A loyalty contract is an agreement between a shipper and an ocean common carrier. This type of contract allows the shipper to receive lower shipping rates by committing to use the carrier for all or a specified portion of their cargo. Additionally, loyalty contracts often include a deferred rebate arrangement, where the shipper may receive a rebate after meeting certain conditions.
Loyalty contracts are primarily used in the shipping and transportation industry. They fall under maritime law, which governs the rights and responsibilities of parties involved in shipping goods over water. These contracts are relevant for businesses that rely on shipping to transport goods, allowing them to manage costs effectively. Users can often create or manage loyalty contracts using legal templates provided by services like US Legal Forms.
Here are a couple of examples of abatement:
For instance, a company that regularly ships electronics may enter into a loyalty contract with a shipping company. By agreeing to ship a certain volume of products over a year, the company secures a lower rate per shipment and may receive a rebate at the end of the year based on the total volume shipped.
(hypothetical example) A grocery distributor might sign a loyalty contract with a shipping line, committing to ship 80% of their goods through that line to benefit from reduced rates and a rebate system.
According to 46 USCS § 40102, loyalty contracts are defined within the context of maritime law. This statute outlines the basic framework for such agreements, ensuring that they are legally recognized and enforceable.
| Term | Definition | Differences |
|---|---|---|
| Loyalty Contract | Agreement for reduced rates based on cargo commitment. | Includes a deferred rebate arrangement. |
| Shipping Contract | General agreement for shipping services. | Does not necessarily include loyalty incentives or rebates. |
| Freight Agreement | Contract specifying terms for freight services. | May not involve loyalty commitments or discounts based on volume. |
If you are a shipper considering a loyalty contract, evaluate your shipping volume and needs. Compare offers from different carriers to find the best rates. You can explore US Legal Forms for templates that can help you draft a loyalty contract tailored to your needs. If your situation is complex, consulting a legal professional is advisable.
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A loyalty contract is an agreement that allows shippers to receive lower shipping rates by committing to a specific carrier.