SHIPMASTER's BUSINESS

1st BOE ( Jun-2013 ) B2

1. What is Particular average and General Average? What are the elements of
General Average? Give examples of General Average situation? ( 20 Marks )
Answer Q 21

Q 21. What is Particular Average and General Average? What are the
elements of General Average? Give examples of General Average Situation?
( 20 marks )

Particular Average
- Accidental partial loss of insured property which is not a general average
loss.
- It is accidental.
- Examples
1. Stranding of ship
2. Damage to hull, machinery or cargo due to fire
3. Damage to hull, machinery or cargo due to HW.
4. Damage to ship or cargo due to collision, etc
5. Loss of anchor during bad weather

General Average
- There is a GA act when and only when any extraordinary sacrifice or
expenditure is intentionally and reasonably made or incurred for the
common safety for the purpose of preserving from peril the property
involved in a common maritime adventure.
- It is intentional.
- Examples
1) Beaching of ship to protect foundering
2) Wetting previously undamaged cargo while extinguisher fire
3) Jettison of cargo due to heavy weather
4) Salvage costs to port of refuge
5) Slipping anchor to prevent collision

- Elements of GA
There must be sacrifice or expenditure
1) must be extraordinary (Damage main engine in refloat operation)
2) purpose of preserving the property from peril. Peril is a danger. The peril
must be real and substantial, but it need not be imminent. (Engine failure
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 in mid ocean in good weather will be GA because Sooner or later, ship and
cargo would come to peril one way or another.
3) must be intentional or voluntary (CO2 flooding, beaching)
4) must be reasonable (jettison not all deck cargo only enough for save)
5) must be for common safety

- Example of General act

1) Act of Damage to engine, propeller or hull due to refloating
2) Wetting previously undamaged cargo during fire fighting
3) Damage of cargo due to CO2 flooding.
4) Beaching a damage ship to prevent foundering.
5) Slipping anchor to prevent collision.

2. What is Note of protest? How it should be extended? In what circumstances NOP shall
be made? ( 20 Marks )
Answer 1

( 1 ) What is Note of protest? How it should be extended? In what

circumstances NOP shall be made? ( 20
marks )

Note of Protest is a solemn declaration made on oath by a shipmaster that

circumstances beyond his control have, or may have given rise to loss and/or
damage to his ship or its cargo .
Extended protest is a protest to which supplementary information has been
added at a later date.
Procedure for noting protest
(1) As soon as possible, within 24 hrs arrival port
(2) For cargo, it should be noted before breaking bulk
(3) Statements under Oath taken from master and other crew, supported by log
book entries and evidence as necessary
(4) Protest made before Notary Public, Consular Office or other authority
(5) At least three true and certified copies obtained: One copy retained on
board and others sent to owners
(6) Shall be noted at each discharging port and not just at 1 port of call
(7) Master shall reserve the 'Right to Extend
Extended Protest

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-Often impossible to ascertain full extent of loss or damage, and therefore
master shall reserve right to extend.
-Extension need not be made in same place as original protest
-Go to another Notary Public, Consular office or other authority with original
protest and relevant documents
-Extension is entered, witnesses, signed and sealed in same manner as initial
protest
-Pay fee and receipt obtained
NOP shall be made under following circumstances but not be limited to:
(1) Every of General average act
(2) Encountered heavy weather conditions which may result in cargo damage
(3) Encountered heavy weather conditions which caused failure to cancelling
date
(4) Ship is in anyway damaged (or) suspected damage
(5) Ventilation not possible due to bad weather
(6) Charterer (or his agent) breach of charter party terms
(7) Consignees fail to discharge cargo, take delivery or pay freight.

3. (a) What is Bill of Lading and what are the functions?

Answer 2

( 2 ) What is Bill of Lading and what are the functions? (4 marks )

B/L is a document issued by carrier for goods either received into his custody
or shipped on board his vessel.
Chief functions of a bill of lading
(1) Receipt for goods : B/L is only be issued by carrier once goods have been
received into his custody or shipped on board.
(2) Evidence of a contract : B/L contains carrier's terms, conditions and
exceptions
- Signed only by carrier or his agent. Although not signed by both parties, it is
strong evidence that a contract of carriage with carrier and the shipper.
(3) Document of title : B/L is a transferable and negotiable document.
- Someone who hold B/L is deemed owner of goods.

( 37 ) What are the various types of Bill of Lading? ( 4 marks )

1)Shipped BL - BL issued by carrier after goods are loaded on ship.

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2) Received for shipment BL – BL issued to shipper when carrier receives
goods in his custody.
3) Straight B/L - BL where consignee is named and named consignee takes
delivery.
4) Order BL - B L where consignee is not named and has word “to order”.
5) Open B/L - BL. where no consignee is named and kept opened .
6) Bearer B/L - BL where goods are deliverable 'to bearer' and does not
require any endorsement.
7) Clean B/L - BL which bears no clauses of defective condition of goods or
packaging.
8) Foul B/L - Dirty BL which is claused with remarks.

( 4 ) What is letter indemnity in relation to clean B/L ? ( 4 marks )

-Letter of indemnity may be offered by shipper against to issue of a "clean" bill

of lading when shipped cargo are not in apparent order and condition
-In such circumstance letter of indemnity should never be accepted. By
accepting the letter of indemnity could be to a fraud (a criminal act) against the
bank or banks involved as well as the consignee.

( 5 ) What is Foul B/L and when clause B/L is not considered foul? ( 4 marks
)

-Foul B/L – a Dirty B/L and which is claused with remarks.

-By International Chamber of Shipping (ICS), B/L should not be considered, it
contains:
1) Clauses which do not expressly state that goods or packaging are
unsatisfactory
2) Clauses which emphasize carrier's non-liability for risks arising through
nature of goods or packaging
3) Clauses which disclaim on part of carrier knowledge of contents, weight,
measurement quality or technical specification of goods.

( 6 ) What is Paramount Clause? ( 4 marks )

-Paramount clause : inserted in charter parties under which a Bill of Loading
is required to be issued.

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-That having the effect of incorporating into the contract of carriage one of
three international conventions as follow:
1) The Hague Rules 2) The Hague Visby Rules 3) The Hamburg Rules

2nd Time BOE ( Nov-2013 ) F1

1. (a) To what extent, if any, may a shipowner be deemed to be
(i) Common Carrier
(ii) Private Carrier? (8 marks)
Answer Q 18

Q18. To what extent, if any, may a shipowner be deemed to be

1) Common Carrier
2) Private Carrier ( 8 marks )

-Carrier means a person which includes a company such as ship owners or ship
operators who agrees to carry goods or persons from one place to another.

Common Carrier: A carrier who holds himself ready to carry from one terminal
to another the goods of any person who chooses to employ him for the purpose.
-Very few common carriers operate in the modern shipping industry.

-Common law Obligations

(1) to provide a seaworthy vessel
(2) vessel must not deviate from the contract route
(3) vessel will be ready to load the cargo and proceed on the voyage with
reasonable despatch.

Private Carrier: A carrier who declines to accept the status of a common carrier.

-He refuses to carry goods other than those of a particular kind.

-He makes a special contract of carriage with each consignor in turn.
-He is only liable for damage or the consequences of delay occurring through his
negligence

1. (b) What are a shipmaster’s legal position in relation to a time charter? (8 marks)
Answer Q 19

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Q19. What are a shipmaster’s legal position in relation to a time charter? ( 8
marks )

-The master should follow a time charterer's instructions insofar as they

relate to the
commercial activities of the ship.
-Charterers have to give the master the necessary sailing instructions.
-Master is to be under the orders of the charterer as regards employment,
agency,
or other arrangements.
-Master is to prosecute the voyage with the utmost despatch and render
customary
assistance with the vessel's crew.
-Master and engineers to keep proper logs accessible to charterers or
their agents.
-If the charterers are dissatisfied with the conduct of the master,
the owners will investigate the matter and if necessary and practicable,
change the appointments.

2. Write short notes on the following clauses.

(a) Sundays and Holidays excepted.
(b) Sunday and Holiday excepted unless used.
(c) Working Days.
(d) Reversible laydays. (16 marks)
Answer Q 20

Q20. Write a short notes on the following clauses

1).Sundays and Holidays excepted

2).Sunday and Holiday excepted unless used
3).Working Days
4).Reversible Laydays( 16 marks )

(1) Sundays and Holidays excepted

Where a C/P provides that Sundays and holidays are not to count as lay
days, those days still do not count even if they have been used for
working by agreement between the Master and charter. ( Hopkin 477 )
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 (2) Sunday and Holiday excepted unless used
If the agreement in the C/P is that Sundays and holidays are not to
count unless usedthe meaning if different to above. ( Hopkin 477 )
(3) Working Days
means days or part ( s ) thereof which are not expressly excluded from
lay time by the charter party and which are not holidays. ( Hopkin 488 )
(4) Reversible Laydays

When the charterer has the right to add together the laydays allowed
for loading and discharging, the laydays allowed are known as reversible
laydays.

3. (a) Under what circumstances is a deviation from your customary route justifiable when
on a voyage charter? (5 marks)
Answer 7

( 7) Justifiable deviations on a voyage charter? ( 5 marks )

1) Due to default of the charterer (where the discharge port nominated by the
charterer is found to be unsafe
2) to avoid Imminent danger (TRS)
3) to save or attempt to save life (responding to a distress alert or MAYDAY)
4) to save property (for salvage purpose)
5) Due to force majeure beyond the ship owner's or master’s control (on a
warship's order)

3. (b) What kind of the deviations by your ship when at sea would probably be regarded in
law as unjustifiable? (5 marks)
Answer 8

( 8 ) Unjustifiable deviation on a voyage charter ? ( 5 marks )

1) Taking a route which is not the custom of the trade for purely private
reasons
2) Putting into an intermediate port or place for stores or provisions which are
not essential to the safe completion of the voyage
3) Putting into an intermediate port or place for bunkers for a future voyage
when there is no P&I bunker deviation clause.

5. (a) What perils is a ship owner insured against under a hull and machinery policy that
incorporate the Institute Time Clauses-Hulls? (8 marks)

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( 39 ) What perils is a ship owner insured against under a hull and machinery
policy that incorporated the Institute Time Clauses-Hulls? ( 8 Marks )

Insurance covers loss or damage caused by:

(1) Cause by seas, rivers, lakes or other navigable waters (2) Fire, explosion
(3) Theft by outside of vessel
(4) Piracy
(5) Barratry of Master, officer or crew
(6) Jettison
(7) Natural disasters such as earthquake, volcanic eruption or lighting
(8) Accidents in loading, discharging or shifting cargo or fuel
(9) Accidents in contact with dock, harbor equipment or installation.
(10) Negligence of Master, Officers, Crew or Pilot.

3rd BOE 17-Mar-2014 G1

1. (a) What is the main reasons for a Master to make “Note of Protest”? (3 marks)
Answer Q12

Q12. What is the main reasons for a Master to make “Note of Protest”? (4
marks)

Note of Protest is for solemn declaration made by master under oath before a
notary public or other officer having authority to administer oaths, that loss,
damage or delay to ship or its cargo have been caused by circumstances beyond
his control.
It is used in any ensuing legal proceedings, a formal statement to protect
shipowner’s legal position.

1. (b) Describe the procedure of making Note of Protest? (5 marks)

Answer 1 ( Partly )

Note of Protest is a solemn declaration made on oath by a shipmaster that

circumstances beyond his control have, or may have given rise to loss and/or
damage to his ship or its cargo .

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 Procedure for noting protest
(1) As soon as possible, within 24 hrs arrival port
(2) For cargo, it should be noted before breaking bulk
(3) Statements under Oath taken from master and other crew, supported by log
book entries and evidence as necessary
(4) Protest made before Notary Public, Consular Office or other authority
(5) At least three true and certified copies obtained: One copy retained on
board and others sent to owners
(6) Shall be noted at each discharging port and not just at 1 port of call
(7) Master shall reserve the 'Right to Extend

1. (c) When would a master making Note of Protest? (8 marks)

Answer 1 ( Partly )
NOP shall be made under following circumstances but not be limited to:
(1) Every of General average act
(2) Encountered heavy weather conditions which may result in cargo damage
(3) Encountered heavy weather conditions which caused failure to cancelling
date
(4) Ship is in anyway damaged (or) suspected damage
(5) Ventilation not possible due to bad weather
(6) Charterer (or his agent) breach of charter party terms
(7) Consignees fail to discharge cargo, take delivery or pay freight.

2. (a) What is “deck cargo” according to Hague Rule? (3 marks)

Answer 11

( 11 ) What is deck cargo according to Hague Rule ? ( 3 marks )

According to Hague rule
(1) Deck cargo must be suitable for on-deck carriage
(2) there is a statement in the bill of lading stating that the goods are stowed
on deck, and
(3) the goods are actually stowed on deck
If the deck cargo is to be carried B/L should have following statements
“CARRIED ON DECK AT SHIPPER'S RISK”

2. (b) At whose risk is deck cargo carried? (2 marks)

Answer 12

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( 12 ) At whose risk is deck cargo carried ( 2 marks )
Deck cargo is carried at shipper's risk .If the deck cargo is to be carried, B/L
should have the
following statements.
“ CARRIED ON DECK AT SHIPPER'S RISK “

2. (c) What are the carrier’s obligation before and at the beginning of the voyage?
(3 marks)
Answer 10

( 10 ) What are the carrier’s obligations before and at the beginning of the
voyage ?
( 3 marks )
- Carrier’s obligation before and at the beginning of voyage :
1) To make the ship seaworthy
2) Properly man, equip and supply ship, and
3) make holds, refrigerating and other parts, fit and safe for their reception,
carriage and preservation.

2. (d) Compare the voyage charter and time charter. (8 marks)

Answer 40

( 40 ) Compare the voyage charter and time charter. ( 8 Marks )

Voyage Charter : A contract for the carriage by a named vessel of a stated

quantity of cargo between named ports.
Cost : Ship owner bear Running cost and Voyage cost and operate the ship
technically and commercially.
Remuneration : Ship owner’s remuneration is freight.
Owner's obligations : to provide a seaworthy ship / to bring the ship to the
agreed loading port / to load the agreed cargo / to carry the cargo to the
agreed destination / to discharge the cargo.
Time Charter : A contract for the hire of a named vessel, complete with crew,
for a specified period of time.
Cost : Ship owner bear Running cost and operate the ship technically.
Charter pay voyage cost and operate the ship commercially.

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Remuneration : Ship owner remuneration is hire money.
Charterer remuneration is freight.
Owner's Obligation : Owners operate the vessel technically, but not
commercially.
Owners bear no cargo handling expenses and do not appoint stevedores.

5. (a) Describe how General Average Act can arise. (8 marks)

Answer 41

( 41 ) Describe how General Average Act can arise ? (8 Marks )

- There is a GA act when, and only when, any extraordinary sacrifice or
expenditure is intentionally and reasonably made or incurred for the common
safety for the purpose of preserving from peril the property involved in a
common maritime adventure.

- Elements of GA
There must be sacrifice or expenditure
1) must be extraordinary ( Damage main engine in refloat operation )
2) purpose of preserving the property from peril. Peril is a danger. The peril
must be real and substantial, but it need not be imminent. (Engine failure in mid
ocean in good weather will be GA because Sooner or later, ship and cargo would
come to peril one way or another.
3) must be intentional or voluntary (CO2 flooding, beaching )
4) must be reasonable (jettison not all deck cargo only enough for save )
5) must be for common safety

- Example of General act

• Act of Damage to engine, propeller or hull due to refloating
• Wetting previously undamaged cargo during fire fighting
• Damage of cargo due to CO2 flooding.
• Beaching a damage ship to prevent foundering.
• At of Slipping anchor to prevent collision.

5. (b) Give two reasons proceeding to port of refuge. (4 marks)

Answer 13
(1) Weather, collision or grounding damage affecting seaworthiness of the ships
(2) Serious fire
(3) Dangerous shift of cargo
(4) Serious machinery breakdown

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(5) Any other accident causing some serious threat to the vessel and cargo
(6) Shortage of banker due to exceptionally severe weather, contamination, etc.

5. (c) What are 4 types of marine insurance policy (4 marks)

Answer 14

( 14 ) What are 4 types of marine insurance policy ? ( 4 marks )

( 1 ) Voyage Policy : A policy in which limits of risks are determined by named

places.
( 2 ) Time Policy : A policy designed to give cover for some specific period of
time.
( 3 ) Voyage and Time Policy : A policy which covers for a named voyage and for
some stipulated period after arrival at her destination.
( 4 ) Construction Policy : A policy which covers risks to building of a vessel
(5) Port Policy : A policy which covers a vessel during a period in port against
risks
( 6 ) Valued Policy : A policy which specifies agreed value of subject matter
insured.
( 7 ) Unvalued Policy : A policy where value of subject matter insured is not yet
stated . It will become value policy when assured informed value.

4th BOE 14-Jul-2014 L1

3. (a) What is the difference between “Express term of contract” and “Implied term of
contract”? (6 marks)
Answer 15

( 15 ) What is the difference between Express term of contract and implied

term of contract ? ( 6 marks )

Express term : A contractual term which has been agreed to by the parties in
words, either in writing or orally.
Eg, The written terms of a crew agreement or a charter party are express
terms.
Implied term : A contractual term which is not agreed to by the parties, but
deemed to exist

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 in the contract because of some statutory requirement.
Eg, there is an implied term in a contract of carriage of goods by sea that the
carrier will provide
a seaworthy ship.

3. (b) Define “Carrier”. (2 marks)

Answer 16

( 16 ) Define "Carrier" ( 2 marks )

-A person (or a company) who enter into a contract of carriage with shipper and
agrees to carry goods or persons from one place to another.

3. (c) What is “Warranty” in the carriage of goods by sea Act? Explain fully. (8 marks)
Answer 17

( 17 ) What Is Warranty in the carriage of goods by sea Act ? Explain fully

( 8 marks )

-Warranty mean a contractual term less essential than a condition.

-Breach of warranty will not have the injured party the right to repudiate the
contract,although he may sue for damages.
-However Breach of condition by one party injured party have right to repudiate
the contract and sue for damage.
-Example of warranty in carriage of goods by sea act
1)A charter party usually contains a speed warranty (that the chartered vessel
is capable of a specified speed),
2)A tanker charter party usually contains a pumping warranty (that the tanker
can pump at a specified rate)
Express term : A contractual term which has been agreed to by the parties in
words, either in writing or orally.
Implied term : A contractual term which is not agreed to by the parties, but
deemed to exist in the contract because of some statutory requirement .

4. (a) What are the shipowner’s usual basic obligations under a voyage charter party?
Answer 18 (8 marks)

( 18 ) What are the ship owner’s usual basic obligations under a voyage
charter party? ( 6 marks )

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- to provide a seaworthy ship suitable to carry the intended cargo
- to bring the ship to the agreed loading port by the agreed date
- to load the agreed cargo
- to carry the cargo to the agreed destination
- to discharge the cargo

-Ship owner bear Running cost and voyage cost and operate the ship technically
and commercially .
-Ship owner's remuneration is freight.

4. (b) What are the functions of a Bill of lading? Explain fully them. (8 marks)
REED

What are the functions of a Bill of lading? Explain fully them. (8 marks)
B/L is a document issued by carrier for goods either received into his custody
or shipped on board his vessel.

B/L Function
(1) It is receipt for the goods specified therein. B/L is issued by the carrier
once the goods have been received into his custody or shipped on board his
vessel.
(2) It is a document of title : B/L is a transferable and negotiable document
and someone who is holding the B/L is deemed to be the owner of the goods
specified therein, in the absent of fraud.
(3) It is evidence of a contract : B/L contains carrier's terms, conditions
and exceptions ; it is signed only by carrier or his agent; although it is not
signed by both parties, it shall be construed as the contract between carrier
and cargo owners.
(4) It is evidence of freight received: If freight is prepaid, B/L is a contract
that legally proves that the carrier has received the freight and is required to
deliver in good condition.

5. (a) Define “Policy”, “Premium” and “Utmost good faith” under Marine Insurance
Contract. (6 marks)
Answer 19 Policy , Premium

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Answer Q 13 Utmost good faith

( 19 ) Define "Policy" 'premium" and "Utmost good faith" under Marine

insurance .
( 6 marks )

-Policy : is a document which embodies the insurance contract. There are

various kind of policies eg voyage policy, time policy, port policy, voyage & time
(mix) policy, construction policy etc.
-Premium : is a financial cost of obtaining an insurance cover during the
duration of policy.

Utmost good faith: is basically honesty in declaring the facts about the
subject matter to be insured.
The assured must declare to the insurer, before the contract is made,
every material fact known to the assured.

5. (b) What is “P & I” Club? List the seven major types of claim which are covered under
P&I liabilities? (10 marks)
Answer 20

( 20 ) What is P & I Club ? List the seven major type of claims which are
covered under P& I Liabilities. ( 10 marks )

-To secure cover against third party risks which are normally outside the scope
of Hull & Machinery marine policy and are known as Protection and Indemnity
Associations.

Risks under Protection

1) Loss of life and personal injury claims.
2) Hospital, medical and funeral expenses arising from injury claims
3) Sickness and repatriation of distress seamen;
4) 3d party collision damages not covered by RDC;
5) Cargo damage due to improper navigation;
6) Damage to piers, wharves and other stationary objects;
7) Cost of DOT enquiries
8) Cost of raising wreck
9) Oil pollution; 10) Quarantine expenses
11) Legal costs of defending claims if incurred with the consent of the Club

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12) Cargo's irrecoverable proportion of G.A.

Risks under Indemnity

1) Claims in respect of wrong delivery of cargo;
2) Ship's liability to cargo after collision not covered by insurance
3) Fines due innocent breaches of customs, health and immigration laws
4) Cost of resisting cargo claims with the consent of the Club directors

5th BOE ( Nov-2014 )

4. (a) At what location, you can say that your ship is Arrived ship? (7 marks)
Answer 21

( 21 ) At what location you can say that your ship is Arrived ship ( 7 marks )

-Arrived ship : A ship which has reached the required place under the terms
of the Charter party and is fully at charter's disposal.
-By checking the wording of the charter party to establish whether it is a port
charter party or a berth charter party.
-If a port is defined as the place for loading without specifying loading berth,
the charter party is a port charter party and it is unnecessary to be on a berth
to be an arrived ship.
-If a particular berth is defined as the loading place the charter party is a
berth charter party and the vessel becomes an arrived ship only when she has
reached the specified berth. Owners prefer port charter parties.
-Usually use charter party abbreviations such as
WCCON Whether Customs Cleared Or Not
WIBON Whether In Berth Or Not
WIFPON Whether In Free Practique Or Not

6th BOE ( Mar-2015 )

3. (a) What are the elements of Salvage? (6 marks)
Answer 22

( 22 ) What are the elements of Salvage ? ( 6 marks )

1) must be recognised subject of salvage

2) must be in danger
3) must be voluntary

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4) must be successful.

‘1) Recognised subject of salvage : only to "maritime property", ie property at

risk eg, vessels, their equipment, cargo, bunkers, wreck and freight.
‘2) In danger : real peril but it need not be present or imminent. Eg. a vessel
which has lost her propeller at sea will be in peril, since she will eventually
either run aground or founder etc.
‘3) volunteer : must not be under any pre-existing contract or statutory duty
‘4) Successful : unless something of value is saved, there can be no salvage
reward well-known no-cure, no-pay" salvage principle.

3.(b) If a tug is towing/pushing a ship,who will be the control and responsibility?

(2 marks)
Answer Q3

Q3. If a tug is towing or pushing a ship, who will be the control and
responsibility?
( 2 marks )

- Master will be the control and responsibility.

4. Discuss buyer’s and seller’s duties for the following international sales contract.
(a) Free On Board (FOB) (8 marks)
Answer 42

( 42 ) Discuss buyer's and seller's duties for the following international sales
contract
( a )Free On Board (FOB) ( b ) Cost Insurance and Freight ( CIF ) (8
Marks )

FOB ( Free Onboard )

•means Free On Board at named port of shipment ( Loading port )
(eg : FOB "Liverpool")
• based on the port of loading. Seller must supply the goods and documents to
that port
• on board the vessel named by buyer on the date or within period stipulated.
• the seller must bear all costs and risks of the goods until they have passed the
ship's rail including export charges and taxes.

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• the seller give sufficient information to buyer to arrange insurance.
• the buyer must nominate the carrier, loading berth and loading dates.
• FOB invoice price is lower than the CIF price.

4.(b) Cost, Insurance and Freight. (8 marks)

Answer 42
CIF ( Cost, Insurance and Freight )
-means Cost, Insurance and Freight paid to a named port of discharge.
-based on the port of discharge. • the seller must pay all costs including marine
insurance and freight necessary
-risks passes from seller to buyer when the goods cross the ship's rail at
loading port.
-seller must provide the buyer with clean, negotiable bills of lading, an invoice
and insurance policy.
-title in the goods only passes when documents are taken up by buyer.
-the buyer bears all costs and charges excluding freight, marine insurance and
unloading costs unless included in the freight.
-CIF goods normally cost more than FOB goods.

5. (a) Describe the functions of classification societies? (8 marks)

Answer 31

( 31 ) Describe the functions of classification societies? ( 8marks )

Classification is a process involving
-Establishment of technical standards for ship design, construction and
maintenance
-Application of those rules to a ship -Carry out special survey of the ship by the
society's surveyors to confirm that the ship has been constructed to the
required standard
-Issue Certificate of Class to attest that the standard was met, and
-Monitoring by periodic class surveys throughout the ship's service life
Main function of classification societies
Carrying out apart from the classing the ship
1) statutory surveys on behalf of flag State Administrations
2) SMC audits for some flag State Administrations and
3) ISPS audits for some flag State Administrations
4) analysis of bunker fuel and lube oil, and
5) research and development

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Other function
i. Supervise testing of equipment and materials,
ii. Assigning freeboard;
iii. Survey of 1. refrigerating machinery
2. tonnage
3. cargo handling and securing equipment
4. Preloading
Iv .Provide technical advice

v. Verify

5. (b) Give examples for eight major types of claims which are covered under P & I
liabilities. (8 marks)
Answer 20
( 20 ) What is P & I Club ? List the seven major type of claims which are covered under
P& I Liabilities. ( 10 marks )
-To secure cover against third party risks which are normally outside the scope
of Hull & Machinery marine policy and are known as Protection and Indemnity
Associations.
Risks under Protection
1) Loss of life and personal injury claims.
2) Hospital, medical and funeral expenses arising from injury claims
3) Sickness and repatriation of distress seamen;
4) 3d party collision damages not covered by RDC;
5) Cargo damage due to improper navigation;
6) Damage to piers, wharves and other stationary objects;
7) Cost of DOT enquiries
8) Cost of raising wreck
9) Oil pollution; 10) Quarantine expenses
11) Legal costs of defending claims if incurred with the consent of the Club
12) Cargo's irrecoverable proportion of G.A.
Risks under Indemnity
1) Claims in respect of wrong delivery of cargo;
2) Ship's liability to cargo after collision not covered by insurance
3) Fines due innocent breaches of customs, health and immigration laws
4) Cost of resisting cargo claims with the consent of the Club directors

7th BOE ( 17-Jul-2015 ) K4

19
4. (a) Before a Bill of Lading (B/L) is signed, what items should be confirmed? (6 marks)
Text Page 19 Last paragraph

Before a Bill of Lading (B/L) is signed, the following items should be

confirmed .

(1) must be in proper form;

(2) the goods have actually been shipped;
(3) the date of shipment is correct;
(4) Freight, if prepayable, has been paid;
(5) any clausing of the corresponding Mate's Receipt is also contained in the B/L;
(6) any Charter Party terms do not conflict with the B/L terms;
(7) reference is made to the Charter Party where one exists;
(8) the number of original bills in the set is stated.

4. (b) Describe
(i) Received for shipment B/L
(i) Shipped B/L
(iii) Direct B/L
(iv) Through B/L
(v) Combined B/L. (10 marks)
Answer Q 17 Text Page 20 Last paragraph

-Received for shipment BL – BL issued to shipper when carrier receives goods in

his custody.

-Shipped BL - BL issued by carrier after goods are loaded on ship.

-Direct BL - B/L- covering carriage of goods in one ship direct from one port to
another.

-Through BL - A B/L issued when the carriage will involve both sea and other
transport modes. The sea carrier issues the through B/L and accepts
responsibility for the sea portion.

20
-Combined BL - A B/L issued by Combined Transport Operator when goods are
carried from door to door by various transport modes. The issuer takes
responsibility for the entire movement.

5. (a) Describe between General Average Loss and Particular Average loss. (8 marks)
Answer ( 36 )

Particular Average Particular Average General average

-Accidental partial loss of insured - There is a GA act when, and only

property which is not a general when any extraordinary sacrifice or

average loss. expenditure is intentionally and

reasonably made or incurred for the

common safety for the purpose of

preserving from peril the property

involved in a common maritime

adventure.

- Accidental - Intentional

1.Stranding of ship - Beaching of ship to protect

2. Damage to hull, machinery or cargo foundering

due to fire -Wetting previously undamaged cargo

3. Damage to hull, machinery or cargo while extinguisher fire

due to HW. - Jettison of cargo due to heavy

4. Damage to ship or cargo due to weather

collision, etc - Salvage costs to port of refuge

5. Loss of anchor during bad weather - Shipping of anchor to prevent

collision

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 6. Damage to hull, machinery due to - Damage of hull, machinery during

Grounding refloating

-Contributed by a particular insurer. -Contributed by all parties.

8th BOE ( Nov-2015 ) N1

3. (b) Distinguish between Salvage and Towage. (8 marks)
Answer 29

( 29 ) Distinguish between salvage and towage (8 Marks)

SALVAGE TOWAGE

1)Salvage operation means any act or -Towage is any operation holding,

activity undertaken to assist a vessel pushing, pulling, moving escorting or
or any other property in danger guiding of or standing by Hirer's
vessel
2)saving of maritime property - safety of ship operation
3)property must be in danger - property need not be in danger
4) voluntary service - contemplated service
5)independent of contract, whereas - previously arranged contract
6) Salvage reward is open - Towage is charged at fixed rate
7) Salvage reward is contributed by - Towage remuneration is payable by
salved property owners ship owner.
8) Special compensation in salvage - No special compensation in towage
9) based on no cure no pay principle - in accordance with contract terms

3. (c) Explain the Environmental concern under "No cure-no pay" contract.(4 marks)
Answer Q4

Q4. Explain the Environmental concern under “ No Cure – No Pay “ Contract.

( 4 marks )

-Under "No cure-no pay" contract, salvor have obligation to take all reasonable
measures to avert and or minimize damage to the environment in the salvage
operation.

22
-The expenses to take all reasonable measures to avert and or minimize damage
to the environment is salvor’s expenses reasonably incurred in the salvage
operation.

-It is special compensation.

-When salvage operations cause damage to environment and the salvors

have failed to earn a reward, a special compensation payment is payable
by ship’s owner.
-The Arbitrators will fix the payment and difficulties were experienced in
several salvage cases in assessing the amount of special compensation under
article 14 of the International Salvage Convention.

-An alternative means of assessing special compensation remuneration, known as

the Special Compensation P&I Clause or “SCOPIC Clause”, was therefore
developed by salvors, P&I Clubs, underwriters and other parties.

(c) Charter Party (6 marks)

Answer Q 16

Q16. Explain Charter Party ( 6 marks )

Charter Party

A charterparty is a document containing the written terms of a charter

agreement defining the rights, responsibilities and liabilities of the owners and
charterers.

Types of charter

(1) voyage charter

(2) time charter
(3) bareboat charter and
(4) demise charter

5. (a) What is Notice Of Readiness (NOR)? How will you tender the NOR? (8 marks)
Answer 28

23
( 28 ) What is Notice of readiness how will you tender NOR ? ( 12 marks )

-Notice given to the charterer, shipper, receiver or other person as required by

Charter party that the vessel has arrived at the port or berth and ready to load
or discharge.
-It must be tendered before lay time can commence.
-It must be rendered in accordance with the procedure in the notice clause or
lay time clause.
- It is often required to be tendered during normal office hours.
- It must be addressed to the charterers or their agent.
- It should be in duplicate.
- It should contain date and time of serving the notice
- The charterer should state the date and precise time of acceptance on ship's
copy
- It should contain the amount of cargo the vessel can take
- If notice time or turn time' is not specified, lay time will commence as soon as
the Notice of Readiness is given
- It must be tendered as soon as possible
- By a printed form or letter or by telex, fax or cable
- Charterers or owners notice of readiness forms are often pre-printed for
masters to us but if necessary the master should write and send his own notice
in duplicate with the time and date of receipt for the ship's retention.

5. (b) Explain the “Warranty" in the Marine Insurance contract. (8 marks)

Answer 26

( 26 ) Explain "Warranty" in marine insurance contract. ( 6 marks )

-Warranty in Marine Insurance : A promise by assured that something will or

will not be done or that some obligations to be fulfilled.
-If Breach of warranty by assured, insurer have right to repudiate the
contract.

-An express warranty must be written or contained in document (Eg the vessel
is classed with a particular society and class will be maintained. )

-Implied warranties are not written in policy but are implied by law to exist in
contract. (Eg. Major implied warranties Seaworthiness and Legality)

9th BOE ( Mar-2016 ) I1

24
4. (b) What are the functions of a Bill of lading? Explain fully them. (8 marks)
REED

What are the functions of a Bill of lading? Explain fully them. (8 marks)
B/L is a document issued by carrier for goods either received into his custody
or shipped on board his vessel.

B/L Function
(1) It is receipt for the goods specified therein. B/L is issued by the carrier
once the goods have been received into his custody or shipped on board his
vessel.
(2) It is a document of title : B/L is a transferable and negotiable document
and someone who is holding the B/L is deemed to be the owner of the goods
specified therein, in the absent of fraud.
(3) It is evidence of a contract : B/L contains carrier's terms, conditions
and exceptions ; it is signed only by carrier or his agent; although it is not
signed by both parties, it shall be construed as the contract between carrier
and cargo owners.
(4) It is evidence of freight received: If freight is prepaid, B/L is a contract
that legally proves that the carrier has received the freight and is required to
deliver in good condition.

10th BOE ( 22-Jul-2016 ) K3

4. (a) What does the following INCOTERM stand for? Explain briefly.
(i) FAS (ii) DES (iii) CFR (9 marks)
Answer Q 14

Q14. What does the following INCOTERM stand for?

1) FAS
2) DES
3) CFR

FAS (Free Alongside Ship)

- The shipper’s duty is completed when he has delivered the goods within reach
of the ship’s tackles;

25
- Further costs of loading, stowing and trimming are then the ship owner’s
account.

DES (Delivered Ex-Ship)

Delivered ex-ship (DES) was an Incoterm (an international commercial term)

that applied to both inland and sea shipping and often in charter shipping.
DES stipulated that a seller had to deliver goods to a buyer at a certain port of
arrival, as specified in an international shipping contract. After delivery, all
obligations shifted to the buyer.
Discontinued in 2011, DES was replaced by two new Incoterms, delivered at
terminal (DAT) and delivered at place (DAP).

CFR (Cost and Freight)

- The seller must pay the costs of bringing the goods to the specified port.
- The buyer is responsible for risks when the goods are loaded onto the ship

4. (b) What is Notice of Readiness (NOR)? How will you tender the NOR? (7 marks)
Answer 28

( 28 ) What is Notice of readiness how will you tender NOR ? ( 12 marks )

-Notice given to the charterer, shipper, receiver or other person as required by

Charter party that the vessel has arrived at the port or berth and ready to load
or discharge.
-It must be tendered before lay time can commence.
-It must be rendered in accordance with the procedure in the notice clause or
lay time clause.
- It is often required to be tendered during normal office hours.
- It must be addressed to the charterers or their agent.
- It should be in duplicate.
- It should contain date and time of serving the notice
-The charterer should state the date and precise time of acceptance on ship's
copy
- It should contain the amount of cargo the vessel can take
- If notice time or turn time' is not specified, lay time will commence as soon as
the Notice of Readiness is given
- It must be tendered as soon as possible
- By a printed form or letter or by telex, fax or cable

26
- Charterers or owners notice of readiness forms are often pre-printed for
masters to us but if necessary the master should write and send his own notice
in duplicate with the time and date of receipt for the ship's retention.

5. (a) Give each four examples for General Average Sacrifices and General Average
Expenditures. (8 marks)
Answer 27

( 27 ) Give four examples for General Average Sacrifices and general Average
Expenditures. ( 6 marks )

Examples of GA sacrifices
(1) Damaging engine, propeller or hull in refloating operations
(2) Jettison of cargo from under deck (3) Jettison of cargo carried on deck
(4) Shipping an anchor and cable to avoid a collision

Examples of GA expenditures
(1) Cost of hiring a tug to refloat a stranded ship with cargo on board
(2) Cost of discharging cargo to refloat stranded ship or to carry out repairs at
port of refuge
(3) Salvage costs
(4) Agency fees at a POR
(5) Sunnyside
(6) Warehousing charges
(7) Port charges
(8) Master's and crew wages while a ship is being repaired
(9) Average adjuster's fee.

11th BOE ( 30-Nov-2016 ) H2

2. (b) What is the function Bill of Lading? Explain fully. (9 marks)
REED
What are the functions of a Bill of lading? Explain fully them. (8 marks)
B/L is a document issued by carrier for goods either received into his custody
or shipped on board his vessel.

B/L Function
(1) It is receipt for the goods specified therein. B/L is issued by the carrier
once the goods have been received into his custody or shipped on board his
vessel.

27
(2) It is a document of title : B/L is a transferable and negotiable document
and someone who is holding the B/L is deemed to be the owner of the goods
specified therein, in the absent of fraud.
(3) It is evidence of a contract : B/L contains carrier's terms, conditions
and exceptions ; it is signed only by carrier or his agent; although it is not
signed by both parties, it shall be construed as the contract between carrier
and cargo owners.
(4) It is evidence of freight received: If freight is prepaid, B/L is a contract
that legally proves that the carrier has received the freight and is required to
deliver in good condition.

2. (c) Give 3 examples of maritime contract. (3 marks)

Answer 33

( 33 ) Give 3 Examples of maritime contract. (3 Marks)

1 Crew agreement
2. Voyage charter
3. Time charter
4. Bare board charter
5. Demise charter
6. bunker supply contract
7. a salvage agreement

5. (a) Explain ¾ collision liability. (3 marks)

Answer 24

( 24 ) Explain 3/4 collision liability.(3 Marks)

3/4ths Collision Liability ( Running Down Clause)

- Underwriters will pay for three quarters of any

a) loss or damage to another vessel or property
b) loss or delay to another vessel or property
c) general average or salvage of another vessel or property
- It can be extended 4/4ths cover (if it is expressly agreed to in writing)
-This clause intend to make ship owners more careful with navigation.

5. (c) Explain Sister Ship Clause under ITC (Hull) (3 marks)

28
Answer 25

( 25 ) Explain the sister ship clause under ITC (Hull) ( 3 Marks )

Sister Ship Clause : an insurance clause which allows vessels owned wholly or
partly by same owners or under same management, to be treated in event of
collision or salvage as different companies.

12th BOE ( Mar-2017 ) 17D1

3. (b) What is an ACT of GOD? (4 marks)
Answer 35
( 35 ) What is Act of God?( 2 Marks)

Act of god : Some unforeseen unpreventable natural event e.g. Lightning,

earthquake, Volcanic, eruption, Tsunami.

-If a particular berth is defined as the loading place the charter party is a
berth charter party and the vessel becomes an arrived ship only when she has
reached the specified berth. Owners prefer port charter parties.
-Usually use charter party abbreviations such as
WCCON Whether Customs Cleared Or Not
WIBON Whether In Berth Or Not
WIFPON Whether In Free Practique Or Not

13th BOE ( 07-Jun-2017 ) 17D1

4. Explain the following with reference to Myanmar carriage of goods by sea act.
(a) goods (5 marks)
(b) carrier (4 marks)
(c) carrier's obligation before and at the beginning of voyage (6 marks)
(d) carrier's right regarding deviation (5 marks)
Answer Q9

Q9. Explain the following with reference to Myanmar carriage of goods by

sea act.

1) Goods ( 5 marks )
2) Carrier ( 4 marks )

29
 3) Carrier’s obligation before and at the beginning of voyage ( 6 marks )
4) Carrier’s right regarding deviation ( 5 marks )

1).Goods

The HVRs apply to all goods shipped under B/L terms except for:  live animals
and  cargo which is stated by the contract of carriage as being, and is actually
carried on deck.

2).Carrier

Carrier means a person which includes a company such as ship owners or ship
operators who agrees to carry goods or persons from one place to another.
Kinds of carrier (1) common carrier (2) private carrier

3).Carrier’s obligation before and at the beginning of voyage

The carrier must, before and at the beginning of the voyage (i.e. up to the
moment of sailing), exercise due diligence to: 1. Make the ship seaworthy; 2.
Properly man, equip and supply the ship; and 3. Make the holds, refrigerating
and cool chambers, and all other parts of the ship in which goods are carried, fit
and safe for their reception, carriage and preservation. These requirements
cover the three aspects of seaworthiness: technical seaworthiness; cargo-
worthiness; and fitness for the voyage.) The vessel must be seaworthy only at
the commencement of the voyage, which usually means when she leaves the
berth, whether under her own motive power or with the aid of tugs

4).Carrier’s right regarding deviation

1. Any deviation in saving or attempting to save life or property at sea

2. any reasonable deviation, will not be an infringement or breach of the Hague-
Visby Rules or breach of contract of carriage.

5. (b) Define "Assured", "Subject matter insured", "insurable interest" and "utmost good
faith". (10 marks)
Answer Q 13

Q13. Define “ Assured “ , “Subject Matter Insured” , “ Insurable Interest” and

“ Utmost Good Faith” (10 marks )

30
"Assured" A person protected by insurance coverage against loss or
damage stipulated by the provisions of a policy purchased from an
insurance company or an underwriter.

"Subject matter insured" Person or property that is the subject matter of

an insurance policy and in which the Assured has insurable interest.

“Insurable Interest“ Any assured must have some legal relationship to

the subject matter insured, and must stand to benefit by its preservation
or lose by its loss or damage.

Utmost good faith is basically honesty in declaring the facts about the
subject matter to be insured.
The assured must declare to the insurer, before the contract is made,
every material fact known to the assured.

14th BOE ( 26-Jul-2017 ) 17E1

4. (b) What basic information should a Bill of Lading contain? (10 marks)
Answer 30

( 30 ) What basic information should a Bill of Lading contain? (5 Marks)

(1) reference number
(2) name and address of shipper or his agent
(3) name and address of consignee, or 'to order of
(4) name and address of any 'notify' party
(5) ports of loading and discharge
(6) name of carrying vessel
(7) any leading marks
(8) number of packages or pieces
(9) description of goods
(10) gross weight or measurement
(11) order and condition of goods
(12) place where freight is payable
(13) number of original Bs/L

31
(14) date of shipment
(15) place of issue
(16) signature of master or carrier's agent

4. (c) What is a sea waybill? (5 marks)

Answer Q2

Q2. What is a sea waybill? ( 5 marks )

- It is often used where there is trust between the buyer and seller.
- It provides the receipt for the goods by the carrier and evidence of
the contract of carriage for the goods specified therein.
-It is not a document of title.
-It is a non-negotiable document.
-It may travel with the goods on the ship and does not have to arrive
ahead of the goods
for the receiver to claim the goods.
-The consignee or his agent must produce the proof of identity or
authority to take delivery of the goods.

5. (b) What is "Lien"? (4 marks)

Answer 34

( 34 ) What is Lien? (4 Marks)

A legal right to retain possession of the property of another as security for an
outstanding payment.
(1) Possessory lien
(2) Maritime Lien
Possessory lien can be divided into: (a) Particular lien (b) General lien
Maritime Lien can be divided into: (a) Damage Lien (b) contractual lien

5. (c) List the 4 perils under ITC (Hull). (4 marks)

Answer 9 ( 4 only )

( 9 ) What perils is a ship owner insured against under a hull and machinery
policy that incorporated the Institute Time Clauses Hulls ( 8 marks )

32
- Insurance covers loss or damage caused by

(1) Cause by seas, rivers, lakes or other navigable waters

(2) Fire, explosion
(3) Theft by outside of vessel
(4) Piracy
(5) Barratry of Master, officer or crew
(6) Jettison
(7) Natural disasters such as earthquake, volcanic eruption or lighting
(8) Accidents in loading, discharging or shifting cargo or fuel
(9) Accidents in contact with land conveyance, dock, harbor equipment or
installation
(10) Breakage of shaft or any latent defect in the machinery or hull.
(11) Negligence of Master, Officers, Crew or Pilot
(12) Negligence of repairers or charterers
(13) Contact with aircraft, helicopters or similar objects or objects filling there
from

15th BOE ( 17-Nov-2017 ) 17A2

3. (a) Explain the followings.
(i) Dead freight
(ii) Demurrage
(iii) Despatch money
(iv) Laydays (12 marks)
Answer Q5

Q5. Explain the followings

1).Dead Freight

2).Demurrage

3).Despatch Money

4).Laydays ( 12 MARKS )

33
1).Dead Freight

A sum of liquidated damages charged by owners to charterers for cargo

that was agreed for loading but not actually loaded. If the charter party
specifies "60,000mt", but only 50,000 tonnes is loaded, deadfreight is
due on 10,000 tonnes, at the same rate as the freight. Any margin allowed
to charterers, e.g. "10% more or less in charterers' option" should,
however, be allowed for, so that in the above example charterers can
legally load as little as 54,000 tonnes. The master should make out a
Deadfreight Claim form.

2).Demurrage

The sum of liquidated damages which become payable by charterers to

owners for each day, or part thereof if stipulated, for detaining the ship
beyond the time of expiry of laytime. Demurrage is normally paid per
running day, 'once on demurrage, always on demurrage'.

3).Despatch Money

A monetary reward payable by owners to charterers for completion of

cargo operations within the agreed laytime period before the laytime has
expired. The rate for despatch is stated in the Demurrage and Despatch
Clause and is usually half the demurrage rate for all time saved, which
mean that laytime exclusions (for weather, etc.) are not taken into
account after the completion of cargo. For working time saved, laytime
exclusions must be taken into account.

4).Laydays

An agreed period of specified days (eg“ Jan 8/15”) during which the
shipowners must present the vessel to the charterer at agreed place for
loading. Failure to tender notice of readiness within the laycan period will
give charterer the option to cancel the charter and sue the owners for
damages. The final layday is the cancelling date.

34
3. (b) What are the aims of an on-hire survey in time charter? (8 marks)
Answer had been given to students.

3.( b ) What are the aims of an on-hire survey in Time charter?

( 8 marks )

To determine

• The quantity of bunkers remaining on board (since charterers will buy

them);

• The general condition of the vessel; and That tanks / holds are fit for
the carriage of the contemplated cargoes.

The surveyor will note any existing damage in holds/tanks.Holds of a dry

cargo vessel must be dry and swept clean, etc., and tanks for oil or chemicals
must pass survey and be certified fit.
Time spent on the survey is normally at the owner's risk, i.e. the vessel is not
on-hire until after the survey.

4. (a) Explain what is mean by "Particular Average". (6 marks)

Answer Text Book Page 9

Q; What is Particular Average (P.A)? ( G.48

, G.49)
Particular Average is defined fortuitous partial loss caused by peril insured
against. It is accidental partial loss of insured property.
PA contribution by a particular insurer. Eg; damaged to the ship‟s hull. The
costs are claimed to hull and machinery insurance policy.
Examples
1. Grounding/Stranding damage
2.Fire & Explosion damage
3.Heavy weather damage
4.Collision damage
5. contact damage (with fixed or floating objects)

35
4. (b) Distinguish between partial loss, total loss and constructive total loss. (14 marks)
Answer Q6

Q6. Distinguish between partial loss, total loss and constructive total
loss. ( 14 marks )
Total Losses (a) Actual total losses (b) Constructed total losses

Actual Total Losses: When the subject matter is destroyed or

damaged so that it ceases to be the thing insured or permanently
deprived.
Example; (1). When a ship or cargo is destroyed by fire
(2). When a ship and cargo is sunk in deep water that it would
be impossible to recover.
Constructed Total Losses: When the subject matter is reasonable
abandoned because actual total loss is un-avoidable or if so damaged
that expenses (such as costs to repair the subject matter) will exceed
the value of the property.
Example (1) Ship so damaged that cost of repair will exceed the value
of repaired vessel (2) a ship was ashore in a position from which it
would be difficult to refloat her without great expense (3) Ship
trapped in a war situation

Partial Losses (a) Particular Average (b) General Average

Particular Average is defined fortuitous partial loss caused by peril

insured against. It is accidental partial loss of insured property.
PA contribution by a particular insurer. Eg; damaged to the ship’s hull.
The costs are claimed to hull and machinery insurance policy.
Examples
1.Grounding/Stranding damage
2.Fire & Explosion damage
3.Heavy weather damage
4.Collision damage
5. contact damage (with fixed or floating objects)

36
 General Average is Partial loss incurred through a deliberate act
performed with the intention of protecting all the interests involved
in a voyage from a danger that threatens them all.
GA contribution by all parties.
Examples
1.Beaching to prevent sinking
2.Extinguishing a fire damage to other cargo
3.Jettisoning cargo caused by peril
4.Salvage costs

16th BOE ( 30-Mar-2018 ) 17B2

1. (a) What is an underwriter? (5 marks)
Answer Q7

Q7. What is an Underwriter ?( 5 marks )

A person who accepts and underwrites a risk on behalf of his syndicate (in case
of Lloyd's underwriter).

1. (b) What is meant by "insurable interest"? (5 marks)

Answer Q 8 , Q 13

Q8. What is meant by “ Insurable Interest “ ? ( 5marks )

“Insurable Interest“ : Any assured must have some legal relationship to the
subject matter insured, and must stand to benefit by its preservation or lose by
its loss or damage.

1. (d) Explain the principle of “Utmost good faith”. (5 marks)

Answer Q 13, 19
Utmost good faith is basically honesty in declaring the facts about the

subject matter to be insured.

The assured must declare to the insurer, before the contract is made,

37
every material fact known to be Assured.
3. (a) Explain Laydays, running days and weather working days? (15 marks)
Answer Q 10

Q10. Explain Laydays, Running days and Weather working days? ( 15 marks )

Lay Days

An agreed period of specified days (eg “Jan 8/15”) during which the shipowners
must present the vessel to the charterer at agreed place for loading. Failure to
tender notice of readiness within the laycan period will give charterer the
option to cancel the charter and sue the owners for damages. The final lay day
is the cancelling date.

Running Days

."RUNNING DAYS" or "CONSECUTIVE DAYS" shall mean days which follow one
immediately after the other.

Weather Working Days

A working day or part of a working day during which it is or, it would be possible
to load / discharge the cargo without interference due to the weather.

3. (b) When will you tender the Notice of Readiness? (5 marks)

Answer Q 11

Q11. When will you tender the Notice of Readiness? ( 5 marks )

As soon as possible, on a day within the laycan period (i.e. the laydays), in
accordance with the procedure state in the Notice Clause or Laytime Clause in
the charter party.

This may require that notice be tendered only during office hours, and
particular care must be taken by the master only to tender in strict accordance
with the clause.

38
4. (a) How is a bill of lading generated in the liner trades (i.e. in container and
ro-ro freight shipping)? (5 marks)
Answer Q1

Q1. How is a bill of lading generated in the liner trades (i.e. in container and
ro-ro freight shipping)? ( 5 marks )
Assuming that the shipper is a freight forwarder acting behalf of the
exporter:

(1) The exporter sends a shipping note and export cargo shipping instructions
(ECSI) to the freight forwarder.
(2) The freight forwarder books space on a liner vessel and arrange customs
clearance and documentation.
(3) The freight forwarder pays freight to sea carrier and delivers the goods
to the sea carrier’s port terminal.
(4) The sea carrier issues to the freight forwarder a set of “shipped” or “on
board” bills of lading on loading.
(5) The freight forwarder sends the bills of lading to the exporter if he needs
them in a documentary credit transaction.

4. (c) What is P&I Club? List the seven major types of claim which are covered
under P&I liabilities? (10 marks)
Answer 20

( 20 ) What is P & I Club ? List the seven major type of claims which are
covered under P& I Liabilities. ( 10 marks )

-To secure cover against third party risks which are normally outside the scope
of Hull & Machinery marine policy and are known as Protection and Indemnity
Associations.

Risks under Protection

1) Loss of life and personal injury claims.
2) Hospital, medical and funeral expenses arising from injury claims
3) Sickness and repatriation of distress seamen;
4) 3d party collision damages not covered by RDC;
5) Cargo damage due to improper navigation;

39
6) Damage to piers, wharves and other stationary objects;
7) Cost of DOT enquiries
8) Cost of raising wreck
9) Oil pollution; 10) Quarantine expenses
11) Legal costs of defending claims if incurred with the consent of the Club
12) Cargo's irrecoverable proportion of G.A.

Risks under Indemnity

1) Claims in respect of wrong delivery of cargo;
2) Ship's liability to cargo after collision not covered by insurance
3) Fines due innocent breaches of customs, health and immigration laws
4) Cost of resisting cargo claims with the consent of the Club directors

21st BOE ( 04-Dec-2019 ) 17C2

1. (b) Describe the procedure of making Note of Protest? (5 marks)

Answer 1 ( Upper Part )

Procedure for noting protest

(1) As soon as possible, within 24 hrs arrival port
(2) For cargo, it should be noted before breaking bulk
(3) Statements under Oath taken from master and other crew, supported by
log book entries and evidence as necessary
(4) Protest made before Notary Public, Consular Office or other authority
(5) At least three true and certified copies obtained: One copy retained on
board and others sent to owners
(6) Shall be noted at each discharging port and not just at 1 port of call
(7) Master shall reserve the 'Right to Extend

22nd BOE ( Mar-2020 ) 20E

4. (c) What is Lien? (4marks)
Answer 34

( 34 ) What is Lien? (4 Marks)

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 A legal right to retain possession of the property of another as security for an
outstanding payment.
(1) Possessory lien
(2) Maritime Lien
Possessory lien can be divided into: (a) Particular lien (b) General lien
Maritime Lien can be divided into: (a) Damage Lien (b) contractual lien

23rd BOE ( Dec-2020 ) 20B

4. (a) What are the shipowner’s usual basic obligations under a voyage charter party?
(8 marks)
Answer 18

( 18 ) What are the ship owner’s usual basic obligations under a voyage
charter party?
( 6 marks )

- to provide a seaworthy ship suitable to carry the intended cargo

- to bring the ship to the agreed loading port by the agreed date
- to load the agreed cargo
- to carry the cargo to the agreed destination
- to discharge the cargo
-Ship owner bear Running cost and voyage cost and operate the ship technically
and commercially .
-Ship owner's remuneration is freight.

24th BOE ( Jul-2021 ) 21B

3. (b) What action should a Master take to protect the owner’s interests following a
berthing accident in which both the ship and quay are damaged. (6 marks)

3.(b) What action should Master take to protect the owner's interest
following berthing accident both the ship and quay are damaged. (6
marks )

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Q-309. Berthing accident in which both the ship and quay are damaged?

The Master should;

1) inform owners and local P & I club correspondent a.s.a.p.;

2) send a full report to owners, signed where possible by the pilot, tug master
(s) and any eye-witnesses (e.g. linesman),. and including: speed and angle of
approach, appended extracts from logs detailing helm and engine movements,
weather conditions, state of tide and current;

3) record in deck log any defects or damage to jetty prior to or immediately on

berthing;

4) with assistance of P&I club correspondent if necessary, appoint an

independent surveyor to inspect the damage, this should ideally be a joint
survey with a surveyor appointed by the port/ terminal operator or their
underwriters;

5) take and submit to owners photographs of damage to quay;

if requested, give port/terminal operator and/or their surveyors every
opportunity to survey damage to the vessel, and attempt to agree with them
the cause and extent of the damage.

26th BOE ( Jul-2022 ) 22BM2

BOE ( 23.06.2023 ) 22A

Q 2 ( A ) What are the practical purposes of ship classification?
( 6 Marks )

It is a requirement of hull and machinery insurers, P&l clubs, ship

financiers and cargo insurers. It is also useful in sale and purchase.
Class is linked with statutory certification: a classed ship which has
had her class suspended or withdrawn after being damaged or failing

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surveys, etc. will normally have her statutory certificates withdrawn
by the flag state administration.

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