stated what would otherwise be 
 the law without their statement : " If any misrepre- 
 sentation be made respecting the size, position, or 
 state of the steamer, or should the steamer not have 
 (g) Appendix. 
 
108 IMPLIED WARRANTIES IN 
 
 arrived at the particular port and be ready to load at 
 or before noon on (a certain day), the freighters are 
 to have the option of cancelling the charter." The 
 latter part of the clause is known as a "cancelling 
 clausCj" giving the option of cancelling on the non- 
 arrival of the ship by a particular day ; and it gives 
 definiteness to the covenant of reasonable diligence 
 otherwise implied. There are a series of decisionSj (r) 
 with which I do not propose to trouble you, as to par- 
 ticular statements which have been held to be con- 
 ditions precedent, such as the ship's class on the 
 register, the ship's name and her national character 
 under certain circumstances, the whereabouts of the 
 ship, and her time of sailing. Those statements may 
 also exist as conditions precedent, in the bill of lading, 
 although it rarely happens that disputes arise as to 
 conditions precedent on a bill of lading, (s) 
 
 Those are express conditions precedent. But 
 there are other terms of the contract which, unless 
 expressly excluded, are implied in every charter ; 
 implied conditions precedent, more usually known, to 
 use the objectionable word, as implied "warranties.'.' 
 Those implied warranties are, as far as the ship- 
 owner is concerned, three, {t) He impliedly under- 
 takes, firstly, that the ship is seaworthy; secondly, 
 
 (r) Charters, Arts. 24-27. (s) See Charters, p. 56. 
 (0 Charters, Art. 28. 
 
GEABTER-PABTIE8 AND BILLS OF LADING. 109 
 
 that he ■will commence and carry out the voyage 
 with reasonable diligence; and thirdly, that he will 
 carry out the yoyage without unnecessary deviation 
 from the ordinary course. If any of these implied 
 contracts is broken, the other party has the option 
 of throwing up the charter-party — that is. if the 
 ship is not seaworthy, if it does not proceed on the 
 voyage with reasonable diligence, or if it deviates 
 from the course of the voyage, unless there are any 
 express words in the charter-party or bill of lading 
 which modify the warranties otherwise implied. 
 
 Taking the implied warranties in order, the sea- 
 worthiness required varies with each particular ad- 
 venture, (u) The ship is to be fit for the particular 
 adventure undertaken. Seaworthiness for a summer 
 voyage is less than seaworthiness for a winter voyage ; 
 and seaworthiness for a river is less than seaworthi- 
 ness for the sea. The ordinary time at which the 
 warranty of seaworthiness is to be complied with is 
 when the ship starts on her voyage. She must be 
 fit to take in her cargo ; and she must be seaworthy 
 at the time she sails on her voyage with her cargo 
 on board. Also the warranty of seaworthiness is 
 absolute. It is not that the ship-owner has used 
 reasonable diligence ; it is a warranty that the ship is 
 absolutely fit for sea, even though the owner could 
 (u) Charters, Art. 29. 
 
110 SEAWOBTHINESS. 
 
 not by reasonable diligence find out the defect com- 
 plained of. {v) There is one variety of the warranty 
 of seaworthiness which is of considerable importance 
 in practice sometimes, and in regard to the cargo 
 to be carried; besides warranting that the ship 
 shall be fit to encounter the perils of the voyage 
 she is undertaking, the warranty is further that she 
 shall be fit to carry the cargo she has contracted 
 to carry. Besides being seaworthy she must be 
 cargo-worthy, if one may coin the phrase. There 
 are two cases which turn upon that. One is the 
 case of Tatter sail v. The National Steamship Co. (w). 
 In that case the ship was chartered to carry cattle. 
 She was perfectly seaworthy for the voyage, but she 
 had on a previous voyage carried cattle which had 
 the foot and mouth disease, and she had not been 
 properly disinfected. There was a clause in the 
 bill of lading which would have exempted the ship- 
 owner from liability for cattle dying from disease, 
 but it was held that this exception did not apply 
 because the ship was not seaworthy at the time 
 of starting ; she was not fit to carry the cargo of 
 cattle that she had contracted to carry, in that she 
 had not been properly disinfected. The other case, 
 
 (v) Steel V. State Line, L. E. 3 App. 0. 86 ; The Glenfruin, 
 L. K. 10 P. D. 103. 
 (w) 12 Q. B. D. 297. 
 
CHABTEB-PABTIES AND BILLS OF LADING. Ill 
 
 rather an extreme case as showing the extent of 
 the warranty, is Stanton v. Richardson. («) There 
 a ship was chartered to carry a cargo of wet sugar, 
 which is a very difficult cargo to carry, because 
 it leaks to an unusual extent. She was perfectly 
 fit to encounter the voyage, and fit for every cargo 
 but wet sugar; but the pumps were not of sufficient 
 capacity to drain off the leakage of the wet sugar. 
 It was held that she was not seaworthy because, 
 it being clear on the charter-party that she was 
 to carry wet sugar, there was an implied warranty 
 that she was fit to, carry that particular cargo. 
 That is the first of the implied warranties. 
 
 If you will refer to the bill 'of lading {y) you will 
 find that, as is often the case now, the warranty of 
 seaworthiness has been slightly altered by its terms. 
 You will see at the end these words : " All the above 
 exceptions are conditional on the vessel being sea- 
 worthy when she sails on the voyage" (that was 
 the law before, so that there was no need to put 
 it in) ; " but any latent defects to hull and machinery 
 shall not be considered unseaworthiness, provided the 
 same do not result from the want of due diligence 
 on the part of the owner or manager." That, you 
 will see, converts the undertaking from an absolute 
 undertaking of seaworthiness, whether the defects 
 (») 45 L. J. H. L. 78. {y) Appendix. 
 
112 REASONABLE DE8PAT0E. 
 
 could be discovered by due diligence or not, into a 
 warranty merely tbat tbe owner has used due dili- 
 gence; and it therefore lessens the extent of the 
 warranty. A similar clause is now common in bills 
 of lading, especially at Liverpool. 
 
 The second implied warranty is the undertaking 
 of the ship -owner that he will start on and carry 
 out his voyage with reasonable despatch, (z) The 
 time within which a commercial adventure or under- 
 taking can be reasonably carried out was considered 
 in the leading case of Jackson v. The Union Marine 
 Insurance Oo. (a) There a vessel was chartered in 
 November to proceed with all possible despatch from 
 Liverpool to Newport, and there load iron for San 
 Francisco. She started from Liverpool for Newport 
 on January 2nd, but stranded on the Welsh coast 
 on January 3rd, and sustained such damage that 
 she was not ready to proceed on her voyage until 
 August in that year. Meanwhile, in the middle of 
 February, the charterers had thrown up the charter. 
 They said, in effect: — "We claim to repudiate; the 
 delay is longer than in a commercial sense we are 
 justified in waiting." The jury found that the delay 
 was such as to put an end to the commercial specula- 
 tion entered into in the charter ; and it was held that 
 the charterer was justified, on that finding, in throw- 
 
 (z) Charters, Art. 30. (a) L. R. 10 0. P. 125. 
 
CHABTEE-PARTIJES AND BILLS OF LADING. 113 
 
 ing lip the charter-party. Therefore the question in 
 each case is whether the delay is such as to put an 
 end to the commercial speculation. If it is not, there 
 is only an action for damages, unless the delay is 
 caused by excepted perils ; if it is, the charterer 
 can throw up the charter. 
 
 The third warranty of deviation one can deal with 
 best in dealing with the course of the voyage, (b) 
 
 There is a further implied undertaking by the 
 cargo-owner, that he will not ship dangerous goods 
 without notice of their character. Goods which the 
 ship-owner could not reasonably know were dan- 
 gerous are not to be shipped by the cargo-owner 
 without notice to the ship-owner, (c) 
 
 We have now considered what is the contract, 
 how it is to be collected from the two documents which 
 evidence it, and how those documents are to be con- 
 strued, and we can come to the performance of the 
 contract. If you will look at the charter-party {d) it 
 runs thus : " It is agreed between . . . owners and 
 
 . charterers, of the good steamer called " (such and 
 such a name, probably a condition precedent), " of the 
 burden of" (so many tons, which may be a condibion 
 precedent), " now at " (so and so, a condition precedent) 
 " guaranteed by the owners to be tight, staunch, and 
 
 (h) Charters, Arts. 99, 100, et post, p. 131. 
 (c) Ibid., Art. 31. (.d) Appendix 
 
114 LOADING. 
 
 strong " (that is an antique form of expressing a war- 
 ranty of seaworthiness), " in every way fitted for the 
 voyage, shall forthwith proceed to . . . and there load 
 in a customary manner." That is the first thing to be 
 done: to proceed to the port of loading and there 
 load according to the stipulations of the charter- 
 party; and, in consequence of the warranty, to pro- 
 ceed with reasonable diligence ; (e) it is necessary 
 that, that should be carried out within such a time 
 as not to frustrate the commercial adventure entered 
 into. In all contracts the ship must proceed to the 
 port of loading within a reasonable time. More 
 frequently the implied warranty is made express by 
 the statement, such as you find in the form given 
 to you, that unless the ship is ready to load on or 
 before a particular day the charterers are to have the 
 option of cancelling the charter-party. That converts 
 the implied warranty into an express warranty con- 
 tained in the " Cancelling Clause." The effect of it is 
 that if the words were " ready to load on oj* before 
 noon of July 1st," and if the ship was not ready 
 to load till one hour after noon on that day, the 
 charterer would be justified in throwing up the 
 charter; and as dropping freights sometimes render 
 it convenient for a charterer to throw up his charter, 
 the Cancelling Clause is frequently used, 
 (e) Ante, p. 112. 
 
CEABTEB-PABTIE8 AND BILLS OF LADING. 115 
 
 " To proceed to the port of loading and there load." 
 The question wliicli constantly arises is, when has the 
 ship got to that place in the port of loading where 
 she is entitled to say : — " I have fulfilled that obli- 
 gation " ? for a ship is nearly always allowed a certain 
 number of lay-days, or a certain amount of time in 
 which to load ; and after that time has elapsed she 
 may claim damages from the charterer for detaining 
 her longer than is stipulated in the charter. Those 
 damages are known as demurrage. But in order to 
 ascertain whether the lay-days have expired, and the 
 time for paying demurrage has arrived, it is necessary 
 to know when the time allowed for loading began. 
 The time for loading begins when three conditions 
 are performed : (/) firstly, when the vessel is at the 
 place where her .carrying voyage is to begin, that is, 
 where she is to receive her cargo ; (g) secondly, when 
 she is ready to load (for instance, if she has brought 
 another cargo into port and has to discharge it, she 
 must have discharged it completely) j {h) and thirdly, 
 when she hias given the charterer notice that she is 
 ready to load, {i) When those three conditions are 
 performed the lay-days begin. 
 
 The charter-party frequently runs, " to proceed to " 
 a certain port, " or so near as she can safely get." {j) 
 
 (J) Charters, Art. 38. {g) Article 39. {h) Article 40. 
 {%) Article 41. 0') Article 36. 
 
 I 2 
 
116 LOADING. 
 
 That clause has givea rise to a good deal of litigation, 
 and it is a very important clause in a charter. It 
 may happen that through low tides, or through ice, 
 or through an embargo, or through the crowded state 
 of the docks, or other circumstances, the ship would 
 have to wait some time before she could get to the 
 place where she ought to load, and the clause " or so 
 near as she can safely get " is inserted to protect her 
 to some extent against that delay. The clause has 
 been considered by the House of Lords in the leading 
 case of Dahl v. Nelson, (k) There a ship was chartered 
 to proceed to the Surrey Commercial Docks " or so 
 near as she can safely get." She got to the dock 
 gates on August 4th, but the docks were so full that 
 she must have waited five weeks to enter; and she 
 claimed therefore under the clause to discharge her 
 cargo outside the docks into lighters. The House of 
 Lords held that the ship-owner was bound to wait a 
 reasonable time to see whether he could overcome 
 whatever obstacles were in the way of his reaching 
 the place of loading. If it was low tide he was bound 
 to wait a reasonable time for spring tides. If he was 
 chartered to go to a port likely to be ice-bound, it 
 must be taken that the parties intended that he 
 should wait till the ice broke up. In the case of 
 going into crowded docks, the question in each case 
 (k) L. R. 6 App. 0. 36. 
 
CHABTEB-PABTIES AND BILLS OF LADING. 117 
 
 must be considered whether the time the ship would 
 have to wait before entering was a reasonable one for 
 the purposes of the adventute, and the House of Lords 
 held that the delay of five weeks in this case was 
 unreasonable, and that therefore the ship-owner was 
 entitled under the clause " so near as she can safely 
 get " to require the charterer to take delivery of the 
 cargo (or in other cases to load) outside the dock. The 
 clause is one constantly inserted to protect the ship- 
 owner; and it does protect him to that limited extent, 
 though not against such cases as waiting for tides or 
 waiting for ice to break up. 
 
 Having arrived at the port of loading, it becomes 
 of importance, as I said, to ascertain when the lay- 
 days begin for the purposes of demurrage. Demur- 
 rage, in the strict legal sense, is an agreed sum to be 
 paid if the ship takes more than an agreed time to 
 load or discharge. {I) For instance, a ship may be 
 chartered to load in ten days, or to pay demurrage 
 at the rate of £10 a day. There you have all the 
 elements of demurrage fixed in the charter-party : 
 "ten days to load," a fixed number of lay-days, and 
 "£10 a day if the ship is more than ten days in 
 loading "; a fixed amount for demurrage after the 
 lay-days have expired. It may be that the amount 
 is not fixed. The charter might run simply, "Ten 
 (Z) Charters, Art. 128. 
 
118 DEMUBBAOE. 
 
 days to load," saying nothing about the amount to be 
 paid afterwards; in which case, though in the com- 
 mercial sense " demurrage " would be payable, in the 
 strict legal sense the ship-owner would only be entitled 
 to recover ''damages for detention." In the strict 
 legal sense of the term, " demurrage " is confined to 
 cases where the amount is fixed or liquidated in the 
 charter-party. Where it is not fixed, but you are left 
 to recover such damages as a jury will give,' un- 
 liquidated damages must be claimed as " damages for 
 detention." 
 
 The place where the carrying voyage is to begin 
 depends on the terms of the particular charter- 
 party, (m) If it runs, as in this case, {n) "shall 
 proceed to the port of X. and there load," the 
 charterer's duty is completed when he has got to 
 the usual place of loading in the port, (o) If it 
 says, "shall proceed to a dock and there load," 
 the ship must get into the dock, (p) unless she is 
 protected by the clause "or so near as she can 
 safely get," when she would only be required to 
 wait a reasonable time for that purpose. Her lay- 
 days will not begin until she has entered the dock, 
 though she may be outside. If the ship is to proceed 
 
 (m) Charters, Art. 39. (n) Appendix. 
 
 (o) Charters, p. 87. 
 
 (23) Ta/psaott v. Balfour, L. E. 8 C. P. 46. 
 
CHABTEB-PABTIE8 AND BILLS OF LADING. 119 
 
 to a particular place in tlie dock, or a particular 
 quay or wharf, the ship-owner must get to that 
 particular place, or that particular qpay or wharf, {q) 
 When the ship is at the place where the carrying 
 voyage is to begin and ready to load, the charterers 
 must furnish a cargo for her, (r) unless the operation 
 of exceptions in the charter-party excuses them 
 from delivering the cargo; but unless the charter- 
 party expressly so states, the charterer will not be 
 excused by matters which prevent him bringing a 
 cargo to the ship, but only from matters which 
 prevent him from loading a cargo which is already 
 at the place of loading. That' in practice is a very 
 important point, because it used constantly to happen 
 — although now the difficulty is less frequent in 
 consequence of the express words which are being 
 inserted — that strikes at collieries, or sometimes ice 
 in canals, prevented the charterer from bringing 
 a cargo down to the ship; and he endeavoured to 
 rely in several cases on exceptions in the charter- 
 party, such as "strikes"; but the House of Lords 
 decided in the leading case of Goverdale v. Grant, (s) 
 that unless it was expressly made clear in the 
 charter-party, such exceptions did not apply to causes 
 
 (q) Tapsaott r. Balfowr, L. E. 8 0. P. 46 ; Murphy v. Coffin, 
 X2 Q. B. D. 87 ; but see The Ga/risiroohe, 15 P. D. 98. 
 (r) Charters, Art. 42. (s) L. E. 9 App. 0. 470. 
 
120 BEMURBAGE. 
 
 preventing the charterer from bringing a cargo down 
 to the ship. In that particular case the exception was 
 held not to apply to ice in canals which prevented the 
 charterer from bringing a cargo into Cardiff Docks. 
 
 It being the duty of the ship-owner to get to the 
 place fixed for loading, and the duty of the charterer 
 to supply a cargo there, the question . then arises, 
 within what time the ship must be loaded. There are 
 three ordinary forms of charter-party as to loading 
 and discharging which are continually being con- 
 strued in cases as to demurrage. The first and a very 
 common form, is to load or unload in a fixed number 
 of days — to load in ten days, for instance ; {t) that is 
 an absolute undertaking by the charterer to load the 
 ship in that time, unless he is prevented by the actual 
 default of the ship-owner, or is protected by the ex- 
 press exceptions in the charter-party, {u) A. recent case 
 has emphasized that proposition again, (v) in which 
 a ship going to Bristol to discharge in ten days was 
 prevented from discharging by a strike of the labourers 
 in the port, which prevented the ship-owner from get- 
 ting men to do his part of the discharging, and the 
 charterer from doing his part. There was an action 
 by the shipowner for demurrage. Defence : " You 
 were not ready and willing to do your part of the 
 
 (0 Charters, Art. 131. (m) Of. Thiis v. Byers, 1 Q. B. D. 244. 
 {v) Budgett v. Birmington (1891), 1 Q. B. 33. 
 
CBABTEB-PABTIES AND BILLS OF LADING. 121 
 
 work." Answer : " You have absolutely contracted 
 that the ship shall be discharged in ten days ; my not 
 being ready did not prevent you, because you could 
 not have done anything if I had been ready." This 
 was held by the Court a good answer, and charterers 
 were made liable to pay demurrage because they had 
 absolutely contracted to discharge the ship in ten 
 days. In this charter (w) the words would have pro- 
 tected the charterer : " Demurrage, 16s. 8d. per hour, 
 except in case of riot or commotion by pitmen, lock- 
 out, strike, or stoppage at any collieries with or upon 
 which the freighters may have arranged for shipment 
 • of the cargo or a portion thereof." Those words are 
 framed on decided cases, and are wide enough to 
 protect the charterer in such a case. 
 
 A second form of demurrage stipulation is "to 
 load or unload in a reasonable time " ; no express 
 time is fixed, but no time at all is named in the 
 charter-party. In that case the law implies a cove- 
 nant to load or discharge in a reasonable time, and 
 the circumstances then existing are taken into ac- 
 count, (aj) The fact that neither party could have got 
 workmen through a strike would probably be con- 
 sidered in estimating what is reasonable. 
 
 (w) Appendix. 
 
 (x) Charters, Art. 132. Ford v. Gotesworth, L. E. 4 Q. B. 
 at p. 137. 
 
122 LIABILITY UNDER 
 
 A third form is a form which you will see in this 
 charter-party, " to load in the customary manner," 
 and there the whole custom or practice of the par- 
 ticular port has to be taken into account in consider- 
 ing whether the customary time at that port has been 
 taken, {y) 
 
 Before the ship starts on its voyage we may con- 
 sider a question important to both parties concerned, 
 na-mely, the liability of the ship-owner or carrier for 
 the goods entrusted to his care. If you look at the 
 charter-party and bill of lading which I handed you(«), 
 you will find that the carrier has introduced a number 
 of stipulations for the purpose of protecting himself.' 
 In the charter-party, after the ship-owner has con- 
 tracted to receive the goods and to deliver them, he 
 inserts a clause : — " The act of God, the Queen's 
 enemies, fires and all dangers and accidents on seas, 
 rivers, errors of or negligent navigation during the 
 said voyage always excepted." And in the bill of 
 lading (a) you will find a long clause of similar nature, 
 beginning with " The act of God " and continuing for 
 several lines. Those clauses are known as the "ex- 
 ceptions" or "excepted perils" in the contract of 
 affreightment. But there are cases where goods are 
 
 {y) Charters, Art. 133 ; of. Postlethwaite v. Freeland, L. B. 
 S App. 0. 608. 
 
 {z) Appendix. (a) Ibid. 
 
CEARTEB-PABTIE8 AND BILLS OF LADING. 123 
 
 carried without a charter-party or bill of lading, as 
 for instance in coasting yessels occasionally, and also 
 in lighters or barges on the river, and in that case the 
 question has arisen : — " What is the liability of the 
 carrier, there being no contract in writing?" 
 
 In the first place, if the person carrying is a 
 common carrier, or is bound to carry goods for any 
 person who brings them to him, his liability is the 
 same as that of common carriers by land, and he is 
 absolutely liable for the safety of the goods committed 
 to his charge, unless he can show that the damage to 
 them results either from what is shortly called " the 
 act of Grod " (which may be translated into more 
 intelligible language as " unavoidable accidents ") or 
 "the Queen's enemies," meaning hostile powers. The 
 leading authority for that you will find in the im- 
 portant case of Nugent v. Smith. (&) There a coasting 
 steamer running from London to Aberdeen received a 
 mare to be carried for a particular shipper, and on the 
 voyage, partly apparently by rough weather, partly 
 by the mare herself getting frightened and kicking, 
 she was injured. The owner of the mare sued the 
 ship-owner, who replied that though he was not carry- 
 ing by land, he had the liability of a common carrier, 
 and that the damage which had happened to the mare 
 was damage partly from the storm, being an " act of 
 (6) L. E. 1 0. P. D. pp. 19, 423. 
 
124 LIABILITY UNDER 
 
 God " whicli lie had no control over, and partly from 
 the vice of the mare herself. Proving those facts, he 
 succeeded in his defence, and was held not to be liable 
 for the injury. 
 
 A more difficult question arises in the case of the 
 numerous vessels and lighters which are not " common 
 carriers " in the strict sense of the word, because they 
 are not bound to carry goods for every person who 
 brings them. For instance, a lighterman in London, 
 who lets out his barges to any person who has goods 
 to take from wharf to ship or from ship to wharf, is 
 not bound to let the barges to anybody who comes to 
 him, and therefore is not a " common carrier " in the 
 strict sense of the word; and the question has arisen : 
 What is the liability, on such a contract of carriage, 
 in the absence of any express printed terms ? The 
 leading case on the point, although I cannot say it 
 leaves the question finally settled, is the case of Liver 
 Alkali Oq. v. Johnson, (c) There the Court held, its 
 members agreeing in the result, though for very 
 different reasons, that, though not a " common carrier," 
 such a carrier by water had the same liability as a 
 "common carrier," and therefore was absolutely liable 
 for injury to goods unless he could show that the 
 damage resulted from unavoidable accidents, the "act 
 of Grod," or from "the Queen's enemies." Injuries 
 (c) L. R. 7 Ex. 267 ; 9 Ex. 338. 
 
GHABTHB-PABTIES AND BILLS OF LADING. 125 
 
 from the action of the Queen's enemies rarely happen. 
 An attempt was made five or six years ago to prove 
 that a fire resulted from a Fenian plot, and was there- 
 fore the act of "the Queen's enemies"; it failed in 
 the outset from the difficulty of proof that the fire 
 was so brought about, but had it been proved, the 
 exception would probably have been held only to 
 apply to recognised foreign states at war with the 
 sovereign, (d) 
 
 The far more numerous class of cases comprise 
 cases where the owner of goods sues for damage done 
 to his goodsj or for their non-delivery, and the ship- 
 owner sets up by way of defence one of the " excepted 
 perils " in the charter-party or bill of lading, and such 
 cases are constantly coming before the Courts. Two 
 recent cases in the House of Lords render it possible 
 to state fairly authoritatively what the proper con- 
 struction of the general provision as to " excepted 
 perils" is. (e) The contract of a ship-owner who has 
 entered into a charter-party or bill of lading is three- 
 fold, or in three stages. la the first place he abso- 
 lutely contracts to deliver; that is to say he is not 
 merely liable to use reasonable ca-re in the carriage of 
 goods, but his liability, to start with, is absolute. 
 This absolute liability exists unless he can show that 
 the damage complained of is caused by one of the 
 {d} Charters, Art. 81. (e) Ibid. Art. 79. 
 
126 EXGJEPTEB PSBILS. 
 
 excepted perils ; and even then he is only exempted 
 provided that he or his servants could not by reason- 
 able care have avoided the operation of that peril. 
 He is an absolute insurer, unless protected by tha 
 " excepted perils," and provided he could not have 
 avoided those perils by due diligence on the part of 
 himself or his servants ; whilst in considering whether 
 damage is caused by an " excepted peril/' the imme- 
 diate and not the remote cause of the damage is 
 to be looked at. That last proposition has beeti 
 shortly summarised in a maxim which is constantly 
 used in the cases : — " causa proxima non remota 3pec- 
 tatur," the proximate and not the remote Cause is 
 looked to. The . best way to illustrate that maxim 
 will be to refer to one of the recent decisions of 
 the House of Lords, which caused great discussion 
 in shipping circles, the case familiarly kno\vn as 
 the " rat case," though the more orthodox -way 
 to cite it in Court is Hamilton v. Pandorf. {f} 
 The particular rat in that case deserves great credit ; 
 he succeeded in raising a very ingenious question. 
 He was on board a ship laden with rice, and being 
 thirsty, he went, as rats do under those circumstances, 
 to the nearest running water he heard, which happened 
 to be in a lead bath pipe communicating with the 
 outside salt water. The rat gnawed through the pipe 
 (/) L. R. 12 App. 0. 518. 
 
OEABTEB-PABTIES ANB BILLS OF LABING. 127 
 
 and must have been horribly disappointed when he 
 got to the salt water. Having reached the salt water 
 he did not stop up the hole after him, but left, and the 
 salt water came through and seriously damaged the 
 cargo. As a result, when the ship arrived, there 
 was delivery of a large quantity of rice damaged by 
 salt water which had entered through this bath pipe. 
 Action by the owner of the rice against the ship for 
 delivery of damaged cargo. Answer by the ship- 
 owner : — " Damaged by perils of the sea," for it had 
 been damaged by salt water, which is a " peril of the 
 sea." Further answer to that by the cargo-owner: "The 
 real cause of the damage was not the salt water but 
 the ratj rats are not 'perils of the sea,' but are 
 peculiar to all elements " ; and the case went up to 
 the House of Lords. The House of Lords expounded 
 the whole nature of the contract as stated above, and 
 saying that the immediate and not the remote cause 
 must be looked to, they argued in effect : " The im- 
 mediate cause of this damage is the salt water ; it 
 seems immaterial to us how the salt water got into 
 the ship, whether through a rat or by any other 
 means, so long as it did not enter the ship through the 
 negligence of the ship-owner and his servants " ; and 
 as there was no finding by the jury of negligence or 
 that due diligence would have kept the rat off the 
 bath pipe, the House of Lords held that the ship- 
 
128 EXGJEFTED PERILS. 
 
 owners were exempted from liability by the exception. 
 They had before them at the same time another case 
 which raised a similar question, which they decided 
 in the same way. {g) There the goods were lost 
 through a collision occasioned by the negligence of 
 another ship, the ship that carried the goods being 
 free from blame. Again an action was brought by 
 the cargo - owner for non - delivery of the goods. 
 Answer by the ship-owner : " They were lost by perils 
 of the sea, the salt water which entered the ship 
 through the hole made in collision." Answer by the 
 goods-owner : " The real cause of the loss was the 
 negligence of the crew of the other ship, and the 
 negligence of men is not a peril peculiar to the sea." 
 Judgment was given by the House of Lords on the 
 same lines as in the "rat case":— "You must look at 
 the immediate cause of the damage, which was the 
 entry of salt water, and the fact that the salt water 
 entered the ship by reason of the negligence of men 
 of another ship is immaterial, so long as the negligence 
 of the ship-owner or his servants had no part in the 
 collision." Those two cases are now the leading cases 
 of the whole question of " excepted perils,^' and to 
 them I refer you for wider discussion of the principle. 
 Into the details of the meaning of each exception 
 I do not propose to go. (A) Every line of steamers 
 {g) The Xantho, 12 App. 0. 503. (h) Charters, Arts. 80-90. 
 
CnABTEB-PARTIES AND BILLS OF LADING. 129 
 
 has its own bill of lading with its own large and 
 varying number of " excepted perils." But I wish to 
 say a word on the- burden of proof in an action for 
 loss or damage to cargo. If the ship arrives and the 
 goods do notj that throws upon the ship-owner the 
 burden of proving how he lost them, (i) To excuse 
 himself from non- delivery of the goods though his 
 ship has arrived, he must show either that they were 
 never shipped, or that they have been lost through 
 one of the "excepted perils." But a more usual 
 case is where the goods arrive, but arrive damaged. 
 His liability then depends on the exact clauses of 
 the bill of lading, (j) If you look at the bill of 
 lading (h) you will see it begins, " Shipped in good 
 order and condition ... to be delivered in the like 
 good order and condition," and it concludes with 
 words in large print, "weight, quantity, and quality 
 unknown," which of course contradict to a con- 
 siderable extent the formal receipt at the beginning 
 for "goods in good condition." The way in which 
 those two clauses have been reconciled is by holding 
 that . the words " shipped in good condition " only 
 apply to the external appearance of the package ; 
 they show that externally there did not appear to be 
 anything the matter with the goods when they were 
 
 (i) Charters, Art. 91. . (j) Ihid. Art. 51. 
 
 (k) Appendix. 
 
130 THE VOYAGE. 
 
 shipped. If tlien the goods are delivered damaged 
 the shipper must support his case by giving prima 
 facie evidence — very slight evidence will do — that 
 the goods were shipped in good condition internally, 
 or that they have been damaged from some external 
 cause, as for instance if they appear dirty and wet 
 on the outside. When the shipper has given such 
 proof, the owner has thrown upon him the burden 
 of bringing the case within one of the exceptions. 
 That is the way in which the burden of proof works 
 with regard to all actions of damage to cargo. 
 
 That being the liability of the ship-owner, we 
 may start on our voyage. The first duty of the 
 master on the voyage is to carry out his contract 
 of carriage without deviation from the ordinary 
 commercial route of the voyage, and without 
 unnecessary delay, those being, as you will remember, 
 two of the implied warranties in every contract of 
 affreightment. (?) 
 
 If the ship deviates without justification from 
 the ordinary commercial route on the voyage, the 
 ship-owner will be liable for any damage to the 
 goods on the voyage, for it is always impossible 
 to prove that the damage would have happened, even 
 if the ship had continued on its ordinary course. 
 The latest case on that point is the case of Le Due v. 
 (I) Charters, §§ 99, 100. 
 
GHABTEB-PABTIES AND BILLS OF LADING. 131 
 
 Ward, (m) There gooda were shipped under a bill of 
 lading, describing the ship as " now lying at Trieste\, 
 and bound for London." The ship went from 
 Trieste to London by way of Glasgow for her owner's 
 private purposes, and was lost while on the way to 
 Glasgow. Glasgow was not on the ordinary commer- 
 cial route from the Adriatic to LondbiL It was held 
 that the ship-owner Was liable for the damage to the 
 goods, though, caused by perils of the sea, tte 
 statement in the bill of lading amounting to an 
 implied warranty that tbe ship should proceed 
 without deviation, by the ordinary commercial route. 
 Deviation from such a route will be allowed, even in 
 the absence of express stipulation in the bill of lading, 
 either to avoid imminent danger, (n) or to save life 
 and to save life only, (o) To save property, which is 
 another word for getting salvage, will not be considered 
 as justifying a deviation. The master wiU also be 
 justified in delaying his voyage, or in deviating 
 from the course of it, if he receives information of 
 some imminent peril awaiting his ship on the ordinary 
 course of the voyage, such as for instance, to take 
 the case which genei^Uy occurs, the case of hostile 
 capture; the whole doctrine has been discussed in 
 
 (to) 20 Q. B. D. 475. 
 
 («) The Teutonia, L. E. 4 P. 0. 171. 
 
 (o) Scaramanga v. Stamp, 5 0. P. D. 295. 
 
 E 2 
 
132 ' TEE VOYAGE. ■ 
 
 the leading case of The Teutonia. (p) That was one 
 of the many cases which occurred at the time of the 
 Franco-German war, when German ships coming home 
 from America to French ports found that war had 
 broken out, or was just on the eve of breaking out. 
 This particular German ship received orders to 
 proceed to Dunkirk, and on arriving off that port was 
 told by a pilot that he thought there was war; sooner 
 than go into the French ports and run the chance 
 of being confiscated, she went to Dover to inquire. 
 The question arose whether she had the right to 
 make that deviation, and it was held by the Court 
 that she was perfectly justified in doing it to avoid 
 imminent danger of capture, although Dover was out 
 of the ordinary voyage to Dunkirk. That then is 
 the first duty of the master, to proceed without 
 unreasonable delay or deviation on the voyage he 
 has contracted to carry out. 
 
 His second duty, as representing the ship-owner, 
 is to take care of the goods that are entrusted to 
 him ; if, therefore, on the voyage the goods sustain 
 damage and the master by taking reasonable measures 
 can save them from incurring further damage, it is 
 his duty as representing the ship-owaer to take those 
 measures, (q) That duty you will find laid down in 
 the leading case on this particular point, Notara v. 
 
 ip) L. E. 4 P. C. 171. (2) Charters, Art. 101. 
 
CHABTEB-PABTIE8 AND BILLS OF LADING. 133 
 
 Henderson, (r) A vessel carrying beans came into 
 ooUisioDj and the beans were damaged by salt water. 
 It was proved that at the port to which the master put 
 in to repair the damage caused to his ship, he might 
 have taken measures that would have stopped further 
 damage to the beans ; he did not, but took them on 
 in their damaged state, with the result that they 
 sustained further damage; and in an action against 
 the ship-owner by the owners of the cargo for deliver- 
 ing their beans in this state, it was hfild that the ship- 
 owner by his master should have taken reasonable 
 steps to cure the damage at the intermediate port. 
 
 Those are the ordinary duties of the master, but 
 unexpected incidents on the voyage may impose 
 further duties upon him. Both the duties that I have 
 mentioned are imposed on him as representing the 
 ship-owner, but he may under certain circumstances 
 be turned into an agent of the cargo-owner and be 
 empowered to bind the cargo by his action ; for 
 instance, he may have the power and the duty as 
 against the cargo-owner to sell the cargo instead of 
 carrying it on ; (s) he may have power to tranship it 
 into another vessel ; {t) he may have power to raise 
 money upon it for the purpose of repairing his ship 
 to carry the cargo on. (u) Those, you will see, are 
 
 (r) L. E. 7 Q. B. 225. (t) Article 103. 
 
 (s) Charters, Art. 102. (u) Articles 104, 105. 
 
134 TEE VOYAGE. 
 
 extraordinary powers outside the contract of carriaige. 
 In order that the master should have those powers 
 two conditions must be present ; {v) firstly, the action 
 that he takes must be necessary, that is to say 
 apparently the best course for a prudent man to 
 take in the interests of the cargo, {w) It will not 
 be enough that he acts in good faith, he must further 
 act reasonably ; he must take what would be the best 
 course for a prudent man to take ; the first justification 
 for his action is that it is necessary. The second is that 
 he has no power of communicating with the cargo- 
 owners, (a) If he has the power of communicating 
 with the cargo-owners in time to receive an answer 
 from them before action he must do it; he cannot 
 then act without consulting them ; it must be (owing 
 to the place where he is and the necessity of imme- 
 diate action) impossible for him to communicate with 
 the cargo-owners in time to receive an answer, before 
 he is entitled to act. But if those two conditions 
 concur he has, as I said, power to sell the cargo if 
 it is in such a state that it cannot be carried on as 
 a merchantable article either at all or without greater 
 expense than it is worth, {y) He has power under 
 certain circumstances to tranship the cargo into 
 another vessel, {z) If his own vessel is hindered 
 
 {v) Charters, Art. 96. (ic) Article 97. (») Article 98. 
 (») Article 102. {s) Article 103. 
 
0EABTEB-PABTIE8 AND BILLS OF LADING. 135 
 
 from going on by "excepted perils," he is not 
 bound to carry the cargo on as agent of .the 
 ship-owner, but it may be his duty to look after it 
 as agent of the cargo-owner, and under those circum- 
 stances it may be his duty, and he may have power, 
 to make another contract of carriage for the cargo- 
 owner in another ship, which is known as tran- 
 shipping the cargo. "If his vessel is not hindered 
 from going on by " excepted perils," it is, of course, 
 his duty to carry the cargo on as representing the 
 ship-owner, for otherwise he would be liable to an 
 action for failure to deliver and would have no 
 defence. In the same way he might have power to 
 raise money on the cargo, to bind the cargo as 
 security for a loan obtained in order to carry on the 
 adventure, (a) That is frequently ^done by a docu- 
 ment known as a "bottomry bond," under which a 
 loan is made on the security of the cargo or ship, 
 to be repaid only if the ship and cargo arrive safe, 
 and that is the meaning of the ordinary phrase, 
 "raising money on bottomry"; — on the security of 
 the ship and cargo which are to be benefited, (b) 
 Further he may have authority^m cases where it is 
 necessary for the safety of the adventure to jettison 
 part of the cargo, that is to throw it overboard. Of 
 course, in case of jettison he is usually unable to 
 (a) Article 104. (6) Articles 105, 106. 
 
136 GENERAL AVERAGE. 
 
 coromunicate with the owners, except in the cases 
 where a ship has stranded in an accessible position, 
 and it is necessary to lighten it. Obviously, while 
 at sea in a storm the master cannot communicate 
 with the owners, and therefore he has only to show 
 that what he did was necessary. 
 
 Farther, liability to pay money on account of the 
 cargo may arise on the voya'ge under one of two 
 heads. The cargo-owners may become liable to pay 
 money in respect of " general average," or they may 
 become liable to pay money in respect to " salvage." 
 The question of " general average " is almost entirely 
 in the hands of average adjusters, and I only propose 
 therefore to explain to you the meaning of the term. 
 When one of the interests in the adventure, the cargo- 
 owner, or the ship-owner, has to pay a sum of money, 
 or to make some sacrifice for the benefit of the whole 
 adventure, the owner of the part sacrificed is entitled 
 to be recouped his loss or part of it from the other 
 interests in the adventure, (c) What is paid for the 
 whole adventure is to be repaid by the whole ad- 
 venture. A loss suffered in the interests of the 
 whole adventure is called a "general average loss," 
 the repayment of that loss by the interests which 
 have been benefited is called a " general average 
 contribution " or payment ; the amount of the pay- 
 (c) Articles 108 et seq. 
 
GHARTER-PABTIES AND BILLS OF LADING. 137 
 
 ment to be made by each interest in the adventure is 
 contained in a "general average statement," whicli is 
 made up by an " average adjuster." To illustrate the 
 working of this, take a ship at sea, carrying cargo 
 under a charter-party. A storm arises ; to save the 
 ship and cargo it becomes necessary to throw some of 
 the cargo overboard, and to cut away one of the 
 masts of the ship. The cargo thrown overboard and 
 the mast cut away are general average sacrifices, they 
 are sacrifices made for the benefit of the whole ad- 
 venture to get the ship and the rest of the cargo 
 safe home. The owners of the ship suffer the general 
 average loss of the mast, and the owners of the cargo 
 thrown overboard suffer a general average loss of the 
 cargo which has gone to the bottom ; they are there- 
 fore entitled to call upon the other interests, which 
 have reached home safely in consequence of the mast 
 cut away and the cargo thrown overboard, for a 
 " general average contribution " to replace their 
 share of the loss ; so that the loss which otherwise 
 would have fallen on the owner of the ship which had 
 lost its mast, and on the owners of the particular 
 cargo which was thrown overboard, is spread over the 
 whole adventure. 
 
 Instead of the ship being saved by the sacrifice of 
 something on board it may be saved by services 
 rendered by persons outside the ship. Another ship 
 
138 SALVAGE. 
 
 may appear to tow a disabled ship into port ; friendly 
 inhabitants of an island on wbicb the ship is wrecked 
 may render service in discharging the cargo, and 
 either the inhabitants or the other steamer will 
 be entitled to a reward for saving what has been 
 saved. They may have agreed the reward beforehand, 
 for the captain may have the power under those circum- 
 stances to bind the cargo or the ship to pay salvage. 
 These sums claimed by way of salvage form a very 
 profitable part of the business of the Admiralty 
 Division, in actions for salvage either by steamers or 
 fishing smacks, who have rendered assistance to 
 Vessels in distress, or others who have landed the 
 Hargo, or anybody else who has helped the adventure. 
 Those are matters which arise on the voyage ; 
 when the ship gets to port again there arise all the 
 questions about demurrage that we have already con- 
 sidered in dealing with loading, (d) The law as to demur- 
 rage at the port of discharge is the same as that at the 
 port of loading with one exception; it is necessary 
 at the port of loading, in order that your lay-days 
 should begin, that you should have given notice to 
 the charterer that your ship is ready to load ; at the 
 port of discharge it is not necessary that you should 
 give such a notice, for the consignee is supposed to 
 look out for himself, (e) With that difference the 
 
 (i) Ante, p. 115 et seg;. (e) Article 123. 
 
CEABTEB-PABTIES AND BILLS OF LADING. 139 
 
 law of demurrage is the same whetlier it be the port 
 of loading or the port of discharge. The duty of 
 the master as to discharge has been provided for in 
 England by a series of statutory provisions. (/) It 
 is often also regulated by a custom of the port of 
 discharge, and there are very frequently express 
 provisions in the bill of lading or charter. In the 
 absence of any of those provisions the master must 
 give the consignee a reasonable time to tate his 
 goods ; (g) he cannot simply turn them out on to the 
 wharf as soon as he gets there and say : — " I have 
 done with them." The question to what person the 
 master is entitled to deliver depends rather on the 
 meaning of the bill of lading as a document of title, (h) 
 If no bill of lading is produced and no consignee 
 claims the goods, the master is not bound to wait 
 there for ever with them; he can land the goods 
 and warehouse them, still preserving his lien for 
 freight ; (*) and under some circumstances, if there 
 is no possibility of warehousing them safely, he may 
 take thein back to the place whence he came and 
 charge freight for the back voyage ; (J) bnt as a 
 general rule in England his liabilities are settled by 
 the statute to which I have referred. (/) ~ 
 
 (f) 25 & 26 Yic. c. 63, §§ 66-78. 
 
 (g) Arfciole 125. (M Post, p. 163. (i) Post, p. 144. 
 (j) Chartsre, Art. 138 ; Cargo ex Argos, L. E. 5 P. 0. 134. 
 
140 FBHIGHT. 
 
 "When the master is ready to deliver the goods, 
 one of the moat important obligations under the 
 contract of carriage ariseSj the obligation of the con- 
 signee to pay freight. The term "freight" has 
 obtained a well-recognised mercantile meaning which 
 can only be varied by express words in the bill of 
 lading or charter. " Freight " in its ordinary mer- 
 cantile sense has to be paid on delivery of the goods, 
 and is not due unless the goods are delivered. (Z) 
 On goods shipped from India to the United Kingdom 
 and lost at the month of the Thames no freight is 
 payable, for no freight is due unless the goods are 
 delivered. Further, by mercantile usage, the ship- 
 owner or master has a lien on the goods that he 
 carries for the freight due for their carriage, and can 
 refuse to give the goods up till the freight is paid, (m) 
 Those are the two mercantile incidents of " freight " ; 
 it is only due on delivery, and a lien on the goods 
 exists till the freight is paid. One may illustrate 
 that by the case of Krall v. Bv/rnett. (n) Goods were 
 shipped under a bill of lading containing the words 
 " freight payable in London." The ship started from 
 London, and it was attempted to prove a custom of 
 the port of London that those words meant " freight 
 payable in advance in London," that is to say freight 
 
 (l) Charters, Art. 136. (m) Article 150. 
 
 (») 25 W. B. 305. 
 
GHABTER-PABTIE8 AND BILLS OF LADING. 141 
 
 payable not on delivery of the goods, but on the 
 sailing of the ship. It was held that the term 
 " freight " had such a well-recognised mercantile 
 meaning, that no evidence was admissible to contra- 
 dict the mercantile meaning of the word, and that 
 therefore the freight was payable in London, but only 
 on the safe delivery of the goods at the other end of 
 the voyage. 
 
 That is the meaning of " freight " in the ordinary 
 sense ; but it has become exceedingly common now to 
 pay " freight " on the sailing of the ship, or within a 
 certain number of days after the sailing of the ship. 
 That description of payment ia known as " advance 
 freight" ; but the Courts adhered so closely to the 
 mercantile definition of ''freight," that they would 
 not recognise " advance freight " as a payment for the 
 carriage of the goods, but treated it as a payment for 
 taking the goods on board ship, and would give no 
 lien for it if, although due, it was not paid, in the 
 absence of an express agreement that there should 
 be such a lien. If you look at the form of charter 
 which has been given to you, (o) yon will see there 
 that part of the freight is to be paid in advance, 
 " freight to be paid at the rate of as follows : one- 
 third of the estimated freight to captain on signing 
 bills of lading" (one-third in advance), "and the rest 
 
 o) Appendix. Of. Smith v. Pymcm (1891), 1 Q. B. 42. 
 
142 FREIGHT. 
 
 to be payable on delivery," whicli is a very usual form 
 for payment of freight nowadays. 
 
 Another usual form in which the word "freight" 
 occurs is " dead freight " j this is not really freight 
 at all, but is damages for not loading a full 
 cargo, {p) If there is a stipulation that the charterer 
 shall load a full cargo and he only loads half the 
 cargo, the damages that would be obtained for that 
 breach of contract are called " dead freight " ; and 
 that is the explanation of the clause which you will 
 find in nearly every charter giving a lien for " dead 
 freight " and " demurrage." 
 
 Another form of "freight" frequently used is 
 "lump freight." You will find charters headed at 
 the top " hmpswm charters." That is where one 
 sum is to be paid, say £3,000; the freight is not 
 made payable at so much per ton shipped, or so much 
 per measure, but is one lump sum for the whole ship, 
 and that is called " lump freight." There is one 
 other phrase connected with freight before I deal 
 with the circumstances under which freight become* 
 payable, and that is pro rata freight, which is freight 
 which may become payable in proportion when only 
 part of the voyage is accomplished (g) or when only 
 part of the cargo is delivered, (r) 
 
 (p) Charters, Art. 161. (g) Ibid. Art. 143. 
 
 (r) Article 142. 
 
CEABTEB-PARTIE8 AND BILLS OF LADING. 143 
 
 A ship-owner is entitled to the full freight (») where 
 he delivers the goods at the port of destination ; or is 
 ready to deliver them, for the fact that the consignee 
 does not appear to take them cannot make a difference 
 to his right to freight. Where he has transhipped 
 the goods, having a right to do so, and has brought 
 the goods to their destination on another vessel, he 
 is still entitled to the whole original freight, {t) In 
 strict law also he is entitled to full freight though 
 he has delivered the goods damaged ; (m) for the 
 remedy of the owner of goods so damaged is not by 
 making deductions from the freight but by counter- 
 claim, the only question as to freight being : — " has 
 the ship-owner in substance delivered the goods he 
 contracted to deliver ? " (v) If they are so damaged 
 as to be utterly unlike the same goods, for instance as 
 in the case where a cargo of cement is delivered as a 
 solid mass, (v) freight would [not be payable. It is 
 possible nowadays that a case which previously decided 
 that the delivery of a cargo of bricks as brick-dust 
 would do would be overruled, (w) but as a general 
 rule the remedy of the freighter is not by deducting 
 from the freight but by counter-claim. 
 
 The ship-owner would only be entitled to claim 
 
 (s) Articles 139, 141. (i) Article 139. {u) Article 141, 
 (v) DaUn v. Oxley, 15 0. B. N. S. 646. 
 (w) Melhuish v. Garrett, 4 Jar. N. S. 943. 
 
144 FREIGHT PRO RATA. 
 
 freight jpro rata or for delivery short of the place of 
 destination for such a delivery under an express or 
 implied agreement to pay a proportionate freight, {x) 
 The mere fact of his delivery of goods to their owner at 
 an intermediate port will not entitle him to any freight ; 
 he has not delivered at the place where he contracted to 
 deliver. The fact that he has delivered at some place 
 short of the place of destination will not entitle him to 
 any payment jpro rata, or prdportionallyj unless he can 
 prove an agreement by the goods-owner to pay such 
 freight. The only other form of freight you should 
 notice is this, that in charters which are made not for 
 a voyage (known as "voyage charters") but for a 
 certain tim& (known as " time charters "), the freight is 
 not usually payable on the delivery of the goods, but 
 at the expiration of certain periods, as so much every 
 month; and in that case express provisions as to 
 payment of freight are always contained in the charter 
 itself. 
 
 The master is entitled to -keep the goods till 
 certain debts are paid him, that is to say he has 
 a lien on the goods. At Common Law he has a lien 
 on the goods for three matters : a lien on the goods 
 for freight ; {y) a lien on the goods for general 
 average contributions, that is to say for sums due 
 from the cargo to repay general average sacrifices ; [s) 
 (a;) Article 143. (y) Article 150. {z) Articles 117-120. 
 
CEABTEB-PAETIE8 AND BILLS OF LADING. 145 
 
 and a lien on the goods for any amount that he 
 spent in protecting and preserving the goods, (a) In 
 the absence of express agreement, there is no lien 
 by Common Law for "advance freight," or for 
 demurrage, or for dead freight, i.e. for damages for 
 not shipping a fall cargo, or for pro rata freight 
 in the absence of express agreement ; but a lien for 
 all those matters may be given, if it is expressly 
 stipulated in the charter or contract of affreightment. 
 So that even without a stipulation in the charter 
 there will be Common Law liens j with stipulations 
 in the charter there may be liens to the extent of the 
 stipulations. 
 
 The rule of damages for breach of the contract of 
 affreightment is the general rule of damages for the 
 breach of all contracts, the celebrated rule which 
 has been laid down in Badley v. Baxendale. 
 Damages for a breach of contract, according to the 
 rule in Hadley v. Baxendale, (b) are such as may 
 be reasonably supposed to have been in the con- 
 templation of both parties at the time they made 
 the contract as the probable result of a breach 
 thereof. As in ordinary mercantile life people when 
 they make a contract do not contemplate its being 
 broken, that rule does not carry one very far, but 
 the practical effect is this. A ship-owner agrees to 
 (a) Articles 101, 121. (6) 9 Exoh. 341. 
 
 L 
 
146 DAMAGES. 
 
 charter Ws ship to a charterer; for some reason he 
 breaks his oontractj and the charterer then says : 
 "Oh, if I had got this ship under my charter I 
 shpuld have' made an enormous profit, for I happened 
 to have a special contract with somebody or other 
 to pay a much higher rate than the market rate." 
 The rule of Eadley t. Baxendale applies there ; 
 and if the ship-owner did not know at the time le 
 made the contract that the ship was wanted for the 
 purpose of fulfilling this very pTofitable contract, 
 the charterer cannot recover those damages against 
 the ship, for they would not have been in the con- 
 templation of the parties at the time they made' the 
 contract, (c) 
 
 That concludes the nautical side of the contract 
 of affreightment, and in the next lecture I propose 
 to deal with the mercantile side in treating^ of the 
 bill of lading as a document of title to the goods, 
 (c) .See further, Articles 158-160. 
 
CHAPTER V. 
 
 THE BILL OF LADING AS A DOCUMENT OF TITLE. 
 
 Authorities. — Sorntton on Charter - parties, Section V. ; 
 Chalmers on Sale, Articles 19-72 ; Benjamin on Sale, 4fch. ed. 
 pp. 345-372, 754-898. 
 
 In the last lecture, we finislied tlie consideration of 
 tie contract of carriage, or the contract of affreight- 
 ment, expressed in charter-parties and bills of lading. 
 But the bill of lading has by the custom of merchants 
 acquired another and a very important side ; besides 
 being very good evidence of the contract of carriage 
 it is also a document of title, dealings with which 
 may pass the property in the goods for which the 
 bill appears on its face to be a receipt, and therefore 
 in a large number of mercantile cases it becomes 
 important to consider the way in which a bill of 
 lading has been dealt with by the parties to it as 
 affecting the property in the goods. 
 
 Before the bill of lading is signed by the ship- 
 owner at the beginning of the voyage, and after 
 
 h 2 
 
148 SIGNATURE OF 
 
 it has been handed back discharged to the ship- 
 owner at the end of the voyage by the consignee, 
 there are certain other documents to- which with 
 varying success the custom of merchants has at- 
 tempted to give an effect similar to bills of lading ; 
 and therefore in considering the bill of lading as 
 a document of title, we must also consider the 
 analogous documents which come in existence before 
 the bill of lading is signed, or after the bill of lading 
 is given up. 
 
 The course of business as to the signature of a bill 
 of lading is usually this. Some merchant has 100 
 tons of iron to ship to a particular port ; he goes into 
 the office of a ship-owner who has a line of ships 
 running to that port, and says: ''I shall have 100 
 tons of iron for your next steamer." Sometimes he 
 knows what the freight will be, and sometimes he 
 asks what it will be. Sometimes there is no memo- 
 randum of the contract in writing at all ; sometimes 
 the ship-owners give him one of their shipping cards 
 for the particular steamer, with a note " 100 tons 
 iron" written on the back. The ship comes into dock ; 
 the merchant finds on the shipping card the last day 
 on which he is to send goods down to her, and he 
 sends down 100 tons of iron, sometimes by barge, 
 sometimes by cart, to the docks : whichever way they 
 come, a document called a "mate's receipt" is signed 
 
THU BILL OF LADING. 149 
 
 by the mate or some representative of the ship, and this 
 acts as a receipt for the iron delivered on board, [d) 
 That is a document relating to the goods, which 
 comes into existence before the bill of lading is 
 signed, and attempts have been made to give to 
 the mate's receipt a similar effect to the bill of lading, 
 in passing property in goods, (e) The result of the 
 cases is this; the ship-owner will be justified in 
 giving bills of lading to any person who produces 
 the mate's receipt unless he has notice that somebody 
 else claims the goods, in which case he must inquire 
 into the question of property and cannot simply deliver 
 to the mate's receipt. Farther, as the mate's receipt 
 usually contains the name of the person from whom 
 the goods have been received, the ship-owner may 
 deliver to the person named in the mate's receipt 
 though such person does not produce the mate's 
 receipt, if he has no notice of any other claim. In 
 the absence of any other claim the ship-owner will be 
 entitled to deliver either to the mate's receipt or to 
 the person named in the mate's receipt. But the 
 mere fact that the mate's receipt has been indorsed to 
 somebody or transferred to somebody without any 
 notice to the ship-owner passes no property in the 
 
 (c?) This is not strictly accurate as to the practice of the 
 port of London. See Charters, Appendix II. 
 (e) Charters, Art. 51. 
 
150 MATE'S RECEIPT. 
 
 goods, and an attempt to prove a custom to that 
 effect has been held to fail, even if the custom was 
 proved. (/) Thus the mate's receipt has but a very 
 limited effect as a document of title, and its mere 
 indorsement will pass no property whatever. 
 
 "When the goods have been shipped, and the ship's 
 agent at the dock has sent up the ship's, tally-book to 
 the broker^s oflBce, the shipper of the 100 tons of iron 
 gets a form of bill of lading. For instance, if it is 
 a Black Sea cargo, he would get the particular form 
 you have; (g) he could biiy it at any stationer's ; he 
 would fill in the particulars of the 100 tons and the 
 name of the consignee, and would take the bill thus 
 filled up into the ship-owner's office and ask him to 
 sign it; the ship-owner would look at the tally- 
 book, and if the goods were found there, would 
 usually give him the bill of lading without any 
 question. Obviously this practice opens a wide door 
 to fraud, if people want to be fraudulent ; but the 
 answer of ship-owners is, that in the hurry in which 
 bills of lading have to be signed to send them off 
 by the mails to foreign consignees, they take their 
 chance, and in practice fraud so rarely happens as 
 to justify their disregarding it. That is the way in 
 which the bill of lading is signed ; brought in usually 
 
 (/) Sathesmg \.Lamg, L.^ E. 17 Eq, 92. 
 {g) Appendix. 
 
TEE BILL OF LAVING. 15,1 
 
 by the shipper after the goods have been shipped, 
 and signed in London by the ship-owner, for in 
 foreign ports it is usually signed by the master. 
 ' Having received the bill of lading signed^ you 
 have a document to which the custom of merchants 
 for centuries has attached a very particular signifi- 
 cation. In the great case of LicJcharrow v. Mason {h) 
 (a case dealing with stoppage in transitu), a special 
 jury found the custom of merchants with regard to 
 bills of lading ; LicJcbarrow v. Mason had a very 
 chequered and lengthy career, and went through a 
 large number of Courts, but it has been the leading 
 case ever since on the subject. The jury found iu 
 that case that by the custom of merchants, "bills 
 of lading are after the shipment and before the 
 voyage performed negotiable and transferable by 
 the shipper's indorsement and delivery j and that by 
 such indorsement and delivery the property in such 
 goods is transferred." 
 
 I shall have to deal more in detail with the 
 various forms of indorsement that may be made by 
 the custom of merchants to transfer the properiy 
 in the goods j but that may be the first effect of in- 
 dorsement- Secondly, by statute, the indorsement of 
 a bill of lading may transfer to the indorsee the 
 contract of carriage contained in the bill of lading. 
 (h) 6T. B. 683; 1 Smith L. 0. 
 
152 INJDOBSUMENT OF 
 
 That is the result of the "Bills of Lading Act/' 
 1855; (i) the property may be passed by the custom of 
 merchants; the contract may be passed by the effect 
 of the statute. And further, the Admiralty Jurisdiction 
 Act of 1861, (j) provides that the indorsement of a 
 bill of lading may give the indorsee tbe right to 
 proceed against the carrying sbip in the Court of 
 Admiralty, to proceed in rem against- the ship in 
 distinction from the action in personam against the 
 ship-owner on the contract. 
 
 The custom of merchants found by the jury in 
 LicJcbarrow v. Mason (h) has been, after great conflict 
 in the Courts, finally and authoritatively explained by 
 the House of Lords in the case of Sewell v. Burddck. (Z) 
 Previously to that decision there were a number of 
 dicta of very eminent judges, notably of Lord 
 Esher, {m) that indorsement of the bill of lading 
 always passed the whole property in the goods, and 
 that you could not look into the circumstances of 
 the indorsement to ask what was the intention of 
 the parties in indorsing it. In Sewell v. Burdick 
 the House of Lords held, overruling Lord Esher 
 and the Court of Appeal, that the verdict in Lick- 
 barrow y. Mason : — " the property is transferred by 
 
 (i) 18 & 19 Vie. c. 111. Qc) 5 T. R. 683. 
 
 U) 24 Vic. c. 10. (I) L. E. 10 App. 0. 74. 
 
 (m) Of. 13 Q. B. D. at p. 67 ; and 6 Q. B. D. at p. 480. 
 
THE BILL OF LADING. 153 
 
 indorsement," must be read, " the property wliicli it 
 is the intention to transfer is transferred/' thus differ- 
 ing from the previous view that indorsing the bill 
 of lading passed the wholei property in the goods. 
 The chief commercial effect is this : it is extremely 
 common to deposit bills of lading with a bank for 
 security for advances. On the authority of the 
 previous dicta of the judges, such a deposit and 
 indorsement — for the bills were always indorsed to 
 the bank — passed the whole property in the goods to 
 the bank. In consequence of the decision in Sewell v. 
 Burdich it is always possible to consider what was 
 the intention of the parties, and as the intention of 
 the parties nearly always is to pledge the goods and 
 not to pass the whole of the property therein, banks 
 which had been previously treated as owners of the 
 goods must now be treated as pawnees or pledgees. 
 In Sewell v. Burdich a bank successfully resisted an 
 attempt to make it liable on the contract contained 
 in the bill of lading on the plea that the property 
 had passed to it by indorsement, by showing that 
 the goods-owner only pledged the goods to it, and 
 therefore that the whole property did not pass so 
 as to bring the bank within the Bills of Lading 
 Act; for by that Act rights and liabilities under 
 the contract contained in a bill of lading are only 
 passed by an indorsement which passes the property. 
 
154 UNPAID VENDOR 
 
 As a consequence, in every case one has to look at 
 the facts to see what property was intended by the 
 parties to pass, [n) • It may be the intention of the 
 person indorsing to absolutely transfer the property 
 in the goods ; (o) it may be his intention to transfer 
 the property conditionally on the bills of exchange, 
 which accompany the bill of lading, being accepted j {,p} 
 he may mean to mortgage or pledge the good^ retain- 
 ing for himself the right of redemption ; [q) or he 
 may intend to pai^s no property in the goods at all, 
 but simply to give his agent the means of dealing 
 with the goods by placing an indorsed bill of lading 
 in his hands, (r) JSTow the effect of dealings with a 
 bill of lading as a document of title is usually 
 important in connection with the rights of that un- 
 fortunate person th» unpaid vendor, and the forms 
 of commercial business of which I now want to speak 
 are all forms of protection invented to assist the 
 unpaid vendor. 
 
 A seller of goods who has not been paid may be- in 
 one of four positions, and according to his particular 
 relation to the good^ so will the nature of his remedies 
 vary. . In the first place he may have both the property 
 in the goods and the possession of them, as where he 
 
 (to) Charters, Art. 58. (p) Article 62. 
 
 14 Article 59. (g) Articles 72, 73. 
 
 (r,) Article 74, but of. Factors' Act, post, pp 171-177, 
 
TEE BILL OF LABINQ. 155 
 
 has entered into an agreement to sell goods in his pos- 
 session, but that agreement has not yet been carried 
 out. Obviously in that case he does not want any 
 protection except that given by his right of action on 
 the agreement to sell. He has the property in the 
 goodsj he has not parted with that yet ; he has also the 
 possession of the goods, so that he can protect himself 
 against being deprived of them. That is his first and 
 most fortunate position. 
 
 Secondly, he may have possesion of the goods 
 but have parted with the property. The terms of the 
 contract of sale may be such that the property has 
 passed to the purchaser, though the vendor still 
 retains possession. In that case he is protected by 
 the unpaid vendor's lien, (s) That is rather more than 
 an ordinary Common Law lien. A lien by Common 
 Law, I need hardly say, is the righlj, to put it forcibly, 
 to sit on the goods till you are paid. The unpaid 
 vendor's lien is rather more than that. A lien at 
 Common Law gives no right to sell the goods in any 
 event ; you will find a very good illustration of that 
 by referring to the case of Mulliner v. Florence, (t) 
 There an innkeeper had a guest who departed without 
 paying his bill, but left a horse of uncertain value; 
 the innkeeper, after trying the experiment of keeping 
 the horse for some time, while his guest did not come 
 (s) Chalmers on Sale, Art. 4,2. (t) L. B. 3 Q. B. D. 484. 
 
156 TEE UNPAID VENDOR. 
 
 backj came to the conclusion that it was an ex- 
 pensive luxury, and proposed to sell the horse, on 
 which by Common Law he had a lien for the' unpaid 
 bill of the guest ; but on action brought the Courts 
 held that such a lien at Common Law gave no 
 power to sell, with the result that a Statute was 
 passed to protect innkeepers in that respect, (m) The 
 unpaid vendor's lien is rather more than that, {v) 
 The unpaid vendor has a power to sell if the price is 
 not paid ; his right is very similar to the right of a 
 pledgee or pawnee at Common Law with a power to 
 sell. That is the protection of the unpaid vendor so 
 long as he has the possession of, though not the 
 property in, the goods. 
 
 Neither of these cases applies to a vendor who has 
 shipped his goods and taken a bill of lading for them, 
 because in this case he has lost possession of the 
 goods, which has passed to the master of the ship as 
 carrier, and so we come to the third position of an 
 unpaid vendor j he may have the property but not 
 the possession. He may have lost the possession by 
 delivery to the master of the ship as carrier for the 
 purchaser, but he may still, and frequently does, 
 retain the property. He usually attains that result in 
 one of two ways, which have each a technical name. 
 
 (m) 41 & 42 Vic. c. 38. 
 
 {v) Chalmers, Art?. 42-49. 
 
THE BILL OF LADING. 157 
 
 The vendor may either reserve the jus disponendi, which 
 sounds rather a formidable operation, or he may con- 
 ditionally indorse the bill of lading. Those are the two 
 methods of protection open to the vendor where he has 
 lost the possession but still retains the property in the 
 goods. The first is to reserve the jus disponendi, (w) 
 which put into commercial English amounts simply 
 to the vendor's saying : — " I will keep the property 
 in the goods " ; and the vendor effects that result 
 by making the goods deliverable under the bill of 
 lading to his own order. If you look at the bill of 
 lading which you have, {x) you will find that the 
 goods which are shipped. in good order and condition 
 are to be " delivered in like good order and condition 
 at the aforesaid port of . . . unto . . . or to his or 
 their assigns." If the vendor fills in that blank by 
 writing his own name, he still preserves the pro- 
 perty in the goods, for no one can get delivery of 
 the goods at the port of discharge without the bill 
 of lading, whilst the person who is according to 
 the bill of lading the person to receive them is the 
 vendor himself or his assignee j and thus only the 
 vendor or persons to whom he has indorsed the 
 bill can obtain the goods. Filling in the bill of 
 lading in that form, making the goods deliverable 
 
 (w) Charters, Art. 61 ; Chalmers, Art. 22. 
 (») Appendix. 
 
158 TES UNPAID VENDOR. 
 
 to the vendor or his assigns, is known as reserving 
 the jus disponendi, or reserving the right of dis- 
 position, and therefore it becomes important when- 
 ever a question of property in goods at sea arises, 
 to see to whom the bill of lading makes them de- 
 liverable. That is the first security the unpaid 
 vendor may take. 
 
 But he may take another. He may indorse the 
 bill of lading, which makes the goods deliverable 
 to himself, to the purchaser, and may send it or 
 present it through a bank, to the purchaser, ac- 
 companied by a bill of exchange for the price of 
 the goods, (y) In that case the purchaser cannot 
 keep the bill of lading unless he accepts the bill 
 of exchange, and the vendor has the security of 
 condMional indorsement — the transfer of property by 
 indorsement is conditional upon acceptance of the 
 bill of exchange by the purchaser. That is a form 
 of vendor's protection which is common in commer- 
 cial transactions j and the leading case in which the 
 rights and duties following from such a conditional 
 indorsement have been dealt with is Shepherd v. 
 Harrison, (z) By these two forms of protection, re- 
 serving the jus disponendi and conditional indorse- 
 ment, the unpaid vendor, though by shipping his 
 
 (j/) Charters, Art. 62 ; Chalmers, p. 34 
 {z) L. E. 5 H. L. p. 116. 
 
THE BILL OF LADING. 159 
 
 goods he loses possession, yet ships them in such a 
 way as to keep the property in himself. In the last 
 case, conditional indorsement, he is not completely 
 protected, for he must take the risk of the bill of 
 exchange if accepted being dishonoured when it comes 
 due, and therefore he is not so fully protected as if 
 he were paid in cash for the bill of lading. 
 
 Next there comes a fourth and a very important 
 position of the unpaid vendor, and one which gives 
 rise to a great deal of litigation. In the first case 
 I referred to (a) he has got both the possession and 
 the property; in the second case (,&) he has got the 
 possession but lost the property ; in the third case (c) 
 he has got the property but lost the possession ; and 
 now in the last case he may have lost both the pro- 
 perty and the possession, as where he has shipped 
 goods which by the bill of lading are deliverable to 
 the purchaser, so that the vendor has lost the pro- 
 perty, and the possession has passed into the master 
 of the ship as carrier. The vendor's remedy in that 
 case, which only arises in particular circumstances, is 
 known as " stoppage in transitu" a remedy which does 
 not apply, of course, only to carriers at sea, but is avail- 
 able in every case where goods are in the possession 
 of a carrier in course of transit from vendor to purchaser. 
 The right of stoppage in transitu differs from the 
 (a) Aide, p.. 154 (6) Ante, p. 165. (c) Ante, p. 156. 
 
160 STOPPAGE IN TRANSITU. 
 
 unpaid vendor's lien (d) in two ways. The lien 
 exists so long as tbe buyer is in default in payment ; 
 the right of stoppage only comes into existence if the 
 buyer is insolvent as well as in default. Further, 
 the right only comes into existence when the vendor 
 has lost his lien by parting with the possession of the 
 goods. The right of stoppage in transitu depends 
 upon the existence of the following conditions, (e) 
 There must be an unpaid vendor or others in a similar 
 position : (/) the fact that a man has been paid in 
 bills of exchange which have not matured will not 
 prevent his being considered as an unpaid vendor, 
 unless, which very rarely happens, he took the bills 
 as absolute payment, whether they were honoured or 
 not. The right can be exercised by an unpaid vendor 
 on the bankruptcy or insolvency of the vendee, for 
 the purchaser must be insolvent to give the right to 
 stop in transitu, [g) It may be exercised against 
 the vendee and all persons claiming under him with 
 one exception, the person whom one may shortly 
 describe as an indorsee in good faith without notice. 
 If, before the vendor claims to stop the goods in 
 transit, the purchaser has indorsed the bill of lading 
 for value to a person who takes it without notice of 
 
 (i) Ante, p. 156. 
 
 (e) Charters, Arts. 63-70 ; Chalmers, Arts. 46-48. 
 
 (/) Charters, Art. 64. (jr) Ibid. Art. 65. 
 
TEE BILL OF LADING. ■ 161 
 
 the insolvency or of any fraud^ that person's rights 
 
 cannot be affected by the stoppage in transitu, {h) 
 
 for the Courts will only protect the vendor against an 
 
 insolvent purchaser^ so far as they can do so without 
 
 injuring the rights of persons who have given value for 
 
 the goods in ignorance of the vendor's position. The 
 
 only remaining point is one on which there has already 
 
 been much litigation, and on which, as every case 
 
 differs in its facts^ there is likely to be much more, 
 
 and that is the question up to what time the right to 
 
 stop in transitu can be exercised. To state it very 
 
 shortly, but in a way which does not answer the 
 
 question, stoppage in transitu can take place during 
 
 the transit and not after the transit has ended ; and 
 
 the transit is considered by the Courts to have ended 
 
 when the goods reach the possession of the vendee, 
 
 or some agent of his other than a carrier. So long 
 
 as the goods are in the possession of the carrier, 
 
 they are in transit; but when they get to the 
 
 end of the carriage, or to a place where they will 
 
 wait till further directions from the vendee are 
 
 received, the transit is over and the right to stop 
 
 is gone, {i) One of the most recent cases in which 
 
 the question has been discussed is the case of Bethell 
 
 V. Clarke, (j) which is a very good illustration of 
 
 (h) Charters, Arts. 66, 67 ; lAckharrow v. Mason, 1 S mith L. 0. 
 (■i) lUd. Art. 69 ; Chalmers, Art. 47. 
 \i) 20 Q. B. D. 615. 
 
 M 
 
162 . INDORSEMENT OF 
 
 the questions which arise in discussing the problems 
 of stoppage in transitu. The bill of lading repre- 
 senting goods may be indorsed by its holder, and 
 the indorsement is effected, with one important ex- 
 ception, in a very similar way to that of biUs of 
 exchange. Qc) A bill of lading may, like a bill of 
 exchange, be indorsed in blank, by simply writing 
 on the back the name of the consignee or holder, (l) 
 The effect of such an indorsement is the same as 
 that of an indorsement in blank on a bill of ex- 
 change; the goods become deliverable to bearer. 
 The holder may also indorse specially, as in the 
 case of bills of exchange, or in full, by writing on 
 the back, "Deliver to A. B., 0. D." The point in 
 which a bill of lading differs from a bill of exchange 
 in its indorsement is that there is no implication in 
 the indorsement of the words " or order." You will 
 remember a bill of exchange made payable "to A." 
 or indorsed " to A.," is treated as payable " to A. or 
 order." (m) There is no such implication in biUs of 
 lading, and it is probable, although it has not been 
 finally decided, that a bill of lading which does not 
 contain on its face or indorsement the words ''or 
 assigns " or " order," is restricted in its negotiation, (n) 
 
 (k) Ante, p. 60. (l) Charters, Art. 56. (m) Ante, pp. 49, 61. 
 (re) Henderson v. Comptoir d'EscOmpte, L. E. 5 P. 0. 263, at 
 p. 260. 
 
THE BILL OF LADING. 163 
 
 At the end of the voyage the master or ship- 
 owner who has signed this document of title to the 
 goods has cast upon him the responsibility of deciding 
 to whom he shall deliver. For the convenience of 
 commerce and by long - established practice, ship- 
 owners are not content with signing one bill of lading 
 but always sign three and sometimes four, each of 
 which bears words to the effect that one of these 
 being accomplished the others are to be void. Ob- 
 viously you can conceive a case in which all these four 
 bUls of lading get by indorsement into the hands of 
 four different people, who all appear and claim the 
 goods ; and this might put upon the master in a 
 distant port the problem of settling a difficult ques- 
 tion of law as to which of the four was the right- 
 ful owner of the goods. This practice of signing sets 
 of bills of lading has brought at least two cases to the 
 House of Lords, (o) which have with some degree of 
 certainty defined the position of the master. 
 
 The first point that has been settled is this : the 
 master must not deliver to the consignee named in 
 the bill of lading unless the consignee produces the 
 bill of lading. It is not, as in the case of the mate's 
 receipt, (p) sufficient to say, "A. B. is the person 
 
 (o) Ghjn Mills v. East and West India Docks, 7 App. 0. 
 511 ; Meyerstein v. Barler, L. E. 4 H. L. 317. 
 (p) Ante, p. 149. 
 
 • ir 2 
 
164 DELIVERY UNDER 
 
 named as consignee in tie bill of lading", (for the 
 captain always has a copy), "and therefore I will 
 deliver to him although he has not got the bill." 
 That has been recently decided, although it probably 
 has been law for a long time, in the case of The 
 Stettin, (2) where the master did deliver to the con- 
 signee named in the bill of lading, without his pro- 
 ducing the bill of lading, and it turned out that 
 somebody else had the bill of lading and ought to 
 have had the goods. 
 
 The second point that has been settled is that the 
 ship-owner or master is entitled to deliver the goods 
 to the first person presenting a bill of lading if he has 
 no notice of any other claim, and there is nothing to 
 raise suspicion of anything being wrong. That was 
 settled by the House of Lords a few years ago in a 
 case which was the subject of universal discussion in 
 the City at the time, the case of Qlyn Mills 8f Go. v. The 
 East and West India Dock Co. (r) In that case goods 
 were shipped, consigned to Gr. in London, under three 
 bills of lading marked " First," " Second," and " Third," 
 as was the ordinary custom. G., as the consignee, in- 
 dorsed the first bill of lading to a bank, Glyn Mills &O0., 
 as security for a loan. When the goods reached London 
 they were put by the master into the warehouses of the 
 East and "West India Dock under a stop for freight — 
 (2) 14 P. D. 144. (r) L. B. 7 App. 0. 591. 
 
THB BILL OF LADING. 165 
 
 that is to secure tlie payment of freight for their 
 carriage. Gr., the consigneOj went to the Bast and 
 West India Dock with the second bill unindorsed, and 
 presented it to them, whereupon they entered him in 
 their books as the owner of the goods. Gr. then paid 
 the freight due, and gave a delivery order to a third 
 person, who obtained the goods on that order; after 
 which the bank woke up and presented their bill, the 
 first bill of lading indorsed to them, only to find that 
 the goods had gone. The bank sued the East and 
 West India Dock Company as representing the ship, 
 saying : " You had presented to you a bill of lading 
 marked ' Second,^ and that of itself was sufficient to 
 put you on inquiry as to where the ' First ' bill of 
 lading was. If you had required its production this 
 fraud would have been exposed ; you did not, and we 
 claim that we shall not suffer for your carelessness.^' 
 The House of Lords, in answer to that claim, laid 
 down the law that the master, or the Dock Company 
 or warehouseman representing him, were justified in 
 delivering, without notice of any other claim, to any 
 bill of lading presented, and that the mere fact that 
 the bill of lading presented was marked " Second " 
 was quite insufficient in commercial usage to put the 
 Dock Company on inquiry. That case has settled the 
 liability of the captain or the warehouseman where a bill 
 of lading is presented and no other claim is made or 
 
166 DELIVBBT UNDER 
 
 suspected. It makes no difference to the master that 
 the man who first presents a bill of lading has in 
 fact no property whatever, -though it does to the 
 person presenting it, for when property in goods 
 has once been passed by the indorsement of a bill of 
 lading, a dealing with another copy of the bill after- 
 wards cannot give the person who gets such a copy 
 any property in the goods, (s) 
 
 It only further remains to deal with the position of 
 the master when two or more claims are made on him. 
 If only one bill of lading is presented and he has no 
 notice of another claim, he may deliver to the bill. But 
 if two people appear with bills of lading or claims on the 
 goods, his practical remedy is to take the advantage of 
 the legal proceeding known as "interpleader," by which 
 he says : " I as the stake-holder have no interest in 
 these goods except to give them to the right man. I 
 do not and cannot know which of you two is the 
 right man ; fight it out among yourselves, and then I 
 will give up to the one who is proved to be right," 
 That is his practical remedy ; but if he takes it upon 
 himself to consider the question who is the right man, 
 and delivers to one of them, he does so at his risk. 
 He must, if he takes upon himself to decide the 
 question, take the risk of giving the right answer 
 of the riddle whatever it may be, and he will be 
 (s) Sarler v. Meyerstein, li. B. 4 H. L. 317. 
 
THE BILL OF LADING. 167 
 
 liable if lie does not deliver it to the true owner. 
 Another way in which the master sometimes gets out 
 of the difficulty, short of an interpleader, is where, if 
 one of the persons claiming is a fairly substantial 
 man, the master delivers to him. under an indemnity 
 against any claim by the other claimant ; for in that 
 case, if he takes care to have his indemnity wide 
 enough, he or his ship-owner will not be hurt ; one of 
 the claimants will get the goods at once without the 
 delay of an interpleader, and then the two claimants 
 can fight it _out among themselves by an action in 
 which the master will not suffer, because he is in- 
 demnified by the person who has got the goods. 
 
 There are also documents which come into exis- 
 tence at the end of the transit while the bill of 
 lading is, so to speak, dying out. You have at the 
 beginning of the transit "the mate's receipt"; {t) 
 at the end of the transit you have " delivery orders " 
 and "dock warrants," or "wharfinger's certificates," 
 and the condition of these documents has been altered 
 materially by the set of Acts known as the Factors' 
 Acts, and particularly by the Factors' Act, 1889. (u) 
 There are a great many difficulties in the matter, 
 and I am not going to perplex you with one-tenth 
 of them, bnt before the Factors' Acts it was fairly 
 well settled what the position of delivery orders 
 (t) Ante, p. 149. («) 52 & 53 Vic. c. 45, post, p. 172. 
 
168 BELWEBY 0BDEB8. 
 
 and dock warrants was. A delivery order would be 
 an order to the person who held the goods, given 
 by the consignee or the person claiming to be entitled 
 to them, running, "Deliver my goods to A. B. "; that 
 would be a very short form. Assuming that the 
 goods on arriving had been warehoused by the master, 
 the consignee might give a delivery order to any 
 person, who would then take it to the warehouse 
 and get himself entered on the books of the ware- 
 house as the owner, by virtue of the delivery order 
 which he presented. He might simply leave it in 
 ■that way, being entered on the books of the ware- 
 house as the owner, and take no further steps. But 
 he might get a document from the warehouse-keeper 
 stating that he was the owner, an acknowledgment 
 or receipt that they held so many goods of his; 
 and that document was called a dock warrant, 
 when given by the docks; a wharfinger's certificate 
 or warrant, when given by a wharf. It was frequently 
 issued in the case of wine and a large number of 
 other goods which are always warehoused at the 
 docks. But until the holder .of a delivery order 
 presented his order he gained no benefit from 
 it; that was the law before the Factors' Act. (v) 
 The mere fact' that he had such an order was per- 
 fectly immaterial unless there had been an attorn- 
 
 («) Charters, p. 140. 
 
BOGK WABRANT8. 169 
 
 ment to him, a recognition of his title by the 
 warehouseman. Now for some time at the beginning 
 of the century, and indeed pretty late in the century, 
 the City took the view that delivery orders and 
 dock warrants were documents of title, and was 
 continually trying to prove a custom that indorsing 
 them or negotiating them passed the property in 
 the goods they referred to ; and during that time 
 the Courts took the view that they were not "docu- 
 ments of title," but " tokens of an authority to receive 
 possession," and the judges declined to recognise 
 that indorsement of a dock warrant or of a delivery 
 order had the same effect as in the case of a bill 
 of lading in defeating stoppage in transitu. They 
 declined to give the same effect to delivery orders 
 and dock warrants that they did to bills of lading 
 in dealing with stoppage in transitu; and as far as 
 my information goes, this persistence of the Courts 
 all but succeeded in convincing the City that these 
 documents were not documents of title, and banks 
 were reluctant to have anything to do with mere 
 delivery orders as being sufficient security for advances, 
 although they always looked more favourably upon 
 dock warrants, (w) And then came the Factors' Act, 
 which made these documents documents of title, with 
 
 (w) Some of the private acts of the London Dock Com- 
 panies gave to indorsement of dock warrants the effect of 
 passing the property. 
 
170 DOCUMENTS OF TITLE. - 
 
 the result that at present in a good many cases 
 docaments which the City used to treat as documents 
 o£ title, without recognition by the Courts, are now 
 treated as documents of title by the Courts, and 
 distrusted by the City. The fourth subsection of 
 the first clause of the Factors' Act of 1889 defines 
 "documents of title" as "any bill of lading, dock 
 warrant, warehouse-keeper's certificate, or order for 
 the delivery of goods, and any other document used 
 in the ordinary course of business as proof of the 
 possession or control of goods." The ninth and tenth 
 Sections of the Factors' Act, 1889, appear to give — 
 I only say " appear " because it is still doubtful what 
 they mean, and especially what the difference between 
 the ninth and tenth Sections is — appear to give to 
 "documents of title" so defined the same effect as 
 bills of lading in defeating stoppage in transitu or 
 the vendor's lien. So that now delivery orders and 
 dock warrants have apparently by the Factors' Act 
 got into the position of documents of title, dealings 
 with which may affect the property in goods, but 
 they have derived that position from the Statute and 
 not from the Common Law, inasmuch as the Courts 
 always refused to recognise them as such documents 
 of title. 
 
CHAPTER VI. 
 
 THE PACTOES' ACTS ; AND NOTES ON THE CONTRACT OF 
 
 SALE. 
 
 Authorities. — Carter and Neish on the Factors' Acts ; 
 Chalmers' Digest of the Law of Sale ; for fuller information 
 on the subject, see Benjamin on Sale, 4th ed. ; Blackburn on 
 Sale, 2nd ed. by Graham. 
 
 Beeoee referring to a few points in connection with 
 tlie contract of sale, I propose to deal with the leading 
 features of the Factors^ Acts^ a class of Acts of con- 
 siderable importance in the mercantile world and of 
 considerable complexity. The necessity for any 
 legislation in the nature of the Factors' Acts arises 
 from the Common Law rule that I mentioned to you 
 in the first lecture, {x) that one man cannot give to 
 another a better title than he himself had : nemo 
 potest dare quod non hahet. Consequently the mer- 
 chant in the City who dealt with an agent whom he 
 found in possession of goods or documents of title, was 
 liable under the old Common Law rule to have his 
 
 («) Ante, p. 22. 
 
172 THE COMMON LAW AND 
 
 transactions with such, an agent upset, because it 
 turned out that the agent had no authority from his 
 principal to deal with the goods or the documents of 
 title in the way that he did. It was the universal 
 experience of commercial men that in matters of 
 business it was almost impossible to inquire into the 
 exact authority of every person who came to them 
 professing to be able to deal with goods ; they in- 
 variably offended their client or their customer to 
 begin with, and they very frequently were not able to. 
 discover the real truth. Now that is the substantial 
 difficulty which has been met by the Legislature 
 very grudgingly by a series of Factors' Acts. The 
 Legislature has passed a remedial Act ; but the Law 
 Courts have then had to reconcile that Act with the 
 old Common Law rule ; and the Courts have never 
 interpreted the Factors' Acts in any liberal spirit, lont 
 have always preserved as far as possible the old 
 Common Law, with the result that a series of Factors' 
 Acts has been necessary, each aimed at remedying 
 some one or more specific decisions of the Courts. 
 The Factors' Acts in consequence form a system of 
 legislation of great complexity and intricacy, which 
 even yet does not satisfactorily meet all mercantile 
 difficulties. The first Factors' Act was passed in 
 1824; (y) there were others in 1826, 1842, and 
 (y) 4 Geo. IV. o. 83. 
 
THE FAOTOBS' ACTS. 173 
 
 1877j (z) and now there has been passed (what is the 
 last for the time), the Factors' Act of 1889, (a) which 
 repeals all the previous Acts and re-enacts them with 
 some variations to meet cases which have been 
 decided between 1877 and 1889. 
 
 The only Common Law protection that a merchant 
 dealing with an agent had enjoyed prior to the 
 Factors' Acts was in the case where the principal 
 had clothed his agent with apparent authority to 
 deal with the goods, for if the principal had put 
 an agent in such a position that the agent had 
 apparent authority to deal with the goods in the way 
 he did, the principal might be estopped or prevented 
 from alleging that the agent had no authority. That 
 was some slight help to persons who dealt with 
 agents, but inasmuch as the Courts always treated 
 the mere fact that an agent was in possession of 
 goods as no evidence of apparent authority to bind 
 his principal, the security did not go very far. The 
 question the Legislature had to answer in the Factors' 
 Acts was this : " How far shall we sacrifice the 
 Common Law rights of the true owner of goods in 
 order to enable the ordinary business of buying from 
 agents and advancing money to agents to be carried 
 on with reasonable security ? " And the general 
 
 (s) 6 Geo, IV. c. 94 ; 5 & 6 Vic. c. 39 ; 40 & 41 Vio. o. 39. 
 {a) 52 & 53 Vic. c. 45. 
 
174 PROVISIONS OF 
 
 answer that has been given to that question by the 
 Legislature is this : they " have said that where the 
 agent is one ordinarily entrusted with the powers he 
 then exercises, the true owner shall be Ijound by the 
 agent's act as against persons dealing in good faith 
 with such an agent. 
 
 Now in that answer there are several points, each 
 of which is embodied in some part of the Factors' Act 
 of 1889. In the first place, in the definition clause, 
 which is the first clause of the Act of 1889, the 
 qualities an agent is to have are defined. "The 
 expression 'mercantile agent' shall mean an agent 
 having in the customary course of his business as 
 such agent authority" to do a number of things 
 which are there stated, such as to sell goods and to 
 consign goods for sale. That you should obtain pro- 
 tection, the man with whom you are dealing must be 
 acting in a manner ordinary to his class, he must be 
 doing the thing which you would ordinarily expect 
 such an agent to do. That is the first condition, the 
 agent must be a mercantile agent who in the ordinary 
 course of his business has authority to deal with 
 goods. Secondly, he must be in possession of the 
 goods or of documents of title to the goods with 
 which he professes to deal — that is, either in actual 
 possession or some one must hold them subject to his 
 control. That you will find defined also in the second 
 
THE FAGTOBS' AGT8. 175 
 
 subsection of the first Section of tlie Act. Thirdly, 
 he must in the particular transaction be acting in the 
 ordinary course of business of a mercantile agent of 
 his class ; and fourthly^ the person taking from him 
 must take in good faith and without notice of any 
 want of authority in the agent. There is yet one 
 difficulty in that; if the agent is in possession of 
 goods without the consent of their owner, the Legis- 
 lature has not gone so far as to protect the person 
 dealing with him. But it has protected a person who 
 deaJs in good faith with such an agent, to a limited 
 extent j it has protected him if the owner once gave 
 his consent to the agent but has withdrawn it ; (&) 
 it has protected him if the agent had possession of 
 goods or documents of title with the owner's consent, 
 and by means of that possession obtained other goods 
 or documents of title without the owner's consent — 
 that is, if the owner put into the agent's hands the 
 power of getting the goods that he professed to deal 
 with, (c) And thirdly, the Legislature has said that' 
 the agent shall always be deemed to have authority 
 until the principal proves that he has not ; it has put 
 upon the principal the burden of proving that the 
 agent was acting without his consent, {d) 
 
 That is the substance of the Factors' Act so far 
 
 (6) Act, § 2, s. 2. (c) Act, § 2, s. 3. 
 
 (d) Act, § 2, s. 4. 
 
176 THE LAW OF SALE. 
 
 as it relates to factors or agents, (e) The object of 
 this part of the Act is to protect persons, who deal 
 with agents acting in the ordinary course of their 
 business, from too strict aa enforcement of the 
 Common Law rights of the true owner. 
 
 Another portion of the Factors' Acts deals with 
 the matters to which I am just about to come, and 
 effects some alteration in the law of sale. In the case 
 of sale from a vendor to a purchaser, the possession 
 may be in one of them while the property is in the 
 other. The property may be still in the vendor but 
 the purchaser by some means may have got posses- 
 sion ; or though the property may have passed to the 
 purchaser the vendor may retain possession. And in 
 either of these cases the man who only has the posses- 
 sion may profess to sell the goods to a person who is 
 ignorant of his vendor's true position. In this case 
 the man who really has the property in the goods sold 
 may find himself apparently deprived of his property 
 by the action of the man who has been left in posses- 
 sion, who, presuming on the evidence of authority the 
 possession of goods gives him, has sold the goods as if 
 they were his own although the property in them is 
 in somebody else. But according to the strict Com- 
 mon Law rule, (/) the man with only the possession 
 could pass no property for he had not any property to 
 
 (e) See especially § 2. (/), Ante, pp. 22, 170. 
 
TEE FACTORS' ACTS. 177 
 
 pass^ and consequently a merchant dealing in good 
 faith and innocently with such a person might find 
 himself mulcted in the loss of his money and the loss 
 of his goods, one man having bolted with the money 
 and the other man having come forward and claimed 
 the goods. The second part of the Factors' Act is 
 designed to protect people who deal with persons 
 having the possession of goods under those circum- 
 stances, and if yon refer to the eighth, ninth, and 
 tenth Sections of the Act you will find that protection 
 set out. The principle the Legislature has acted upon 
 has been to protect a person buying in good faith and 
 without notice of any defect of title from the man who 
 has had the possession but not the property j the 
 reason suggested being this, that if the man with the 
 property chooses to leave his goods in the hands of 
 somebody else, he gives that other person the oppor- 
 tunity of committing a fraud on an innocent purchaser, 
 and if so, as between the two people innocent of the 
 fraud, the innocent purchaser and the innocent owner, 
 the Legislature will cause to suffer the man who has 
 enabled the fraud to be committed. 
 
 These are all the provisions of the Factors' Act 
 with which I propose to trouble you, and I now come 
 to what few remarks I have to make on the com- 
 mercial aspect of the contract of sale. For as Mr. 
 Benjamin has succeeded in filling a large book on 
 
178 BOUGHT AND SOLD NOTES. 
 
 the law of sale, it is obvious that I can only deal 
 in one lecture with a very few of its leading com- 
 mercial aspects. 
 
 The first matter I want to deal with is the nature 
 of the very common mercantile transaction when a 
 broker acts as a go-between between the vendor and 
 the purchase!", and when the transaction is recorded 
 in "Bought and Sold notes." In order to simplify 
 the illustration, perhaps you will allow me to name 
 my vendor as V., my purchaser as P., and my broker 
 in the middle as B. It is usual for the broker when 
 he effects a sale between V. and P. to send what 
 is called a " sold note " to the vendor^ and a " bought 
 note " to the purchaser recording the transaction. 
 There are four common forms of sold or bought 
 notes in use in the City and in every mercantile 
 town in England, each of which has now its well- 
 known effect. 
 
 The practice of sold and bought notes seems to 
 have sprung up from the legislation with regard to 
 London brokers. Until very recently all brokers 
 carrying on business in the City, of London were 
 under the control of the Corporation of London ; (g) 
 and until 1870, all brokers by the Act which put 
 them under the control of the Corporation, were 
 required to keep a broker's book, and therein " truly 
 (f/) Benjamin on Sale, 4th ed. p. 249. 
 
THE OONTBAOT OF SALE. 179 
 
 and fairly enter all sucli contracts, bargains, and 
 agreements on the day of the making thereof, 
 together with the christian and surname at full 
 length of both buyer and seller," and a number of 
 other particulars. The broker having by statute 
 been compelled to make that entry in his broker's 
 book, usually made a sort of abstract or note of 
 it, which he sent on to each of the parties concerned, 
 the sold note to the vendor, the bought note to the 
 purchaser J so that one really had or might have 
 three records of the transaction — the note in the 
 broker's book, the note sent to the vendor, and the 
 note sent' to the purchaser. Obviously if all three 
 differed, as they sometinies did, there was every 
 material for a good lawsuit. 
 
 Now the first common form of sold and bought 
 notes runs in this way: the sold note would run, 
 "Sold for V. to P., (signed) B.," and the bought 
 note would run, " Bought for P. from V., (signed) B." 
 There the names of all the parties appear on each 
 note; and the effect of sending a note like that to 
 either party would be that he would have notice that 
 B., acting as his agent, had in the one case sold for 
 him to P., in the other case bought for him from V, 
 And if the person receiving that sold or bought note 
 did not return it or object to it he would be bound 
 to recognise the broker as his agent ; for he would 
 
 N 2 
 
180 BOUGHT AND SOLD NOTES. 
 
 have received a statement that the broker had acted 
 for him, making a sale or a purchase, and would have 
 been bound by the recognition of authority implied in 
 his not objecting in any way to that sale or purchase. 
 Now in the form of note I have given the principal's 
 name is mentioned : — " Sold for V. to P."; " Bought 
 for P. from -V." Sometimes it runs " to " or " for 
 my principal," in which case it only appears on the 
 note that the agent had a principal; it does not 
 appear who that principal is. In that case, if a 
 usage of trade to that effect is proved, the broker 
 may be held personally liable as principal on the 
 contract, unless he names his principal within a time 
 which varies according to the particular trade. If 
 you will refer to the case of Pike v. Ongley, (h) you 
 will find a case where such a custom was proved and 
 sustained by the Court of Appeal. The note ran, 
 "Sold by Ongley & Thornton to Messrs. Pike & 
 Sons for and on account of owners " ; not naming the 
 principal. Evidence was tendered that by the custom 
 of the hop trade, brokers who did not disclose the 
 name of their principal at the time of making the 
 contract were personally liable on it as principal, 
 although they contracted as brokers for the principal. 
 It was held that such a custom gave a remedy against 
 the brokers, as well as against the principals. So 
 (fe) 18Q.B. D. 709. 
 
TEE CONTRACT OF SALE. 181 
 
 that in such a case, by proof of usage, you can make 
 the broker personally liable as principal. Without 
 such a usage you cannot do so, for the broker pro- 
 fesses on the note to act as an agent, and that has 
 been decided in the leading case of Southwell v. 
 Bowditch. (i) One may further add that where the 
 broker sends notes in the form I have just given you 
 — " Sold for V. to P.," " Bought for P. from V."— 
 supposing V. as a matter of fact had given B. no 
 authority to make such a contract, so that the broker 
 represented he had the authority of a named principal, 
 who in fact had given him no authority, the other 
 party's remedy against the broker is not on the con- 
 tract, but is on the breach of the broker's implied 
 warranty that he has an authority from his prin- 
 cipal, (j) For every person contracting as agent for 
 another impliedly warrants that he has the authority 
 he professes to have. 
 
 The second form of bought and sold note runs 
 in this way. The sold note would run, " Sold for 
 v., (signed) B." ; the bought note would run, " Bought 
 for P., (signed) B." Neither of these notes states all 
 the parties to the contract, for neither of them states 
 who is the other principal ; it suggests that there is 
 a principal, for the broker professes to have sold for 
 
 (i) L. B. 1 C. P. D. 374. 
 
 (j) Gollen V. Wright, 8 E. & B. 647. 
 
182 BOUGHT AND SOLD NOTES. 
 
 the vendor or to have bought for the purchaser^ 
 implying that there is some one else with whom he 
 had the transaction. And in this case, though no 
 one note shows all the parties, any person receiving 
 such a note without objection admits the authprity 
 of the broker to make on his behalf the contract 
 therein stated, for the broker represents to such a 
 person that he is acting on that person's authority ; 
 and if the person receiving the note does not re- 
 pudiate it he admits the authority of the broker so 
 to act. 
 
 The third form of note runs in this way: the 
 sold note, "Bought from you by me, B." ; the 
 bought note, "'Sold to you by me, B." There the 
 broker represents himself to each party as the prin- 
 cipal; though in fact he is making a contract as 
 a go-between between two persons, he represents to 
 each person that he is the principal ; and though in 
 fact he may be agent in each case for an undisclosed 
 principal, he is in form the principal and in law is 
 liable as the principal. (Jc) So that if having sent 
 the sold note, "Bought by you from me, B.," the 
 broker then says to the vendor, "I had an undis- 
 closed principal. P.," though the vendor may make 
 P., the undisclosed principal, liable on the contract, 
 
 (h) Eiggins v. Senior, 8 M. and W. 834, per Baron 
 Parke. 
 
THE CONTBAGT OF SALE. 183 
 
 he has also a remedy against the broker as principal. 
 That is the third form of bought and sold notes. 
 
 The fourth and last ordinary form is where the 
 bought note runs, "Bought for your account, B.," and 
 there is no sold note, for the reason that B., who 
 represents himself as having bought as agent for the 
 purchaser, is in reality the principal and the vendor. 
 In that case there is no contract at all. The agent 
 was in fact the principal, but the purchaser only 
 knew him as his agent, and from the form of bought 
 note it is clear that the purchaser never intended io 
 enter into such a transaction of purchase from his own 
 agent. The only way in which the purchaser can be 
 made liable in such a case is if a trade usage to that 
 effect can be proved, and if the purchaser is shown 
 to know of it. (Z) 
 
 Now those being the forms of bought and sold 
 notes, a number of cases have been decided as to 
 the effects of the different documents, and the result 
 of the authorities comes shortly to this, (m) The 
 broker's signed entry in his broker's book con- 
 stitutes (w) the contract, if authority is proved from 
 the principals to the broker tc act for them. The 
 
 (Z) BoUnson v. Mollett, L. E. 7 H. L. 802. 
 
 (m) Benjamin oh Sale, 4th ed. p. 268. 
 
 (m) Mr. Benjamin uses this word (4th ed. p. 268), which 
 probably means " is the best evidence of " ; but the expression 
 is ambiguous. Of. Blackburn on Sale, 2nd ed. p. 114. 
 
184 BOUGHT AND SOLB NOTES. 
 
 bought and sold notes do not constitute the contract, 
 that is to say, the entry in the broker's book is 
 much better evidence of the contract than the bought 
 and sold notes ; but if the bought and sold notes 
 contain all the terms of the contract, they may be 
 used as evidence to satisfy the Statute of Frauds (o) 
 without the broker's book being produced; in the 
 same way either the bought or sold note may satisfy 
 the Statute of Frauds if it contains all the terms of 
 the contract as it does in the first form of bought 
 and sold notes I referred you to. (p) If only one 
 bought or sold note is put in evidence, the other 
 side may put in the other note to show that the 
 notes differ, with a view of upsetting the evidence 
 of the contract. If these notes and the broker's 
 book do differ, the result is this : (q) where there 
 is a signed entry in the book, but the bought a,nd 
 sold notes differ from it and from each other, the 
 signed entry prevails. If the bought and sold notes 
 agree, but differ from the entry in the book, they 
 may be used as evidence of a new contract, varying 
 the entry in the broker's book, as may also agree- 
 ments in letters outside the bought and sold notes. 
 If there is no signed entry and the bought and 
 sold notes differ, there is no valid contract. Those, 
 
 (o) 29 Oar. II. c. 3, § 4 (p) Ante, p. 179. 
 
 (q) Benjamin, 4th ed. p. 269. 
 
TEE CONTRACT OF SALE. 185 
 
 I thiBk, are the leading diflBculties which have arisen 
 in the transaction of purchasing goods through 
 brokers and by bought and sold notes, of which it 
 is no exaggeration to say there are thousands every 
 day in London and the great mercantile centres. 
 
 The next matter I want to deal with in connec- 
 tion with the contract of sale is the result of the 
 authorities as to the terms implied in the contract 
 of sale. You remember the terms of a contractr may 
 be either such that their truth is essential to the 
 validity of the contract, or they may be such that 
 their untruth or a breach of them may only justify 
 an action for damages. They may be conditions 
 precedent, or simply terms of the contract; further, 
 in selling a thing, the question frequently arises 
 how far a description given of it by the seller at 
 the time of the sale is part of the terms of the 
 contract; that is to say, supposing the description 
 given of the thing sold by the seller at the time 
 of the sale turns out to be untrue, has the buyer 
 a right to rescind the contract, or has he merely a 
 right to claim damages because the statements of 
 the vendor are not complied with ? That question 
 gives rise to endless litigation as to "warranties," 
 because though with charter-parties and policies of 
 insurance the term " warranty " is appropriated to 
 conditions precedent, in the contract of sale it is 
 
186 WARRANTIES IN 
 
 applied to express terms iu the contract whicli 
 are not conditions preoedentj though it is also used 
 for implied terms which are conditions precedent, (r) 
 which adds greatly to the confusion ; and all the 
 disputes which arise whether a horse has been 
 warranted sound, and whether a picture has been 
 warranted as by Canaletti or Turner, all turn upon 
 the question whether the vendor, intended to make 
 it a term of the contract that his statement as to 
 the thing he was selling should be true. These 
 statements, you see, are all express warranties.; the 
 term is expressed in the contract. 
 
 But there are certain terms implied in every 
 contract of sale unless they are expressly^ excluded 
 by the wording of the contract. These "implied 
 warranties" have gradually grown up in the Law 
 Merchant ; very gradually, for they are not settled 
 yet. The Common Law and the Law Merchant origi- 
 nally stated the whole law of sale on this point in 
 two words, "caveat emptor" — the purchaser must 
 look after himself; for nearly every sale took place 
 in market overt, and the Court in effect said to 
 the purchaser : " Here you see the thing, and having 
 seen it you buy it at your risk, and if you were fool 
 enough not to discover its faults on the view, you 
 must take your chance." Subsequent case law has 
 (r) See Chalmers, p. 95. 
 
TEE OONTBAGT OF SALE. 187 
 
 been devoted to wkittling away tlie maxim of " caveat 
 emptor" until there are only the most tattered rags 
 of that venerable institution left, and at present the 
 law begins by stating there is no implied warranty 
 on a certain point, but goes on to make exceptions, 
 which leave practically nothing of the original rule 
 remaining. 
 
 The first implied warranty in a contract of sale, 
 unless clearly excluded, is a warranty that the vendor 
 has a title to sell. ' " By a contract of sale the seller 
 impliedly warrants his right to sell the goods unless 
 the -circumstances of the sale or agreement to sell 
 are such as to show that the seller is transferring 
 only such property as he may have in the goods." (s) 
 When I tell you about fifty years ago the law would 
 have been stated thus, "On a sale of specific goods 
 there is no implied warranty of title", you will see 
 that case law has succeeded in getting the maxim 
 very much altered in its application. The leading 
 case at present which decides that is the case of 
 Eichholz V. Bannister, {t) There the plaintiff went 
 into the warehouse of a Manchester warehouseman 
 and bought a lot of goods. Nothing was said as 
 to the ownership in the goods; but it turned out 
 that the goods were stolen, and the buyer was com- 
 pelled to restore them to the true owner, whereupon 
 
 (s) Chalmers, § 15. (t) 17 0. B. N. S. 708: 
 
188 IMPLIED WABBANTIES IN 
 
 he sued the vendor on the ground that he had 
 warranted the goods were his, and the Court after 
 discussion of all the authorities held that there was 
 such an implied warranty in such a sale. 
 
 The second implied warranty in the sale of goods 
 is this : where the goods sold are not specific goods 
 seen by the vendor, but where they are sold by 
 description, there is a warranty that" they correspond 
 with the description, (m) For instance, to put it 
 shortly, if you contract to sell beans you cannot 
 deliver peas; there is a warranty that the goods 
 which you are selling by description correspond with 
 the description under which you are selling. For 
 instance, in the case of Josling v. Kingsford (v) 
 there was a contract to buy "oxalic acid," and the 
 article tendered was oxalic acid adulterated with 
 sulphate of magnesia, so that in a commercial sense 
 it was not oxalic acid; there was a good deal of 
 oxalic acid in the article, but there was a lot of 
 sulphate of magnesia as well. An action on the 
 implied warranty that the goods should answer the 
 description under which they were sold was success- 
 ful. If the sale as well as being by description is 
 also by sample, the goods must correspond with both 
 the sample and the description, (w) 
 
 {u) Chalmers, § 17. («) 13 C. B. N. S. 447. 
 
 {w) Chalmers, § 16 ; Benjamin, 4th ed. 640. 
 
THE GONTRAOT OF SALE. 189 
 
 The next warranty one has to state in a very un- 
 satisfactory way, owing to the whittling away of the 
 strict old rules. It is laid down that " there is no 
 implied warranty in a contract of sale of the quality, 
 fitness, or condition of goods sold except " — and then 
 come a whole string of exceptions. You will find 
 them stated in Article 17 of Mr. Chalmers' book 
 thus : (1) by the usage of trade there may be such a 
 warranty ; (2) where the goods are ordered by the 
 buyer from a seller who may be expected to supply 
 suitable goods for a particular purpose known to the 
 seller, there is an implied warranty that they are fit 
 for that purpose; (3) where goods are ordered by 
 description from a seller who deals in goods of that 
 description, if the buyer has no opportunity of 
 examining them there is an implied warranty that 
 they are of a merchantable quality ; and lastly, where 
 the contract is for the sale of goods by a manu- 
 facturer, there is an implied warranty that the goods 
 he sells are of his own manufacture ; he is not allowed 
 to go and buy somebody else's goods and sell them 
 without stating that they are not of his own manu- 
 facture. The whole law on this subject, which was 
 first systematically dealt with in the case of Jones v. 
 Just, {x) has also been exhaustively considered by the 
 House of Lords in the case of Drummond v. Van 
 {x) L. E. 3 Q. B. 197. 
 
190 IMPLIEB WABBANTIEB. 
 
 Ingen. (y) That was a complicated case of a latent 
 defect in a sample whicli rendered the clotKs sold 
 tmfit for the purpose for which, the vendors knew 
 they were heing sold. The buyer saw the sample, 
 and the sample corresponded with the goods, but the 
 nature of the defect was such that the goods were 
 unfit for the purpose for which they were sold. It 
 was held that there was an implied warranty that the 
 goods should be fit for use in the manner in which 
 goods of the same quality and general character 
 ordinarily would be used, and the judgment of Lord 
 Herschell in that case in particular is well worth 
 your study. Lastly, in a contract of sale by sample 
 there is an implied warranty that the bulk of the 
 goods sold corresponds with the sample in quality and 
 condition, that the buyer should have a reasonable 
 opportunity of comparing the bulk with the sample, 
 and that the bulk shall be free from any latent defect 
 which would not appear on an examination of the 
 sample, (a) While the purchaser must judge of the 
 goods by the sample he sees, he is not bound to take 
 them if they have a defect which could not be found 
 out by examining the sample that he sees. So much 
 for the warranties that are implied in every contract 
 
 {y) L. E. 13 App. 0. 284; cf. Jams v. Padgett, 24 Q. B. D. 
 650. 
 
 (z) Chalmers, § 18. 
 
TEE CONTBAGT OF SALE. 191 
 
 of sale, and you will readily see that they may be very 
 important in considering the effect of any mercantile 
 transactions. 
 
 The only other matter I wish to deal with, and I 
 can only do so slightly, is the question of when the 
 property passes under a contract of sale, (a) In the 
 first place we may clear off the case where there is a 
 contract for the sale of goods which are not ascer- 
 tained at the time of the contract. In such a case 
 the property never passes until the goods are ascer- 
 tained, so that we may deal only with the case of 
 a sale of ascertained goods. Until the goods are 
 ascertained the property does not pass. (6) And when 
 there is a contract for the sale of specific or ascer- 
 tained goods, the guiding note as to the time when 
 the property passes is the intention of the parties 
 as gathered from the contract, (c) But as the parties 
 do not always take the trouble to express their inten- 
 tion, the Courts have had to invent a number of rules 
 as to what their intention shall be presumed to be if 
 they have not expressed it. {d) In the first place the 
 judges have said that if the contract is for the sale of 
 specific goods fit to be delivered, the property in the 
 goods passes when the contract is made, although the 
 payment for delivery may be postponed. Thus in 
 
 (a) Of. cmte, p. 154 et seq. (c) Ibid. § 20. 
 
 (6) Chalmers, § 19. {3) See Chalmers, § 21. 
 
192 WEEN PBOPEBTY PASSES UNDER 
 
 a contract to sell a ship now on a voyage, payment 
 three months after her arrival, the property in the 
 ship passes at once (subject to the requirements of the 
 Merchant Shipping Act), although the payment will 
 not be made until three months after the ship gets 
 home, and although possession of the ship cannot be 
 delivered till she comes in from sea. 
 
 Where the contract is for the sale of specific goods 
 to which the seller is to do something before they are 
 delivered, the property does not pass until he has 
 done what he has to do to them. If they are clothes 
 which have to be altered by the seller, the property 
 will pass when he has done what is necessary to make 
 them fit to deliver. And in the same way, if the goods 
 are fit to deliver but something must be done by the 
 seller to fix the price, if for instance he has to 
 measure the quantity that is being sold, to weigh it, 
 or to take some other step to ascertain the price, the 
 property will not pass until such measuring or weigh- 
 ing or ascertaining has taken place. That you see 
 practically resolves itself into two propositions : where 
 specific gOods are ready to deliver, the property passes 
 at once ; where there are goods specified but not ready 
 to deliver till something is done, the property passes 
 when that thing has been done. In the case of goods 
 sent " on sale or return " the property passes when the 
 would-be purchaser, the person who holds them on 
 
THE CONTBAOT OF SALE. 193 
 
 sale or return, signifies that he intends to keep them, 
 or having kept them for a reasonable time does not 
 repudiate them. When there is a contract for the 
 sale of goods not yet ascertained, goods which are 
 part of a large quantity, as of a ton of sugar, there 
 being 100 tons in the warehouse, the property will 
 pass when the vendor appropriates a ton of sugar to 
 the particular contract and the buyer assents to that 
 appropriation. Appropriation with the assent of both 
 parties concerned is required, and as an ordinary rule 
 the seller by delivering to a carrier is taken to have 
 appropriated the goods to the contract, unless he re- 
 serves the jus disponendi, (e) by dealing with the bill of 
 lading. The risk usually follows the property ; when 
 the property has passed, the goods are at the risk of 
 the person in whom the property is, and that proposi- 
 tion is very often used in the converse way when one 
 endeavours to find whether the pi'operty has passed 
 by finding at whose risk it was supposed to be ; for it 
 is often a test in commercial transactions as 'to the 
 time when the property passes, to find out who has 
 insured the goods, because the person who has insured 
 the goods is usually the person who thinks that he has 
 to bear the risk, and the person who thinks he has to 
 bear the risk is usually the person who has the pro- 
 perty at the time. Obviously there is a great deal 
 (e) Ante, p. 157. 
 
194 THE OONTBAOT OF SALE. 
 
 more one might say about the contract of sale, and 
 equally obviously I cannot say it in three-quarters of 
 an hour, and I must therefore refer you to the works 
 of Mr. Benjamin and Mr. Chalmers for your further 
 studies. ' . 
 
CHAPTER VII. 
 
 THE POLICY OF MARINE INSUKANCE. 
 
 Authorities. — LoTfudes on Marine Insurance, 2nd ed. For 
 more detailed information see Arnould on Marine Insurance, 
 6th ed., 1887 ; and the American 'work, Phillips on Marine 
 Ittsuranoe. 
 
 You have been supplied with a very ordinary policy 
 of marine insurance, (/) and in the transaction which 
 that, or any, policy embodieSj there will be two parties, 
 the insurer and the insured. The insurer may be, 
 as in this policy, a company — "The Corporation of 
 the Eoyal Exchange Assurance." A number of 
 private insurers at Lloyd's may " underwrite " the 
 policy, or put their names at the bottom, getting 
 the name of the " underwriters " ; or it may be 
 that a large number of ship-owners join together in 
 a mutual insurance club, and produce a very com- 
 plicated association in which everybody is both an 
 
 (/) Appendix, p. 230. 
 
196 TEE POLIGY OF 
 
 insurer and an insured, (g) On the other hand there 
 is the insured who may act through an insurance 
 broker. 
 
 The nature of a policy of marine insurance in 
 English law is twofold. Oa the part of the under- 
 writer or the insurer it is really a bet or wager ; the 
 underwriter^ who was not previously interested in 
 the subject insured, bets so much that a loss to the 
 subject insured will not happen from the perils insured 
 against. If the loss happens, the underwriter is to 
 pay the amount of the loss ; if it does not happen, 
 the insured pays him the amount which has been 
 estimated by the underwriter as a safe amount to 
 risk in the transaction. So that on the side of the 
 underwriter it is a gaming or wagering transaction. 
 But on the side of the insured there must be a real 
 interest at stake in the thing insured; some interest 
 arising from property or contract which will be 
 
 (g) The ship-owner endeavours in oommeroial practice to 
 cover every risk to which his ship may be exposed at sea by 
 a series of policies. Besides the ordinary risks insured by a 
 " Lloyd's policy " similar to the form in the Appendix, which 
 may be underwritten by either private underwriters at Lloyd's, 
 or by one of the large Companies, or may be insured in a 
 Protecting Association, or Mutual Insurance Club, the ship- 
 owner wUl protect himself in a Protecting Association against 
 risks not covered by a Lloyd's policy, and also in a Small 
 Damage Club, against petty claims not covered by either of 
 the above forms of policy. 
 
MARINE INSUBANGE. 197 
 
 affected by the peril insured against, and which is 
 called an " insurable interest." Unless such an 
 interest exists at the time of a loss, the insured 
 cannot recover for the loss; but if it does exist 
 he can recover what will in effect be an indemnity 
 to him against the loss which he has sustained by 
 the peril against which he is insured. As a matter 
 of fact in English law the amount recovered may 
 be more than an indemnity, owing to the English 
 rules as to the insurance of freight and other 
 matters ; but the substantial difference between 
 the two parties to the contract is that while the 
 underwriter is practically betting on the safety of 
 a thing in which apart from the policy be has no 
 interest, the insured must have a real interest in 
 the property which is at risk by perils insured 
 against. 
 
 Before we come to the terms of the policy, certain 
 requisites are necessary for its validity. It is a 
 contract in which extreme good faith is required. 
 Obviously the person who comes to insure a ship, or 
 goods or freight on a ship, knows far more about the 
 particular undertaking that he wishes to insure than 
 the underwriter to whom he comes, and who is only 
 acquainted with the general nature of the trade, and 
 the general nature of the risks to which a vessel in 
 that trade will be exposed. Consequently the law has 
 
198 TEE POLIOY OF 
 
 required extreme good faith from tie insured. He 
 must tell the " whole truth," that is to say he must 
 not conceal anything from the underwriter which 
 might be material to the underwriter's estimation of 
 the risk, and which the underwriter is not expected 
 by the course of business to know. Any conceal- 
 ment of a material fact which is known to the assured, 
 or to one of hia agents who ought to have com- 
 municated it to the assured, may entirely invalidate 
 the policy.. If an underwriter is able to come when an 
 action is brought on the policy and to prove that a 
 fact, which the assured knew and whicb would have 
 affected the judgment of a reasonable underwriter in 
 settling the premium he would take the risk at, has 
 been concealed from him, the policy will be null and 
 void. The insured must speak the " whole truth " to 
 the underwriter. Further, the insured must tell the 
 underwriter "^^ nothing but the truth ;" it must be the 
 " whole truth and nothing but the truth " ; and 
 therefore if in the statements which he makes to the 
 underwriter he misrepresents any material fact, how- 
 ever innocently he may do it, again the policy will 
 be null and void. The temptations which the insured 
 has to conceal facts and to misrepresent facts, the 
 risks which the underwriter runs through not being 
 told of all the facts which the assured knows, are 
 so great that the most extreme penalty is imposed on 
 
MARINE INSUBANOK 199 
 
 any detected case of concealment or misrepresenta- 
 tion. Observe that in neither of these cases does the 
 thing concealed or the thing misrepresented form a 
 part of the contract. It is a statement made or 
 a statement suppressed at the time the contract is 
 entered into ; and a misrepresentation, though inno- 
 cent, though, made in good faith, though, not a term 
 of the contract, may yet invalidate the policy. This 
 is a great distinction between policies of marine in- 
 surance, where the strictest good faith is required, 
 and ordinary contracts ; for in ordinary contracts it 
 is required that the misrepresentation to avoid the 
 contract shall be " fraudulent,^' or made without good 
 faith. 
 
 While that is so with matters which are not terms 
 of the policy, certain terms of the contract may be 
 conditions precedent, conditions upon whose truth the 
 validity of the policy depends, and those conditions 
 precedent here as in the contract of affreightment are 
 called "warranties." {h) The warranties again may 
 be express, stated in the policy, or they may be 
 implied, to be read in any policy unless there are 
 words expressly excluding them. And just as there 
 are in contracts of affreightment a series- of cases 
 about the class of statements that have been held to 
 
 Qi) A warranty must be literally true; a representation 
 need only be substantially so. 
 
200 WABBANTIES IN 
 
 be express warranties, sucli as tlie time of sailing, or 
 the condition of a ship, (i) so in policies of assurance 
 there are a large number of cases as to the state- 
 ments which are held to be " express warranties," the 
 truth of which is essential to the validity of the 
 contract. Sometimes these express warranties are 
 statements of present fact, as of the class of the . 
 vessel. Sometimes they are promises for the future, 
 statements that the ship will not sail beyond certain 
 limits, as for instance that the ship will not navigate 
 the Gulf of the St. Lawrence River in the winter months 
 when the navigation is dangerous, or as it is shortly 
 put, "Warranted no St. Lawrence between October 
 and May." But beside these express warranties, 
 which must turn on the terms of each policy, there 
 are also important implied warranties; for just as 
 in the contract of affreightment there is an implied 
 warranty of the seaworthiness of the ship which is to 
 carry the goods, so in a policy of insurance there 
 is a warranty of the seaworthiness of the ship in 
 which the interest assured is exposed to risk. If 
 the insurance is on ship, the warranty is that the 
 ship is seaworthy or fit to encounter the perils that 
 might be reasonably expected on a voyage of the 
 class she is undertaking. If the insurance is on 
 goods, there is a warranty that the ship which is 
 (i) Ante, p. 108. 
 
TEE POLICY OF MARINE INSURANCE. 201 
 
 going to carry the goods is seaworthy, and i£ that 
 
 ship is not seaworthy the policy may be void, although 
 
 the unfortunate goods-owner has no control over the 
 
 seaworthiness of the ship. Or if the policy is on 
 
 freight, which is the third ordinary form of policy, 
 
 it may be void if the ship which is to earn the 
 
 . freight is unseaworthy. That must be taken with one 
 
 great exception which does not exist in contracts of 
 
 affreightment, in charter-parties, or bills of lading. 
 
 It is quite immaterial to the warranty whether a 
 
 charter is for a voyage or for time ; whether the 
 
 charter is one for twelve months or whether it is 
 
 for a voyage from London to Australia is absolutely 
 
 immaterial to the warranty of seaworthiness in a 
 
 contract of affreightment. But the warranty of 
 
 seaworthiness in a policy of insurance only applies 
 
 to voyage policies. In a time policy, a policy on 
 
 a ship for twelve months, there is no warranty of 
 
 seaworthiness, (j) the suggested reason being that 
 
 the time policy may expire and be renewed when 
 
 the ship is in the middle of her voyage, and when 
 
 it is obviously impossible that any ship-owner can 
 
 guarantee that she is seaworthy, for he does not 
 
 even know whether she is in existence. 
 
 The other warranty which exists in a policy is 
 
 (j) Gibson v. Small, 4> H. L. C. 420 ; Dudgeon v. PemhroTce, 
 L. R. 2 App. 0. 284 
 
202 TSE SLIP. 
 
 the warranty tliat the ship will proceed on the voyage 
 specified, in the ordinary course of that voyage and 
 without unreasonable delay, that is to say the warranty 
 against deviation ; but the practice of the present day 
 very frequently affords a partial provision against 
 a breach of that warranty by what is known as the 
 " deviation clause," which provides that in the event 
 of the ship deviating from the voyage insured the 
 policy is to be extended at a premium to be agreed 
 upon. That clause has the effect of preventing the 
 policy from becoming void by a deviation, and in 
 cases of deviation in good faith, it enables the under- 
 writer to cover the deviation by agreeing a premium 
 with the insured whose ship has deviated. Those 
 then are conditions for the validity of the policy; 
 the assured must have spoken the "whole truth"; 
 he must have spoken "nothing but the truth"; he 
 must literally aud exactly comply with any express 
 warranties in the policy; and he must comply with 
 the implied warranties contained in every policy. 
 Failure in any of these respects will invalidate the 
 policy. 
 
 Before, however, we come to the policy itself, there 
 is a document of great importance in commerce which 
 is the origin of the policy, a little document called 
 the "slip." The "slip" is the document in which 
 the agreement for a policy is in fact made between 
 
THE FOLIOY OF MARINE IN8UBAN0E. 203 
 
 business men, and I venture to say if a " slip " was 
 put before any of you gentlemen here, unless you 
 happen to have special experience in the matter, you 
 would find it entirely unintelligible. The leading 
 terms of the policy to be effected are put on the 
 "slip" in a series of underwriters' hieroglyphics in 
 which few words are of more than one letter, and on 
 which sometimes there is dispute even amongst the 
 underwriters themselves as to what the particular 
 hieroglyphics mean, (k) The Slip cannot be given in 
 ' evidence in any Court, for every policy of insurance 
 requires a stamp, and the " slip " is never stamped ; 
 it is nevertheless an undertaking of the most abso- 
 lute honour among underwriters and business men 
 that the "slip" shall be considered as equivalent 
 to a policy, and if the ship is lost the day after 
 a " slip " has been granted, and long before any 
 policy can come into existence, the underwriter 
 always honours the "slip." To such extent is the 
 binding character of the "slip" in honour carried 
 in commercial circles, that the insured is not bound 
 to communicate with the underwriter any material 
 fact which comes to his knowledge after the slip is 
 signed. Though it comes to his knowledge long 
 
 (Ic) In a recent Msi Prius case, a number of underwriters 
 gave conflicting evidence as to the meaning of an abbreviation 
 fairly common in slips. 
 
204 THE POLICY OF 
 
 before the policy is effected, a binding engagement 
 is created once the " shp " has been signed, and 
 no assured is bound to communicate material facts 
 after that' date to the underwriters, because, as has 
 been quaintly said, "no one is bound to lead his 
 neighbour into temptation," 
 
 The form of policy before you (Z) is a document 
 of very respectable antiquity. The most recent clause 
 in this policy is, I believe, the last, the one which 
 begins, " Free from all average on Corn, Flour, Fish, 
 Salt, Fruit, and Seed," etc. That clause was intro- 
 duced in the year 1745, and is comparatively a 
 modern innovation. For the rest of the policy, with 
 some slight improvements that have been introduced, 
 is some five hundred or six hundred years old, and 
 is probably very nearly in the same form as when 
 the Lombard merchants first brought policies of 
 insurance into England, and when a clause in every 
 policy ran that it shall be " of as much force as 
 every policy that has been effected now in Lombard 
 Street." 
 
 The policy falls into three parts. There is an 
 undertaking by the underwriter to assure a certain 
 interest, whatever it may be, named in the policy 
 against certain perils. That takes up about two- 
 thirds of the policy. Then there comes what is 
 (l) Appendix, p. 230. 
 
MARINE IN8URAN0E. 205 
 
 called " the Sue and Labour Clause," which runs : 
 "And in case of any Loss or Misfortune it shall be 
 lawful to the Assured their Factors Servants and 
 Assigns to sue labour and travel for in and about the 
 Defence Safeguard and Recovery of the said Goods 
 and Merchandises and Ship etc. (or any part thereof) 
 without Prejudice to this Assurance, to the charges 
 whereof the said Corporation will contribute according 
 to the rate and quantity of the sum herein assured." 
 That 'amounts to an undertaking by the underwriter 
 to pay expenses legitimately incurred by the insured 
 in protecting the property insured. By the first part 
 of the policy he will pay damage to the goods by 
 perils insured; in the Sue and Labour Clause he will 
 pay expenses incurred in protecting the goods by 
 preventing the consequences of the perils insured 
 against to goods or ship or freight as may be. And 
 in the last place the innovation of 1745, the 
 " memorandum " as it is always called, provides that 
 certain partial loss on goods, loss which does not 
 amount to more than a certain percentage of the 
 whole amount insured, shall not fall upon the under- 
 writer. Thus while in the first two parts of the 
 policy the underwriter is rendered liable for damage 
 and for expenses incurred to prevent damage, in the 
 last part he is freed from what you may call petty 
 damage to the interest assured. 
 
206 TEE POLIGT OF 
 
 The policy begins with the name of the person 
 assured. The broker who is effecting tha policy 
 usually puts in his own name, for the policy goes 
 on, " as well in his own name as for and in the name 
 and names of all and every other person or persons 
 to whom the same doth may or shall appertain in part^ 
 or in all Doth make Assurance " — so that under that 
 clause the agent can bring in his principals, whoever 
 they may be, aa interested in the policy — " and causeth 
 . . . them and every of them to be assured lost or not 
 lost." The words " lost or not lost " will enable the 
 policy to attach though the interest assured may have 
 been lost at the date of the policy, so long as the 
 assured does not know of the loss. For in insuring 
 an interest at sea it is quite possible that the ship or 
 goods may have been lost before the policy is effected, 
 and these words "lost or not lost" throw upon the 
 underwriter the risk of that, so long as no suggestion 
 of concealmeut or misrepresentation can be made 
 against the person effecting the policy. "At and 
 from " — and then there follows in a voyage policy the 
 description of the voyage insured, which is set 
 out sometimes simply with the place of sailing and 
 the place of arriving, sometimes with more minute- 
 ness j sometimes as simply "voyaging between," 
 leaving a wide liberty of choice. Sometimes the 
 policy is not for a voyage at all but is for a certain 
 
MARINE INSUBANGE. 207 
 
 time, and time policies are becoming more and more 
 usual every year as a way of insuring steamers on 
 regular lines. Owing to the Stamp Act, however, no 
 time policy for longer than a year can be effected. 
 
 Then after one or two immaterial clauses come the 
 words, "upon any kind of Goods and Merchandises 
 whatsoever loaden or to be loaden And also upon 
 the Body Tackle Apparel Ordnance Munition Artillery 
 Boat and other Furniture of and in the Grood Ship or 
 Vessel called the " (whatever the name may be). The 
 name of the ship is a very essential part of the policy, 
 for the underwriter must have an accurate name in 
 order to turn to his Lloyd's Register and see the 
 character of the ship which he is assuring. Now that 
 form, " Ordnance Munition Artillery Boat," runs in 
 every policy but nobody pays the slightest attention 
 to it, for after all the rigmarole about the " Artillery " 
 and the " Boat " there is written into the policy what 
 the parties really mean to insure, simply "goods " or 
 " ship " or " freight," whichever it may be ; and in 
 that, which is the subject matter of the insurance; the 
 insured must have an insurable interest at the date of 
 the loss. If he has at the date of the loss an interest 
 in the goods insured, either from property or from 
 contract, which will be injured by the "loss, it is 
 sufiicient to give him a claim on the policy, although 
 he may have had no such interest at the time when 
 
208 INSURABLE INTEREST. 
 
 the policy was effected, even if his interest only- 
 accrued tlie day before the loss; but he must have 
 some interest of a legal nature in the matter insured. 
 A mere moral expectation not based upon any legal 
 right will not suffice. There is a case which is always 
 known as the " Orchella Weed " case which illustrates 
 the extent to which that is carried, (m) A ship was 
 loading orchella weed in one of the Cape de Verde 
 Islands j the Governor had a large quantity of weed 
 ready to ship^ and if everything had gone on in the 
 usual way the ship would have received a full cargo 
 of orchella weed. The insurance was on freight, but 
 there was no binding contract to ship the orchella 
 weed or pay freight for it ; although it was a matter 
 of tolerable certainty that a full cargo would have 
 been shipped if the ship had remained there, there 
 was no contract on which any action could have been 
 brought binding the Governor to ship a cargo of 
 orchella weed ; and before more than twenty or 
 thirty tons had been got on board the ship was blown 
 out to sea and lost by perils of the sea. The insured 
 claimed the freight of the orchella weed from the 
 underwriters, alleging it had been lost by the perils 
 insured against — perils of the sea. It was answered 
 and held by the Court that insomuch as the insured 
 had no legal right to have the orchella weed shipped 
 (m) Patrick v. Ea/mes, 3 Camp. 441. 
 
THE FOLIOY OF MABINE INSURANCE. 209 
 
 ttey had no insurable interest in freight, however 
 great might have been the moral certainty that the 
 orchella weed would have been shipped in spite of 
 the absence of a binding contract. And in one of the 
 other cases Lord Mansfield summarised the doctrine 
 of insuring expectations, then attempted to be pushed 
 to a considerable extent, by saying that the contention 
 would lead to insuring a £20,000 prize in a lottery 
 without having taken a ticket. The law has always 
 required that there should be at the bottom of your 
 expectations of gain or profit some legal right to 
 either the whole property or part of the property or 
 an interest under some contract, such for instance as 
 the risk which a carrier runs with regard to goods in 
 his care. A carrier is under contractual liability with 
 regard to the goods that he is carrying, and therefore 
 may insure the risk he runs in carrying them, (w) 
 
 Instead of the name of the ship in the policy you 
 will sometimes find " ship or ships " inserted, and in 
 that case there is an obligation upon the insured to 
 declare the name of the ship which he proposes to put 
 at risk under the policy as soon as it comes to his 
 knowledge. A man may not know by what ship 
 goods are coming forward and he may insure £10,000 
 
 (n) Tor a specimen of the cases on insurable interest, 
 which are very complicated, see Anderson v. Morice, L. E. 1 
 App. 0. 713, where the Lords were equally divided. 
 
210 TEE POLIOY OF 
 
 on goods in ''ship or ships." As soon as he knows 
 the ship on which his goods are going forward he may 
 "declare/' "in the ship so-and-so £2; 000 of goods 
 are at risk, and in the ship so-and-so £2,000 of goods 
 are at risk," until he has exhausted the amount which 
 he has insured on his policy on goods in " ship or 
 ships." The policy continues : " Beginning the Ad- 
 venture upon the said Goods and Merchandise from 
 and immediately following the loading thereof on 
 board the said Ship." That may be varied to include 
 the risk of lighters or craft bringing goods from the 
 shore,, and it also depends upon the insured having an 
 insurable interest. If the insured has not an interest 
 in the goods at the time when the goods are loaded, 
 the policy will not attach to the goods as far as he is 
 concerned until he has such ah interest. " And so 
 shall continue and endure during her abode there 
 Upon the said Ship etc. and further until the said 
 Ship with all her Ordnance Tackle Apparel etc. and 
 Goods and Merchandise whatsoever shall be arrived 
 at " — the place of destination — " Upon the said Ship 
 etc. until she hath there moored at anchor Twenty- 
 four hours in safety." There is, you see, a sort of 
 time policy tacked on to the end of the voyage policy, 
 and the ship is required to be in good safety for 
 twenty-four hours after her arrival before the policy 
 lapses, and any loss during those twenty-four hours 
 
MARINE INSURANCE. 211 
 
 will be covered by the policy. The policy proceeds : 
 " And it shall be lawful for the said Ship etc. in this 
 Voyage to proceed and sail to and touch and stay 
 at any Ports or Places whatsoever without Preju- 
 dice to this assurance." That liberty of course is 
 limited to places in the course of the voyage ; it 
 does not give unlimited license to go to the 
 North Pole or any other place the ship chooses 
 to go to ; " the said Ship etc. in this Voyage is at 
 liberty to proceed and sail to and touch and stay." 
 Then the policy states that the said ship, goods, and 
 merchandise shall be rated and valued at so much. 
 This particular policy is a valued policy. The usage 
 originally was to have what were called "open 
 policies" in which no value was stated j and in the 
 event of a loss of the interest insured, it became 
 necessary to set to work and prove exactly what 
 was the value of the interest which had been lost, 
 and there arose a series of complicated rules as to 
 the deductions which were to be made for old 
 material, wear and tear, and in estimating the values 
 of particular interests. This was found so intolerable 
 in commerce to men who wanted to get their money 
 quickly, that underwriters introduced the "valued 
 policy " as it was called, in which the insured stated 
 the value at which his interest was to stand. And 
 when that was done, in the case of a total loss the 
 
 p 2 
 
212 TEH POLICY OF 
 
 valuation was conclusive in the absence of evidence 
 of fraud. Tou can reopen the valuation by showing 
 a grossly fraudulent over-valuation, but the fact that 
 the value is slightly more than what might be ascer- 
 tained to be the true value of the goods will be quite 
 immaterial. For purposes of commercial business 
 the underwriter takes his risk, and is repaid by 
 the increased amount of premium that he gets on 
 the larger valuation inserted in the policy. 
 
 No such stipulation, however, can excuse the 
 assured from proving that he had an insurable 
 interest. Policies are sometimes made with a clause, 
 "No proof of interest in the policy," or what are 
 called in the abbreviated language of underwriters 
 P.P.I. Policies, (o) These are only honour policies ; 
 they could never be sued on because they are gaming 
 or wagering transactions. If the insured has apart 
 from the policy no interest in the subject insured, 
 he is simply making a bet on its safe arrival, and 
 consequently he comes within the provisions of the 
 statutes against wagering policies; (p) and thus any 
 policy which contains similar clauses to a P.P.I. 
 policy is only an honour policy. An underwriter 
 who has taken a premium on such a policy would 
 not be justified by commercial feeling in taking the 
 
 (o) " Policy Proof of Interest." 
 
 (p) 19 Geo. II. c. 37; 8 & 9 Vic. c. 109, § 18. 
 
MARINE IN8UBAN0E. 213 
 
 objection that it was a P.P.I, policy, unless in 
 the presence of very gross fraud indeed, and even 
 then probably a great outcry would be made against 
 that defence being raised. 
 
 Next in the policy there comes an enumeration of 
 "perils assured against," -which is of immemorial 
 antiquity : " Touching the Adventures and Perils 
 which the said Corporation are contented to bear 
 and do take tfpon them in this Voyage They are of 
 the Seas Men of War Fire Enemies Pirates Rovers 
 Jettizons Thieves Letters of Mart and Countermart " 
 (you see how far this policy goes back) " Surprizals 
 Taking at Sea Arrests Restraints and Detainments 
 of all Kings Princes and People of what nation con- 
 dition or quality soever Barratry " (and then come 
 what are called the " general words ") " and of all 
 other Perils Losses and Misfortunes that have or 
 shall come to the hurt detriment or damage of the 
 said Goods Merchandises and Ship etc. or any part 
 thereof." Of course if these words were taken 
 literally they would effect an insurance against every- 
 thing, nothing would be too far-fetched to come 
 under those general words ; but in consequence the 
 Courts have adopted a rule of construction that the 
 general words shall be limited to perils of the same 
 nature as one of the previous perils specifically named, 
 or perils ejusdem generis. To bring the loss within 
 
214 PERILS INS USED AGAINST. 
 
 the " general words " you must show that it is closely 
 
 similar to one of the named perils. To show how 
 
 strictly that has been applied I may refer to the 
 
 recent case of Thames and Mersey Insurance Co. v. 
 
 Hamilton, Fraser ^ Oo. {q) A donkey-engine at sea 
 
 burst its air-chamber owing to somebody's carelessness 
 
 in closing a valve, and the underwriters were sued for 
 
 damage to the donkey-pump, on the ground first of all 
 
 that it was a peril of the sea because it happened on a 
 
 ship at sea, and if it was not a peril of the sea it was 
 
 so like a peril of the sea that it would come under the 
 
 " general words." The case went to the House of Lords, 
 
 because there had been a previous case which created 
 
 some diflBculty, (r) and the House of Lords laid down 
 
 authoritatively the rule for construing these " general 
 
 words/' and held that such a peril was not sufficiently 
 
 like any peril named to be recovered under the 
 
 "general words." The maxim specially applied to 
 
 decide whether a loss is occasioned by these perils 
 
 within the meaning of the policy is the one which I 
 
 have already referred to : (s) — causa proxima non remota 
 
 specto.tur : you are to look at the immediate and not at 
 
 the remote cause. If sea water enters the ship it is 
 
 immaterial by what its entry is caused, for you look at 
 
 (2) 12 App. 0. 484. 
 
 (r) West India Oo. v. Home and Colonial Insurance Co., 
 6 Q. B. D. 51. 
 (s) Ante, p. 126. 
 
TEE POLICY OF MABINE INSURANGE. 215 
 
 the immediate and not at 'the remote cause. The 
 immediate cause of damage is the sea water coming 
 into the ship, the remote cause may be the negli- 
 gence of the crew or of another ship ; but in no case 
 you will look at the remote cause; the only excep- 
 tion is that the assured cannot recover for anything 
 that arises from his own personal faulb. That ex- 
 ception you will see is very much narrower than the 
 undertaking of the carrier in the contract of afEreight- 
 ment ; for there the assured cannot recover for anything 
 which arises from his own personal fault or that of 
 his servants. The assured in a policy of insurance is 
 not affected by the carelessness or negligence of his 
 servants provided that he himself used proper care in 
 selecting them, so that no fault can be ascribed -to 
 him in the manning and equipment of the ship. Thus, 
 the chief distinction in construing these perils under 
 a policy and under a charter-party or contract of 
 affreightment, is, that in the contract of affreight- 
 ment the carrier has contracted, in the absence of an 
 exception, that reasonable diligence shall be used by 
 himself and his servants ; in the policy of insurance it 
 is only against his own personal default that he holds 
 himself responsible. 
 
 Those being the perils against which the interest 
 is insured, if there is a loss the underwriter must 
 pay. Now a loss may be of two kinds ; it may be 
 
216 LOSSES UNDER 
 
 a total, or a partial loss, a loss of tlie whole interesb 
 assured, or a loss of part of the interest assured. 
 Some insurances are against total loss only, which 
 are called in the hieroglyphics of underwriters, 
 "policies F.P.A.," free of particular average, par- 
 ticular average being the name for partial loss. An 
 P.P.A. policy is one in which the underwriter only 
 insures against the total loss of the interest insured. 
 This total loss may be of two kinds ; it may be 
 an absolute total loss, or it may be a constructive 
 total loss. An absolute or actual total loss happens 
 in a case in which it is physically impossible to 
 restore the thing insured to the condition in which 
 it was before the loss. In the case of a construc- 
 tive total loss, it is commercially unreasonable to 
 restore the thing to the condition in which it was 
 before the loss ; it can be done by expenditure 
 of money, but it is not worth while commercially to 
 do it. A ship which is broken up in a storm and 
 goes to bits all over the sea is an actual total loss ; 
 a ship which is stranded and seriously damaged on 
 a desert island where there are no shipbuilding 
 appliances, and is in such a condition that it would 
 take more to repair it than the ship would be worth 
 when it was repaired,' is a constructive total loss. 
 The difference between the two kinds of loss for 
 practical purposes is this : in an actual loss it follows. 
 
TEE POLIOY OF MARINE INSUBANOE. 217 
 
 as a matter of course, that the underwriter takes 
 what if anything is left of the thing lost; he has 
 the " benefit of the salvage," as it is called ; if there 
 are a few planks left of the ship which has been 
 wrecked, they belong to the underwriter without any 
 further proceeding. But in a constructive total loss, 
 something more is necessary before the assured can 
 recover ; he must give notice of abandonment to the 
 underwriter within a reasonable time. Opinions of 
 what is commercially possible and expedient may 
 differ, and if the insured means to say that the ship 
 or the goods are a constructive total loss, and in 
 such a state that commercially it would cost more 
 to repair them than they are worth, he must give 
 the underwriter a chance of forming his own opinion 
 upon that, and himself repairing the loss if he thinks 
 it worth while. In an actual total loss, therefore, 
 you need not give notice of abandonment to the 
 underwriter; in a constructive total loss you must 
 if you intend to claim for a total loss, and you must 
 give that notice with reasonable promptness, so that 
 the underwriter may not be affected by your delay. 
 
 These being the divisions of total loss, partial 
 injury to the subject insured is known as " particular 
 average " or " partial loss," which must be distin- 
 guished from " general average." " Particular average " 
 is partial loss, " general average " is loss which falls 
 
218 TEE MEMOBANDUAL 
 
 upon the whole adventure. As you will see if you 
 compare tlie two expressions, the term "average" 
 can hardly be used in the same sense in both those 
 terms. But " particular average " does not apply to 
 every kind of partial loss. It does not apply to any 
 sums which have to be paid under the Sue and Labour 
 Clause, although they may be less than the whole 
 value of the interest insured. Such a payment, 
 though smaller than the value insured, is not called 
 a " particular average " ; neither are general average 
 payments, though smaller than the amount insured. 
 
 The underwriter's liability for " particular average " 
 is limited by the Memorandum at the end of the 
 policy, which is a remarkably nngrammatical and 
 incoherent production, but has received from the 
 Courts, by a series of cases, an explanation. " Free 
 from all average on Corn Flour Fish Salt Fruit and 
 Seed, unless G-eneral or the Ship be stranded. Free 
 from Average on Sugar Eum Hides Skins Hemp Flax 
 Rice and Tobacco under Five per Cent., and on all other 
 Goods, the Ship and Freight under Three per Cent, 
 unless General or the Ship be stranded, sunk, or 
 burnt." Any person set down to make out by the 
 light of nature what that meant might find con- 
 siderable difficulty in understanding it. The mean- 
 ing which the Courts have attached to it is this, 
 that underwriters are free from all average on 
 
THE POLICY OF MARINE INSUBANGE. 219 
 
 corn, etc., which, is not general average, "unless 
 the ship be stranded." If the ship be stranded 
 they at once become liable for particular average, 
 although the stranding has nothing to do with 
 the particular loss which is claimed as particular 
 average. As to the last part of the clause, the effect 
 is that unless the ship is stranded the underwriter 
 is not liable for a loss which ia under five per cent, 
 of the whole value on the first head of goods enume- 
 rated, or under three per cent, qn the ship or freight. 
 If the ship is " stranded, sunk, or burnt," the under- 
 writer at once becomes liable for all such losses under 
 five per cent, or three per cent., though such losses may 
 not have been caused by the stranding, or the sink- 
 ing, or the burning. The memorandum practically 
 frees the underwriter from liabilities for small losses 
 unless something serious has happened to the ship, 
 such as stranding, or sinking, or burning; and then 
 presumably the idea is, something serious having 
 happened, too minute a line will not be drawn as 
 to the consequences of that stranding, sinking, or 
 burning. 
 
 Two principles have been laid down in construing 
 the Sue and Labour Clause to which I have already 
 referred you. The underwriters under the Sue and 
 Labour Clause are to be liable for expenses incurred 
 by the assured on two conditions. In the first place 
 
220 SUE AND LABOUR CLAUSE. 
 
 those expenses must have been incarred to protect 
 the matter insured from a peril for which the under- 
 writer was liable. If the peril in protection against 
 which the expenses were incurred was one which 
 would not have afEected the underwriters, they are 
 not bound to contribute to any expenses incurred 
 by the insured, because it was perfectly immaterial 
 to them whether the insured incurred those expenses 
 or not; if the goods had been damaged by such a 
 peril, the underwriter would not have had to pay 
 for them. And secondly, the expenses incurred 
 under the Sue and Labour Clause must be incurred 
 by the insured or his agents. Expenses incurred by 
 some perfectly independent salvor, some ship that 
 goes to the rescue of a ship in distress, cannot be 
 recovered from the underwriters under the Sue and 
 Labour Clause ; the payments must be expressly 
 incurred by the agents of the assured, or the assured 
 themselves. 
 
 In the same way the underwriter by commercial 
 custom is liable for general average contributions 
 falling upon the interest which he insures, and con- 
 sequently when any question arises on the general 
 average statement you generally find it is being 
 fought out between different sets of underwriters. 
 The underwriters of freight and cargo of the ship 
 dispute as to the relative proportions in which their 
 
TEE POLICY OF MARINE INSURANCE. 221 
 
 interests should bear on the matter which is to be 
 settled. 
 
 There is only one other matter I want to mention 
 with regard to the policy^ and that is that it has 
 become common lately to add a new liability for 
 the underwriter in the shape of a Collision Clause, 
 which provides that the underwriter shall bear three- 
 fourths of the amount that the ship-owner has to 
 pay for any damage done by his ship in collision. 
 Damage done to the ship insured can be recovered 
 usually under ''perils of the sea," but the liabilities 
 for damage done by the ship insured are or may be 
 very heavy. Commercial men have wished to insure 
 against them, and they constantly and frequently 
 insure such risks in the ordinary form of policy 
 by a collision clause, by which the underwriter under- 
 takes to bear three-fourths of the amount which the 
 insured has to pay, the insured being supposed to 
 bear the remaining one-fourth as a premium on his 
 carefulness. And commercial practice further insures 
 the remaining fourth of such risks in an Indemnity 
 and Protection Association, for merchants desire to 
 equalise losses by averaging all such risks by the 
 means of insurance. 
 
APPENDIX. 
 
 -FLAG 
 
 (Charter iartg. 
 
 18 
 
 IT IS THIS DAY AGREED BETWEEN 
 
 Owners, and 
 Freighters ; that the good Screw Steamer called the 
 of the burthen of Tons, exclusive of Bunkers, now 
 
 at hereby guaranteed 
 
 by the Owners tight, staunch, strong, efficiently ventilated, 
 and every way fitted for 
 
 the voyage, shall forthwith proceed to 
 
 and there load in the customary manner, from the 
 Factors of the said Freighters ; a full and complete Cargo 
 of Coal, not exceeding what she can reasonably stow and 
 carry over and above her Tackle, Apparel, Provisions, and 
 Furniture (including all and sufficient Coal for Steamer's 
 use, which is to be supplied by Freighters at current 
 price), and being so loaded, shall, without delay, proceed 
 to (Steamer having liberty to tow, be towed, 
 
 and assist Vessels in distress), and there deliver the same 
 
224 APPENDIX. 
 
 alongside any Vessel or Wharf, or into Lighters, where she 
 may deliver afloat, as ordered. In consideration thereof 
 Freight to be paid at and after the rate of 
 Shillings and pence per ton of 20 Cwt., 
 
 or 1,015 Kilogrammes ascertained there on delivery, 
 thus : — One third of the estimated Freight to Captain 
 on signing Bills of Lading, in cash less three per cent, 
 discount, and the remainder (less cash for ordinary dis- 
 bursements at Port of Discharge, which is to be advanced 
 at the exchange of 25 francs per £ sterling), on the right 
 and true delivery of the Cargo, by Bill on Freighters, at 
 three months' date, or by like Bill on Paris payable in 
 London at Merchants' option. All charges incurred under 
 this Charter by Steamer at Port of Loading, are to be 
 considered as Cash advanced on account of Freight, and 
 may be deducted from any payment of same. Should no 
 advance be taken, the amount of such charges may be 
 endorsed on Bills of Lading as Freight advanced. The 
 Steamer to be consigned to the Receivers of the Cargo, 
 paying them 2 per cent. Address Commission ; and their 
 Broker, free of Commission, but paying latter the usual 
 charge for doing the Steamer's business. 
 Captain or Agents to sign Freighters' BiUs of Lading as 
 presented, and without qualification, in accordance with 
 the weight of the -Dock or Railway Company, which the 
 Captain is to ascertain and control by all the means at 
 his command. 
 
 The Steamer to pay Harbour Tolls and Dock Wharfage on 
 Cargo as Customary, Trimming, Consulages on Ship and 
 Cargo, Lights, Pilotages, and all other Port Charges what- 
 soever, but the Cargo to be taken from alongside free of 
 expense and risk to the Steamer. (The Act of God, the 
 Queen's Enemies, Fire, and all Dangers and Accidents of 
 
APPENDIX. 225 
 
 the Seas, Rivers, errors of and/or negligent navigation 
 during the said Voyage always excepted. 
 Cargo to be loaded in hours, from and during the 
 
 time Steamer is ready to load ; which time is not to count 
 until receipt by Freighters of vn-itten notice, between the 
 hours of 9 a.m. and 5 p.m. (from 5 p.m. Saturdays until 
 7 a.m. Mondays, Custom House, Colliers, Bank, or other 
 Holidays excepted), and time not to count after 5 p.m. on 
 the day previous to a Bank, Colliers or Custom House 
 Holiday, and not to commence again until 7 a.m. the day 
 after such Holiday, but Charterers to be at liberty to load 
 Cargo or bunkers into the Steamer during these excepted 
 hours, the time used in Shipping Cargo to count as loading 
 hours, and if sooner despatched, Steamer to pay Eight 
 Shillings and Fourpence for every hour saved on the time 
 allowed for loading. Steamer to be discharged at the rate 
 of 400 tons per working day from and during the time she 
 is ready to discharge. Demurrage over and above the said 
 Ijdng time, at Sixteen Shillings and Eightpence per like 
 hour, except in case of riot, or commotion by pitmen, 
 lockout, strike, or stoppage at any collieries with or from 
 which the Freighters may have arranged for the shipment 
 of the Cargo or a portion thereof; occasioned by any dis- 
 pute between masters and men, stoppage, strike, or lockout 
 of trimmers, or any hands employed in loading or dis- 
 charging the Cargo ; frosts, floods, or any other occurrence 
 beyond the control of the Freighters or Receivers, by which 
 they are prevented from getting the coal to or from the 
 Steamer. Freighters to be at liberty to appoint trimmers 
 for stowing the Cargo at the usual tariff, it being under- 
 stood that Freighters shall not be responsible for their acts 
 or defaults, nor shall the Trimmers be deemed Freighters' 
 Servants or Agents. 
 
226 - APPENDIX. 
 
 The Receivers of the Cargo to have the option of appointing 
 the Stevedore to discharge the Steamer at current rate^ 
 steam appliances, shovels, and baskets to be provided by 
 the Steamer. 
 
 Freighters to be kept advised of Steamer's probable date of 
 readiness to load, and also of her sailing for 
 Should Steamer arrive and be ready to load at 
 without this advice to Freighters, they to be allowed am 
 extra twenty-four hours for loading. 
 
 In case of average, the same to be settled in England ac- 
 cording to custom at Lloyd's. 
 
 Should the Steamer put into any Port or Ports, leaky or 
 with damage, the Captain shall without delay inform the 
 Freighters thereof, and in event of the Cargo or any portion 
 thereof having to be discharged, the Freighters to have the 
 option of Shipping in substitution of the whole or any 
 portion of the original Cargo so discharged an equivalent 
 quantity of other Coals, but any additional expense occa- 
 sioned by such substitution to be borne by Freighters. 
 Should a new Cargo or part Cargo be shipped, no further 
 advance of Freight beyond the one-third above mentioned 
 shall be due or payable. 
 
 If any misrepresentation be made respecting the size, posi- 
 tion, or state of the Steamer, or should the Steamer not 
 have arrived at and be ready to load on or before 
 
 noon of the Freighters to have the option of 
 
 cancelling this Charter Party. 
 
 It is agreed that for each breach of this Contract not other- 
 wise specially provided for, the party breaking the Contract 
 shall pay to the other party, by way of liquidated 
 
 damages, the sum of Three Hundred Pounds. 
 It is agreed that all liability of the Freighters under this 
 
APPENDIX. 227 
 
 Charter, in every respect, except as regards Advance Freight 
 and loading Demurrage, if any, shall cease as soon as the 
 •Cargo is shipped, the Captain accepting his lien on the 
 •Cargo for Freight and Demurrage in lieu thereof. 
 
 A true copy of the original Charter. 
 
 The Commission of 5 per cent, on the amount of Freight and 
 Primage is due on the signment of this Charter, Steamer 
 lost or not lost and the Captain to clear with. 
 
Mediteeeanean, Black Be a and Baltic Grain 
 Cargo Steamer Bill op Lading, 1890. 
 
 §hi|)p£l), in good order and condition, by_ 
 
 in and upon the good Steam-ship called the_ 
 under Flag whereof. 
 
 is Master for this present voyage, now lying in_ 
 _and bound for 
 
 with liberty to call at any ports on the way for coaling 
 or other necessary purposes, to sail without Pilots and to 
 tow and assist Vessels in distress, and to deviate for the 
 purpose, of saving life ; 
 
 and to be delivered in the like good order and condition 
 
 at the aforesaid port of ' 
 
 unto or to his or 
 
 their assigns, he or they paying freight and/or demurrage, 
 if any, for the said goods and all conditions and exceptions 
 
 of the Charter Party, dated 
 
 are incorporated herewith. The Act of God, Perils,-Dangers, 
 and Accidents of the Sea or other Waters of what nature 
 and kind soever; Fire from any cause on Land or on 
 Water, Ban-atry of the Master and Crew, Enemies, Pirates 
 and Robbers, Arrests and Restraints of Princes, Rulers 
 and People, Explosions, Bursting of Boilers, Breakage of 
 Shafts, or any latent defect in the Hull, and/or Machinery, 
 Strandings, Collisions, and all other Accidents of Navi- 
 gation, and all Losses and Damages caused thereby are 
 excepted, even when occasioned by negligence, default or 
 
APPENDIX. 229 
 
 error, in judgment of the Pilot, Master, Mariners, or other 
 Servants of the Shipowners, but, unless stranded, sunk or 
 burnt, nothing herein contained shall exempt the Ship- 
 owner from liability to pay for Damage to Cargo occasioned 
 by bad Stowage, by improper or insufficient Dunnage, or 
 absence of customary Ventilation, or by improper opening 
 of Valves, Sluices and Ports, or by causes other than 
 those above excepted, and all the above exceptions are con- 
 ditional on the Vessel being Seaworthy when she sails on 
 the Voyage, but any Latent Defects in the Hull and/or 
 Machinery shall not be considered unseaworthiness, pro- 
 vided the same do not result from want of due diligence of 
 the Owners, or any of them, or by the Ship's Husband or 
 Manager. 
 
 General Average payable according to York- Antwerp 
 Rules, 1890. 
 
 laying days have been used at the 
 
 ports of Loading. 
 
 In Witness whereof, the Master of the said Ship hath 
 affirmed to three Bills of Lading, aU of this tenor and date, 
 one of which Bills being accomplished, the others to stand 
 void. 
 
 Dated in this ^day of 189 
 
 Weight, Quantity and Quality unknown. 
 
 We certify that tlie witliin is the agreed form of the 
 Mediterra-nean, Blaeh Sea and Baltic Grain Cargo Steamer 
 Bill of Lading, 1890. 
 
 (^Sigri£d) 
 
 Chairman. 
 
 [Signed) 
 
 Hon. Sec. 
 
Xo. £ Payable at 
 
 By the Corporation of the Royal Exchange 
 
 Assurance. 
 
 in the #ame of Sob Amen. 
 
 as well in own name as for and in the name and 
 
 7iames of all and every other person or persons to ivlwm the 
 same doth may or shall appertain in part or in all Doth 
 viaJce Assurance and eauseth 
 
 and them and every of them to he assured lost or not lost at 
 and from 
 
 ' With leave to touch at all Ports and Places on either side 
 of and at the Cape of Good Hope for all purposes. 
 
 Including Risk of Craft to and from the Ship. Warranted 
 free of Capture, Seizure, and Detention, and the conse- 
 quences thereof or any attempt thereat, and also from all 
 consequences of hostilities or warlike operations, whether 
 before or after declaration of war. 
 
 v.pon any Icind of Goods and Merchandises lohatsoever loaden 
 or to be loaden And also upon the Body Tackle Apparel 
 Ordnance Munition Artillery Boat and other Furniture of 
 and in the Good Ship or Vessel called the 
 Burthen or thereaboids Whereof is Master (under 
 
 GOD) for this present Voyage 
 
 or tohosoever else shall go for Master in the said Ship or by 
 irhatsoever other name or names the same Ship or the Master 
 thereof is or shall he named or called, Beginning the Ad- 
 venture upon the said Goods and Merchandises from and 
 immediately folloinng the loading thereof on hoard the said 
 Ship And upon the 
 
 said Ship etc. and so shall continue 
 
APPENDIX. 231 
 
 and endure during her abode there Upon the said Ship etc. 
 And further until the said Ship with all her Ordnance Tackle 
 Apparel etc. and Goods and Merchandises whatsoever shall 
 he arrived at Upon the said Ship etc. 
 
 until she hath there moored at anclwr Twenty-four hours in 
 good safety. And upon the Goods and Merchandises until the 
 same he there discharged and safely landed : And it shall he 
 lawful for the said Ship etc. in this Voyage to proceed and 
 sail to and touch and stay at any PoHs or Places whatsoever 
 icithout Prejudice to this Assurance. The said Ship etc. 
 Goods and Merchandises etc. for so much as concerns the 
 Assureds {by Agreement made between the Assureds and the 
 said Coi'poration in this Policy) are and shall he rated and 
 valued at Sterling, loithout 
 
 further Account to he gicen by the Assureds for the same. 
 
 Touching the Adventures and Perils which the said 
 Corporation are contented to bear and do take upon them 
 in this Voyage They are of the Seas Men of War Fire 
 Enemies Pirates Rovers Thieves Jettizons Letters of Mart 
 and Countermart Surprizals Taking at Sea Arrests Re- 
 straints and Detainments of all Kings Princes and People 
 of what nation condition or quality soever Barratry of the 
 Master and Mariners and of aU other Perils Losses and 
 Misfortunes that have or shall come to the hurt detriment 
 or damage of the said Goods and Merchandises and Ship 
 etc. or any part thereof : And in case of any Loss or Mis- 
 fortune it shall be lawful to the Assureds their Factors 
 Servants and Assigns to sue labour and travel for in and 
 about the Defence Safeguard and Recovery of the said 
 Goods and Merchandises and Ship etc. (or any part thereof) 
 without Prejudice to this Assurance, to the charges whereof 
 the said Corporation will contribute according to the rate 
 and quantity of the sum herein assured. It is expressly 
 
232 APPENDIX. 
 
 declared and agreed that no acts of the Insurer or Insured 
 in recovering, saving, or preserving the property insured 
 shall be considered as a waiver or acceptance of abandon- 
 ment. And it is agreed by the said Corporation that this 
 Writing or Policy of Assurance shaU be of as much force 
 and effect as the surest Writing or Policy of Assurance here- 
 tofore made in Lombard Street or in the Royal Exchange 
 or elsewhere in London. And so the said Corporation are 
 contented and do hereby promise and bind themselves and 
 their Successors to the Assureds their Executors Adminis- 
 trators and Assigns for the true performance of the pre- 
 mises, confessing themselves paid the Consideration due 
 unto them for this Assurance by 
 at and after the Rate of per Cent. 
 
 En §SEitn£00 whereof the said Corporation have caused 
 their Common Seal to be hereunto affixed and the Sum or 
 Sums by them assured to he hereunder written at their Office 
 in the Royal Exchange of London this day 
 
 of in the Year of Our Lord One 
 
 Thousand Eight Hundred and 
 
 '3[ke saii Corpflration are content with this 
 Assurance for 
 
 Free from all Average on Corn Flour Fish Salt 
 Fruit and Seed, unless General or the Ship be 
 stranded. Free from Average on Sugar Rum 
 Hides Skins Hemp Flax Rice and Tobacco under 
 Five per Cent, and on all other Goods, the Ship 
 and Freight under Three per Cent, unless Gene- 
 ral or the Ship be stranded, sunk,, or burnt. 
 
 By Order of the Court of Directors, 
 
 Secretary. 
 
INDEX, 
 
 Abandonment, notice of, 217. 
 Acceptance, presentment of bill 
 for, 51. 
 
 „ of bill, 53-59. 
 
 „ general and qualified, 55. 
 Acceptor of bill, liabilities of, 57. 
 Accommodation bill and party, 
 
 68. 
 Act of God, 123. 
 Advance freight, 141. 
 Agents and Factors' Acts, 171-176. 
 Allonges to bills, 63. 
 Average, general, 136, 217, 220. 
 ,, partioulai-, 217. 
 
 Banker and customer, 79-81. 
 
 Bank-notes, history of, 33. 
 
 Bill of Exchange, definition, 40-49. 
 
 „ history of, 28-31. 
 
 „ form of, 41. 
 
 „ when payable, 47. 
 
 „ acceptance of, 53-59. 
 
 ,, indorsement of, 59-64. 
 
 „ holder in ,due course of, 65- 
 67. 
 
 Bill of Exchange, payment of, 69- 
 73. 
 
 „ dishonour of, 73-77. 
 
 „ discharge of, 77. 
 
 „ forgery of, 78. 
 Bill of Lading, form of, 228. 
 
 „ definition, 87-89. 
 
 „ construction of, 90-102. 
 
 „ and charter, 96-102. 
 
 „ captain's authority to sign, 
 102, 
 
 „ liability for signature of, 103. 
 
 „ conditions precedent in, 105- 
 113. 
 
 I, liability of carrier under, 
 122-130. 
 
 „ freight under, 140-144. 
 
 „ as document of title, 147. 
 
 „ indorsement of, 151-154, 
 158, 162. 
 
 „ delivery under, 163-167. 
 
 „ sets of, 163. 
 Bill of Lading Act, 152. 
 Bottomry bond, 135. 
 Bought and Sold notesj 178-185. 
 
234 
 
 INDEX. 
 
 CanoeUing olauee, 141. 
 Captain's authority to sign bill of 
 lading, 102. 
 
 „ duty on voyage, 130-136. 
 Carrier's liability, 122-130. 
 Causa proxima, non remota, speo- 
 
 tatur, 126, 214. 
 Caveat emptor, 186. 
 Charter-party, form of, 223. 
 
 „ definition, 87-89. 
 
 ,, construction of, 90-102. 
 
 „ law governing, 91. 
 
 „ custom and, 95. 
 
 „ and bill of lading, 96-102. 
 
 „ incorporated in bill of lading, 
 101. 
 
 „ conditions precedent in, 105- 
 113. 
 
 „ loading under, 114-122. 
 
 „ liability of carrier under, 
 122-130. 
 
 „ discharge under, 189. 
 
 „ freight under, 140-144. 
 
 „ damages under, 145. 
 Cheques, 79-84. 
 
 „ history of, 34. 
 CtoseB in action, 25. 
 Civil law, 3. 
 Clearing House, 82. 
 Collision clause, 221. 
 Common Law, meanings of, 2-4. 
 
 „ rules of, evaded by Law 
 Merchant, 23, 171. 
 Concealment in policies, 198. 
 Conditions precedent in charters, 
 105-113. 
 
 „ in sale, 185-190. 
 
 „ in policy, 199-202. 
 
 Consignee in bill of lading, 163. 
 Constructive total loss, 216. 
 Courts of fairs, 7. 
 Crossing cheques, 81-84. 
 Custom in Law Merchant, 19, 20, 
 96, 180. 
 
 Days of grace, 70. 
 Dead freight, 142. 
 Debenture bonds and scrip, 38. 
 Declaring under policy, 210. 
 Delivery orders, 167-170. 
 Demurrage, 115, 117-122, 138. 
 Deposit receipt, 85, 86. 
 Deviation on voyage, 130-132. 
 
 ,, clause, 202. 
 Discharge under charter, 139. 
 Dishonour of bill, 73-77. 
 Dock warrants, 167-170. 
 Drawee of bill, 44. 
 Drawer of bill, 44. 
 
 ,, liabilities of, 50. 
 
 Equity, 2. . 
 
 Excepted perils, 122-130. 
 
 F.P.A. policy; 216. 
 Factors' Acts, 170-177. 
 Fairs, Mercantile Law in, 7. 
 Flag, law of the, 92. 
 Forgery of bill, 78, 80. 
 Freight, 88, 140-144. 
 Freight pro rata, 144. 
 
 General average, 136, 217, 220. 
 General ship, 88. 
 
INDEX. 
 
 235 
 
 Holder in due oouree, 65. 
 Holt, Lord, on promissory notes, 
 31, 32. 
 
 I.O.U., 85, 86. 
 
 Indorsement of bill of exchange, 
 59-64. 
 
 „ of bill of lading, 151-154, 162. 
 
 „ conditional, 158. 
 Indorser, liability of, 64. 
 Insurable interest, 197, 207-209. 
 Ipswich, Domesday Book of, 11. 
 Iron warrants, 37. 
 Ives, St., fair at, 7-10. 
 
 Jettison, 135. 
 
 Jus disponendi, 157, 193. 
 
 Lay days, 115. 
 
 Liens under charter, 144. 
 
 „ of unpaid vendor, 155. 
 Lloyd's policy, 196. 
 Loading under charter, 114-122. 
 Lost or not lost, 206. 
 Lumpsum charters, 142. 
 
 Mansfield, Lord, 16. 
 Market overt, 24, 186, 
 Mate's receipt, 149. 
 Memorandum in policy, 205, 218. 
 Mercantile agent, 174. 
 Mercantile Law, nature of, 5, 6, 12. 
 
 ., growth of, 6-19. 
 
 „ in fairs, 7-10. 
 
 „ in seaports, 11, 12. 
 
 „ evades Common Law Eules, 
 23-26. 
 
 Misrepresentation in policy, 199. 
 Mutual Insurance Club, 195. 
 
 Negotiable instruments, 26. 
 
 „ marks of, 27. 
 
 „ history of, 28-39. 
 Negotiation of bills, 59. 
 Notice of dishonour, 73-77. 
 " Not negotiable," 84. 
 
 Open policy, 211. 
 
 Particular average, 217-219. 
 Payment of bill, 69-73. 
 
 „ presentment for, 71. 
 Pepoudrous, Court, 7. 
 Perils, insured against, 213-215. 
 Policy, form of, 239. 
 
 „ nature of, 196, 197. 
 
 „ requisites for validity, 197- 
 202. 
 
 „ warranties in, 199-202. 
 
 „ explanation of, 206-215. 
 
 „ open and valued, 211. 
 
 „ wagering or P.P.I., 212. 
 
 „ perils insured against in, 
 213-215. 
 
 „ losses under, 215-219. 
 Post Office orders, 38. 
 Presentment for acceptance, 51. 
 
 „ for payment, 71. 
 Promissory Notes, 84-86. 
 
 „ history of, 31-33. 
 Property, when it passes under 
 
 sale, 191-194. 
 Protecting Association, 196. 
 
236 
 
 INDEX. 
 
 Qualified aooeptances, 56. 
 Queen's enemies, 123. 
 
 Restrictive indorsements, 62. 
 
 Sale, Contract of, 178-194. 
 
 „ and Factors' Acts, 176, 177. 
 
 ,, warranties in, 185-190. 
 
 „ when property passes under, 
 191-194. 
 Sale or return, 192. 
 Salvage, 138. 
 Seaworthiness, 109, 201. 
 Slip and policy, 202. 
 Small Damage Club, 196. 
 Sold notes, 178, 185. 
 Stoppage in transitu, 159-161. 
 Stopping a cheque, 81. 
 
 Strikes, 119, 120. 
 
 Sue and Labour Clause, 205, 219. 
 
 Total loss under policy, 216. 
 Transhipment, 133-135. 
 
 Underwriters, 195. 
 Unpaid vendor, 154-160. 
 „ his lien, 155. 
 
 Valued policy, 211. 
 
 Voyage, oaptain'sduty on, 130-136.. 
 
 Wagering policies, 212. 
 WarrcmUea in charters, 105-113. 
 
 „ in sale, 185-190. 
 
 „ in policies, 199-202. 
 Warrants, Iron, 37. 
 Wharfinger's certificate, 167-170.