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Sun Oil Co. of Pennsylvania and Sun International Ltd. v. M/T Carlisle In Rem and Ore Sea Transport S.A. of Panama and Tradax Gestion S.A. (The Carlisle) - United States Court of Appeals for the Third Circuit (Hunter and Sloviter, Circuit Judges and Cohen, District Judge) - 4 September 1985

Short delivery of crude oil - Whether permissible by virtue of a term implied by custom and practice of the trade

The plaintiffs (“Sun”) chartered the vessel Carlisle to transport Zarazatine crude oil from La Skhirrah, Tunisia to Marcus Hook, Pennsylvania. The vessel loaded the oil on 13 October 1980 and measurements showed 540,401 barrels on board. When it arrived at Marcus Hook on 31 October, measurements showed 537,566 barrels on board. Sun claimed damages from the carriers for the missing 2,835 barrels. The carriers raised the defence that by custom and practice the carrier had a 0.5% trade allowance, which was an implied term in the charterparty. Thus the carrier would be obligated to deliver only 99.5% of the oil loaded except when the loss was due to some specific, known cause, such as a collision, in which case the allowance would not apply. Sun argued that the trade custom was inconsistent with the Carriage of Goods by Sea Act, which established a statutory scheme of responsibilities with regard to carriage of cargo and for determination of liability with regard to claims for short delivery of cargo. The District Court found that there was such an implied term, that there was no non-delivery if the cargo was not contractually obligated to be delivered and that accordingly the recognition of a trade allowance was not inconsistent with COGSA.

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