LIABILITY CASE EMPHASIZES COMMUNICATION

Marine cargo surveyors are key players in international shipping. This group of skilled maritime professionals is called upon by the shipping industry to perform various functions at load and discharge prots throughout the world. Surveyors assist captains with cargo stowage problems, inspect cargo holds for cleanliness and attest to the quality and quantity of cargoes at various stages of transportation. They also evaluate the worth of damaged cargoes.

Unlike ship officers, cargo surveyors are seldom licensed for competence. Instead, their skills are continuously evaluated by those who use their services. Surveyors who do not perform with the degree of skill commonly possessed by others in their profession have short careers.

Regardless of how skilled surveyors may be, they occasionally make mistakes. If losses result from their errors, they may find themselves defendants in lawsuits. The recent International Ore & Fertilizer Case (87 Civ. 6391) in the federal court for the Southern District of New York illustrates the point. In that case, the court used an unusual approach (negligent misrepresentation) to hold a surveyor 50 percent liable for damages sustained to a cargo of fertilizer that the surveyor had inspected at the load port.

The plaintiff, a fertilizer seller, sued a surveying company, alleging that the cargo surveyor improperly inspected and certified a ship’s holds as suitable to carry the plaintiff’s fertilizer from Florida to New Zealand. The plaintiff claimed the surveyor did not perform a workmanlike inspection because he failed to detect grain residues from previous cargoes that were on deck beams and stringers in the holds. The surveyor did, however, issue a “Certificate of Readiness” attesting that the cargo holds were suitable to load fertilizer.

During the voyage, the vessel experienced heavy weather. When New Zealand officials inspected the cargo, they discovered the fertilizer was contaminated with grain that had falled from the deck beams and stringers furing the rough weather. The entire cargo then was rejected.

At a trial, the defendant successfully argued that the mere fact that the surveyor failed to satisfy a contractual duty to use reasonable care did not mean that he surveyor should be held fully liable for all resulting damages. The plaintiff paid the defendant $150 to perform the cleanliness inspection and sought damages of $2,400,000 (ratio of 1 to 16,000). The court found the low contract price indicated that the parties did not allocate the risk by contract and dismissed the contract action.

The court also dismissed the traditional negligence action because the duty to reasonably inspect the holds arose by virtue of the contract. This, however, did not rule out an action for negligent misrepresentation. Both parties knew the surveyor’s inspection would be the last check of the holds before loading. The plaintiff was relying on the Cleanliness Certificate for assurance that the fertilizer could be loaded safely. The surveyor should have notified the plaitniff that there wre sections of the holds that he did not inspect. The plaintiff then could have taken corrective measures to rectify the situation before the cargo was loaded.

Surprisingly, the plaintiff was held 50 percent liable for failing to apprise the surveyor that even minimal contamination of the cargo by grain would result in a rejection of the cargo by the New Zealand buyer. The court found both parties had exclusive knowledge of facts that, if communicated to the other, might have prevented the damages to the cargo.

The case should send a message to surveyors that their written certificates must accurately reflect the facts. The case should also send a message to those who use the services of surveyors. The surveyor must be given more details regarding the purpose of the inspection. Otherwise, both parties may find themselves jointly liable for large losses.


[Back]