TTM15100 | Background material: Shipping contracts

Contracts of affreightment

General meaning

A ‘contract of affreightment' is a contract between a shipowner and a shipper, whereby the shipowner undertakes to carry a cargo over a certain route on specified occasions. There are two distinct forms of contract

• charter

• bill of lading

The contract if ‘free-on-board’ (f.o.b) will be made by the purchaser of the goods, as the vendor’s obligations cease when the goods have been loaded onto the ship.

However, if the sale is ‘carriage, insurance and freight’ (c.i.f.) it will normally be the vendor which enters into the contract.

Specialised meaning

Although this term can refer to any contract for the carriage of goods, it can often have a specialised meaning relating to contracts for a series of voyages involving bulk cargoes. Both BIMCO and INTERTANKO, see TTM15200, issue standard forms. A feature of such a contract of affreightment is that it is unlikely to relate to any particular ship, in contrast to a charterparty.

Charters

A charter is a contract to hire a ship for a particular time or journey. The document associated with a charter is termed a charterparty. It may take several forms

• Bareboat charter, for a (longer) period of time without crew, see TTM15110

• Time charter, for a (shorter) period of time with crew, see TTM15120

• Voyage charter, for a particular voyage, or voyages, see TTM15130

References

Bills of lading – TTM15140