What is a Contract of affreightment?

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Contract of Affreightment

A contract of affreightment is a contract between a ship owner and the charterer, in which the ship-owner agrees to carry goods for the charterer in the ship, or to give the charterer the use of the whole or part of the ship’s cargo-carrying space for the carriage of goods on a specified voyage or voyages or for a specified time. The charterer agrees to pay a specified price, called freight for the carriage of the goods or the use of the ship.

Contract 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 charter party. 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.

Contracts of affreightment are different from the Contracts of carriage. I have written separately on Contracts of carriage. Click here to read about it.

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