Charter Party vs Bill of Lading and Other Key Contract Law Differences
Difference between Charter Party and Bill of Lading
1. Charter Party
A charter party is a contract between the shipowner and the charterer under which the whole ship or a part of it is hired for carrying goods or passengers. It mainly contains the terms and conditions for the use of the ship.
Example:
A company hires an entire cargo ship from a shipowner to transport 5,000 tons of cement from India to Nepal’s nearest seaport. The agreement between them is called a charter party.
2. Bill of Lading
A bill of lading is a document issued by the carrier or shipowner acknowledging that goods have been received for transportation. It also contains details of the goods and the terms of carriage and can serve as a document of title.
Example:
A company sends 500 boxes of electronics by ship. The shipping company gives the company a document showing the goods received, quantity, destination, and terms of delivery. This is a bill of lading.
Main Differences
| Basis | Charter Party | Bill of Lading |
|---|---|---|
| Meaning | Contract for hiring the whole or part of a ship | Document acknowledging receipt and carriage of goods |
| Parties | Mainly shipowner and charterer | Carrier and shipper/consignee |
| Purpose | To hire/use a ship for transportation | To provide evidence of receipt and carriage of goods |
| Nature | Mainly a contract of hiring | Contract/document relating to carriage of goods |
| Possession of ship | Charterer may obtain control/use of the ship depending on the type of charter | Shipper does not obtain control of the ship |
| Goods | May cover large quantities of goods under the charter arrangement | Usually specifies particular goods being carried |
| Transferability | Generally not a document of title | May be transferable and can function as a document of title |
| Example | Hiring an entire ship to carry 5,000 tons of cargo | Document issued for 500 boxes being transported by ship |
Conclusion
In simple words, a charter party is an agreement for hiring a ship, whereas a bill of lading is a document showing that goods have been received for transportation and stating the terms of carriage.
Difference between Sale and Agreement to Sell
Meaning
Sale:
A sale is a contract in which the ownership of goods is immediately transferred from the seller to the buyer for a price.
Agreement to Sell:
An agreement to sell is a contract in which the transfer of ownership of goods will take place at a future time or after fulfillment of a condition.
Differences
| Basis | Sale | Agreement to Sell |
|---|---|---|
| Transfer of ownership | Ownership is transferred immediately. | Ownership is transferred in the future or after a condition is fulfilled. |
| Nature | It is an executed contract. | It is an executory contract. |
| Risk | Risk generally passes to the buyer with ownership. | Risk generally remains with the seller until ownership passes. |
| Rights | Buyer gets ownership rights over the goods. | Buyer gets only a contractual right to obtain ownership. |
| Loss of goods | If goods are destroyed after sale, the loss generally falls on the buyer. | If goods are destroyed before ownership passes, the loss generally falls on the seller. |
| Example | A buys a laptop from B and ownership is transferred immediately. This is a sale. | A agrees to buy B’s laptop next month after making full payment. Ownership will transfer later, so it is an agreement to sell. |
Examples
Example of Sale:
Ram buys a mobile phone from Shyam and receives the phone immediately. Ownership is transferred to Ram. This is a sale.
Example of Agreement to Sell:
Ram agrees to buy Shyam’s motorcycle after Shyam receives full payment next month. Ownership will be transferred later. This is an agreement to sell.
Rules Regarding Valid Acceptance
Meaning of Acceptance
Acceptance means the willingness of the person to whom an offer is made to agree to the terms of the offer. When the offeree accepts the offer, it may create a legally binding contract if other requirements are fulfilled.
Rules of Valid Acceptance
1. Acceptance must be absolute and unconditional
Acceptance must be made according to the exact terms of the offer. If the offeree changes the terms, it becomes a counter-offer, not acceptance.
Example:
A offers to sell a bike to B for Rs. 2,00,000. B says, “I accept, but I will pay Rs. 1,80,000.” This is not valid acceptance because B changed the terms.
2. Acceptance must be communicated
Acceptance must be communicated to the offeror. Mere mental intention to accept is generally not enough.
Example:
A offers to sell a laptop to B. B decides in his mind to buy it but does not communicate his acceptance to A. There is no communicated acceptance.
3. Acceptance must be made within the prescribed time
If the offer specifies a time for acceptance, it must be accepted within that period.
Example:
A offers to sell goods to B and says the offer is valid until Sunday. B accepts on Monday. The acceptance is not valid if the offer had already expired.
4. Acceptance must be made in the prescribed manner
When the offeror specifies a particular method of acceptance, the offeree should follow that method.
Example:
A asks B to accept an offer by email. B sends acceptance through an unrelated method instead. The prescribed method has not been followed.
5. Acceptance must be made by the person to whom the offer is made
An offer can normally be accepted only by the person to whom it is addressed, or by an authorized person.
Example:
A offers to sell a car to B. C cannot accept the offer on B’s behalf unless C is properly authorized.
6. Acceptance must be given before the offer is revoked or terminated
If an offer has already been legally revoked or has otherwise ended, it cannot subsequently be accepted.
Example:
A offers to sell a computer to B but withdraws the offer before B accepts it. B cannot later create a contract by accepting the withdrawn offer.
7. Acceptance must be of the whole offer
The offeree cannot accept only a part of the offer and treat it as complete acceptance.
Example:
A offers to sell B a table and five chairs for Rs. 50,000. B says, “I accept the table but not the chairs.” This is not acceptance of the whole offer.
Conclusion
Therefore, for acceptance to be valid, it should be absolute, unconditional, properly communicated, timely, made in the prescribed manner, and made by the proper person.
Rules Regarding a Valid Offer
Meaning of Offer
An offer is a proposal made by one person to another showing willingness to enter into a contract on certain terms, with the intention of obtaining the other person’s acceptance.
Rules of a Valid Offer
1. Offer must create legal relationship
The offer must be made with the intention of creating a legal obligation.
Example: A promises his friend B that he will give him a gift of Rs. 5,000. This may not be a contractual offer if there is no intention to create a legal relationship.
2. Offer must be clear and definite
The terms of the offer must be certain and understandable.
Example: A offers to sell his laptop to B for Rs. 50,000. The price and subject matter are clear.
3. Offer must be communicated
An offer is effective only when it is communicated to the person to whom it is made.
Example: A decides to sell his bike to B but does not tell B about it. B cannot accept an offer that was never communicated.
4. Offer must be made with the intention of obtaining acceptance
The offeror must intend that the other person can accept the proposal and create a contract.
Example: A tells B, “I may sell my phone to you someday.” This is generally not a definite offer because it does not show a clear intention to obtain acceptance.
5. Offer may be express or implied
An offer may be made through words (express) or through conduct (implied).
Example: A says, “I will sell this book for Rs. 500” — express offer.
A bus stopping at a bus stop and accepting passengers indicates an implied offer to provide transportation.
6. Offer must not contain impossible conditions
The terms of an offer must be capable of being performed.
Example: A offers to pay B Rs. 10,000 if B can bring a person who does not exist. Such a condition cannot be performed.
7. Offer may be specific or general
A specific offer is made to a particular person, while a general offer is made to the public at large.
Example: A offers to sell his motorcycle to B — specific offer.
A company announces a reward of Rs. 10,000 to anyone who finds and returns its lost document — general offer.
8. Offer should be different from an invitation to offer
An advertisement, catalogue, price list, or display of goods is generally an invitation to make an offer, rather than an offer itself.
Example: A shop displays a shirt with a price tag of Rs. 2,000. Generally, the display invites customers to make an offer to buy it.
Conclusion
A valid offer should be clear, definite, communicated, legally intended, and capable of acceptance and performance.
Termination of Offer
Meaning
Termination of an offer means the ending or cancellation of an offer, after which the offer can no longer be accepted and does not create a contract.
Rules / Modes of Termination of Offer
1. Revocation by the Offeror
The offeror may withdraw the offer before it is validly accepted.
Example: A offers to sell his bike to B for Rs. 2,00,000. Before B accepts, A tells B that he has withdrawn the offer. The offer is terminated.
2. Lapse of Time
An offer terminates when the specified time for acceptance expires. If no time is specified, it must be accepted within a reasonable time.
Example: A offers to sell a laptop to B and says the offer is valid for 5 days. B accepts after 5 days. The offer has expired.
3. Rejection of Offer
If the offeree rejects the offer, the offer is terminated.
Example: A offers to sell a motorcycle to B for Rs. 2,00,000. B says, “I don’t want to buy it.” Later, B cannot simply accept the same offer unless A makes a new offer.
4. Counter-offer
If the offeree changes the terms of the original offer and makes a counter-offer, the original offer is terminated.
Example: A offers to sell a phone for Rs. 50,000. B says, “I will buy it for Rs. 45,000.” This is a counter-offer, not acceptance.
5. Death or Insanity of the Offeror
An offer may terminate due to the death or loss of legal capacity of the offeror, depending on the applicable law and whether the offeree has knowledge of the event.
Example: A offers to sell his land to B. Before B accepts, A dies and B becomes aware of his death. The offer may terminate.
6. Failure to Fulfill a Condition
If the offer is subject to a condition and that condition is not fulfilled, the offer may terminate.
Example: A offers to sell goods to B on the condition that B provides a required document within 7 days. If B fails to provide it within the required period, the offer may terminate.
7. Subsequent Illegality or Impossibility
If the performance of the proposed contract becomes illegal or impossible before acceptance, the offer may terminate.
Example: A offers to sell certain goods to B, but before B accepts, the government legally prohibits their sale. The offer cannot be accepted to create the proposed contract.
Conclusion
An offer can be terminated by revocation, lapse of time, rejection, counter-offer, death or incapacity in appropriate circumstances, failure of conditions, or subsequent illegality/impossibility.
Conditions of Unlawful Agreement and Void Agreement
Meaning of Unlawful Agreement
An unlawful agreement is an agreement whose object or consideration is prohibited by law or is against legal principles. Such an agreement cannot be enforced by law.
Conditions / Circumstances of an Unlawful Agreement
An agreement is unlawful when:
- It is forbidden by law
If the purpose of the agreement is prohibited by law, it is unlawful.
Example: A agrees to sell prohibited drugs to B. - It defeats the provisions of law
An agreement made to avoid or defeat the purpose of a law is unlawful.
Example: A makes an agreement with B to avoid a legal obligation imposed by law. - It is fraudulent
An agreement made for committing fraud is unlawful.
Example: A and B agree to prepare false documents to deceive another person. - It causes injury to a person or property
An agreement intended to cause unlawful harm to a person or property is unlawful.
Example: A agrees to damage B’s property in return for payment. - It is immoral
An agreement based on an immoral purpose may be unlawful.
Example: An agreement made for an unlawful immoral activity. - It is against public policy
An agreement that goes against the interests or principles of society and public welfare may be unlawful.
Example: An agreement to influence a public official through an illegal payment.
| Unlawful Agreement | Void Agreement |
|---|---|
| Its object or consideration is unlawful. | It is an agreement that has no legal enforceability. |
| It is prohibited by law or contrary to legal principles. | It may be unenforceable because it lacks a necessary legal requirement. |
| Example: agreement to commit fraud. | Example: an agreement with uncertain terms. |
Void Agreement
Meaning
A void agreement is an agreement that cannot be enforced by law. It creates no enforceable legal rights or obligations.
Examples of Void Agreements
- Agreement with an incompetent person
An agreement with a person who is not legally competent may be void, subject to applicable law.
Example: A minor enters into a contract to purchase expensive goods on credit. - Agreement with unlawful object or consideration
An agreement having an unlawful purpose or consideration is void.
Example: A agrees to pay B to commit theft. - Agreement without consideration, where the law requires consideration
Example: A promises to give B Rs. 10,000 without receiving anything in return, where no legal exception applies. - Agreement in restraint of marriage
An agreement that unlawfully restricts a person’s freedom to marry may be void.
Example: A agrees never to marry in return for money. - Agreement in restraint of trade
An agreement that unlawfully restricts a person from carrying on a lawful business may be void, subject to legal exceptions.
Example: A agrees never to conduct any business anywhere in Nepal. - Wagering agreement
An agreement based purely on betting on an uncertain event is generally treated as void, subject to applicable law.
Example: A and B bet Rs. 10,000 on which team will win a football match. - Agreement with uncertain terms
If the terms are too uncertain to determine the parties’ obligations, the agreement may be void.
Example: A agrees to sell B “some goods” without specifying what goods or the quantity.
Conclusion
Thus, an unlawful agreement is one involving an illegal or prohibited object or consideration, while a void agreement is one that has no legal enforceability. An unlawful agreement is therefore also incapable of being legally enforced.
Difference between Private Carrier and Common Carrier
Meaning
Private Carrier:
A private carrier is a person or organization that transports goods for its own business or for a specific person under a particular arrangement, rather than offering transportation services to the general public.
Example:
A company uses its own truck to transport its products from its factory to its warehouse. The company is acting as a private carrier.
Common Carrier:
A common carrier is a person or organization that regularly offers transportation services to the general public for payment.
Example:
A transport company accepts goods from different customers and transports them from Kathmandu to Pokhara for freight charges. It is a common carrier.
Main Differences
| Basis | Private Carrier | Common Carrier |
|---|---|---|
| Meaning | Carries goods for its own use or a specific arrangement. | Carries goods for the general public. |
| Public service | Does not generally offer service to everyone. | Offers transportation services to the public. |
| Business nature | Transportation may be incidental to its main business. | Transportation is generally its business. |
| Selection of customers | Can choose whom it will carry for. | Generally provides service to customers according to its terms and applicable law. |
| Liability | Liability depends mainly on the specific agreement and applicable law. | Has broader legal duties as a carrier and may be liable for loss or damage to goods according to applicable law. |
| Example | A manufacturer uses its own truck to deliver its products. | A public transport/cargo company transports goods for different customers for payment. |