Misdelivery of cargo against letter of guarantee

Liner agents were authorised by shippers to deliver a consignment of frozen chickens to receivers against a bank guarantee.  The bank guarantee was received covering 112,309 kilos of frozen chickens for a value of USD$ 106,393.  The agent telexed the terms of the guarantee to their principals who confirmed that the cargo should be delivered.

Unfortunately, the employee who prepared the delivery order failed to notice that the bill of lading was for 18,657 cartons of frozen chickens which was a substantially greater quantity than the 112,309 kilos covered by the bank guarantee and a delivery order was issued for the full quantity, valued at US$ 219,746.

The shippers claimed against the agents for the value of the consignment not covered by the guarantee, i.e. US$ 113,353 and the Club settled the claim for the full amount on the recommendation of its lawyers who advised that there was a clear liability on the agents.

Efforts to recover from the receivers met with no success.