Sisco Systems is a security equipment developer and manufacturer based in Melbourne. In January, Anzen, a Japanese company, ordered 2000 Sisco Complete Security Systems. The total purchase price for the systems was AUD $1 million CIF (Tokyo). Sisco employees packed the systems into two containers for carriage to Tokyo on board 'The Lively', a ship owned and operated by Teppi Shipping Inc. The master of The Lively issued Sisco a clean bill of lading on behalf of Teppi Shipping, which Sisco forwarded to Anzen for payment, along with other necessary documents. The following term was included on the back of the Bill of Lading,

"In the event of the loss or damage of cargo, the carrier's liability is limited to $400 or the value of the goods shipped if the shipper's value has been inserted on the Bill of Lading."

The Lively departs Melbourne on 1 March. However, only two days into the journey the ship's navigation systems fails. As a consequence, the ship strikes submerged rocks and the force of impact dislodges a number of containers, which fall overboard. On arrival it was discovered that one of the containers lost overboard was destined for delivery to Anzen. Further investigations reveals that Teppi Shipping is in financial trouble and to save money it has reduced its on-shore maintenance checks and staff to levels described by employees and others in the industry as 'negligent'.

1. Under Australian law, the Modified Hague Visby Rules applies to this contract of carriage, can you explain why?
2. Explain whether Teppi Shipping can rely on the term included in the Bill of Lading to reduce its liability?
3. Examine the carrier obligations in Article 3.1 and 3.2. On which do you think Anzen should base an action against the carrier? Apply the articles to the facts and explain how Anzen could argue
4. that the carrier has breached its obligations.