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Deviation and Fundamental Breach of Contract

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					                                              Deviation and Fundamental Breach of Contract                                             page 1 of 15


Deviation and Fundamental Breach of Contract
By Igor Sterzhantov LLM, 2010


Contents

    Extent of protection available to the carrier ..................................................................................... 3
    Justice of the Case v Fundamental Departure .................................................................................. 5
    Marine Deviation and Fundamental Breach Distinguished.............................................................. 7
    Special Feature ............................................................................................................................... 11
    Description of Voyage.................................................................................................................... 12
    Justified Departure from the Direct Route ..................................................................................... 13


The law of marine deviation originated from disputes on insurance policies when either ship or
cargo or both were lost during sea passage and subsequent claims were defended by the insurers on
the footing that the voyage stated in the policy was in fact never performed because of deviation
which was not justified by necessity1. From the earlier days of this branch of the law when it was in
its infancy, there were two factors which formed the base of distinctive nature of the law of marine
deviation. They are: specific kind of act which constitute the breach, i.e. a geographical departure
from the agreed voyage; and business efficiency in interrelationship between the cargo interests2
and the shipowners. When the first factor remained in its unchanged form throughout the years of
evolution, the second factor, in the course of time, undergone considerable transformation and has
largely contributed to development of shipping law. The clash of interests the carrier’s and the cargo
owner’s was legally reflected in the contracts of carriage. There were times when the carrier was
able to protect his interests by broadly drafted clauses with very wide range of options regarding to
places where it was lawful for ship ‘to proceed and sail to, and touch and sky at…’. The cargo
interests, on the other hand, were resolute in restricting in the courts the meaning of such provisions
within the following limits:

a) description of voyage
b) justification of departure from the direct route
c) the justice of the case

Among the authorities on marine deviation one of the oldest is Lavabre v Wilson case3, in which the
owner claimed money under insurance policy when his ship was lost being captured by privateer.
The policy was issued for the voyage from:




1
  As early as in 1741 Lee CJ said in Clayton v Sirnmondsthat (1741) 1 Burr. 343 ‘...if a ship puts into a port, not usual,
or stays au unusual time, it is deviation’
2
  Cargo interests not confined by the shipper and the consignee but include the insurers also, whom the former usually
subrogated their rights upon occurrence of insured accident.
3
  (1779) 1 Doug 284

                                                            Igor Sterzhantov@2010
                                                                 www.lawandsea.net
                                                                info@lawandsea.net
                               Deviation and Fundamental Breach of Contract                 page 2 of 15

       … Port L’Orient to Pondicherry, Madras and China, and at and from thence back to the
       ship’s port, or ports of discharge in France, with liberty to touch in the outward or
       homeward-bound voyage, at the Isles of France and Bourbon, and at all or any other place or
       places what or wheresoever.

       And it shall be lawful for the said ship, in this voyage, to proceed and sail to, and touch and
       sky at any ports or places whatsoever, as well on this side, as on the other side of the Cape of
       Good Hope, without being deemed a deviation.

In fact the ship arrived to Pondicherry (port in the southern part of India) with great delay and
instead of China sailed from there to Bengal, where further voyage to China was abandoned
altogether and the ship returned back to Pondicherry again with considerable delay. The usual time
in which the direct voyage between Pondicherry and Bengal was performed in that times, was six or
seven clays, but I took for the ship about six weeks in going to Bengal, and two months for the way
back to Pondicherry. Delay resulted from the fact that both going and returning, she either touched
at, or lay off, Madras, Masulipatam, Visigapatam, and Yanon, and took in goods at all those places.

When sailed from Pondicherry back to France vessel was captured en route by privateer. The
shipowner claimed firstly, that voyage to Bengal was a necessary departure from agreed route for
safety reasons, secondly, that the time employed in going to Bengal and back could not alter the
case, as the risk had not been thereby increased, the coasting voyage performed being free from all
hazards and thirdly that a voyage superadded by necessity, i.e. deviation to Bengal, ought to be
subject to the same liberty provisions as the voyage insured.

Lord Mansfield approaching the jury; stated that Bengal was certainly not within the words of the
policy, but even if necessity was admitted to have been the sole motive for substituting the
voyage to Bengal in the place of that to China (the evidence which was given on the part of the
defendant shown that the necessity was fictitious and original plan of plaintiff the ship owner was to
go to Bengal and not to China), still the insured was under the duty to have pursued that voyage of
necessity directly, in the shortest and most expeditious manner, and that the delay in going from
Pondicherry to Bengal, and the repeated stops by touching at different places, and trading there,
were deviations, and not within the protection which the supposed necessity afforded to the direct
voyage.

His Lordship then emphasised two key elements of deviation – justification of departure from the
direct route and voluntarily substitution of another voyage for that which has been contracted for:

       A deviation from necessity must be justified both as to substance and manner. Nothing more
       must be done than what the necessity requires. The true objection to a deviation is not
       increase of the risk. If that were so it would only be necessary to give an additional premium.
       It is that the party contracting has voluntarily substituted another voyage for that which has
       been insured. If the voyage to Bengal was unavoidable, where was the necessity to trade? All
       the ports touched at were out of the direct course, and six weeks and two months were
       consumed instead of six days.-The justice of the case required a different decision.

This clear statement of law is difficult to misunderstand taking into consideration facts of the case
and wording of insurance policy. When the carrier voluntary chooses to depart from contracted

                                         Igor Sterzhantov@2010
                                             www.lawandsea.net
                                            info@lawandsea.net
                                       Deviation and Fundamental Breach of Contract                               page 3 of 15

voyage it does not matter whether by doing this he did or did not increase the risk of marine
adventure. Any new risk can be covered by additional premium4 agreed with the insurer5. Lord
Mansfield underlined that crucial effect of deviation on the contract, either one of insurance policy
or one of carriage of goods, is that deviation brings the original voyage to an end and substitutes it
by a new one, under a new contract, implied by law, which bears no traces of any protection
available to the carrier under the original contract.


Extent of protection available to the carrier

Extent of protection available to the carrier under new, implied contract was not discussed in
Lavabre v Wilson, but decision of Tindal J in Davis v Garrett6 (sometimes also cited as Davies v
Garrett7) established the rule that to qualify the loss or damage incurred by the aggrieving party as a
consequence of deviation, the carrier shall prove that such loss or damage must have occurred in any
event, and whether he had deviated or not8. Accordingly, so far as the fact of deviation has been
established, the shipowner becomes an insurer of the goods9 with almost absolute liability for any
loss or damage caused.

See the rest of this article at http://www.lawandsea.net/COG/COG_deviation1.html




4
  s 45 Change of voyage. (1) Where, after the commencement of the risk, the destination of the ship is voluntarily
changed from the destination contemplated by the policy, there is said to be a change of voyage.
(2) Unless the policy otherwise provides, where there is a change of voyage, the insurer is discharged from liability as
from the time of change, that is to say, as from the time when the determination to change it is manifested; and it is
immaterial that the ship may not in fact have left the course of voyage contemplated by the policy when the loss occurs.
5
  Change of Voyage (MIA, 1906, sect. 45) — Once the ship commences the voyage she must proceed by the most direct
route to the destination named in the policy. If she sails for a different destination, this constitutes a "different" voyage,
with consequences as in the previous paragraph. If she sails for the named destination, but this destination is changed
after the ship has sailed, this is termed a "change of voyage". In this case, cover attaches, but continues only until the
decision to change the destination is manifested (see MIA Section 45). The effect is that the underwriter remains liable
for all insured losses up to the time the decision to change is manifested, but not in respect of any accident occurring
after that time. However, in practice, the hull clauses always incorporate a condition whereby change of voyage is held
covered, subject to prompt advice to the underwriters, payment of an additional premium, and any change in conditions
required by the underwriters. Brown’s Marine Insurance, Vol. I, 178
6
  (1830) 6 Bing 716
7
  See for example Suisse Atlantique Societe D'armement Maritime S A v N V Rotterdamsche Kolen Centrale - [1966] 2
All ER 61 and same case reported as Suisse Atlantique Sociètè d'Armement Maritime S.A. v. N.V. Rotterdamsche
Kolen Centrale (H.L.(E.)) [1967] 1AC 372
8
  See also James Morrison & Co Ltd v Shaw, Savill and Albion Co Ltd [1916-17] All ER Rep 1068 by Swinfen Eady LJ
at 1072: If they, as carriers, were duly performing their contract of carriage, they would not be liable for loss occasioned
by the King's enemies. But they are breaking their contract. They are quite unable to show that the loss must have
occurred in any event, and whether they had deviated or not.
9
  See also statement of Lloyd LJ in State Trading Corporation of India Ltd v M. Golodetz Ltd. ( ow Transcontinental
Affiliates Ltd.) [1989] 2 Lloyd's Rep. 277.

                                                   Igor Sterzhantov@2010
                                                      www.lawandsea.net
                                                     info@lawandsea.net

				
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Description: The law of marine deviation originated from disputes on insurance policies when either ship or cargo or both were lost during sea passage and subsequent claims were defended by the insurers on the footing that the voyage stated in the policy was in fact never performed because of deviation which was not justified by necessity.