Legal Issues

In this case, the carrier of the machine should have been International Forwarding Limited (IFL), according to the contract entered between IFL and the Hong Kong Import Limited (HKI). However, given that IFL did not actually transport the machine, Fast Shipping Limited was the actual carrier.

The reason that IFL is a contractual carrier is because they did not actually undertake the shipping. Instead, they contracted another company, the FSL. This could be due to the fact that IFL did not have its own ship to transport cargo.

As such, in the event of any breach of contract, Hong Kong Import Limited would be in a better position to question the company, which actually handled the transportation, Fast Shipping Limited. Since IFL promised to transport the cargo as required by HKI, and entered into a contract for the same, they should have been the carriers, a responsibility that they passed on to Fast Shipping Limited (FSL).

Given that a contract was entered between Hong Kong Import Limited and International Forwarding Limited (IFL), the importer (HKI) authorized IFL to transport the machine, in the understanding that IFL was the carrier. However, the real carrier was Fast Shipping Limited.

Subsequently, it is unlikely that the carrier would be liable for the cargo damage, since they did not enter into any contract with the importers, who are seeking compensation. Moreover, Fast Shipping Limited, the actual carriers spelt out clearly in a special clause that any cargo on deck was shipped at shippers risk. This was made clear to International Forwarding Limited (IFL), who represented themselves to Fast Shipping Limited, the actual carriers, as the shippers.

However, the shippers cannot claim compensation because the carriers were clear in a special clause that they do not take liability for goods shipped on deck. They are therefore relieved of any liability, since their terms stated that they would not be liable.

Facts
According to this case, the facts are that Hong Kong Import Limited contracted International Forwarding Limited (IFL), believing that they would undertake the transportation, as the carriers.

However, International Forwarding Limited (IFL) instead appointed another party to execute the transportation, and they instead purported to be the shippers, while they claimed that the genuine shippers were their agents.

The purported shippers did not ask for the cargo to be shipped under deck, as the real shippers had instructed. IFL did not therefore carry out the wishes of HKI as they had promised.

As such, the contract between IFL and HKI was not honored to the latter.

IFL falsely claimed to be the shippers of the cargo, and agreed to the terms and conditions of the actual carriers.

Legal issues
The legal issue here is misrepresentation of facts. This is because from the contract entered between the actual carriers and the supposed shippers, there was no breach since the carriers absolved themselves from liability from the onset, and IFL did not object or request for the cargo to be shipped under deck.

IFL falsely claimed to be the importers of the cargo, while purporting that the genuine importers, HKI, were their agents. As a result, an agreement was made between IFL and FSL. HKI were not privy to this contract in any way whatsoever.

Although HKI contracted IFL, the contracted party went ahead to contract yet another party, whereas the critical aspect of the initial contract with HKI was overlooked or forgotten in the second contract.

Much as the request to ship the cargo under deck was oral and not on the written contract, IFL promised HKI to ensure that the cargo would not be shipped on deck.

Indeed, There is an old joke that, an oral contract isnt worth the paper its written on. That is a reference to the fact that it can be very difficult to prove that an oral contract exists. Absent proof of the terms of the contract, a party may be unable to enforce the contract or may be forced to settle for less than the original bargain. Thus, even when there is not an opportunity to draft up a formal contract, it is good practice to always make some sort of writing, signed by both parties, to memorialize the key terms of an agreement.

Law
Considering the facts involved, the right law that could help to resolve this problem would be the law of misrepresentation.

Misrepresentation refers to a statement made by a party to a contract that induces another to enter into a contract, which can be interpreted, as false or untrue. The misrepresentation must be both false and fraudulent, in order to make the party making it liable for damages.

Restatement (Second) of Torts  552, defines a negligent misrepresentation as
One who, in the course of his business, profession or employment, or in any transaction in which he has a pecuniary interest, supplies false information for the guidance of others in their business transactions, is subject to liability for pecuniary loss caused to them by their justifiable reliance upon the information, if he fails to exercise reasonable care or competence in obtaining or communicating the information ( HYPERLINK httpdefinitions.uslegal.commmisrepresentation httpdefinitions.uslegal.commmisrepresentation).

Application of the law to facts
Basing on the law of misrepresentation, HKI was falsely led to believe that IFL would ship its goods, and subsequently made to enter into a contract that IFL.

However, IFL went ahead to contract another party, the FSL, claiming that HKI was their agent, which was not true.

IFL should have made sure that the machine was transported under deck to avoid damaged, since they were acting on behalf of HKI, and HKI had pointed out exactly how they wished the machine to be handled. IFL failed to ensure that this instruction was followed, which makes them liable for misrepresenting their client by failing to ensure that all the directions are followed as instructed.

The subsequent contract made between IFL and FSL did not address the issue of transporting the machine under deck, as clearly requested by HKI, and promised by IFL.

In this case, therefore, HKI can only file a suit against IFL under the law of misrepresentation, and argue that they were misled to enter a misleading or false agreement.

Conclusion
HKI can only have a case against IFL if they decide to pursue a misrepresentation case.

However, basing on their contract, HKI do not have sufficient grounds to seek for compensation for damages from IFL, because the agreement to ship the cargo under deck was oral and not documented anywhere. There is no proof that IFL assured HKI that the cargo would not be shipped on deck.

Moreover, HKI cannot seek any compensation from FSL because they have no contract whatsoever, and there is no basis of engagement between the two parties. In fact, FSL know HKI as agents. On their part, FSL made it clear from the onset that they would not be liable for damages from transporting goods on deck, a fact that the purported shippers, IFL, did not contest.

Consequently, HKI only have the alternative of suing for false representation, since there is no sound basis for breach of contract. HKI should have instead made a direct written agreement with Fast Shipping Limited as their carriers. In this event, HKI would be able to easily seek compensation on the basis of a breach of contract.