Contracts of Affreightment - Nomination Terms February PDF Version 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.
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Some textbooks still call charters by this term. Charters are for one named ship carrying out one or more voyages or let on hire or leased out for a period. When a contract comes into existence usually to carry a large volume of cargo over a period of time between named ports or regions, the named ship may be unable to carry the cargo over the necessary number of consecutive voyages.
If the ship could carry out consecutive voyages it would most probably have to return to the loading place in ballast and this would increase the freight the owner would have to charge to make an acceptable return on his investment.
In the late s and early s, the party which had control over quite a volume of specific cargo may have wanted it moved in more than one shipment over a long period. He would enter into a contract with another party who did not have to be a shipowner to carry the complete or a very large quantity of cargo within the agreed period.
For example, one party perhaps a shipowner may agree to carry all logs produced for export by a timber mill operator during and The cargo interest would guarantee that each year there would be, say, 10 shipments each of. The ports of loading and discharging do not have to be specified but it is most likely that the cargo movement would be between agreed ports. The ship used for the carriage is not named, provided it meets the general description specified by the cargo owner.
As each shipment is made, a new voyage charter may be entered into between the two parties. If the original ship which the shipowner, if he has entered into a COA, is unable to make the next voyage, the shipowner can go to the spot market to charter-in tonnage.
This gives the shipowner considerable flexibility.
contract of affreightment
The rights and obligations of the ship-owner and the freighter depend, as in the case of all parties to contracts, upon the terms of the agreement entered into between them. Certain contracts are forbidden by the law, and being illegal are therefore incapable of enforcement. The most important example of illegality in the case of contracts of affreightment is when the contract involves trading with an enemy. The meaning of words in the contract, or—in other words—its construction, when a dispute arises about it, are determined by a judge or court. The result is that certain more-or-less common clauses in affreightment contracts have come before the courts, and decisions in these cases are treated practically  —though perhaps not logically—as rules of law that determine the meaning of certain common expressions in shipping contracts.