Bills of Lading and Charterparties

When a shipowner undertakes to transport goods by sea the contract can take several different forms, but it is common to distinguish between two main types. Generally speaking the contract is either in the form of a charterparty or it is evidenced by a bill of lading. Under a charterparty the shipowner agrees to make the carrying capacity of the ship available for transportation of cargo, usually the entire capacity, although there are exceptions, either for a particular voyage or for a specified period of time. This is the common form of contract in tramp shipping. On the other hand, in liner shipping, the liner operator offers the service of carrying goods to anybody who wishes to send cargo from one place to another along the vessel’s route. In such cases, the contract of carriage is usually evidenced by a bill of lading. From the outset it should be remembered that these two types of contracts are not mutually exclusive. In most cases when goods are carried under a charterparty a bill of lading will be issued once the goods have been loaded on board the vessel. On the other hand, very often the party who has chartered a vessel under a time charter may operate it in a liner trade and, consequently, issue bills of lading as evidence of the contract of carriage. In the following sections the particular features of bills of lading and charterparties and the legal regimes will be explained.

In legal texts the term ‘Contract of Affreightment’ is often used to cover any contract of carriage by sea, regardless of whether the contract has the form of a charterparty or is evidenced by a bill of lading. Although this terminology is not wrong, it may cause confusion. In modern shipping practice the term ‘Contract of Affreightment’ is more commonly used to describe a ‘volume contract’, that is, a contract which covers a total quantity