Contract of Affreightment (COA)

A Contract of Affreightment (COA) is a medium to long-term, hybrid type of charter where the Shipowner commits to transporting specified quantities of homogeneous cargo at designated shipment dates over an agreed period, such as twelve shiploads of coal per year, across specific voyages without assigning a specific ship. The Charterer typically pays the Freight in USD per metric ton of cargo carried on each Executed Voyage. A Contract of Affreightment (COA) is considered a Hybrid form of charter, merging elements of both Voyage Charter and Time Charter.

The Need for a Contract of Affreightment (COA)

While a traditional Voyage Charter Agreement is tailored to single-voyage arrangements of the chartered ship, the need often arises for a Charter Contract that encompasses multiple shipments. This requirement can sometimes be met through Time Chartering or by arranging Voyage Chartering for Consecutive Voyages, where voyages are typically conducted with the same ship in direct succession. An alternative approach is through a Contract of Affreightment (COA), sometimes also known as a volume contract. Unlike single-voyage contracts, agreements covering multiple cargo shipments or voyages raise additional considerations. To date, the discussion has included three basic pure charter types—Voyage, Time, and Bareboat Charters—as well as two Hybrid forms, namely Consecutive Voyage Charters and Trip Time Charters (TCT). The focus here shifts to the most common and complex of the hybrid charter types: the Contract of Affreightment (COA), a term recognized globally.

Scope and Benefits of a Contract of Affreightment (COA)

A Contract of Affreightment (COA) often serves as a practical solution for both Shipowner and Charterer, offering significant flexibility. Opting for a Contract of Affreightment (COA) tends to streamline negotiations for individual shipments, facilitating enhanced cooperation and optimization of loading, carriage, and discharging details. Familiarity among the personnel and companies involved can simplify administration and planning, leading to more efficient adjustments and problem-solving as the contract progresses. This personal connection typically enables better anticipation, prevention, and resolution of issues. It’s important to note, however, that changing market conditions could prompt either party to shirk their contractual obligations, a risk inherent to any charter form.

From the Charterer’s perspective, a Contract of Affreightment (COA) offers several distinct advantages. Given that transportation and handling can significantly impact the final cost of many commodities, ensuring reliable transport is crucial. Transportation disruptions can lead to production delays and increased costs due to additional storage and handling needs. Thus, securing a dependable Shipowner as a counterpart is vital for the Charterer, ensuring a steady supply of raw materials and cargoes. The right contractual arrangement can also place liability for consequential damages on the party responsible for transportation should they fail to meet their obligations. For shippers or receivers, entering into a Contract of Affreightment (COA) with a trustworthy Shipowner or Ship Operator presents a practical and efficient method for managing sea transportation. This is especially true for large international industries and trading companies, where logistics, including the calculation of storage and transport costs and “just in time” delivery systems, are paramount, thus underscoring the importance of the Shipowner’s reliability.

Another aspect that may be significant for a Seller or Buyer of cargo is that by engaging in a Contract of Affreightment (COA), they can mitigate fluctuations in the Freight Market. This allows for more precise financial forecasting and avoids potential catastrophic cost discrepancies. Although similar stability can be achieved through a Time Charter, in such arrangements, the Charterer also assumes the commercial employment of the ship, which they might prefer to avoid. Additional considerations such as the risk of strikes and port congestion are also factored in when choosing the type of charter and contract.

On the flip side, a Contract of Affreightment (COA) offers considerable benefits to the Shipowner. It provides economic stability and visibility, as Large Ship Operators often engage in long-term Contracts of Affreightment (COA), utilizing their fleet effectively. Even if the Spot Market declines, a secure agreed income is ensured, provided the Charterer remains solvent. Conversely, entering into a Contract of Affreightment (COA) during a period of Low Freight Rates can be economically detrimental if the Freight Market later rises, potentially missing out on more lucrative opportunities. However, a long-term Contract of Affreightment (COA) can also enhance a Shipowner’s ability to finance ship acquisitions, as ships are often designed, built, and financed against a specific Contract of Affreightment (COA). While similar benefits are available through long-term Time Charters, they generally offer less flexibility than Contracts of Affreightment (COA).

Terminology in Contract of Affreightment (COA)

A key feature of a Contract of Affreightment (COA), as opposed to other Charter Types, is its linkage more to the volume of Cargo to be transported rather than to a specific ship. Terms like Cargo Contract of Affreightment (COA), Cargo Contract, Quantity Contract, and Volume Contract are commonly used interchangeably in shipping practice. Under English law, the definition of a Contract of Affreightment (COA) isn’t entirely clear, as it might also refer to a Voyage Charter or any general cargo carriage contract. Similar ambiguities can arise in other legal frameworks. Typically, a distinction is maintained between contracts of carriage and Contract of Affreightment (COA) in international shipping literature. It is crucial for parties to clearly define their intentions when employing specific terms in the charter contract, with Volume Contract or Quantity Contract sometimes preferred to describe a Contract of Affreightment (COA) in chartering and shipbroking contexts.

Characteristics, Terms, and Examples of Contract of Affreightment (COA)

The primary elements of a Contract of Affreightment (COA) relate to the total cargo quantity covered by the Charter Party, the quantity per voyage/shipment, the shipment schedule, the agreed Freight Rate concerning potential Freight Market Fluctuations, the ships involved, and the duration of the Charter Party. Specific obligations of the parties can sometimes be precisely outlined, such as “the sale of 200,000 tonnes of coal” or “the carriage of 50,000 MT plus/minus 5 percent.” However, terms can also be less specific, for instance, “not less than 100,000 MT” or “60,000–90,000 MT at Buyer’s Option.”

Examples of how a Contract of Affreightment (COA) can be structured include:

• Shipowner commits to transport a total of X tons of coal between Port A and Port B throughout 2025;
• Shipowner agrees to transport all cargo shipped by the Charterer from Loading Port X to Discharging Port Y over the period from 2025 to 2027;
• Shipowner has the right to transport all wheat imported by the Charterer during 2025 and 2026;
• Shipowner is obligated to transport all coal exported by the Charterer from 2025 to 2028, with the Charterer guaranteeing a minimum of ten shipments per year, each containing at least X quantity.

 

There are various ways to define the duties and rights of the parties in a Contract of Affreightment (COA). Volume Contracts, which are distinct from other charter types such as Time Charter and Voyage Charter, separate the time factor from the Voyage element in a Contract of Affreightment (COA). This differs from Consecutive Voyage Charters, where a series of voyages occur in direct succession.

The flexibility inherent in the Contract of Affreightment (COA) allows for various ships, ports, and cargoes to be utilized. It is crucial for both Shipowners and Charterers to work closely to identify the most effective solutions. In a Contract of Affreightment (COA), both the time element and cargo volume are significant, but these factors must be balanced with the contract’s duration. Typically, the agreement stipulates that the Shipowner and Charterer agree that a ship with specific characteristics will perform a series of voyages over a set period, such as 9 months or 2 years, but not consecutively, to transport a specified minimum/maximum quantity of certain types of cargoes between designated ports. Voyages should occur on a “Fairly Evenly Spread Basis,” meaning that, unless otherwise agreed, the Charterer cannot require the Shipowner to transport the majority of the cargo within a compressed timeframe, such as at the beginning or end of the period.

Characteristics of a Contract of Affreightment (COA):

• It generally involves the transportation of a specific type and quantity of cargo using ships with particular characteristics.
• It covers multiple shipments, usually spanning a significant period, sometimes several years.
• For instance, a typical Contract of Affreightment (COA) might involve the regular transport of coal from Colombia to China.

Unlike other types of carriage contracts that focus on a specific named ship, the Contract of Affreightment (COA) centers on the cargo. This is a critical distinction because, while a traditional Voyage Charter Party or Time Charter Party might terminate if the designated ship is lost, a Contract of Affreightment (COA) typically remains in effect. The primary responsibility of the Shipowner under a Contract of Affreightment (COA) is to transport the cargo, and this obligation persists even if the initially nominated ship is lost. The Shipowner is expected to have the flexibility to nominate another suitable ship if necessary, reinforcing the notion that the specific ship is less crucial in a Contract of Affreightment (COA).

Voyage Quantity in Contract of Affreightment (COA):

Although theoretically a Contract of Affreightment (COA) could be set for just one voyage, such an arrangement is not commonly recognized as a Contract of Affreightment (COA), which typically involves at least two shipments. In contrast, a contract drawn up for Consecutive Voyages differs in three main ways: it is tied to a specific ship (with potential for substitution by the Shipowner), the voyages are sequential, and the types of cargo are consistent across the voyages. Additionally, while a Contract of Affreightment (COA) generally spans a longer period, it’s not necessarily longer than other types of carriage contracts.

These distinctions highlight the flexibility and cooperative nature of Contracts of Affreightment (COA), making them a vital part of modern shipping operations where regular, voluminous shipments over extended periods are required.

In the realm of shipping contracts, there are numerous Standard Charter Parties applicable to both Voyage Charter and Time Charter. However, the situation is different for a Contract of Affreightment (COA). The likely reason is that a Contract of Affreightment (COA) typically requires a custom approach, tailored to the specific needs of the transaction. This necessitates incorporating various Clauses that address unique aspects of each contract.

Shipowners and Charterers must meticulously analyze and craft each element of the Contract of Affreightment (COA). The resulting document often incorporates elements from both traditional Voyage Charter and Time Charter agreements. It is a misconception to consider a Contract of Affreightment (COA) merely as a specialized form of Voyage Charter; it is a distinct type of contract that does not fit neatly into the categories of either Voyage Charter or Time Charter. This classification challenge can lead to complications, as parties familiar with Hybrid Charter Party might attempt to base their contracts on standard Time or Voyage Charter Parties, which can lead to solutions that do not effectively address the specific needs of the situation. Therefore, it is crucial for Shipowners and Charterers to ensure their contract accurately reflects their intentions and is articulated clearly.

Typically, the structure of a Contract of Affreightment (COA) is outlined within an overarching frame charter agreement (COA Charter Party) that lays down the general main contract provisions, while the individual voyages are detailed in separate Voyage Charters and respective Charter Parties. However, the approach can vary based on the parties’ preferences.

Often, parties opt to use a Standard Contract of Affreightment (COA) Form as a comprehensive frame agreement that covers essential aspects such as cargo quantities, shipment schedules, periods, owner’s compensation, and ship type. Attached to this main agreement, a standard Voyage Charter Party is typically used for the individual voyages and day-to-day operations. Another approach involves incorporating Additional Clauses (Rider Clauses) into a standard Voyage Charter Party to address specific Contract of Affreightment (COA) issues. Alternatively, a completely tailor-made contract may be negotiated, uniquely designed to suit the specific needs of the Shipowners and Charterers, the cargo, and the carriage involved. The choice of documentation should be guided primarily by the specifics of the negotiation.

In some instances, ships are nominated via email or similar methods, but sometimes Shipowners and Charterers prefer to formalize each nomination with a Fixture Note. This document provides detailed information about the specific ship designated for a voyage and is also commonly used in Spot Chartering. In this context, the Fixture Note typically outlines the particulars for a planned individual voyage, with other terms incorporated by reference to a Standard Charter Form such as “otherwise as per GENCON Charter Party dated…” or “otherwise as per GENCOA Charter Party dated…”.

Three main standard Contract of Affreightment (COA) Forms are widely used in practice: the INTERCOA 80, the VOLCOA, and the GENCOA. The INTERCOA 80, published by INTERTANKO in 1980, is an older document originally intended to govern the shipment of oil products, typically used in conjunction with INTERTANKVOY 76 as the underlying document. It can also be modified for use with other voyage forms. The VOLCOA, published by BIMCO (Baltic and International Maritime Council) in 1982 for dry bulk cargo trading, is now considered outdated. It was a precursor to the more popular and contemporary general-purpose Contract of Affreightment (COA) known as GENCOA, which BIMCO introduced in 2004. Designed as a flexible steering form, GENCOA can be used with any dry cargo Charter Party as the underlying document.

 

Period in Contract of Affreightment (COA)

The duration of a Contract of Affreightment (COA) often varies based on the complexity of the voyage schedules and the contract’s term. For a Single Voyage, it’s typically easier for both Shipowners and Charterers to adopt a standard document, even if it’s not perfectly suited to their needs, than in a long-term agreement covering multiple shipments. In the latter scenario, each cost, risk, and function must be meticulously analyzed, and every clause in the contract precisely formulated.

There is no set limit to the duration of a Contract of Affreightment (COA); however, practical constraints usually dictate the maximum and minimum periods. While it is feasible to draft a Contract of Affreightment (COA) for just one trip, such an arrangement is generally not recognized as a Contract of Affreightment (COA). If Shipowners possess both the right and obligation to substitute a ship, the Charter Party closely resembles a Contract of Affreightment (COA) more than a standard Voyage Charter Party or Time Charter Party.

Practical factors limit the contract period. Predicting changes in the Freight Market, cost fluctuations, or technological advancements is challenging. Additionally, global geopolitical shifts are unpredictable, making long-term contracts, typically exceeding 3–5 years, uncommon. In lengthy contracts, sections dealing with Shipowner’s remuneration and currency are particularly challenging to manage. Therefore, Shipowners and Charterers often prefer a medium-term arrangement with the possibility of extension rather than committing to an extended duration from the outset.

Alternative Ways to Define Period in Contract of Affreightment (COA)

The contract period can be defined in several ways, such as:

• A fixed period that ends automatically without notice from any party.
• A fixed period that automatically extends for another term unless terminated by notice from one of the parties.
• A fixed period with an option for extension by one or both parties.
• An indefinite period that concludes a fixed duration after one party issues a termination notice.

These methods can be mixed or modified. For example, in the fourth method, it’s common to set a minimum guaranteed period during which neither party can issue a termination notice.

When opting for a termination notice, the duration from the notice to the actual termination also needs to be clearly stipulated in the contract. This Notice Period may vary in length depending on the parties’ intentions. In long-term contracts, the term is often segmented with specific conditions for each segment, and clauses regarding the Shipowner’s compensation may differ from one period to another.

Commencement and Termination of Period in Contract of Affreightment (COA)

Merely specifying the start and end dates of the contract period, such as “2025-01-01 to 2027-12-31”, is often inadequate. Since each voyage spans a period, it’s necessary to more precisely define what triggers the start or end of a period, or at which stage a voyage or its segment falls under the terms of a specific period. To detail the contract period more clearly, one might specify: “the first ship to be load ready at the loading port during June 10–30, 2025, and the last ship under the contract to be ready to load at the loading port no later than December 1, 2028,” or a similar clause.

When a period is divided into segments, the contract must clearly indicate to which segment a particular voyage belongs. If this is unclear, disputes may arise over which Freight Rate applies, or how to categorize the cargo volume in terms of the contract’s different stages.

 

Early Termination and Interruptions in Operations under a Contract of Affreightment (COA)

While the basic principle of law imposes a duty on a promisor to fulfill their promises, there are various limitations to this principle. Non-performance or malperformance by one of the parties can lead to a Breach of the Contract of Affreightment (COA). Such a Breach may entitle the aggrieved party to various remedies, including the right to claim damages for any losses or expenses incurred. Furthermore, a Breach may grant the right to terminate the contract. Similar to other areas of contract law, critical incidents may arise from actions of either party or from situations beyond anyone’s control. Different legal systems may vary in their interpretation of what constitutes a Breach and the corresponding remedies. Additionally, parties can outline specific Breach scenarios in the contract that, if they occur, could lead to contract termination or other remedial actions.

It’s common in long-term contracts for Shipowners and Charterers to include clauses that relieve both or either party from their duties under certain conditions, or that allow for the termination of the contract. Examples include general Force Majeure Clauses, Specific War Risk and War Cancellation Clauses, Weather Hindrance Clauses such as Ice Clauses, and more. Parties might also incorporate Hardship Clauses, Crisis Clauses, Catastrophe Clauses, or clauses for Renegotiation or Escalation, recognizing that long-term Contracts of Affreightment (COA) are susceptible to risks that can disrupt or prevent the fulfillment of obligations, potentially leading to operational interruptions or early termination of the contract.

Various scenarios can disrupt a Contract of Affreightment (COA). For instance, a ship might not arrive at the loading port, arrive late, or might not meet contractual conditions. Additionally, the Shipowner might fail to nominate a ship, or the designated ship could experience an engine failure. On the other hand, the Charterer might fail to deliver the cargo, deliver it late, or deliver cargo that does not meet the specified quality or type. Payment issues can also arise, such as the Charterer failing to pay Freight or other costs as stipulated by the contract.

The response to these disruptions can vary significantly based on the circumstances and the terms of the contract. Key considerations in such situations include:

• Whether the contract specifically addresses the issue at hand or remains silent.
• Whether the issue arose from uncontrollable circumstances or was caused by an action or omission by one of the parties, and whether it involved negligence or a breach of contract.
• Whether any preventive or mitigative measures could have been taken by the parties, and whether such measures were executed.
• Whether the issue is isolated or part of a pattern of repeated events.

If the contract explicitly addresses potential disruptions, that stipulation will typically govern unless overridden by mandatory laws or disallowed by a court or arbitration decision. If the scenario or its consequences are not covered by a specific clause, the general law (legislation or case law) applicable to the contract will apply.

The outcome of an interruption or early termination might result in each party bearing its own losses, which could include direct costs, lost profits, and liabilities to third parties. In many instances, one or both parties may have the right to claim damages from the other. A party’s failure might also grant the other party the right to interrupt operations or cancel one or more voyages, or even the entire Contract of Affreightment (COA).

A common provision in a Contract of Affreightment (COA) is that the party at fault must compensate the other by extending the contract duration or by compensating for the lost quantity or period. Both INTERCOA 80 and VOLCOA include clauses that address such situations.

 

Handling Interruptions in Contract of Affreightment (COA)

Contracts of Affreightment (COA) incorporate various clauses to address operational disruptions, often referring to Force Majeure events. For example, the GENCOA (part II, clause 15 “interruption of performance”) includes a typical Force Majeure Clause which also addresses damage by stating that neither party shall be liable for the consequences of the interruption, and unshipped quantities cannot subsequently be demanded. The clause specifically states:

“Neither the Owners nor the Charterers shall, except as otherwise provided in the attached charter party, be responsible for any loss, damage, delay, or failure in performance hereunder arising or resulting from an act of God, act of war, act of terrorism, seizure under legal process, quarantine restrictions, strikes, boycotts, lockouts, riots, civil commotions and arrest or restraint of princes, rulers or people. Quantities not carried as a result cannot be demanded to be shipped.”

Similarly, VOLCOA (part II, clause 19.1 “interruption of performance”) stipulates:

“If the performance of this Contract or part of it is interrupted through any event whatsoever which cannot be avoided or guarded against by either party, the performance affected shall be suspended until the hindrance ceases to have effect.”

Should an interruption occur, or if either party fails to meet their obligations without any specific contractual clause to reference, the defaulting party is typically liable for any damages incurred by the other party.

INTERCOA 80 (clause I(c) “late payment of freight and demurrage – suspension”) addresses breaches that do not result in interruptions but do allow one party to suspend operations. Specifically, if the Charterers fail to pay Freight or Demurrage, the Shipowners may suspend operations by refusing to nominate further tonnage, proceed to the loading or discharging port, load or receive cargo for shipment, issue Bills of Lading for any loaded or received cargo, or discharge or deliver cargo. Additionally, any time lost during this suspension counts as Laytime or time on Demurrage, and the Charterers must indemnify the owners against any third-party claims resulting from the suspension. Furthermore, the owners may claim damages for any additional losses incurred.

It is crucial to differentiate between situations where it is impossible to continue operations and those where it is merely difficult and costly. In the latter case, the affected party is generally expected to continue operations. Such scenarios are often addressed by Escalation Clauses.

Cargo in Contract of Affreightment (COA)

Type of Cargo in Contract of Affreightment (COA)

Given that the Contract of Affreightment (COA) often follows principles from both Voyage Charter and Time Charter, the issues related to the type of cargo are generally consistent with those seen in these traditional charter types. The specific type of cargo intended for transport is typically defined within the Contract of Affreightment (COA), particularly when the contract leans more towards Time Charter principles. The cargo may involve a single commodity or a primary cargo with additional commodities either as planned options or as potential supplementary cargoes.

 

Total Cargo Quantity in Contract of Affreightment (COA)

Specifying just the number of tons or other units of cargo is insufficient in a Contract of Affreightment (COA). It’s critical to clearly define the respective obligations concerning cargo quantities. Therefore, during The Chartering Negotiations, it is essential to analyze the contract from multiple perspectives.

Under any Contract of Affreightment (COA), three fundamental questions must be addressed:

1. Is the cargo quantity fixed or variable?
2. Is there an obligation for the Charterer to offer cargo to the Shipowner?
3. Is there an obligation for the Shipowner to transport cargo offered by the Charterer?

Regarding the first question, the cargo quantity in a Contract of Affreightment (COA) might be specified precisely (e.g., “A metric tons” or “B units”) or within a range (e.g., “minimum A and maximum B mt” or “between A and B units”). Terms like “ABOUT” or “X percent more or less” or “X percent more or less at Owners’ Option (OO) or Charterers’ Option (CHTO)” are often used to introduce flexibility.

The cargo quantity might also be tied to the Charterers’ production during a specified period, such as “All Charterers’ export on CIF basis for 2025” or based on specific needs which can vary depending on the commodity, the nature of the Charterers’ sales contracts, etc. Sometimes, these requirements are defined with minimum or maximum quantities, or both, for example, “Charterers’ production during 2025 up to X mt” or “Charterers’ production 2025 not less than X mt.”

Determining whether the cargo quantity is fixed can be complex. For example, describing the cargo quantity as “all Charterers’ production of wheat during the contract period” fixes it to the actual amount produced during that time. However, since this amount is unknown at the contract’s outset, it is not fixed for calculation purposes, potentially leading to losses for the Shipowner if insufficient cargo is delivered.

Regarding the second question, sometimes the Charterer merely has the option to utilize the Shipowner’s vessels. In other cases, it’s the Charterer’s obligation to deliver cargo for shipment under the Contract of Affreightment (COA). Often, the contract stipulates that the Charterer must deliver a specific quantity and may offer additional quantities. Terms like First Refusal might be used, as in “Charterers to give Shipowners first refusal on all his shipments of coal from the Colombia Atlantic coast during 2025.” This gives the Shipowner the first choice on each cargo shipment, though it carries little weight unless paired with minimum cargo quantities, Freight terms, and other fundamental contract terms.

Regarding the third question, it’s crucial to ascertain whether the Shipowner is obligated to transport all offered cargo or if it’s merely an option.

Over-Lifting and Short-Lifting in Contract of Affreightment (COA)

Charterers are generally liable for damages if they fail to deliver the agreed cargo. Under individual Voyages, this could lead to claims for Deadfreight (DF). If the Charterer has committed to certain yearly quantities, issues may arise at three levels: the individual Voyage, the yearly Quantity, and the Total Quantity.

INTERCOA 80 addresses these issues in clauses C over-lifting and D short-lifting. Clause C states:

“If in the course of a contract year more cargo has been lifted than is provided for in the Preamble, such over-lifting shall have no bearing upon the quantities to be carried under this Contract.”

Clause D stipulates:

“If it appears that by the end of a contract year less cargo will have been lifted than agreed to, the party not responsible for the short-lifting shall, until the year is out, have the option to add the cargo not so lifted to the quantity agreed for the next year. Such option must be exercised by written notice. In respect of short-lifting in the final contract year, the option can only be exercised for loading within the quantity limits provided in Clause (A) above, and only for shipment within the first … months after the end of the final year. Whether or not any such option is exercised, no claim which the parties may have against each other shall be prejudiced thereby.”

The standard approach to over-lifting is that the excess quantity does not affect the planned quantities for subsequent contract years. However, parties may agree otherwise, adjusting the future obligations to account for the extra cargo carried. If significant over-lifting occurs and several part periods remain, the parties must also decide how to distribute the reduction across the remaining periods. Alternatively, not including a clause about over-lifting allows for negotiations based on the specific circumstances at the time of shipment.

 

Final Shipment in Contract of Affreightment (COA)

In situations where an About Quantity per voyage has been agreed upon, there might still be a residual balance remaining for the Last Voyage. The Shipowner, committed to transporting a certain total quantity from one location to another, hasn’t fulfilled his obligations until the entire quantity has been shipped. Thus, it’s reasonable to assume that the Shipowner is obligated to transport any Residual Quantity, even if it does not constitute a full cargo load. To safeguard against potential costly surprises, the Shipowner should include a provision specifying the cargo quantity required on the Last Voyage. For instance, GENCOA (part II, clause 5 “final shipment” and part I, box 11 “final shipment”) offers clauses that allow the parties to predefine a minimum quantity for the Final Shipment by completing a specific box in part I of the contract. Additionally, if the ship’s size is detailed in the Contract of Affreightment (COA), the issue can be addressed with a clause stipulating that the ship must carry a Full and Complete cargo.

Ships in Contract of Affreightment (COA)

Within a Contract of Affreightment (COA), the focus is on cargo transport rather than the use of a specific ship, meaning the contract may not specify individual ships. It is the Shipowner’s responsibility to ensure that all ships utilized for transport under the Contract of Affreightment (COA) are appropriate for the cargo, the trade routes, the ports of call, and the navigational paths. However, the names, types, categories, or sizes of the ships might be specified, either directly or indirectly. This could be articulated in several ways, such as “Owners to nominate only ships suitable for handling palletised cargo,” “Owners to nominate only ships of X-type,” or “Owners to nominate only ships flying the Panama Flag.”

In a Contract of Affreightment (COA), what often begins as a generic obligation—meaning a fleet of available tonnage from which a ship will eventually be nominated for the Particular Voyage—becomes critical when considering the timing and specifics of ship nomination. A key issue is the consequences if the Shipowner fails to nominate a ship on time.

The focus must gradually shift towards a named ship. Initially, the Shipowner’s obligation is Abstract or Generic, potentially subject to various restrictions. Initially, there is a choice, but eventually, the Shipowner must make a decision, possibly retaining the legal and practical option to change this decision. As the Actual Performance (Tendering Of Notice) draws closer, the Shipowner’s options—commercially speaking—become increasingly limited. At a certain point, the Shipowner is legally obligated to the Charterer to use a specific ship, losing the right to opt for another, unless it becomes necessary to do so due to unforeseen circumstances with the initially named ship. In essence, the abstract obligation to ship a specified lot of cargo around a set date on a ship of a certain type evolves into a specific obligation where a defined lot of cargo must be shipped on a specified date on a designated ship.

 

 

Program of Shipments and Nomination Procedure in Contract of Affreightment (COA)

In a Contract of Affreightment (COA) that covers multiple shipments, it is common to initially agree on the timing of different loadings and the cargo quantities each ship will carry under the contract. However, both Shipowners and Charterers often maintain the flexibility to adjust the timing and quantities of shipments as needed. It is crucial for both parties to maintain as much flexibility as possible, as rigidity on one side, such as insisting on specific loading dates or cargo quantities that are contractually permissible, can increase costs for the other party without providing proportional savings, adversely affecting the overall economics of the venture.

In a long-term Contract of Affreightment (COA), it’s challenging to specify exact dates and quantities for shipments in advance. Thus, parties typically agree on a general framework and procedure rather than detailed planning. This flexibility is often articulated with phrases like:

“The shipments under this contract shall be evenly (or ‘fairly’ or ‘fairly evenly’) spread over the contract period,” or

“The 30 shipments under this contract shall be allocated as follows: 6 ships to be presented load-ready at the loading port during June–July, 15 ships during August-September, and the remaining 9 ships during October–December, with all shipments to be evenly spread within each period.”

Additionally, parties must decide on the procedure for establishing a more detailed schedule. This might include a clause stipulating that the Shipowner or the Charterer must present a schedule by a certain date, detailing loading dates and names of the ships intended. Sometimes this schedule is final, while other times it serves as a basis for further discussion.

Once the final schedule is confirmed, a system of notices typically comes into play. A typical clause for such notices might state: “Shipowners or the ship to give ETA-notices 30, 15, 5, and 2 days prior to the estimated time of load readiness at the first port of loading. The owners to keep Charterers informed about all changes in ship’s expected load readiness.” The importance of such notices varies, and terms like Preliminary Notices or Definite Notices are used, often without a clear definition of their implications. To prevent misunderstandings, it should be clearly established how much the Shipowner can alter the ship’s ETA and to what extent they are bound by a given notice.

The scheduling of shipments, or the program, is central to the Contract of Affreightment (COA). It requires clear and effective cooperation between the Shipowner and the Charterer to maximize the benefits of the project. Both parties should consistently communicate about significant events, ship positions, and cargo availability, fostering a collaborative relationship that is usually aimed at long-term cooperation.

Freight Market Fluctuations can create challenges. For instance, in a rising freight market, a Shipowner might be tempted to employ ships in the open market for higher freight rates rather than continuing under the Contract of Affreightment (COA) with the Charterer. Conversely, in a declining market, the Charterer might look to avoid their obligations under the Contract of Affreightment (COA) and seek cheaper tonnage on the open market. A well-drafted contract doesn’t prevent such difficulties but provides a solid foundation for negotiation and resolution.

 

Individual Clauses in Contract of Affreightment (COA)

While there is a necessity to tailor each aspect of a Contract of Affreightment (COA), using standard Charter Party forms or Standard Clauses within such contracts is often feasible. However, caution must be exercised in Hybrid Contracts to ensure that the combination of clauses is appropriate and that established shipping terms are not misapplied. Certain clauses hold particular significance in long-term contracts. Notably, clauses concerning the nomination of ships and cargo present more complexity in a Contract of Affreightment (COA) than in standard Voyage Charter Parties. Additionally, Currency Clauses, Escalation Clauses, and Force Majeure clauses are critical components.

It’s also common for parties in a Contract of Affreightment (COA) to agree on averaging the effects of specific circumstances or clauses across the contract. For instance, while laytime is typically calculated for each voyage, the assessment of Demurrage or Dispatch may not be finalized until the cumulative performance of all voyages is considered.

Shipbrokers’ Role in Contract of Affreightment (COA)

The role of a shipbroker in long-term contracts differs significantly from their role in single-voyage contracts. In long-term arrangements, direct communication between parties about operational details is common, potentially diminishing the shipbroker’s involvement in daily information exchanges and even in negotiations for contract extensions or amendments.

Eventually, this might lead to debates over the Shipbroker’s Commission. It’s most prudent for parties and brokers to clarify commission terms at the start of the agreement. Issues to address include whether the commission should be restricted to a portion of the contract term, if the shipbroker is entitled to commission on extended or subsequent contracts, and whether commissions apply to other similar contracts between the Shipowners and Charterers. Failure to resolve these questions upfront can lead to complications later, especially as this remains a somewhat undefined area in international Maritime Law.

Discussing the limitations of a Shipbroker’s Commission while simultaneously relying on them for critical negotiations can be sensitive. Consequently, Contracts of Affreightment (COA) often do not specify shipbrokers’ entitlements to commissions on prolonged or additional contracts. The entitlement to brokerage upon charter extension varies widely by jurisdiction and depends on the specific laws, circumstances, customary practices, and other factors related to intermediaries.

 

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What is Contract of Affreightment (COA)?

A Contract of Affreightment (COA) is utilized when a Shipowner or Ship Operator commits to transporting a specified quantity of cargo over a set period. Differing from other Charter Parties, a Contract of Affreightment (COA) does not specify particular ships within the Charter Party documentation, leaving it to the Shipowner or Ship Operator to provide suitable ships as required for the project.

In tanker chartering, where port states are particularly concerned about oil pollution, a Contract of Affreightment (COA) often mandates specific conditions concerning the ships used, likely requiring the Shipowner to supply the Charterer with a list of potential ships for the contract.

A Contract of Affreightment (COA) allows the Shipowner significant flexibility in managing their fleet optimally. Additionally, a Shipowner or Ship Operator may charter in ships if their own fleet is tied up in more lucrative activities elsewhere.

Contracts of Affreightment (COA) are popular among owners of small coasters engaged in short journeys, as it obviates the need to charter a ship for each separate cargo movement. Governments also frequently use COAs for international shipping needs.

Several Standard Charter Party Forms are designed specifically for use with a Contract of Affreightment (COA), such as VOLCOA and INTERCOA.

These Standard Charter Party Forms are intended for use alongside Voyage Charter Party Forms for each individual voyage conducted under the Contract of Affreightment (COA). Additionally, BIMCO’s standard Contract of Affreightment (COA) for dry bulk cargoes is known as GENCOA.

GENCOA A 2022 is BIMCO’s latest standard Contract of Affreightment (COA) for dry bulk cargoes, updating the version last issued in 2004. It comes in two versions:

• GENCOA A – a framework contract adaptable for various Voyage Charter Parties across different trades.
• GENCOA B – an “all in one” contract that incorporates all usual terms and provisions found in a Contract of Affreightment (COA), combining both the contract terms of GENCOA A and the Charter Party terms typically included in a voyage charter associated with GENCOA A.

Contract of Affreightment (COA)

A Contract of Affreightment (COA) is a contractual agreement between a shipowner and a cargo owner or charterer for the transportation of goods by sea. Unlike a time charter or voyage charter, where a specific vessel is chartered for a particular voyage or period, a COA establishes a long-term commitment to transport a specified quantity of cargo over a series of voyages during a fixed period.

Under a COA, the shipowner agrees to provide the necessary vessel capacity to transport the agreed-upon cargo, while the cargo owner or charterer commits to providing the cargo for shipment. The COA typically specifies the cargo type, the total quantity to be transported, the loading and discharging ports, the frequency of shipments, the duration of the contract, and the freight rate.

Key features of a Contract of Affreightment (COA) include:

1. Flexibility: COAs allow both parties to have flexibility in terms of shipment scheduling, as it is not tied to a specific vessel or a single voyage.
2. Economies of scale: COAs enable cargo owners or charterers to negotiate more favorable freight rates due to the large quantities of cargo involved and the long-term nature of the agreement.
3. Risk management: COAs allow both shipowners and cargo owners or charterers to better manage their respective risks, such as fluctuations in freight rates, vessel availability, and cargo supply.
4. Performance measurement: COAs usually include performance criteria, such as laytime and demurrage provisions, to ensure the timely transportation of cargo and minimize potential disputes between parties.

COAs are commonly used in the bulk shipping industry, particularly for the transportation of commodities such as coal, iron ore, grains, and oil. To ensure a smooth and successful execution of a COA, both parties should have a clear and comprehensive agreement in place outlining their respective rights, obligations, and responsibilities throughout the duration of the contract.

 

COA (Contract of Affreightment) in Ship Chartering

The Contract of Affreightment (COA) was originally used to refer to contracts for the transportation of goods by sea, such as voyage charters and time charters. Some textbooks still use this term to refer to charters. However, charters are typically for a specific named ship carrying out one or more voyages, or for a ship that is let on hire or leased out for a period. In contrast, a COA comes into play when a contract is made to carry a large volume of cargo over a period of time between named ports or regions. In this case, the named ship may be unable to carry the cargo over the necessary number of consecutive voyages. If the ship were to do so, it would likely have to return to the loading place in ballast, thereby increasing the freight the owner would need to charge to make an acceptable return on investment.

During the late 1960s and early 1970s, a party with control over a significant volume of specific cargo may have wanted it moved in multiple shipments over a prolonged period. To achieve this, the party would enter into a contract with another party, who did not have to be a shipowner, to carry the complete cargo or a substantial quantity of it within the agreed period. For example, a shipowner may agree to carry all logs produced for export by a timber mill operator between 1990 and 1992. The cargo interest would guarantee that there would be, for instance, 10 shipments each year, each of a specific quantity. Although the ports of loading and discharging need not be specified, it is likely that the cargo movement would occur between agreed ports. The ship used for the carriage does not need to be named, as long as 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 specified in the COA is unable to make the next voyage, the shipowner can charter-in tonnage from the spot market. This provides the shipowner with considerable flexibility.

There are two main types of standard-form COAs: VOLCOA and INTERCOA 80. The former refers to the “Standard Volume Contract of Affreightment for the Transportation of Bulk Dry Cargoes”, which was published by BIMCO in 1982. The latter refers to the “Tanker Contract of Affreightment,” which was published by INTERTANKO and adopted by BIMCO in 1980.

Although a COA is not a charter for a named ship, it can be considered a hybrid contract for carrying goods by sea. It is a relatively new development in shipping, and problems can arise because users are not entirely familiar with it. One issue that can occur is when individual charterparties are used for each shipment, but these charterparties may not cover the points contained in the COA.

Shipowners’ Responsibilities under COA (Contract of Affreightment)

A contract of affreightment is a legal agreement between a shipowner and a charterer, wherein the shipowner commits to deliver a defined number of cargoes to the charterer at a predetermined price over a fixed period of time. Irrespective of whether the items are ready for shipment or not, the charterer is obliged to pay for the shipping, and the shipowner provides cargo space for transporting the items on a specific journey or voyages. The freight charges, which are the fees paid by the charterer, are settled by them for the ready-to-ship freight at the agreed-upon time. Even if the items are not available for transport at a particular time as per the schedule, the charterer is required to pay the full price.

The shipowner bears the responsibility for the items carried on board until they are delivered to the specified destination on time. If the cargo fails to arrive at its destination on time, the shipowner will be held liable for any penalties incurred as a result of the delay. Both the shipowner and charterer have their respective duties and privileges under an affreightment contract, which aims to place the onus on the transporter to convey a specific quantity of goods within the timeframe specified in the contract. A bill of lading and a charter party are the two types of affreightment contracts used in business.

The shipowner is obliged to lease a vessel to the charterer for a predetermined period, during which they must handle the loading and management of the cargo entrusted to them in a safe and careful manner. The shipowner must comply with the authorized directions of the charterer, and carry out the contract, which entails transporting a predetermined amount of items for the charterer over a specified period of time during a given journey. The shipowner is responsible for following the route’s directions and overseeing the management, which includes the captain, crew, and the ship. It is the shipowner’s responsibility to ensure that the ship is in perfect condition and that the diesel tank is full to reach the destination.

 

Contract of Affreightment (COA) vs Time Charter

A Contract of Affreightment (CoA) and a Time Charter are both types of agreements used in the shipping industry, primarily for the transportation of goods and cargo. However, they differ in terms of their structure, scope, and purpose. Here’s a comparison between the two:

Contract of Affreightment (CoA):

1. Definition: A Contract of Affreightment is a medium-to-long-term agreement between a shipowner and a charterer, wherein the shipowner agrees to transport a specified quantity of cargo (usually bulk or break-bulk) over a certain period of time. The CoA sets out the terms and conditions of the shipments, such as the type of cargo, the number of shipments, the loading and discharging ports, and the freight rates.
2. Payment: The charterer pays the shipowner on a per-shipment basis, usually in the form of a freight rate per ton of cargo. This rate may be fixed or subject to market fluctuations.
3. Control: The shipowner retains control over the vessel’s commercial and technical management. The charterer is responsible for providing the cargo and arranging loading and discharging operations at the ports.
4. Flexibility: A CoA can provide flexibility to both parties. The charterer can spread their cargo shipments over time, while the shipowner has the opportunity to utilize their vessel’s capacity efficiently.

Time Charter:

1. Definition: A Time Charter is an agreement between a shipowner and a charterer, in which the charterer hires the vessel for a specific period of time. The charterer assumes control of the vessel’s commercial operations, such as determining the routes, ports of call, and cargoes, while the shipowner remains responsible for the vessel’s technical management and crewing.
2. Payment: The charterer pays the shipowner a daily rate, known as the “hire,” for the entire duration of the charter. This rate is usually fixed but can be subject to market fluctuations or negotiated adjustments.
3. Control: Under a Time Charter, the charterer has greater control over the vessel’s commercial operations, while the shipowner remains responsible for the vessel’s technical management and crewing. The charterer must comply with the agreed-upon terms and conditions, such as speed and fuel consumption limits.
4. Flexibility: Time Charters can offer charterers the flexibility to adjust their shipping operations according to market conditions, with the ability to carry different types of cargo and call at different ports. However, this flexibility may be limited by the vessel’s specifications and any restrictions imposed by the shipowner.

Contract of Affreightment (COA) focuses on the transportation of a specified quantity of cargo over a certain period, with the shipowner retaining control over the vessel’s operations. In contrast, a Time Charter is an agreement for the use of a vessel for a specific period, with the charterer assuming control of the vessel’s commercial operations while the shipowner remains responsible for its technical management.

 

What is the difference between Contract of Affreightment (COA) and Charter Party?

A Contract of Affreightment (CoA) and a Charter Party are both agreements used in the shipping industry for the transportation of goods and cargo. While a Contract of Affreightment is focused on the transportation of a specified quantity of cargo over a certain period, a Charter Party is a broader term that encompasses various types of charter agreements, including Time Charters and Voyage Charters. Here’s a comparison between the two:

Contract of Affreightment (CoA):

1. Definition: A Contract of Affreightment is a medium-to-long-term agreement between a shipowner and a charterer, wherein the shipowner agrees to transport a specified quantity of cargo (usually bulk or break-bulk) over a certain period. The CoA sets out the terms and conditions of the shipments, such as the type of cargo, the number of shipments, the loading and discharging ports, and the freight rates.
2. Scope: A CoA is focused on the transportation of a specified quantity of cargo over a series of shipments during an agreed period. It does not cover the hire or lease of the entire vessel for a specific period or voyage.
3. Payment: The charterer pays the shipowner on a per-shipment basis, usually in the form of a freight rate per ton of cargo. This rate may be fixed or subject to market fluctuations.

Charter Party:

1. Definition: A Charter Party is a general term used to describe a legally binding agreement between a shipowner and a charterer, where the charterer hires the vessel for a specific period (Time Charter) or for a specific voyage (Voyage Charter). The Charter Party sets out the terms and conditions of the agreement, such as the vessel’s description, hire or freight rate, loading and discharging ports, and other operational details.
2. Scope: A Charter Party is a broader concept that includes various types of charter agreements. Under a Time Charter, the charterer hires the vessel for a specific period, while in a Voyage Charter, the charterer hires the vessel for a specific voyage. The charterer assumes control of the vessel’s commercial operations in both cases, while the shipowner remains responsible for the vessel’s technical management and crewing.
3. Payment: In a Time Charter, the charterer pays the shipowner a daily rate or “hire” for the entire duration of the charter. In a Voyage Charter, the charterer pays the shipowner a freight rate based on the quantity of cargo carried or a lump-sum rate for the entire voyage.

In summary, a Contract of Affreightment is an agreement focused on the transportation of a specified quantity of cargo over a series of shipments, while a Charter Party is a broader term that includes various types of charter agreements, such as Time Charters and Voyage Charters, where the charterer hires the vessel for a specific period or voyage.

Is there any difference between Contract of Affreightment (COA) and the Contract of Carriage?

There are differences between a Contract of Affreightment (CoA) and a Contract of Carriage. Both agreements are used in the shipping industry for the transportation of goods and cargo, but they differ in terms of their scope, purpose, and the parties involved. Here’s a comparison between the two:

Contract of Affreightment (CoA):

1. Definition: A Contract of Affreightment is a medium-to-long-term agreement between a shipowner and a charterer, wherein the shipowner agrees to transport a specified quantity of cargo (usually bulk or break-bulk) over a certain period. The CoA sets out the terms and conditions of the shipments, such as the type of cargo, the number of shipments, the loading and discharging ports, and the freight rates.
2. Parties Involved: The CoA is an agreement between the shipowner and the charterer. The shipowner is responsible for providing the vessel and the crew, while the charterer is responsible for providing the cargo and arranging loading and discharging operations at the ports.
3. Scope: A CoA is focused on the transportation of a specified quantity of cargo over a series of shipments during an agreed period. It does not cover the hire or lease of the entire vessel for a specific period or voyage.

Contract of Carriage:

1. Definition: A Contract of Carriage is an agreement between a carrier (shipowner or shipping company) and a shipper (the party shipping the goods), wherein the carrier agrees to transport the shipper’s goods from one location to another. The contract sets out the terms and conditions of the transportation, such as the type of cargo, the loading and discharging ports, and the freight charges. It is usually evidenced by a Bill of Lading or other transport documents.
2. Parties Involved: The Contract of Carriage is an agreement between the carrier (shipowner or shipping company) and the shipper. The carrier is responsible for providing the vessel, the crew, and the transportation services, while the shipper is responsible for providing the cargo and paying the freight charges.
3. Scope: A Contract of Carriage covers the actual transportation of goods from one location to another. It is typically used for individual shipments, and it may involve multiple modes of transportation (e.g., sea, road, rail, or air) depending on the terms of the agreement.

Contract of Affreightment (COA) is a medium-to-long-term agreement between a shipowner and a charterer for the transportation of a specified quantity of cargo over a certain period, while a Contract of Carriage is an agreement between a carrier and a shipper for the transportation of goods from one location to another. The main differences lie in the parties involved and the scope of the agreements.

 

A Contract of Affreightment (COA) refers to an agreement between a ship-owner and a charterer, wherein the former undertakes to transport goods for the latter on the ship, or to allow the latter to utilize either the entire or a portion of the cargo-carrying capacity of the vessel, for the purpose of conveying merchandise on a designated voyage.

A Contract of Carriage of goods is a legal instrument that outlines the agreement between a carrier and a sender (shipper) for the transfer of goods from one location to another, using an appropriate mode of transportation, in exchange for compensation. For such a contract to be legally binding, it must incorporate certain fundamental and formal aspects.

 

 

Implied Obligations in a Contract of Affreightment (COA)

Implied obligations are those obligations that are not explicitly mentioned in a contract, but are understood to be present and binding on both parties by virtue of custom, practice, or the nature of the transaction itself. In the context of a contract of affreightment, there are several implied obligations that arise, such as the obligation of the ship-owner to ensure that the ship is seaworthy and fit for the intended purpose, the obligation of the charterer to provide a suitable cargo that can be safely transported on the vessel, and the obligation of both parties to act in good faith and deal fairly with each other. Additionally, both parties have a duty to cooperate and take necessary measures to prevent or mitigate any loss or damage to the goods during transit. These implied obligations play a crucial role in ensuring the smooth and efficient execution of the contract, and their violation may result in legal consequences for the defaulting party.

 

Advantages of Contract of Affreightment (COA)

Contracts of Affreightment are utilized when a shipowner or operator commits to transporting a specific quantity of cargo over a fixed period. Unlike other charter parties, no specific vessel is named in the agreement. It is the responsibility of the owner or operator to provide ships as required for the project. With tankers, due to the sensitivity of port states regarding oil pollution, the contract is likely to include specific requirements regarding the ships employed. This 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 offer the owner significant freedom to manage their fleet to their advantage, even to the extent of chartering in ships if their own fleet is engaged in more profitable employment elsewhere. These contracts are commonly used by owners of small coasters engaged in short voyages as it saves them from having to charter a ship for each movement. Government charterers for international trades also use Contracts of Affreightment.

Several standard charter parties exist for Contracts of Affreightment, such as Volcoa and Intercoa, both of which are designed to be used in conjunction with voyage charter forms for each voyage that is undertaken under the COA.

The primary purpose of a Contract of Affreightment is to oblige a carrier to lift a fixed or determinable quantity of cargo of a specified type over a given period. Typically, the COA is not limited to a particular vessel but instead 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, COAs are almost always tailor-made to meet the specific needs of the parties involved. These parties are the shipper or buyer of the cargo, who is often motivated by requiring certainty for transportation costs, and the ship-owner, who is concerned with providing assured long-term employment and flexibility for their owned or chartered-in tonnage. COAs enable ship-owners to be flexible, allowing vessels to be fitted into a pattern of trade that maximizes laden as against ballast distances, resulting in very competitive rates of freight.

As a result, COAs contain very few standardized terms other than the individual voyage charter terms that govern each lifting once the vessel has been tendered for loading. The least standardized part of the contract is the shipping program and nomination provisions, and these provisions are the most contested or abused over the period of a lengthy COA.

 

What are the main characteristics of Contract of Affreightment (COA)?

A contract of affreightment (COA) is a legal agreement between a shipper and a carrier, outlining the terms and conditions for the transportation of goods by sea. The main characteristics of a contract of affreightment include:

1. Parties involved: The contract is usually between the shipper (or cargo owner) and the carrier (or ship owner). Both parties have specific rights and obligations under the contract.
2. Goods description: The contract should contain a clear and detailed description of the goods to be transported, including their nature, quantity, weight, and any special handling requirements.
3. Freight rate: The contract will specify the freight rate, which is the price charged by the carrier for transporting the goods. This can be a fixed rate or a variable rate, depending on the agreement between the parties.
4. Voyage or time-based contract: A COA can either be a voyage-based contract, where the carrier agrees to transport the goods for a specific voyage or a series of voyages, or a time-based contract, where the carrier agrees to provide its services for a fixed period.
5. Loading and discharge ports: The contract should specify the loading and discharge ports, as well as any intermediate ports where the goods may be transshipped.
6. Laytime and demurrage: Laytime is the time allowed for loading and unloading the cargo. Demurrage is the compensation paid by the shipper to the carrier if the loading or unloading exceeds the agreed laytime. These terms are often included in the contract.
7. Bills of lading: A bill of lading is a document issued by the carrier as a receipt for the goods and evidence of the contract of carriage. The terms and conditions of the COA are typically incorporated into the bill of lading.
8. Liability and insurance: The contract will outline the carrier’s liability for loss, damage, or delay of the cargo, as well as any insurance coverage provided by the carrier.
9. Force majeure: A force majeure clause may be included in the contract, allowing either party to be excused from their obligations under certain circumstances beyond their control, such as natural disasters, war, or labor strikes.
10. Dispute resolution: The contract should include provisions for resolving disputes between the parties, such as arbitration or litigation, and the applicable law governing the contract.

It is essential for both the shipper and the carrier to understand these main characteristics and ensure that the contract of affreightment is comprehensive and clearly defines their rights and obligations to avoid potential disputes or misunderstandings.

 

 

 

 

What is VOLCOA in ship chartering?

 

VOLCOA is a commonly used abbreviation in ship chartering that stands for “Standard Volume Contract of Affreightment for the Transportation of Bulk Dry Cargoes”. It is a standard-form Contract of Affreightment (COA) that was published by the Baltic and International Maritime Council (BIMCO) in 1982. The VOLCOA is primarily used for the transportation of dry bulk commodities, such as grains, coal, and iron ore, and it specifies the terms and conditions under which the cargo will be transported over a specified period of time between named ports or regions. The VOLCOA is a flexible and versatile contract that can be used for a wide range of bulk cargo shipments, and it provides a framework for negotiations between the shipowner and the cargo owner.

 

Where can I find a VOLCOA Contract of Affreightment (COA) Form?

We kindly suggest that you visit the web page of BIMCO (Baltic and International Maritime Council) to obtain the original VOLCOA and other Charter Party Forms and documents. www.bimco.org

 

What is GENCOA A in ship chartering?

GENCOA is a standard contract of affreightment for dry bulk cargoes, meticulously formulated by BIMCO. Essentially, a contract of affreightment is a legally-binding agreement entered into between the owner of the cargo and the charterer, stipulating the transport of a certain amount and type of goods between specified ports over a predetermined period of time. It is noteworthy that this kind of agreement is not bound to a specific ship but rather functions as a series of voyage charter parties. While it is adaptable to any dry cargo charter party, BIMCO would highly recommend the use of GENCON, COAL-OREVOY or GRAINCON in conjunction with the GENCOA contract. The most current version of this agreement is GENCOA, with the year of publication being 2004.

GENCOA A Contract of Affreightment (COA) Form

A Contract of Affreightment (COA) is a legal agreement between a shipowner (or carrier) and a charterer for the transport of cargo by sea. The COA outlines the terms and conditions under which a series of shipments will be carried out over a specified period of time, using either specific or unspecified vessels.

General outline of what a COA form may include:

1. Title: A clear title specifying that the document is a Contract of Affreightment.
2. Parties: The names and contact information of the shipowner (or carrier) and the charterer.
3. Effective date: The date when the COA comes into effect.
4. Duration: The term or duration of the COA, including any options for extension or termination.
5. Cargo description: A detailed description of the cargo to be transported, including its type, quantity, and any special handling requirements.
6. Loading and discharging ports: The agreed-upon loading and discharging ports for the cargo, as well as any specific berthing or anchorage requirements.
7. Freight rate: The agreed-upon freight rate for the cargo, which can be expressed as a lump sum, per ton, or on another basis.
8. Payment terms: The terms and conditions for payment of freight, including any discounts, demurrage, or despatch.
9. Laytime and demurrage: The allowed time for loading and discharging the cargo, as well as any penalties for exceeding the allotted laytime.
10. Notice of readiness (NOR): The process and timeline for the vessel to provide a NOR, indicating its readiness to load or discharge the cargo.
11. Vessel nomination: The process and timeline for nominating vessels to perform the shipments, including any requirements for vessel specifications, age, or inspections.
12. Force majeure: A clause addressing circumstances beyond the control of the parties that may affect the performance of the COA, such as natural disasters, strikes, or government actions.
13. Dispute resolution: The agreed-upon method for resolving disputes arising under the COA, such as arbitration or litigation, and the governing law and jurisdiction.
14. Miscellaneous provisions: Any additional clauses or provisions specific to the agreement, such as insurance, indemnification, or confidentiality.
15. Signatures: The signatures of the authorized representatives of the shipowner (or carrier) and the charterer, along with the date and place of signing.

It’s essential to consult with legal counsel when drafting or reviewing a COA to ensure that it complies with the applicable laws and regulations and protects the interests of both parties. Additionally, industry organizations such as BIMCO provide standard COA forms and clauses that can be used as a starting point for drafting a custom agreement.

 

What is GENCOA B in ship chartering?

GENCOA B represents an “all-inclusive” contract that amalgamates all customary provisions and terms observed in a contract of affreightment. Inclusive of the terms present in GENCOA A, as well as the charter party terms that typically attach to GENCOA A for a voyage charter.

 

Where can I find a Contract of Affreightment (COA) Form?

We kindly suggest that you visit the web page of BIMCO (Baltic and International Maritime Council) to obtain the original GENCOA A and GENCOA B Charter Party Forms and documents. www.bimco.org