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Guaranteed Freight: A Comprehensive Guide to Its Legal Definition
Definition & Meaning
Guaranteed freight refers to a shipping agreement where the freight charges are due regardless of whether the goods are successfully delivered. This obligation arises when the failure to deliver is due to circumstances beyond the carrier's control. Typically, under the American rule, a shipper is not responsible for freight charges until the goods reach the destination specified in the bill of lading. However, parties can agree to a guaranteed freight clause, which stipulates that freight is earned once the cargo is loaded onto the vessel.
Table of content
Legal Use & context
This term is commonly used in shipping and transportation law. It is important in contracts between shippers and carriers, especially in maritime law. Users may need to understand guaranteed freight when drafting or reviewing shipping contracts. Legal templates available through US Legal Forms can assist in creating agreements that include guaranteed freight clauses.
Key legal elements
Real-world examples
Here are a couple of examples of abatement:
(Hypothetical example) A shipping company agrees to transport goods from New York to Los Angeles. The contract includes a guaranteed freight clause stating that the freight charges are due as soon as the goods are loaded onto the ship. If the ship encounters a storm and cannot reach the destination, the shipper is still responsible for paying the freight charges.
State-by-state differences
Examples of state differences (not exhaustive):
State
Guaranteed Freight Regulations
California
Generally follows federal guidelines with additional state-specific regulations.
Florida
Similar to federal law, but local contracts may vary based on industry standards.
Texas
Allows flexibility in contracts but requires clear terms defining freight obligations.
This is not a complete list. State laws vary, and users should consult local rules for specific guidance.
Comparison with related terms
Term
Definition
Difference
Freight Collect
Freight charges are paid by the receiver upon delivery.
In guaranteed freight, charges are due upon loading, regardless of delivery.
Freight Prepaid
Freight charges are paid by the shipper before shipment.
Guaranteed freight focuses on payment upon loading, not prepayment.
Common misunderstandings
What to do if this term applies to you
If you are involved in shipping goods, review your contracts to see if they include a guaranteed freight clause. Ensure you understand your obligations and rights under this clause. If needed, consider using US Legal Forms to access templates that can help you create or modify shipping agreements. For complex situations, consulting a legal professional is advisable.
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