Contract of Carriage

Definition

The Contract of Carriage is a legally binding, negotiated agreement established between a carrier (the entity performing the transport) and a shipper (the owner or sender of the goods) for the movement of specific cargo from origin to destination. Critically, this agreement is not governed by public tariffs but is individually determined, setting specific expectations regarding service quality and scope.

Core Function and Process

This contract serves as the blueprint for the entire logistics transaction. It clearly outlines the duties, responsibilities, and liabilities of both the carrier and the shipper. Key elements detailed within the contract include routing, pickup and delivery windows, freight charges, limits of liability for damage or loss, and required documentation. Because these contracts are negotiated, contracted carriers retain the choice regarding if and when to offer service under the agreed-upon terms.

Common types of contracts of carriage include:

• Bill of Lading (B/L)

• Sea waybill

• Air waybill

• Charter party

Expert Advice

For robust logistics risk management, shippers must treat the Contract of Carriage as more than just a formality. Analyze the liability clauses carefully, particularly relating to declared value and limitation periods. Ensure the contract accurately reflects the Incoterms governing the sale, preventing ambiguity regarding when risk transfers from the seller to the buyer. Review clauses addressing force majeure and geopolitical risk to protect your supply chain continuity.

Key Takeaways

• A Contract of Carriage is a negotiated agreement, distinct from tariff-based services.

• It defines the legal obligations and limits of liability for both the carrier and shipper.

• Common transport documents like the Bill of Lading serve as evidence of the contract.