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Copyright © International Chamber of Commerce (ICC). All rights reserved. ( Source of the document: ICC Digital Library )
1996 LC CASE SUMMARIES 68 F.3d 197 (7th Cir. 1995)*
Topics:
Exculpatory Provision (bill of lading); Freight Forwarder Liability.
Type of Lawsuit:
Seller/beneficiary brought this suit against freight forwarder for breach of fiduciary duty, breach of contract, and breach of duties imposed by the 1984 Shipping Act.
Principals:
Plaintiff/Seller/Beneficiary: Zenith Electronics Corp.;
Buyer/Applicant: Electronica Bellavista;
Defendant/Freight Forwarder: Panalpina;
Common Carrier: Pantainer;
Issuer: Hamilton Bank of Miami.
Underlying Transaction:
Purchase of television kits.
LC:
Undisclosed amount. Silent as to whether subject to UCP.
Procedural History:
The freight forwarder's motion for summary judgment was granted by the United States District Court for the Northern District of Illinois, Manning, J. On appeal, the United States Court of Appeals for the Seventh Circuit, Ripple, J., reversed and remanded.
Rule:
Freight forwarder not entitled to summary judgment when an issue of material fact exists concerning the nature of its relationship with the seller/beneficiary.
Article
Factual Summary: To pay seller/beneficiary for the purchase of television kits, buyer/applicant arranged for the issuance of an L/C in seller/beneficiary's favor. To ship the goods to Peru, seller/beneficiary retained the services of a freight forwarder which used its wholly owned subsidiary, a Non Vessel Operating Common Carrier (NVOCC), to arrange the shipment. The NVOCC's bills of lading contained exculpatory provisions which discharged it from all liability within twelve months after the goods were, or should have been, delivered. Because the freight forwarder had not presented the bills of lading prior to expiry, the issuer dishonored. Seller/beneficiary NVOCC's contract applied to it. The trial court granted the motion and, on appeal, the Seventh Circuit US Court of Appeals reversed. then sued the freight forwarder for breach of fiduciary duty, breach of contract, and breach of duties imposed by the 1984 Shipping Act, 46 U.S.C. - 1701. The freight forwarder moved for summary judgment on the ground that because of its parent subsidiary relationship with the NVOCC, the exculpatory provision contained in the seller/beneficiary and
Legal Analysis:
1. Exculpation: The seller/beneficiary challenged the award of summary judgment, arguing that the exculpatory provision applied to the NVOCC but not the freight forwarder even though the NVOCC was a wholly owned subsidiary of the forwarder, since the bills of lading containing the provision were issued in common carrier's name. In effect, the seller/ beneficiary argued that there was one contractual relationship with the freight forwarder and another with the NVOCC. The appellate court agreed that summary judgment was improper, on the ground that the existence of two contracts presents a genuine issue of material fact. Appeals from summary judgment are reviewed de novo, thus all inferences are drawn in favor of the non-movant or seller/beneficiary in this case. Under this principle, the court inferred that seller/beneficiary's letter of instruction addressed to freight forwarder and the bills of lading issued by the carrier established the possibility that a separate contract between the seller/beneficiary and the freight forwarder existed.
©1997 INSTITUTE OF INTERNATIONAL BANKING LAW & PRACTICE
COPYRIGHT OF THE INSTITUTE OF INTERNATIONAL BANKING LAW & PRACTICE
The views expressed in this Case Summary are those of the Institute of International Banking Law and Practice and not necessarily those of ICC or the other partners in DC-PRO.