Contract of affreightment

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Contract of affreightment is a document which provides for the transport of the goods to a particular place and delivery to a particular person[1].

Contract of affreigtment is usually proved by a bill of lading when the goods are to be shipped only from the part of the cargo to which the ship is to be transported. This situation will occur when the shipowner or another person authorized to act in his name of, employs the ship as a general vessel, advertising that he is willing to accept a charge from all newcomers on a specific journey. Such services are part of line-of-trade in cases where ships of a particular shipping line regularly run an advertised route from year to year. Upon Acceptance and dispatch of the cargo by such carrier, on its behalf a consignment note will be issued confirming that the goods have been picked up for carriage or dispatched, as the case is[2].

Bills of lading

Commercial activities often involve the creation of two types of contracts[3]:

  • transportation contracts
  • sales contracts

After concluding the contract of sale of goods, the seller or the purchaser may then conclude a contract of carriage, also called a contract of affreightment, to ensure the transport of goods to a particular place and delivery to a particular person. International sales transactions typically include both sales contracts and transportation contracts. In situations like this, the seller has to not only sell the goods to the purchaser, but the buyer or seller must arrange the carriage of the goods to the purchaser or the party who ultimately receives the goods[4].

Hague/Visby rules

At a common law, the parties to the contract of affreightment, covered by the bull of lading or alike document, had to negotiate freely their own conditions, such as the parties to the charter-party. However, the abuse of a stronger tender position in the nineteenth century resulted in a limitation of that freedom and the conclusion in 1924 of The Hague Rules. The object of those principles and their successors, the principles of the Hague/Visby, was to protect the owners of cargo from the widespread exclusion of liability in respect of maritime transport. This goal was achieved by requiring the inclusion of standard clauses in the bills of lading, identifying the risks that the carrier must bear and specifying the maximum protection that it could require from the exclusion and limitation of liability clauses. Any attempt to exclude or reduce such basic liability has been declared invalid and ineffective. Of course, there is no obstacle to prevent the carrier from taking more responsibility than the minimum specified in the legislation[5].

Shipping capacity commitment

There is an implied obligation in each contract of affreightment to ensure the seaworthy ship which is capable of being fulfilled and to be exposed to the sea and other incidental hazards that it must be exposed to during the journey. In most charter sites, this implied obligation is reinforced by a clear definition of the same effect, such as a requirement in the preamble to the NYPE form, that the ship is sealed, stable, strong and in all respects adapted to the service. This obligation includes not only the physical state of the ship but also the competence and adequacy of the crew, sufficient fuel and other supplies and equipment necessary and suitable for the transport of cargo[6].

Examples of Contract of affreightment

  • A contract of affreightment is a contract between a shipper (the owner of the goods being shipped) and a carrier (the company responsible for moving the goods from one place to another). It outlines the terms and conditions of the shipment, including the type of goods being shipped, the place of delivery, the payment terms, and any additional services provided by the carrier.
  • A contract of affreightment is also used to facilitate chartering of a vessel for the transportation of goods. The contract outlines the details of the voyage, including the type of vessel, the ports of call, the duration of the voyage, and the payment terms.
  • A contract of affreightment is also used in shipbuilding. It outlines the details of the construction of the vessel, including the type of vessel, the materials used, the cost of the vessel, and the payment terms.

Advantages of Contract of affreightment

A contract of affreightment is a document used to provide for the transport of goods to a particular place and delivery to a particular person. There are several advantages to using this type of contract, including:

  • It provides certainty for both parties by outlining the terms and conditions of the shipping contract, ensuring that all parties are aware of their responsibilities.
  • It allows for a formal agreement between parties, ensuring that both parties are held accountable for any issues that may arise.
  • It helps to minimize the risk of loss or damage to the goods being shipped, as the contract outlines the requirements for proper handling and storage of the goods.
  • It helps to protect the interests of both parties, as the contract outlines the agreed upon payment and delivery terms.
  • It helps to ensure a safe and timely delivery of the goods.

Limitations of Contract of affreightment

A contract of affreightment is a document that provides for the transportation of goods to a particular place, and delivery to a particular person. However, there are several limitations of this document that should be considered before signing. These limitations include:

  • The contract cannot guarantee the safety of the goods during transport. Even if the transportation company is reliable, there is no guarantee that the goods will not be damaged during the journey due to accidents or other events.
  • The contract does not cover any additional costs, such as customs fees or taxes. These costs must be taken into account when calculating the total cost of the shipment.
  • The contract does not provide information on how the goods will be handled, stored, or packaged during transport.
  • The contract does not provide any information about delays or other issues that may arise during the transportation of the goods.
  • The contract does not provide any recourse in case of damages or losses. Any disputes must be resolved through other legal means.

Other approaches related to Contract of affreightment

The Contract of affreightment is a document that provides details for the transportation of goods from one place to another and delivery to a particular person. Other approaches related to the Contract of affreightment include:

  • Charterparty - A contract between a shipowner and a charterer for the hire of a ship for a certain voyage or for a certain period of time.
  • Bill of Lading - A document that provides evidence of the contract of carriage of goods and serves as a receipt for the goods.
  • Cargo Insurance - Insurance that provides coverage against physical loss or damage to goods while they are in transit.
  • Freight Forwarder - A company that organizes the transportation of goods from one place to another.

In summary, the Contract of affreightment is an important document for the transportation of goods, and there are other related approaches such as Charterparty, Bill of Lading, Cargo Insurance, and Freight Forwarder that are essential for the successful completion of the transportation.


Contract of affreightment — recommended articles
Bill of lading — Free carrier (FCA) — Master bill of lading — Shipping terms — Free On Board - FOB — Letter Of Indemnity — Ocean bill of lading — Waybill — Freight insurance

References

Footnotes

  1. ↑ Carriage of Goods by Sea p. 9, 113, 173
  2. ↑ Carriage of Goods by Sea p. 113
  3. ↑ Admiralty and Maritime Law p. 208
  4. ↑ Admiralty and Maritime Law p.208
  5. ↑ Carriage of Goods by Sea p. 173
  6. ↑ Carriage of Goods by Sea p. 9

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Author: Maciej Michałek

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