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Gard Guidance Masters LETTERS OF INDEMNITY

It is common for shippers to offer a letter of indemnity in exchange for a clean bill of lading or a bill of lading which is ante/post-dated. This type of letters of indemnity are unenforceable in most jurisdictions because the courts consider the carrier a party with the shippers to a fraud, i.e. the bill of lading is issued in the knowledge that it contains information on which the receivers will rely, but which is known to be incorrect.

A letter of indemnity is therefore not legally binding, and will offer the Company no protection if the shipper goes back on his promise. There will be no P&I cover available either as the P&I Rules exclude cover for claims arising from the issue of an ante/post-dated bill of lading or claims arising from the issue of a bill of lading known by the Master or the Company to contain an incorrect description of the cargo, its quantity or condition. The risks are therefore great in signing a bill of lading containing incorrect information.

Whenever the Master is requested to issue a clean or incorrectly dated bill of lading in return for a letter of indemnity, he/she should
  • refuse, despite threats to delay the vessel or other pressures
  • immediately contact the Company and/or the correspondent for advice and assistance.