Switch bills. Initial shipper off the hook for freight due under bill of lading.

 

The effect of switch bills with a new shipper in the second set has the effect of a novation of the initial contract contained or evidenced in the initial bill with the shipowner as carrier under the bill. So held Stevenson J in the Supreme Court of New South Wales in The Illawarra Fortune [2020] NSWSC 183. Both sets incorporated the freight payable under a voyage charterparty with the time charterer of the vessel. The initial shipper, whose parent company was the voyage charterer, ceased to be liable for unpaid freight once the second bills were issued naming a different shipper. Had the original bills not been switched the time charterer, as assignee of the shipowner’s rights under the bills of lading,  would have been able to sue the original shipper for freight due under the voyage charter with the shipper’s parent company.

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