The transportation of cargo, both domestic and international, must be carried out on the basis of a transportation contract. A transportation contract is a document that defines the legal obligations of the parties to the contract for the provision of transport services, i.e. the carrier and the shipper.
Cargo transportation contract
A contract of carriage is a legally binding document between the charterer (booker) and the carrier. A valid contract means that the carrier undertakes to deliver the cargo for a fee. It specifies the conditions of carriage, the obligations and rights of the parties. These conditions can be negotiated to some extent. The contract can be in writing or online.
What is a carrier?
A carrier is an organization that transports goods (and people) from one place to another. In other words, it runs a transportation company. It can be:
- air carrier
- road carrier
- sea carrier
- railway carrier.
What is a cargo ship?
In the field of trade and transport, the terms consignor (shipper) and consignee (recipient) are used. A contract with a carrier can be concluded by both the person who sends and the person who receives it. The consignor is the original owner of the goods – the seller (exporter). The consignee is the person to whom the consignor sends the goods, also known as the buyer (importer). Thus, the charterer (booker, charterer) can be the consignor or consignee of the cargo or an authorized agent of the carrier’s client.
Who orders and pays for transport?
To facilitate the entire process, the terms of carriage of goods are standardized according to international conventions. Incoterms are rules that are widely used around the world and define the obligations of the buyer and seller. They are published by the International Chamber of Commerce (ICC). Responsibility depends on the policy chosen. Some indicate that the seller is responsible for ordering transport, while others indicate that this responsibility is placed on the buyer.
Other international conventions governing the carriage of goods are the UN Convention on Contracts for the International Sale of Goods (CISG, Vienna Convention), the Hamburg Rules, the Hague and Hague-Visby Rules, and the Rotterdam Rules.
What is included in the contract of carriage?
A typical contract of carriage contains the terms of the carrier’s contract. It defines, among other things: the carrier’s liability for damages, as it is very important to determine what will happen in the event of loss or damage to the cargo. Some of the information contained in a contract of carriage:
- name: transport contract
- identification of participants: detailed information about the sender/recipient, carrier
- scope of services: type of cargo, method of transportation (“Cargo transportation is ordered…”)
- dates related to the performance of the transportation
- conditions by which the sender and the carrier are legally bound
- minimum carrier liability (carrier liability exclusion)
- payment terms (freight), collateral and requirements
- insurance policy
- dispute resolution
- warranty clause
- force majeure clause (a situation that cannot be controlled or foreseen)
- date (indicating the start of the contract), signatures of the parties.
Is a sea bill of lading a contract of carriage?
Please note that a bill of lading is not a contract of carriage . A bill of lading (B/L) is a negotiable document that certifies ownership of goods. It confirms the existence of a contract of carriage. A bill of lading is issued by the shipper’s carrier. It is proof that the carrier has received the goods in good condition and in accordance with the contract of carriage.