Affreightment from freight is a legal term used in shipping. A contract of affreightment is a contract between a ship-owner and a 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. A ship may be let, like a house, to a person who takes possession and control of it for a specified term. The person who hires a ship in this way occupies during the specified time the position of ship-owner. The contract under which a ship is so let may be called a charter-party —but it is not, properly speaking, a contract of affreightment, and is mentioned here only to clarify the distinction between a charter-party of this kind, which is sometimes called a demise of the ship , and a charter-party that is a contract of affreightment.
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COA Contract of Affreightment. Some textbooks still call charters by this term. However, 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 ls and early s the party which had control over quite a volume of specific cargo may have wanted it moved in mare 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. It is still a relatively new development in shipping and there are still areas where problems can occur because users are not totally familiar with the issue. One problem that can arise is to use individual charterparties for each shipment but these charterparties may not cover the points contained in the COA. You must be logged in to post a comment. Username or Email Address. Don't have an account?
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contract of affreightment
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. 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.
Contract of Affreightment (COA)