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Contract of Affreightment in international commercial navigation is a contract by which maritime cargoes are transported.
The contract of affreightment may take the form of,
- A charter party, where an entire ship is hired, or
- A bill of lading, where the goods to be carried in a general ship which can be used for this purpose by any person.
Charter party: It is a contract between a ship owner and someone who wishes to hire or let their ship, for a period of time or for a particular voyage.
Types of Charter party
- Time Charter party: In this case the ship is hired for a set period of time. The owner remains in charge of it but the charterer can take it anywhere and transport anything. The charterer has to pay a fee plus the fuel used and port charges levied.
- Demise / Bareboat Charter party: This is a sub-type of Time Chartering, where a ship is hired for a number of years and the charterer provides crew, insurance, maintenance themselves. Often the charterer obtains ownership after a set period of payments, and the Charter party therefore acts as a form of finance for the sale of the ship.
- Voyage Charter party: This is where a cargo interest just charters a ship for one particular job for moving a bulk consignment. No crew costs, fuel costs or port charges are passed on by the owner, there is usually only one catch-all fee (but the charterer pays the stevedores).
Bills of Lading: Bill of lading is a document issued by a carrier, to a shipper, acknowledging that goods have been shipped on board for conveyance to a specified party and place.
A Bill of Lading has three main purposes.
- It acts as a receipt for the goods, showing the carrier took possession of them,
- It is evidence of a contract of carriage,
- It is a document of transfer, being freely transferable
