Two companies, Company A and Company B, come to an agreement about shipping products across the ocean. Specifically, Company A is a United States-based shipping company that owns a number of large ships and shipping containers used in the shipping of goods across the ocean. Company B is domiciled in China and its main business is importing food products to China.
Company B seeks to import numerous tons of American corn into China to sell on the Chinese market. To that end, Company B contacts a corn dealer based in the Midwestern United States about supplying shipments of sweet corn to China. The corn dealer contacts local farmers requesting the large number of crops that the dealer is looking to sell and requesting that the farmers provide a bulk price. The farmers respond and provide an estimate of how much corn that they can supply. After receiving estimates, the corn dealer responds to Company B about shipping a large amount of corn. The corn dealer then provides an estimate of a trucking company for shipping the corn from the Midwest to the West Coast for export.
Company B then contacts Company A about using its containers for shipping the large amounts of corn. Company A provides an estimate and parties agree to a price, shipping routes, bank letters of credit requirements, and any other pertinent information. Included in the agreement was that Company A was to ship the corn in its containers and unload those containers at a specified Chinese port. At that point, it would be Company B’s responsibility to take the corn out of Company A’s containers.
After getting necessary governmental and bank approvals, the process starts. Trucks come to load the large quantity of corn for shipment to the West Coast. Upon arrival, Company A’s team loads the corn into its shipping containers and then loads those containers aboard the ship. Once loaded, the ship sets sail and arrives in China. After an inspection and other requirements, Company A removes the containers from the ship and awaits Company B’s arrival to unload. Company B does not come that day. It does not come at all.
After two weeks, Company A decides to unload the containers and throw the produce into the trash. It needed the containers for other shipments. The parties then enter into a “Release” wherein Company B would pay Company A for part of expenses incurred and, upon payment, be released from any future claims.
Mitsui OSK Lines
The above scenario is roughly what occurred in the case Mitsui OSK Lines Ltd. v. Archer Midland. In that cases, the shipping company signed the release that had unambigious clauses allowing for a release of any future action related to the corn shipment. Later, the shipping company claimed that the release was limited and did not cover the expenses of leaving the containers out for two weeks and the disposal of the container’s contents. The court did not buy the argument. Unless there is a compelling reason otherwise, unambiguous language in a maritime contract applies.
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