Contract of affreightment

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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].




Author: Maciej Michałek