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Letter of indemnity

What is a Letter of Indemnity in Shipping?

In shipping, a letter of indemnity is issued by a shipper or consignee to the carrier, indemnifying them against any potential losses or liabilities arising from the release of cargo without the presentation of required documents, such as bills of lading. This document acts as a legal instrument to facilitate the smooth movement of goods in situations where original documents are unavailable or impractical to obtain.

What's Included on a Letter of Indemnity?

A letter of indemnity typically includes the following key elements:

  1. Identification of Parties: Names and contact details of the parties involved, including the shipper, consignee, and carrier.
  2. Description of Transaction: Details of the shipment, including the nature of goods, quantity, and destination.
  3. Indemnification Clause: A clear statement of the indemnifying party's obligation to compensate the carrier for any losses or liabilities resulting from the issuance of the letter of indemnity.
  4. Signatures and Date: Signatures of authorized representatives from both parties, along with the date of issuance.

What's the Difference Between a Letter of Indemnity and a Shipping Guarantee?

While both a letter of indemnity and a shipping guarantee provide assurance to carriers in situations involving missing or incomplete documentation, they differ in their legal and financial implications. In a letter of indemnity, the indemnifying party commits to compensating the carrier for any losses or liabilities arising from inadequate documentation. Conversely, a shipping guarantee entails providing financial security or a deposit to the carrier to ensure payment for transportation charges and potential liabilities.

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