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The North of England P&I club has published a new guide for the shipping
industry, Letters of Indemnity - A Guide to Good Practice, on how to avoid
disputes and problems arising from the use of letters of indemnity.
The club says that letters of indemnity are frequently used in international
trade and shipping in conjunction with and sometimes in substitution for
bills of lading.
It warns: “However they can 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.”
Nevertheless North of England's risk-management manager Tony Baker says:
“Whereas the law expects the documentary aspects of international sale
transactions to comply with long-established principles, people sometimes
find those principles and standards difficult if not impossible to apply or
achieve in each and every transaction. In their hour of need to often look
to letters of indemnity.”
The club says: “The purpose of this new guide, which is designed to
complement North of England's existing guide 'Bills of Lading - A Guide to
Good Practice', is therefore to shed some much-needed light on this 'grey
area' of shipping practice and to explain how to minimise the many
commercial and legal risks that can arise.”
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