Sales contract, carriage of goods by sea and bill of lading

Up to this point, analysis has been focused primarily on the presentation of the charter/freight markets, the nature of chartering business and the critical managerial or practical perspectives. Chartering is a part of commercial management of ships, which, however, cannot exist by itself. The operative force is always a sales contract of goods and subsequently the need for sea transport. First, there is a sale/purchase of merchandise; second, a need for sea transport; and third, a need for chartering a vessel. Before proceeding to the “core” chartering matters, this chapter intends to show the general context, by investigating how chartering business is related with the international laws and practices of sales of goods and their transport by sea. Therefore, significant subjects are examined, such as: the importance of the sales contract; Incoterms® 2010 rules, a practical, widely recognised set of internationally accepted trade terms, defining by whom and how sea transport is organised, performed and paid for; the contractual relations among sellers and buyers of goods and sea carriers; the charterparty and the bill of lading as main contracts of sea carriage; the documentary letter of credit as the most commonly used method of payment for exports; the carriage of goods by sea international cargo conventions; the critical functions of bills of lading or other similar transport documents; the carrier’s liability for damage to or loss of goods; and finally how major risks are insured.