This guide to letters of indemnity looks at the practical issues and potential problems that can arise when using them, as well as how to avoid disputes. It provides commentary on the common types of letters of indemnity, the reasons they are used, the pitfalls and risks and some of the legal and insurance issues that may arise. Practical guidance is supported by a notes section showing the legal foundations of advice given.
This publication is designed to be used in conjunction with Bills of Lading – A Guide to Good Practice.
1. Introduction
2. Quick Reference
3. Practical Guidance
4. Detailed Analysis
5. Anatomy of a Letter of Indemnity
6. Legal Notes
Appendices
I. P&I club circulars on standard letters of indemnity
II. Standard letters of indemnity
Bibliography
Index
In 1998 The North of England P&I Association published a loss prevention guide to bills of lading entitled Bills of Lading – A Guide to Good Practice by Stephen Mills. The second edition was published in 2005 and the third edition in 2014.
The aim of the guide is to assist ship’s officers, operators and managers, as well as those advising them, on the problems and practical issues surrounding the everyday use of bills of lading and also to identify the legal principles and standards against which the use of that document would be judged.
However, the cry of many involved in international trade is that the ‘real world’ is a different place. Whereas the law expects that the documentary aspects of international sale transactions will comply with long-established principles and standards, those engaged in international trade may sometimes find those principles and standards difficult, if not impossible, to apply or achieve in each and every transaction. In their hour of need they often look to letters of indemnity.
In recognition of the widespread use of letters of indemnity in international trade and shipping in conjunction with, and sometimes in substitution for, bills of lading, an accompanying guide to Bills of Lading – A Guide to Good Practice, was published in 2008. This provided commentary on the common types of letter of indemnity, the reasons they are used, the pitfalls, and risks, and some of the legal and insurance issues which arise out of their use. This is the second edition of that guide, having been fully reviewed and updated for 2017. In the interests of mutuality, the P&I clubs need to work to the same principles and standards as the law applies to the use of bills of lading. The publication of this guide by The North of England P&I Association is not intended to condone or ratify the use of letters of indemnity, or to suggest that they, or their continued use, will be viewed with any greater enthusiasm in the future by the P&I clubs than is currently the case. Using letters of indemnity may give rise to risks which are uninsured and / or uninsurable, and to obligations which may be unenforceable or which may not be worth the paper they are written on.
However, it is recognised that letters of indemnity may legitimately assist trade on many occasions, and hence the advice given in this guide may be welcome, notwithstanding the caveat above. The aim of this guide is to assist ship’s officers, operators and managers in the understanding of letters of indemnity and the problems and practical issues surrounding their use.
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Title: Letters of Indemnity: A Guide to Good Practice (Second Edition) (eBook)
Edition: Second
Number of Pages: 57
Product Code: WS1711EA
Published Date: August 2019
Author: The North of England P&I Association Ltd
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