Bangabandhu Sheikh Mujibur Rahman Maritime

University, Bangladesh.

ARTICLE on
“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?”
Course Title: International Trade & Commercial Law.
Course Code: PML 3106

Submitted to:
Dr. Parvez Ahmed
Professor, Department of Law
Gono Bishwabidyalay
Adjunct Faculty, Department of Port & Shipping Management
BSMR Maritime University, Bangladesh.

Prepared by:

Paromita Haque Prapty

Roll: 21211032
Department of Port & Shipping Management
Program: BBA in Port Management & Logistics.
Submission Date: 23 December, 2023.
 Table of Contents
Introduction:..............................................................................................................3

Charter Party..............................................................................................................3

Key points of a Charter Party include:...................................................................3

Types of Charterparty Agreements........................................................................3

Essential Clauses in a Charterparty Contract.........................................................4

Bill of Lading (B/L)...................................................................................................5

Essential ingredients of a Bill of Lading include:..................................................5

What is the Purpose of a Bill of Lading?...............................................................6

Types of Bills of Lading........................................................................................6

Example of Bill of Lading:....................................................................................7

Evidentiary Value of a Bill of Lading.......................................................................7

Difference between charter party and bill of lading..................................................8

Conclusion:................................................................................................................9

References:................................................................................................................9

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Introduction:

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

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 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.

a) 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.
b) 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.
c) 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

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 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.
d) 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.
e) 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:

I. Names and addresses: Details of the shipper (sender), consignee (receiver), and the
carrier.
II. Description of goods: Information about the type, quantity, and condition of the goods
being transported.
III. Shipment details: Details about the vessel, voyage, and ports of loading and discharge.
IV. Freight payment terms: Specifies whether the freight has been paid or is to be collected at
the destination.
V. Conditions of carriage: The terms and conditions under which the goods are being
transported.

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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:

1. Inland bill of lading

2. Ocean bill of lading
3. Through bill of lading
4. Negotiable bill of lading
5. Nonnegotiable bill of lading
6. Claused bill of lading
7. Clean bill of lading
8. Uniform bill of lading

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Example of Bill of Lading:

Evidentiary Value of a Bill of Lading

The bill of lading is an important 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.

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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 :

 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.

 Transferable:

Charter party: Charter party is not transferable.

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

 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.

 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.

 Leasing Of Ship:

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

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

 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.

 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.

References:
1. Thanopoulou, H.A. (2000). From internationalism to globalisation. Journal for Maritime
Research. Issue February 2000. Cardiff University
2. Mathews M, 'Lawyers In India - Advocates,Law Firms,Attorney Directory,Lawyer,Vakil'
(Legalserviceindia.com, 2020) <http://www.legalserviceindia.com/article/l412-
CharterParty.html> accessed 27 October 2020
3. Jassal C, 'A Latman's Guide To Lay Time, Charter Party Agreement And Voyage
Charter' https://www.myseatime.com/blog/detail/laytime-and-voyage-charter-party
accessed 27 October 2020

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 4. Augustyn A and others, 'Charter Party' (Encyclopædia Britannica 2018)
https://www.britannica.com/topic/charter-party
5. Andersson, P. G. (2005, Spring). Delivery Clauses in Bills of Lading, Faculty of Law
University of Lund, Master thesis.
6. Curwen, N. (2007). The Bill of Lading as a Document of Title at Common Law ,
Mountbatten Yearbook of Legal Studies (Southampton Solent University; ed by P. Park
and B. Andoh), pp 140-162.
7. Dubovec, M. (2006). The Problems And Possibilities For Using Electronic Bills Of
Lading As Collateral, Arizona. Journal of International & Comparative Law, 23(2), 437-
466.
8. Thanopoulou, H.A. (2000). From internationalism to globalisation. Journal for Maritime
Research. Issue February 2000. Cardiff University
9. Mathews M, 'Lawyers In India - Advocates,Law Firms,Attorney Directory,Lawyer,Vakil'
(Legalserviceindia.com, 2020) <http://www.legalserviceindia.com/article/l412-
CharterParty.html> accessed 27 October 2020
10. Jassal C, 'A Latman's Guide To Lay Time, Charter Party Agreement And Voyage
Charter' https://www.myseatime.com/blog/detail/laytime-and-voyage-charter-party
accessed 27 October 2020
11. Augustyn A and others, 'Charter Party' (Encyclopædia Britannica 2018)
https://www.britannica.com/topic/charter-party
12. Andersson, P. G. (2005, Spring). Delivery Clauses in Bills of Lading, Faculty of Law
University of Lund, Master thesis.
13. Curwen, N. (2007). The Bill of Lading as a Document of Title at Common Law ,
Mountbatten Yearbook of Legal Studies (Southampton Solent University; ed by P. Park
and B. Andoh), pp 140-162.
14. Dubovec, M. (2006). The Problems And Possibilities For Using Electronic Bills Of
Lading As Collateral, Arizona. Journal of International & Comparative Law, 23(2), 437-
466.

15. Alam, M. (2016). FlagVessel Protection Lawin Bangladesh: A Critical Analysis.

International Journal of Inovative Research and Development,5(9), 22-27.
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on Porter's Five Forces Model. The Cost and Management Journal, 16-37.

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 17. BCIMA, B. C. (2019 йил 31-August). About Us. From
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