What is Contract of Affreightment? Logistics Terms | Saloodo! (2024)

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What is Contract of Affreightment? Logistics Terms | Saloodo!? ›

Contract of Affreightment is an agreement between a charterer and a shipowner, where the shipowner agrees to transport specific number of goods for the charterer at a specified period. Under this agreement, the charterer is obligated to pay the freight whether the goods are ready for shipment or not.

Price is decided based on quantity of goods with fines on carrier for delay. Example- Iran is one of the major exporters of crude oil to India. Exporters in Iran can sign such contracts with shipping company. A fixed quantity of oil should reach Indian ports every month for next 2 years.

In every contract of affreightment there is an implied obligation to provide a seaworthy vessel 'fit to meet and undergo the perils of the sea and other incidental risks to which of necessity she must be exposed in the course of a voyage'.

A contract of affreightment is a contract between a shipowner and a charterer for the charter of a vessel for the transportation of goods. A bill of lading is a document that serves as a receipt for the goods being shipped, and also serves as a contract of carriage between the shipper and the carrier.

A contract of affreightment is an agreement between an owner and a charterer for the carriage of a certain amount and type of goods between agreed ports over a given period of time. It is not limited to a particular ship, but operates as a series of voyage charter parties.

A Contract of Affreightment is a legal agreement between the shipowner and the charterer. The shipowner agrees to transport a specific amount of cargo for a specific period for the charterer. In this agreement, the charterer is responsible to make payments whether the goods are ready to be moved or not.

Contracts Of Affreightment gives the owner considerable freedom to manage his fleet to the best advantage, even to the extent of 'chartering in' ships if his own fleet is engaged in more profitable employment elsewhere.

While it is possible to have a charter party of less than the entire ship, as a general rule a charter party deals with the full reach of a ship while a contract of affreightment deals with carriage of goods forming only part of the cargo and coming under a bill of lading.

There are mainly two types of affreightment contracts namely 'Bill of Lading' and 'Charter party'.

What is the contract between the shipper and carrier called? ›

A contract of carriage is a negotiated contract between the carrier and shipper for the transportation of cargo.

The ship is employed, within certain limits, according to needs of the charterers. However, the shipowner remains in possession of the vessel via his employee, the master. The master remains responsible to the owner for the safety and proper navigation of the ship.

The COA typically specifies the cargo type, the total quantity to be transported, the loading and discharging ports, the frequency of shipments, the duration of the contract, and the freight rate.

Charter party bill of lading is another type of bill of lading used under sea mode of transport. If one shipper or a group of shippers arrange to charter their goods to final destination, a vessel is chartered. This chartered vessel is meant to move the goods exclusively for such shipper or shippers.

While the charterparty is that document which embodies the written form of the vessel's charter agreement, containing the terms and conditions which govern the relationship between the shipowner and the charterer, the bill of lading is that transport document which relates to the cargo carriage, governs the ...

The four principal methods of chartering a tramp ship are voyage charter, time charter, bareboat charter, and contract charter. The voyage charter, in which a ship is chartered for a one-way voyage between specified ports, with a specified cargo at a negotiated rate of freight, is most common.

The three main types of charter are: demise charter, voyage charter, and time charter.

The freight forwarder will pay the freight to the ship owner before the container are loaded up the vessel. In this situation, a voyage charter party is signed between the freight forwarder, who is the charterer and ship owner, who is the carrier.

The bill of lading is evidence of the contract of carriage, it is not the contract of carriage itself. That contract between the carrier and the shipper is created when the goods are loaded on board the ship and will therefore already exist before the bill of lading is issued.

Why are there 3 original bills of lading? ›

Typically three bills are issued—one for the shipper, one for the consignee, and one for the banker, broker, or third party. There is no restriction on the number of bills of lading that can be issued, but the number issued must be stated on the bill. Because the bill of lading is a document of title, it is valuable.

A bill of lading (/ˈleɪdɪŋ/) (sometimes abbreviated as B/L or BOL) is a document issued by a carrier (or their agent) to acknowledge receipt of cargo for shipment.

The Shipowner: This is the entity that owns the vessel, pays for its operation, and bears the risk of loss or damage to cargo in transit. The Charterer: This is the entity that hires a ship to carry its cargo on a specific voyage or series of voyages at a fixed price per unit (tonne) shipped.

Where possession of a ship given to a hirer, who appoints his own master and crew, different considerations apply. However, though the contract by which the ship is let may be called a charter-party, it is not truly a contract of affreightment.

A contract is a legally binding agreement between two or more parties, in which each party agrees to do something in exchange for something else of value. In this example, the offer is made by one party (the landlord) to rent a room to the other party (the tenant).

The basic elements required for the agreement to be a legally enforceable contract are: mutual assent, expressed by a valid offer and acceptance; adequate consideration; capacity; and legality.