For the purpose of carriage of goods by sea, there are two main types of contract, i.e., the bill of lading and the charterparty. The bill of lading is a document that transfers ‘title to exported goods’ to the bank that finances the deal when the goods are shipped. Information as to the goods loaded and the contractual terms are provided in the Bill of Lading which can be found on the reverse of the document. The Bill of Lading may sometimes incorporate terms from a Charterparty by using the words of incorporation on its front. In the absence of such words of incorporation, the terms of the Charterparty does not form part of the Bill of Lading contract. The distinction between the Bill of Lading and Charterparty does not cease to exist where the terms of a Charterparty are expressly incorporated into the Bill of Lading. The contract is made usually on the basis of the contractual terms contained in the Bill of Lading when the shipper wants to use only a part of the vessel. When the shipper books space on the ship, the actual contract is made informally. Initially, the conntract may be entirely in oral version. The contractual terms of the initial contract is not definitive. A contract of Charterparty is more expected to be used in a case where the entire or substantial part of the vessel is to be used as in the case of bulk cargoes. This contract is definitive of its terms and is a formal written contract. The Carriage of Goods by Sea Act, 1971 lays down that the international convention of Hague-Visby Rules shall have the force of law with respect to the terms of these contracts relating to the carriage of goods, depending on the country in which the bill of lading was issued, among other things.
