Legal Regulations Regarding the Freight Contract
The Freight Contract is specifically regulated in the Fourth Part of the Fifth Book of the Turkish Commercial Code. Due to its legal nature as a service agreement, freight contracts are subject to the Turkish Code of Obligations provisions regarding contracts for works. In some provisions related to the delivery of goods in the freight contract, reference is also made to the Turkish Code of Obligations.
What are the essential elements for the establishment of a Freight Contract?
In maritime freight, the contract established between the carrier and the shipper, which includes the commitment to transport goods, is called a freight contract. With this contract, the carrier agrees to transport the goods by ship and sea, while the shipper must pay a fee in return for this service.
As a general rule, no specific form requirement is regulated by law regarding freight contracts. The parties can enter the contract in written form, orally, by phone, via email, or any other means. However, in practice, freight contracts are usually made in written form, mainly due to the maritime claims generally involving high amounts and for ease of proof.
The parties may issue a bill of lading to use as evidence of the delivery. If requested by the shipper, the carrier must issue a bill of lading after taking the goods for transportation. A bill of lading is the evidence of the existence of a carriage contract, indicating that the goods have been received by the carrier or loaded onto a vessel and establishing that the carrier is obligated to deliver the goods only upon presenting the document. This enables the shipper to have a means of proving that the goods have been delivered.
The essential elements needed to establish a valid freight contract are as follows:
1. Transport commitment: With the contract, the carrier undertakes a responsibility to transport on behalf of the shipper. This is the primary purpose and essential obligation thereof.
2. Transportation of the goods: The transport commitment must always involve the transportation of goods. The term "goods" here refers to entities other than live human beings; live animals and corpses are also considered as goods. The transportation of live human beings is related to the passenger transport agreement.
3. Transportation by sea: The agreement must explicitly relate to the transportation of goods by sea. Transportations conducted on rivers, lakes, or similar bodies of water cannot be the subject of a freight contract.
4. Transportation by ship: For the establishment of a freight contract, the transportation must be carried out by a commercial vessel .
5. Possession of the goods by the carrier: The goods to be transported must come into the possession of the carrier. In other words, the goods must be handed over to the carrier.
6. Payment of freight: Freight refers to the payment made to the carrier in exchange for transportation. The obligation of the shipper to pay a fee for this service is one of the essential elements of the contract.
Types of Freight Contracts
Freight contracts are classified into two categories: Charter Agreements for specified goods (Kırkambar sözleşmesi) and Voyage Charter agreements (Çarter sözleşmesi). Charter party agreements are additionally classified as full voyage charter agreements and partial voyage charter agreements.
Charter Agreement for specified goods:
In a charter agreement for specified goods, the shipper requests the transportation of their goods by sea in exchange for a fee. The carrier is obligated to transport only the goods and does not make any commitment regarding a specific vessel or the manner of transportation.
Voyage Charter Agreement:
In voyage charter agreements, the carrier must transport the goods by allocating the entire vessel or a certain portion in return for freight. If the commitment is made to deliver the whole vessel, the established contract is called a full voyage charter agreement. If only a part of the vessel is allocated, the established contract is called a partial voyage charter agreement.
When a voyage charter agreement is concluded, each party may request the issuance of a written contract specifying the terms thereof upon payment of expenses. This contract as a document does not possess the characteristics of a commodity warrant but provides evidence for the parties. In the case of a charter agreement for specified goods, the issuance of such a document is not involved.
Fulfillment of the Freight Contract
The fulfillment of a freight contract between the parties can be examined in four stages:
1. Pre-voyage preparation:
The vessel on which the cargo will be transported is agreed on the contract. The carrier is not allowed to transport the cargo on a vessel other than the one specified in the agreement, nor transfer the cargo to another container without the consent of the shipper.
The carrier is obligated to keep the vessel in a sea-worthy, road-worthy, and cargo-worthy condition Sea-worthy means that the vessel's equipment, machinery, boilers, and other technical aspects are capable of withstanding ordinary perils at sea. Roadworthiness indicates that the vessel is equipped for the voyage in terms of the competency of the crew, fuel, and provisions. Cargo-worthiness refers to the parts of the vessel used for cargo transportation being suitable for loading, accepting, and preserving the goods.
2. Loading onto the Vessel
Firstly, the carrier must be notified that the vessel is ready to receive the cargo. The captain anchors the vessel at the agreed location to receive the goods. The fulfillment process starts with the arrival of the vessel at the designated location. Unless otherwise agreed, the shipper is responsible for delivering the cargo to the loading point and covering expenses. However, the loading of the cargo onto the vessel and related costs fall under the responsibility of the carrier.
3. Journey
After the loading is completed, the carrier must depart as soon as possible. The carrier follows the predetermined route specified in the contract. In the absence of a specified route, a safe and efficient route that ensures the timely arrival of the cargo at the destination port must be followed.
4. Unloading and Delivery
The unloading and delivery of the cargo conclude the fulfillment of the contract. The captain anchors the vessel at the predetermined location stated in the agreement for the purpose of unloading the cargo. In the absence of a specified port or area for unloading in the contract, the vessel awaits the designation of the unloading area within the waiting area for that port or area.
If not agreed otherwise, the shipper is responsible for the expenses of unloading the cargo from the ship, while the carrier covers the remaining costs. If the day for starting the unloading is not mentioned in the contract, the carrier or its authorized representative will notify the consignee (receiver) about the preparation for unloading. The unloading period begins on the next calendar day after receiving the notification or from the moment the unloading begins. If the contract specifies an unloading duration, it should be followed. Otherwise, the unloading period is the time needed for uninterrupted work lasting twenty-four hours.
Once the determined or assumed unloading duration ends, the “extended operating period” starts automatically without further notice. It refers to the extra time beyond the agreed period in the contract. The carrier is entitled to receive compensation called "demurrage" for this additional time.
Non-Delivery or Delay in Delivery of Cargo
If the consignee (receiver) fails to receive the entire cargo within the designated time and until the expiration of the extended operating period, the provisions of Articles 107-109 of the Turkish Code of Obligations apply. After giving notice to the consignee, the carrier may hand over the cargo to an official entity or an authorized person, with the expenses borne by the consignee. The carrier may sell the cargo through public auction if the hand over is impossible or excessively costly.
After the cargo is unloaded, the possession of the cargo is transferred to the consignee, and upon acceptance, the freight contract is considered fulfilled. The delivery must be made to the authorized person in the freight contract or bill of lading. If the cargo is damaged or there is a delay in delivery, the carrier becomes responsible.
Conclusion
Having a good understanding of the legal framework and essential elements of freight contracts is crucial for successfully carrying out international trade and transportation. Following the proper procedures, like using written contracts and bills of lading, ensures clarity and accountability throughout the process. By complying with these rules, businesses can reduce risks, protect everyone's interests, and facilitate secure movement of goods across borders.
References:
Turkish Commercial Code No. 6102
Turkish Code of Obligations No. 6098
Prof. Dr. Bülent Sözer - Maritime Commerce Law
Emine Yazıcıoğlu - Maritime Commerce
Demet OZKAYA COLGECEN
Deniz
KAFKASLIOGLU
|