Contracts of Affreightments

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Contracts Of Affreightment are used when a shipowner or operator agrees to transport a given quantity over a fixed period of time. Unlike other charter parties, no specific ship is named in the charterparty. It is up to the owner or operator to provide ships as needed for the project. With tankers, due to the sensitivity of port states regarding oil pollution, it is likely that the contract will include specific requirements regarding the ships employed, which would probably extend to the owner having to provide the charterer with a list of ships likely to be employed in the contract. 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. Contracts Of Affreightment is common with owners of small coasters employed in short voyages, as it saves having to charter a ship for each movement. Contracts Of Affreightment is also used by government charterers for international trades.There are several standard charter parties for Contracts Of Affreightment, one of which is the Volcoa – basically for dry cargo – and the Intercoa. These forms are designed to be used in conjunction with voyage charter forms for each voyage which is undertaken under the COA.

The main purpose of a contract of affreightment (COA) is to oblige a carrier to lift a fixed or determinable quantity of cargo of a specified type over a given period of time. Usually, the COA is not limited to one particular vessel, but operates as a series of voyage charters. Freight is payable on the quantity of cargo transported and the carrier bears the risk of delay en route.
Characteristics

Given the long term nature of the contract, a COA is almost always tailor made to meet the specific needs of the parties concerned. These parties are the shipper or buyer of the cargo who is often motivated by requiring certainty for the costs of transportation, and the ship-owner who is concerned with providing assured long term employment and flexibility for his owned or chartered in tonnage. COAs enable the ship-owners to be flexible and allow the vessels to be fitted into a pattern of trade that maximises laden as against ballast distances and allows such arrangement to be concluded at very competitive rates of freight.

As a result, COAs contain very few standardised terms, other than the individual voyage charter terms that govern each lifting once the vessel has been tendered for loading. The least standardised part of the contract will be the shipping programme and nomination provisions, and it is these provisions that are the most abused or contested over the period of a lengthy COA.