Difference between charter party and bill of lading. what are the essential ingredients of a bill of lading?

Does bill of lading any evidentiary value.

People's lifestyles have changed as the consequence of the global economic expansion and
improvements in economic conditions, which have raised the demand for manufactured goods and
products and expanded the transportation industry. A higher demand for sea transportation results from
a greater requirement for transportation as demand rises. This also drives up the need for import and
export. To meet the demands and requirements of the seaborne trade, the growth in international trade
over the past century has resulted in a massive increase in the size of the shipping fleet.

In this shipping industry two most important documents are charter party and bill of lading. In this
article we will discuss about the charter party and bill of lading.

Charter Party: Charter party is a contract by which the owner of a ship lets it to others for
use in transporting a cargo. The shipowner continues to control the navigation and
management of the vessel, but its carrying capacity is engaged by the charterer.

Key points of a Charter Party include:

1. Parties involved: Shipowner and Charterer.

2. Duration: Specifies the period for which the vessel is chartered (for time
charter) or the specific voyage (for voyage charter).
3. Payment: Outlines the agreed-upon payment terms for the use of the
vessel.
4. Rights and responsibilities: Defines the rights and responsibilities of
both the shipowner and the charterer during the charter period.

Types of Charterparty Agreements

This brings us to the types of charterparty agreements. Charterparty agreements may be
classified into three based on form.

● Time Charter: A time charter occurs when a party hires a ship or vessel from its
owner for a particular period. For instance, Lakeside Minerals may hire a vessel from
Marine Movers & Shakers Co. for a few months or even a year to enable Lakeside to
fulfill its contractual obligations to its numerous customers. In this arrangement, the
vessel passes into the possession of Lakeside for the period of the charter, Lakeside is
also responsible for the Vessel's routing, administration, and control. This includes
fueling, paying port dues, commissions, and a daily hire fee. Depending on the
agreement between the parties, Lakeside may also be responsible for maintaining the
vessel, carrying out repairs, and keeping it seaworthy.

● Voyage Charter: As we considered in the scenario above, a voyage charter is for

transporting cargo (humans, products, and goods) from one port to another. In this type
of charter, a party hires or engages the shipowner for a specific trip or voyage. While the
party pays a shipping amount (known as freight) for the use of the vessel, the
administration, control, and responsibility of fueling the ship, paying port costs,
commissions, etc., lies with the shipowner.

● Demise Charter: Also known as a bareboat charter, a demise charter is similar to a

time charter as the full control, administration, and possession of the ship passes to the
party chartering the ship. However, a demise charter is usually for lengthy periods,
spanning several years. The charterer in a bareboat charter is responsible for hiring crew
and shipmaster.

Essential Clauses in a Charterparty Contract

Charterparties contain several clauses depending on the type of charter, the status of
the vessel, and other factors. However, the following are some clauses you can expect in
a charterparty.

1. Charter hire: This is the consideration for which the ship is chartered. The charterer undertakes
to pay hire to the owner(s) of the ship for the duration of the charter. The hire fee may be paid
daily or monthly and may accumulate interest should the charterer default in paying. Failure to
pay the hire may also entitle the ship's owner to terminate the contract and repossess the
vessel.
2. Insurance: Due to the sensitive nature of Vessels, a charterparty contract needs to include an
obligation to insure the vessel against some foreseeable risks. This clause should contain who to
insure, the amount of insurance coverage, application of insurance proceeds, among others.
3. Dispute Resolution: Charterparty contracts often contain a dispute resolution clause, with most
parties opting for arbitration and specific laws to govern their disputes. Given the cross-border
potentials of charterparties, parties may agree to resolve disputes arising from the contract via
whatever mode they consider suitable. This may include arbitration or mediation and may be
subject to international rules such as UNCITRAL rules.
4. Charter Period: The contract should stipulate the duration of the charter. I.e., 12 months. This is
essential as it highlights the timeline for parties to perform obligations. The charter period
provides for the charter’s termination, subject to the intention of the parties to renew or extend
it.
5. Delivery and Redelivery: While the parties may agree on a commencement date, what marks
the beginning of the contract is the vessel's delivery to the charterers. The charterparty should
 contain the port of delivery to the charterers as well as modalities for the re-delivery of the ship
to the owners at the end of the charter.

Bill of Lading (B/L): A Bill of Lading (B/L) is a fundamental document in the shipping
industry, serving as both a receipt and a contract for the transportation of goods. This legal
document, issued by a carrier or their agent, acknowledges the receipt of cargo, details the
type, quantity, and condition of the goods, and outlines the terms of the transportation
agreement. It serves as proof of ownership, facilitates the transfer of goods between parties,
and is essential for customs clearance and insurance claims. A Bill of Lading is crucial in the
logistics and supply chain, as it provides transparency and accountability throughout the
shipping process, ensuring that cargo reaches its destination securely and in accordance with
the agreed terms.
Essential ingredients of a Bill of Lading include:
1. Names and addresses: Details of the shipper (sender), consignee (receiver), and the
carrier.
2. Description of goods: Information about the type, quantity, and condition of the goods
being transported.
3. Shipment details: Details about the vessel, voyage, and ports of loading and discharge.
4. Freight payment terms: Specifies whether the freight has been paid or is to be collected
at the destination.
5. Conditions of carriage: The terms and conditions under which the goods are being
transported.
What is the Purpose of a Bill of Lading?
 Proof of Contract: A BoL serves as evidence that there exists an agreement between
the shipper and carrier regarding the terms of carriage. It specifies the types of goods
being shipped, the destination, and any special instructions that the transporter must
follow. The BoL essentially sets out the contractual obligations between the parties,
and it is signed by the carrier and shipper.

 Receipt of Goods: A bill of lading acts as a receipt, confirming that the goods are in
the carrier's possession and everything is in order. This means that the carrier becomes
 responsible for the goods from this point onward.

 Title to the Goods: The Bill of Lading also serves as a document of title and reflects
the ownership of the goods. It determines who can claim and receive the goods at their
destination. The consignee named on the document can use the BOL as proof of
ownership when claiming the goods.

 Protection of Parties Involved: A bill of lading provides legal protection for both the
shipper and carrier. It ensures that carriers have fulfilled their obligations and delivered
the goods to the correct destination and location. On the other hand, it provides
shippers with legal protection in case of damages or loss of goods in transit. The terms
and conditions outlined in the bill of lading must be adhered to by the carrier, and
failure to do so can place the carrier in a position of legal liability.

Types of Bills of Lading

There are several types of bills of lading. Some of the most common include:
 Inland bill of lading
 Ocean bill of lading
 Through bill of lading
 Negotiable bill of lading
 Nonnegotiable bill of lading
 Claused bill of lading
 Clean bill of lading
 Uniform bill of lading
Example of Bill of Lading:
 The bill of lading is an important
Evidentiary Value of a Bill of Lading

document for the shipper, the carrier, and the consignee. As well as
containing vital information about the shipment, the bill of lading
represents evidence of the contract between the shipper and the
carrier. It’s also essential for the buyer to be able to check that the
shipment is correct and assume ownership of it.
Since the bill of lading is used to represent the transfer of ownership to
the buyer, the carrier may refuse to release it if the payment for
transportation hasn’t been made. It may also be retained by the
shipper until full payment has been made for the goods. Conversely, a
buyer can refuse a bill of lading if the shipment isn’t delivered as
expected.

In international trade, the Bill of Lading is often used to claim the goods at the
destination port, and it plays a crucial role in the settlement of payments and disputes
between parties involved in the shipping process.

Difference between charter party and bill of lading

We can distinguish the charter party from the bill of lading from the following facts :

1. Contract And Evidence :-

Charter party : Charter party is a contract between the ship owner and shipper about hiring the ship.

Bill of Lading : Bill of lading is an evidence of receiving the goods.

2. Transferable :-

Charter party : Charter party is not transferable.

Bill of Lading : A bill of lading can be transferred by endorsement and delivery.

3. Title To The Goods :-

Charter party : Charter party is not a document which declares the title of the goods.
Bill of Lading : A bill of lading is a document which declares the title to the goods specified.

4. Drawn In Sets :-

Charter party : A charter party is not drawn in sets.

Bill of Lading : A bill of lading is drawn in these sets.

5. Leasing Of Ship :-

Charter party : A charter party may be for amount to a lease of the ship.

Bill of Lading : Such type of intention is not conveyed in the bill of lading.

6. Particular Destination :-

Charter party : A charter party may be for the particular voyage.

Bill of Lading : A bill of lading is related with the particular destination.

7. Case Of Freight :-

Charter party : In case of charter party the freight is usually paid when the ship reaches to the port.

Bill of Lading : The freight is to be paid in advance, in case of bill of lading.

Conclusion:
The distinction between a Charter Party and a Bill of Lading lies in their
primary functions within the maritime and shipping industry. A Charter
Party serves as a contractual agreement between the shipowner and
the charterer, outlining terms and conditions for vessel hire, while a Bill
of Lading functions as a receipt, document of title, and contract of
carriage between the carrier and the shipper.
Since the earth’s surface is largely covered by water, shipping will likely
remain the primary form of transporting cargo worldwide.
Consequently, it is essential to understand Bill of lading &
Charterparty, and their differences for effective service delivery and to
avoid liability.

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