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Subject to insurance

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Subject to insurance. This is one restriction in a charterparty that is not really relevant to the making of the formal contract in the same way that the other "subjects" are.

It is a clause in a charterparty that may provide for payment of advance freight "subject to insurance". When a ship carries cargo freight is only payable when the cargo is delivered, unless otherwise expressed in the charterparty. If advance freight is paid, the loss of the ship and/or the cargo can the freight to be at risk. This risk can be insured. If the shipowner insures the risk, he can pass the benefit of the insurance to the cargo owner who then pays advance freight less the insurance charges. This clause then gives the cargo owner or charterer a deduction from the advance freight payable.

 

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