Letters Of Indemnity

Welcome back to our new series of 'back to basics' blogs in which we will provide blogs focused on common legal issues. This blog post looks at letters of indemnity, a sometimes unreliable but commonplace feature of the shipping industry.

When might an LOI be required:

Letters of indemnity act as an unofficial form of insurance in instances where a party is requested to step out of the bounds of its contracted obligations.

The most common example of such an instance is where the carrier is asked to deliver the cargo without production of the original bills of lading as the cargo has reached its destination before the bills of lading. Often this is simply due to couriering delays or, where the cargo has been traded during the course of the voyage, due to delays in transfer between the parties. It is a problem which is out of step with the speed of modern day trading and communications and yet, curiously, is still a very common one.