ABSTRACT
As seen in Chapter 1, under a contract for sale on cost, insurance, freight (CIF) terms, the seller is responsible for arranging transport of cargo from his country to the buyer’s. Even where the sale is not on CIF terms, transport is still an integral part of an international sale transaction. For instance, in a free on board (FOB) contract, the buyer may arrange transport, or he may ask the seller to arrange transport on his behalf. Depending on the amount of cargo, a number of options are open to the shipper (seller or buyer) where sea carriage is envisaged. Where the cargo is insufficient to fill the entire cargo space of a ship, it is normal for the shipper to find space on a liner service1 and obtain a bill of lading – a document that the seller is obliged to tender to the buyer in a CIF contract.2 Where the shipper is the buyer, he is also likely to obtain a bill of lading which, due to its versatility, can be used to sell the goods on to a third party or used as security for raising money to finance the sale.3 Where the amount of cargo is sufficient to take up a vessel’s full cargo carrying capacity, it is commonplace to charter a ship. Under this type of arrangement, the shipowner agrees to make the ship available to the charterer for a specified voyage(s) – for example, from Southampton to Singapore – or a specified period of time – from 1 January 2008 to 1 January 2009. However, not all charterparties fall neatly into these two classifications. A number of variations are found in practice – trip charter, consecutive voyage charter and long term freighting contracts. In a trip charter, the contract is for a voyage on time charter terms thereby providing a minimum/maximum period for the voyage.4 In a consecutive voyage charter, the contract is for a number of consecutive voyages within an agreed period, and in a long term freighting contract, the agreement is to carry quantities of cargo on particular routes over an agreed period of time with the shipowner choosing the ships.
