RULE 7 - Indemnity

  • Date: 03/08/1997

Is it addressed to both you and your principal?

One of the Club's Members was recently presented with a perfectly worded letter of indemnity counter-signed by a first class bank, addressed to "the master/owner/ charterer".  The Member referred the wording to the Club who pointed out that, as the Member's principal was an NVOC, the letter was useless in that it did not protect the interests of the Member's principal nor the Member himself.  The letter was therefore returned to the bank for amendment.
The Club also recently sighted a letter of indemnity which was only addressed to a sub-agent and did not cover the owner or the charterer or the head agent.  When the ship was arrested by the shippers in Rotterdam, the bank in the Far East refused to honour its indemnity as the party who it had agreed to indemnify had not been named in the proceedings.

Agents must always ensure that letters of indemnity cover all parties who may seek to rely on them.

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