CHARTER PARTY CONTRACT.

[dinesh2476]

Dear Experts,

What are the challenges a bank might face if they ask for a charter party agreement as part of LC to determine goods are not to be released without presentation of charter party bill of lading?

while it is a challenge for a bank to have an employee with such knowledge to review charter party contracts, it gives a bank a kind of comfort for being consignee nominating themselves.

Thanks & Regards
Dinesh

[picant]

Hi Pal,

the fact tha CP Bill of lading has in the UCP a proper article means that it is different from a bill of lading.
the master will get orders from the charterer and, charge, discharge the goods on demand.
The CP bill of lading is not a document of title so the presentation in one l/c is just to show that the goods have been carried. Probably with Charter Party contract in bank's hand, requiring that CP bill of lading consigned to the issuing bank, the goods will remain under bank's controll.
Other comments appreciated.
Ciao

[dinesh2476]

chief,

But in ISBP under consignee, don't see any difference between bill of lading and charter party bill of lading

The CP bill of lading is not a document of title

Regards,
Dinesh

[picant]

From Collyer FAQ


Mitigating risks for a charter party bill of lading
Question raised: 09/04/2018
As issuing bank, we are going to issue a credit, under a credit facility, and a charter party bill of lading (CPBL) will be stipulated as the transport document.
1- What are the risks associated with a CPBL that should be considered in the risk assessment?
2- Will the following conditions (if stipulated in the credit) mitigate the risks of a CPBL:
+CPBL signed by the charterer or its agent is not acceptable.
+CPBL must be marked freight prepaid +CPBL marked (freight payable as per charter party) or similar is not acceptable.

If you are willing to issue a credit requiring the presentation of a charter party bill of lading, a pre-requisite must be that you have no financial issues or integrity concerns with the applicant and that the applicant is known in the marketplace for the commodity being imported. If you have any issues or concerns, then you should not be considering issuing such a credit.

In most cases, the charter party bill of lading has no value in the sense of one original being required to be surrendered in exchange for the commodity. Most goods will be loaded and offloaded according to the terms and conditions of the charter party agreement - without the need for an original charter party bill of lading to be surrendered, and the charter party bill of lading merely serves as evidence of the shipment taking place and the entities involved.

Any security over the commodity would need to be in respect of the storage of the commodity in a warehouse, silo(s) or tank(s) into which the commodity will be stored or pumped.

The issuer and/or signer of any charter party bill of lading will be subject to the agreement of the applicant and the beneficiary. Prohibiting the signing by a charterer or its agent may not be appropriate. The charterer may be a globally recognised name.

If a credit indicates that the charter party bill of lading is to be marked freight prepaid, a document marked 'freight payable as per charter party' would not be acceptable. Therefore, you would not need both conditions.

[gauripuri]

Thanks for the information.

[rapeseeds]

Hi Pal,

the fact tha CP Bill of lading has in the UCP a proper article means that it is different from a bill of lading.
the master will get orders from the charterer and, charge, discharge the goods on demand.
The CP bill of lading is not a document of title so the presentation in one l/c is just to show that the goods have been carried. Probably with Charter Party contract in bank's hand, requiring that CP bill of lading consigned to the issuing bank, the goods will remain under bank's controll.
Other comments appreciated.
Ciao

Dear Picant,
I am very new in this forum and also I am a Seller who is new to the LC payment System.

I have been dealing with and accepting ONLY T/T Payment for my goods, but now a days potential customers wants to Pay me Only by "100% L/C at sight" so i am now trying to consider accepting this system of Payment now, and as a result of this i have been reading a lot about LC payment on the internet .

Please i need your help in clarification Regarding a Phrase that i have been seeing on "Congen Bills" CHARTER PARTY B/L which I am confused and Will appreciate your expertise answer :

We are planing on exporting WHEAT ( Bulk shipment) and i will like to know if during documents presentation to Bank : " if It is MANDATORY / REQUIRED to Submit the CHARTER PARTY B/L " Together With" the "CHARTER PARTY" AGREEMENT that was signed between " Vessel owner and Charterer" " ?

If the "CHARTER PARTY" AGREEMENT is not submitted to the LC issuing Bank "together with the CHARTER Party B/L ", will this be considered by the LC Issuing Bank as Discrepancy ? Or a missing Document ?
And then they will further Request the "CHARTER PARTY" AGREEMENT be submitted before they release Payment ?

One of the reason for this question is because I have seen on the Faces of CONGEN BILLS "B/Ls" the statement ( TO BE USED WITH CHARTER PARTIES ) .

Looking forward to your expertise response and Thank you in Advance.

[picant]

Hi Pal,

better to speak with your bank, maybe our opinion are different. However the Charter Party Agreement is not mandatory to be presented, on the contrary art 22 b) and ISBP 745 indicate that banks are not obliged to examine the contract terms even if such contract is required by the credit terms-
Other comments appreciated
Ciao

[rushirathi]

Thanks for the information.

[rapeseeds]

Hi Pal,

better to speak with your bank, maybe our opinion are different. However the Charter Party Agreement is not mandatory to be presented, on the contrary art 22 b) and ISBP 745 indicate that banks are not obliged to examine the contract terms even if such contract is required by the credit terms-
Other comments appreciated
Ciao

Dear Picant,
Thank you for your response .
It's very much appreciated.
Best regards.