TEST PAPER 1

Q1. Define proposal. What are the requisites of a valid proposal?

Answer: The word ‘offer’ and ‘proposal’ can be used interchangeably. As per Section 2(a) of Contract Act,
“When a person signifies to another his willingness to do or abstain from doing anything with a view to
obtaining the assent of that other to such act or abstinence, he is said to have made a proposal.
Thus, a proposal consists of two parts, (i) a promise by the promiser and (ii) a request to the promisee for
something in return.
Following are the essentials of a valid offer –
• The offer must create some legal obligation, give rise to legal relationship between the parties carry
legal consequences. For example, ‘A’ invites ‘B’ for dinner. ‘B’ accepts the invitation. But, at the
appointed day and time, ‘B’ does not turn up. ‘A’ cannot take legal action against ‘B’ for breach of
contract because this was a social arrangement and there was no intention between ‘A’ and ‘B’ to
create a legal obligation or a legal relationship with legal consequences.
• Offer must be certain: The term of an offer must be certain. Under Section 29 of the Contract Act, only
those agreements, meaning of which is certain or capable of being made certain are valid. Otherwise,
they are void.
• Offer may be specific or general: When an offer is made to a specific person, the offer is specific. Its
performance then has to be by the specific person only. As against this, if the offer is made to world at
large then it is called a general offer and it can be performed by anybody. In a specific offer,
advertisement in media is not necessary. But in general offer, the offer is made through advertisement
in newspapers, radio, TV, etc.
• Offer must be communicated to the offeree: Communication is necessary. It may be by words spoken,
written, by conduct, by sign, by gestures, by post, telephone, telex, internet, email, etc. But if there is
no communication, there can be no acceptance. And if there is no acceptance, there can be no
contract. In other words, a person can accept the offer only when he knows about it. If he does not
know, no contract can come into existence. Also, the communication of an offer is complete when it
comes to the knowledge of the person to whom it is made.
• An offer may be conditional: An Offeror is free to lay down any conditions as he wishes in the offer.
The only requirement is that all the terms and conditions must be brought to the notice of the offeree
at the time of making of offer.

Q2. What agreements are expressly declared void under various sections of the Indian
Contract Act?
Answer: Under Section 2(9) of Contract Act, 1872, an agreement not enforceable by law is said to be void.
As we have seen earlier, some of the agreements expressly declared void by law are as under
- Agreements by minors
- Agreements by persons of unsound mind
- The objects of consideration of which is unlawful
- Agreements induced by mistake.
Besides this, agreements not supported by consideration (excepting the three exceptions, and the contract of
agency, which are explained in subsequent part of this study material), are also void. Furthermore, the
Contract Act also declares following agreements to be void:
(1) Agreements in restraint of marriage
(2) Agreements in restraint of trade
(3) Agreement in restraint of legal proceedings
(4) Uncertain agreements
(5) Wagering agreements
(6) Agreements to do impossible or illegal acts.

Q3. Define bailment. What are the duties of a bailee?

Answer: A "bailment" is the delivery of goods by one person to another for some purpose, upon a contract
that they shall, when the purpose is accomplished, be returned or otherwise disposed of according to the
directions of the person delivering them.
The person delivering the goods is called the "bailor". The person to whom they are delivered is called the
"bailee".

Duties of Bailee:
1. Duty of reasonable care:
In terms of Section 151 of the contract Act – “In all cases of bailment the bailee is bound to take as
much care of the goods bailed to him as a man of ordinary prudence would, under similar
circumstances, take of his own goods of the same bulk, quantity and value as the goods bailed.”
2. Duty not to make unauthorized use:
Bailee is expected to strictly use the goods for the purpose for which they have been given to him. If
he uses the goods for the purpose other than the purpose for which it is given, the contract of
bailment becomes avoidable at the option of the bailee.
3. Duty not to mix:
A bailee is expected to take proper care in storage of goods. He is not expected to mix the goods of
the bailor with his own goods. If he does that he is bound to bear all the expenditure that is incurred in
separating the goods. He will also have to bear any other expenditure associated with that including
damage to the goods on account of this mixing and separation. Furthermore, in cases where the
goods are mixed and mixing is of such a nature that bailor’s goods cannot not be separated from
bailee’s goods, the bailee will be required to compensate the bailor for the loss of goods.
4. Duty to return:
Once the time for which goods have been bailed has expired or the purpose for which the goods were
given is accomplished, it is the responsibility of the bailee to return the goods to the bailor without
waiting for any demand from the bailor.
5. Duty not to set up adverse title:
A bailee is not allowed to set up a title in favour of third party in respect of bailor’s goods. Even if any
other person is claiming the ownership to the goods that have been bailed to the bailee he is
expected to return the goods only to the bailor and this will be without any risk or action against him in
law for conversion by that third person who was claiming to be the owner.
 6. Duty to return increase: If there is any profit earned from the goods that have been bailed, the
bailee is bound to give this increase or profit to the bailor or as per the bailor’s direction, provided
there is no contract to the contrary.

Q4. In your own words describe Section 3 of the Bill of Lading Act, 1856?
Answer: Under Section 3, every bill of lading now in the hands of the consignee for valuable consideration
representing goods to be shipped on board shall be conclusive evidence of such shipment against the master
or other persons who sign the bill of lading.
every bill of lading now in the hands of the consignee for valuable consideration representing goods to be
shipped on board shall be conclusive evidence of such shipment against the master or other persons who
sign the bill of lading.
In my opinion it is good for master and consigner so that they have proper evidence for receipt and delivery of
goods. So, section 3 of bill of landing is beneficiary for both master and consigner.

Q5. Why was the Indian COGSA enacted by the legislature?

Answer: The Indian legislature enacted the Indian Carriage of Goods by Sea Act, 1925, with the purpose of
establishing uniform rules for the liabilities and rights of the sea carrier. The Act is based on the Hague Rules.
The correct title of the Hague Rules is "The International Convention for the Unification of Certain Rules of
Law Relating to the Bills of Lading, 1924". The Rules form the Schedule to the Act. The Act and the Schedule
have now been amended by the Multimodal Transportation of Goods Act, 1993, bringing the Indian law on par
with some of the Hague-Visby Rules of 1963 as amended by the Brussels Protocol of 1979.

Q6. What was the purpose of enacting the Facilitation Convention? Where and what
does it apply to?
Answer: The Convention's main objectives are to prevent unnecessary delays in maritime traffic, to aid co-
operation between Governments, and to secure the highest practicable degree of uniformity in formalities and
other procedures. In particular, the Convention reduces the number of declarations which can be required by
public authorities.
Most human activities are regulated, either by precedent, convention or regulation. Most regulations are
essential - but sometimes they come to be regarded not only as unnecessary but also as a significant burden
on the activities they are supposed to control. Few activities have been more subject to over-regulation than
international maritime transport.
This is partly because of the international nature of shipping: countries developed customs, immigration and
other standards independently of each other and a ship visiting several countries during the course of a
voyage could expect to be presented with numerous forms to fill in, often asking for exactly the same
information but in a slightly different way.
Q7. Discuss various defences against tortious liabilities?
Answer: Defences Against Tortious Liability:
1. Defences For Negligent Harms To Person And Property:
Contributory Negligence and Assumption of Risk: Contributory negligence may be applicable to some torts
other than negligence but that is its main sphere of operation. By speaking of contributory negligence of the
defendant, it is meant that the accident is partly caused by the negligence of the defendant and partly by the
failure of the plaintiff to take such care of his own safety as is reasonable in the circumstances.
The defence of assumption of risk, often called “volenti non fit injuria” (Latin phrase meaning "there can be no
injury to a person who is willing" involves that the plaintiff has expressly or impliedly agreed to run the risk
without compensation of defendant’s negligence if it occurs. A good example of this is the refusal to apply the
defence in cases involving passengers who knowingly continue to travel in a vehicle with a drunken driver.
Dann v. Hamilton (1939).
Contributory negligence was at Common Law a complete defence of tort and now, under the Law Reform
(Contributory Negligence) Act, 1945, goes to reduce damages.
2. DEFENCES FOR INTENTIONAL TORTS TO PERSON AND PROPERTY
Consent: No injury is done to one who consents. No act is actionable as a tort at the suit of any person who
has expressly or impliedly assented to it. This applies to intentional acts which would otherwise be tortious.
Mistake: Mistake may enable the defendant to shelter under a privilege which he believes erroneously to exist
on the facts.
Necessity: The defence, if it exists, enables the defendant to escape liability for the intentional interference
with the security of another person or property on the ground that the acts complained of were necessary to
prevent greater damage to the common wealth of another or of the defendant himself, or to their or his
property. But the defence of necessity is not generally favoured by the Courts.
Contributory Negligence and Illegality: Since contributory negligence has already been dealt with, we shall
here deal with illegality. Illegality is an obscure area of torts. It is certainly not the law that the plaintiff is barred
from suing because he was engaged in criminal conduct when the tort was committed against him. No one
suggests that the plaintiff’s exceeding the speed limit necessarily provides a complete defence in a road
accident case.
Exemption Clauses and Disclaimers: Although parties to a contract are in general free to make what
bargain they please, the Courts lean against clauses which purport to exempt a party from the liability which
would otherwise fall on him. The question whether a party who has been guilty of a fundamental breach of
contract can rely on an exemption clause has been discussed before the House of Lords. Held that there is no
rule of law requiring any particular construction of the contract in issue.
Disclaimers: It is impossible to disclaim liability for a dishonest statement made with the intent that another
shall act on it.
Plaintiff a Wrongdoer: There is an overlap with the defences of consent and contributory negligence.
Statutory Authority: When a statute authorizes a certain act to be done by a certain person, which would
otherwise be unlawful and actionable, no action will lie at the suit of any person for the doing of that act.
Q8. Write a note on the Indian Port Health Rules, 1955?
Answer: In India the Ministry of Health and Family Welfare (Department of Health) has prepared and issued
the Indian Port Health Rules 1955. Since then there has been a radical change in the scenario of global
disease owing to which the Director General of Health Services, in collaboration with the World Health
Organization (WHO) organized an expert committee to suggest amendments to the existing rules. This
meeting was held at Mumbai on December 15th and 16th 1989. However, the amendments have still not been
effected. Therefore the Indian Port Health Rules 1955 are today in existence and valid. Some important rules
are given below:
Write a note on the Indian Port Health Rules, 1955.
Rule 1- These rules may be called the Indian Port Health Rules 1955.
Rule 2- Due to changing concepts in Epidemiology of diseases global eradication or small pox, emergence of
newer disease and increasing international traffic, following terminology has also been amended for the
purpose of these rules:
Existing Amended
Quarantinable diseases Diseases subject to the regulations
Minicoy Deleted
Small pox All rules relating to small pox deleted
Sanitary Health
Rule 3- The Health Officer may for the purpose of these rules inspect any vessel on arrival or already in port.
Rule 4- The Master of every vessel arriving at any Port shall show until the vessel has received free pratique
under these rules, whichever of the following signals are appropriate.
A) By day, during the whole of the time between sunrise and sunset when the ship is within five
kilometres of the coast-
(i) The flag signal Q meaning “my vessel is healthy and I request free pratque”.
(ii) The 2-flag signal QQ meaning “my vessel is suspected”
(iii) The 2-flag signal QL meaning “my vessel is infected”
B) By night – During the whole of the time between sunset and sunrise but only when the vessel is
within 5 kms of the coast, a signal which shall be shown at the peak or other conspicuous place
where it can best be seen, comprising a red light over a white light, the lights being not more than 2
mtrs apart and meaning “I have no free pratique”. Provided that the authorities at a Port may, with the
previous approval of the Central Government, notify alternative signals not conflicting with the
International Code for use by vessels visiting the Port frequently.
Rule 9 - Every medical practitioner who becomes cognizant that nay person on board any vessel in the Port is
suffering from a disease subject to the regulations or an infectious disease shall immediately give notice
thereof by telephone and in wiring to the Health Officer.
Rule 27- A healthy ship shall be given free pratique, but if it has come form a cholera infected area the
measures specified in sub-clauses (1) & (7) of clause A of Rule 25 may be taken at the discretion of the
Health Officer.
Rule 28 – 1. No ship shall bring to India any person who has been in a yellow fever infected area within 9
days of embarkation unless such a person is vaccinated against yellow fever. In addition no ship which has
started from or touched at any Port in a yellow fever infected area within 30 days of its arrival in India shall
bring to India any person even though he may not have been in a yellow fever infected area unless such a
person is vaccinated against yellow fever.
2. The proof of vaccination against yellow fever shall consist in the possession of a certificate in the
form laid down in appendix 2 to these rules.
3. If any ship brings to India any person not vaccinated against yellow fever in contravention of sub-
rule 1 then without prejudice to any other proceedings that may be taken against the Master of the ship the
health officer may, in his discretion apply the measures prescribed in clause V of rule 31.
Rule 35 – 1 - A ship shall be regarded as infected with small pox if it has a case of small pox on board or if a
case of small pox has occurred on board during the voyage.
2- Any other ship shall be regarded as healthy even though there may be suspects on board but
any suspect on disembarking may be subjected to the measures provided for in clause iii of rule 36.
 TEST PAPER 2

Q1. What are the essentials of a valid acceptance? When is communication of an

acceptance complete?
Answer: Acceptance must be absolute and unconditional: As per Section 7(i) of the Contract Act, in
order to convert a proposal into a promise, the acceptance must be absolute and unqualified. If there is any
deviation from the terms of the offer, the acceptance is not considered as valid. To be a valid acceptance, the
offer must be accepted as it is. A conditional acceptance is rather a counter offer, which may be accepted or
rejected by the offerer.
Acceptance must be in the prescribed mode: If the manner of acceptance is prescribed in the proposal, the
acceptance has to be in that manner only. However, acceptance of a proposal in a manner different from the
prescribed one, does not automatically invalidate the acceptance. If the proposer does not raise any objection
to the acceptance, which is different in manner from what is prescribed in proposal, he is deemed to have
accepted the same.
Acceptance must be communicated: A mental acceptance or an uncommunicated acceptance does not
result in contract. Also, mere silence cannot be considered as acceptance of the offer. Acceptance should be
communicated to the offerer by the person to whom the offer has been made.
Acceptance must be given within a reasonable time: If the offerer has prescribed a time limit within which
the offer must be accepted, it must be accepted within the prescribed time limit only. However, if no time limit
is prescribed than offer may be accepted within a reasonable time. The proposal lapses even if acceptor is not
in a position to accept the offer within a prescribed time even if it is because of certain reasons which are
beyond his control.
Acceptance must be given within a reasonable time: If the offerer has prescribed a time limit within which
the offer must be accepted, it must be accepted within the prescribed time limit only. However, if no time limit
is prescribed than offer may be accepted within a reasonable time. The proposal lapses even if acceptor is not
in a position to accept the offer within a prescribed time even if it is because of certain reasons which are
beyond his control.
Acceptance must be after an offer: There cannot be any acceptance without an offer. The acceptor must be
aware of the proposal at the time of accepting the proposal. Acceptance should be made while the offer is
subsisting. If an offerer has withdrawn his offer or if his offer has lapsed, there is nothing which can be
accepted. A proposal once rejected cannot be accepted unless it is renewed. A proposal if it is rejected than it
gets substituted by the offer by which it is rejected i.e., by the counter offer and the original proposal does not
subsist unless and until it is renewed.

communication of an acceptance complete when

Section 4 of the Contract Act provides that communication of a proposal is complete when it comes to the
knowledge of the person to whom it is made.
Communication of the acceptance is complete as against the proposer when it is put in the course of
transmission to him so as to be out of power of acceptor and as against the acceptor, when it comes to the
knowledge of the proposer.
For instance, in the above example, ‘B’ accepts ‘A’s proposal by a letter sent by post. The communication of
the acceptance is complete as against ‘A’ when the letter is posted and as against ‘B’ when the letter is
received by ‘A.’

Q2. Explain, quoting case law, the rules governing the measure of damages for breach
of contract?
Answer: There are some cases where the courts may award damages that go beyond the strict
measure of compensation. The examples of non-compensatory damages are nominal damages,
aggrieved damages, restitutionary damages. Damages for the breach of contract are subject to the
principle of remoteness, causation and mitigation.

Following remedies are available to the party aggrieved by breach or non- performance of contract:
Suit for rescission of the contract:
• The party affected by reach can bring an action in the court of law to set aside the
contract.
• When the court allows rescission, the aggrieved party (a) is free from his obligation
under the contract and (b) becomes entitled for compensation for the loss suffered due
to non-performance.

Suit for damages:

• When there is a breach of contract, the affected party can file a suit for damages.
Damages means monitory compensation for the loss suffered by the party. The
underlying principle is not punishment but compensation to the party which suffered the
loss. The objective behind awarding damages is to put an injured party back in the
same position in which it would have been if there was no breach of contract.

Suit for quantum meruit:

• Quantum meruit means that much as is merited. In other words, it is payment in
proportion to the amount of work done. Benefit of quantum meruit can be claimed in
addition to claiming damages for breach.

Suit for specific performance:

• In some cases, it might so happen that damages or compensation in the form of money
is not an adequate remedy. In such cases, the court may direct specific performance
of the contract by the defaulting party. But specific performance will not be allowed
where the contract is for personal service or where damages are adequate remedy.

Suit for injunction:

• Injunction is an order of the court restraining a person from doing a particular act.
Q3. How is a "major port" defined in the Indian Ports Act, 1908? State the powers of the
Port Health Officer?
Answer: Major Port – Same meaning as in the case of Indian Ports Act, 1908. The Indian Ports Act defines
'Major Port' as any port which the Central Government may by notification in the official Gazette declare, or
may under any law for the time being in force have declared, to be a major port.

A major port, according to the Ports (Technical) Committee 1984, appointed by the Government of India,
should possess facilities including an all-weather, sheltered harbor, alongside berths capable of berthing
vessels of 30 feet draft and having direct road and rail access to the hinterland.

A port is declared as a Major Port by a notification by the Central Government as provided in the Major Port
Trusts Act, 1963. While major ports come under the jurisdiction of the Central Government, minor ports come
under the jurisdiction of the State Governments.

POWER OF THE PORT HEALTH OFFICER:

The Government may appoint at any port an officer to be called the Port Health Officer. His powers consist of:
• To board any vessel and medically examine the officers and crew:
• To examine any documents, papers, log-book, etc., for the purpose of enquiring about the health and
physical condition of the person on board the vessel.
• To call any person for interrogation in the above connection.
• To make any person so interrogated to sign a declaration of the truth of the statements made by him
earlier.

Q4. Write notes on lighthouse, general lighthouse and local lighthouse?

Answer:
1. Lighthouse: It includes any light-vessel, fog signal, buoy, beacon, or any mark, sign or apparatus
exhibited or used for the guidance of ships.

Before the development of clearly defined ports, mariners were guided by fires built on hilltops.

The modern era of lighthouses began at the turn of the 18th century, as the number of lighthouses
being constructed increased significantly due to much higher levels of transatlantic commerce.
Advances in structural engineering and new and efficient lighting equipment allowed for the creation
of larger and more powerful lighthouses, including ones exposed to the sea. The function of
lighthouses was gradually changed from indicating ports to the providing of a visible warning against
shipping hazards, such as rocks or reefs.

2. General Lighthouse: General lighthouse means any lighthouse which the Central Government may
by notification in the Official Gazette, declare to be a general lighthouse for the purposes of this Act.

A general lighthouse authority (GLA) is one of three agencies primarily responsible for aids to
navigation in the United Kingdom and the Republic of Ireland.

They are divided into regions as follows:

• Trinity House: England & Wales, Channel Islands and Gibraltar.

• Northern Lighthouse Board: Scotland and the Isle of Man.
 • Commissioners of Irish Lights (the C.I.L.) the whole of Ireland.

3. Local Lighthouse: local lighthouse means any lighthouse which is not a general lighthouse.

The Director General of Lighthouses and Lightships may, at any time and any Directors or Deputy
Director General of Lighthouses and Lightships may, if authorised in this behalf by a general or
special order in writing of the Central Government enter upon and inspect any local light house and
make such inquiries in respect thereof or of the management thereof as he thinks fit.

Every person having the charge of, or concerned in the management of, any lighthouse shall be
bound to furnish to any officer authorised by or under sub-section (1) to inspect the lighthouse, all
such information regarding the same as the officer may require.

Every local lighthouse authority shall furnish to the Central Government all such returns and other
information in respect of the lighthouses under its supervision and management, or of any of them, as
the Central Government may require.

Power of central Government to prohibit lights and regulate heights of buildings, structures and trees
for unobstructed functioning of lighthouses.

Q5. On what rules is the Indian COGSA based upon? Discuss the application of the
rules?
Answer: the act is based on the hague rules, 1924, as amended by the hague-visby rules , 1968, and the
protocol of 1979

Some of the details of the Rules which form the Schedule to the Act are:

a) The Act does not apply to carriage contracts not evidenced by bills of lading.
b) The Act does not apply to inward carriage contracts, unless parties contract to do so. It applies only to
outward cargo
c) The Act does not apply to cargo carried on deck, live animals and non-commercial goods (such as
personal effects).
d) The liability of the carrier to take care of the cargo under the Rules does not extend to the whole
period during which the goods are in the carrier's possession. It is limited to the period from the time
the goods are loaded till the time they are discharged from the ship, that is, while the goods are on
board the hip.
e) The Act provides that the bill of lading contract shall contain the clause paramount, that is, it must
incorporate a statement indicating that the carriage is subject to the Rules contained in the Act.
f) Liability of the carrier is limited in case of loss. It is now revised to 666.67 SDR per package or 2 SDR
per kilogramme of the gross weight of the goods, whichever is higher.
g) The Act does not apply to charterparties.
Q6. Give the case law of Grant v. Norway. How was it subsequently overruled?
Answer: In Grant v. Norway a bill of lading was signed by the master for 12 bales of silk which the
shipowner proved had not been loaded on board. Held that since the master had no authority to sign for
goods not shipped, the holder of the bill of lading had no claim against the shipowner for non-delivery of these
bales. Under common law the shipowner could therefore escape liability by establishing that the goods were
never loaded on board.

Lastly, a harsh and unfair judgement of the court in Grant v. Norway in 1851 was overruled by enacting
Section 3 in the Bill of Lading Act.

Under Section 3, every bill of lading now in the hands of the consignee for valuable consideration representing
goods to be shipped on board shall be conclusive evidence of such shipment against the master or other
persons who sign the bill of lading.

Q7. In what ways can an agency be terminated?

Answer: TERMINATION OF AGENCY:
The concept of termination of agency is exhaustively explained in Section 201 of the Contract Act as under:

201. Termination of agency - An agency is terminated by the principal revoking his authority, or by
the agent renouncing the business of the agency; or by the business of the agency being completed;
or by either the principal or agent dying or becoming of unsound mind; or by the principal being
adjudicated an insolvent under the provisions of any Act for the time being in force for the relief of
insolvent debtors. As can be seen from the above definition, relationship between the principal and
his agent can be terminated on any of the following ground.

By revocation: A principal may revoke the authority which he has given to his agent at any time
before that authority is exercised by the agent so as to bind the principal. This revocation may either
be express or implied in the conduct of the principal. The point to be noted is that revocation always
operates prospectively.

Termination by renunciation by agent: An agent may renounce his business of agency and in such
a situation, he will be obliged to compensate the principal if agency was for a fixed period of time.
Also, it will be incumbent upon the agent to give a notice of renunciation to the principal. If he
renounces without notice, he will have to make good any damage resulted to the principal.

Termination on completion of business: An agency automatically comes to an end once the

purpose for which it is established is accomplished.

Death or insanity: In case of death or insanity either of the principal or of the agent, the agency
stands terminated.

Principal’s insolvency: If the principal is adjudged insolvent, the agency comes to an end. However,
it does not terminate with insolvency of the agent.

On expiry of time: If an agent is appointed for a fixed period of time, the agency terminates with
efflux of time, i.e. it comes to an end automatically once the time period stipulated is complete.

Agent’s duty on termination: Section 209 of the Contract Act, 1872 deals with Agent's duty on
termination of agency by principal's death or insanity and provides that when an agency is
 terminated by the principal dying or becoming of unsound mind, the agent is bound to take on
behalf of the representative of his late principal, all reasonable steps for the protection and
reservation of the interests entrusted to him.

Q8. Define "freight". What are the different types of freight?

Answer: Freight is the remuneration payable for the carriage of goods in a ship. It is payable only on the
safe carriage and delivery of the cargo.

TYPES OF FREIGHT:
1. Lump Sum Freight:
Normally, freight is charged on basis of value, weight or measurement of the cargo. Sometimes,
the shipper may agree to pay a lump sum as freight for the use of the entire ship or a portion of it.

2. Advance Freight:
Generally, payment of freight and delivery of goods are concurrent acts. But parties are free to
modify this rule by agreement. They may decide that payment of freight shall be made on
shipment of goods or at a definite period after the ship sails. In such cases the freight is known as
Advance Freight and it becomes due at that defined time. And it continues to be due, if not paid,
even though the ship is lost and the cargo not delivered.

3. Pro Rata Freight:

Pro Rata Freight is that percentage of freight payable to the carrier which is in proportion to the
part of the voyage completed or to the part of the cargo loaded or delivered. Where the shipper
accepts delivery at a place other than the port of destination under circumstances which show that
was intended to be treated as substituted performance of the contract, he must pay pro rata
freight.

4. Back Freight:
Sometimes the delivery of goods at the port of destination may be prevented due to a cause
beyond the control of the carrier.

5. Dead Freight:
Where a charterer or shipper fails to fulfill his contract to load the cargo or the full cargo, he
commits a breach of contract for which he is liable to pay damages. These damages are known as
dead freight.