Background
SLT Imports, a New Jersey corporation, financed the importation of goods from India for a third party, Krishna Food Corp. SAR Transport Systems, an Indian carrier, was selected to transport the cargo. The arrangement required that SAR release goods only upon presentation of an endorsed bill of lading. SLT alleged that SAR made thirty deliveries to Krishna without obtaining the required endorsed bills of lading, instead accepting letters of indemnity. SLT sued for fraud in the execution and breach of contract, alleging SAR knowingly issued bills of lading with false terms regarding delivery conditions.
The court’s reasoning
The court agreed with the District Court that the fraud in the execution claim failed because the plaintiff did not allege it lacked knowledge of the endorsement requirement, making the claim a breach of contract in disguise. The court further held that the claim was time-barred under the Carriage of Goods by Sea Act, which imposes a one-year limitations period for suits involving bills of lading. The court rejected the plaintiff’s argument that the deviation doctrine applied, noting that misdelivery of cargo does not constitute a geographic or quasi-deviation that would vitiate the statute of limitations.
What it means going forward
The ruling reinforces that carriers can rely on the one-year statute of limitations under the Carriage of Goods by Sea Act even when accused of misdelivery, and clarifies that plaintiffs cannot recharacterize breach of contract claims as fraud in the execution to bypass time limits.
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