Charterparty Bills of Lading incorporate charterparty terms to provide them with full terms and conditions. This ensures that the terms and conditions of carriage under both the bill of lading and the voyage charterparty are largely identical, so the carrier/owner does not face different potential liabilities under different contracts.
The wording of the Bill of Lading will determine which Charterparty Clauses are incorporated into the Bill of Lading. The more specific and clear the wording in the bill of lading is the less dispute there will be. The common areas of disputes are, as follows:
Which Charterparty? If there is only one charterparty, between the shipowner and cargo owner/ charterer, then that must be the charterparty to incorporate. If there is more than one charterparty, a choice must be made. Only one charterparty’s terms can be incorporated into the bill of lading.
Where there is a chain of charterparties, it can be difficult to know which charterparty is incorporated into the bill of lading contract, if the bill of lading does not name the charterparty.
Under English law it is not necessary to name the charterparty in the bill of lading in order to incorporate its terms. The fact that parties to the bill of lading have shown an intention to incorporate the terms of some charterparty is enough.
The court has made rules, which show how the correct charterparty should be identified. The first step is to determine who is the carrier under the bill of lading. It would usually be the shipowner, though it may be a time charterer.
The next step is to ask under which charterparty is that carrier the owner? Usually, that charter-party will be incorporated, Pacific Molasses v Entre Rios (1976). It may be a time charterparty or a voyage charterparty. However, if that charterparty is a time charterparty and there is a voyage charterparty further down the chain, then the voyage charterparty will be incorporated instead.
It is the charterparty which is most appropriate to a particular voyage and the carriage of goods [as in Nanfri (1978)]. This is because a voyage charterparty is a contract of carriage and a time charterparty is a contract for the use and hire of a vessel.
A voyage charterparty is more likely to contain terms relevant to a bill of lading contract of carriage than a time charterparty is. However, if there is only a time charterparty then that will be the charterparty incorporated into the bill of lading. The holder of the bill of lading (quite often) and the bill of lading carrier (sometimes) may not have a copy of the charterparty referred to and incorporated into the bill of lading. However, the charterparty will still be incorporated into the bill of lading. However the parties to the bill of lading contract of carriage may not know its full terms.