Letter of Indemnity

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Letter Of Indemnity

Summary of Letter Of Indemnity

A document issued by a shipper of merchandise to a steamship line as an inducement for the carrier to issue a clean bill of Lading (read this and related legal terms for further details) where it might not otherwise do so. A letter of indemnity is normally issued where the goods are short or damaged and the carrier would provide only a foul bill of lading; the issuance of a foul bill would preclude the shipper from collecting under a letter of credit. The letter of indemnity acts as a form of guarantee whereby the shipper agrees to settle a claim against the steamship line by a holder of the bill of lading arising from issuance of a clean bill.

(Main Author: William J. Miller)

Letter of Indemnity in International Trade

Meaning of Letter of Indemnity (LOI), according to the Dictionary of International Trade (Global Negotiator): A document that serves to protect the carrier/owner financially against possible repercussions in connection with the release of goods without presentation of an original bill of lading. A letter of indemnity is used in cases in which the goods arrive at the port of destination before the original bill of lading. The issuance of the letter of indemnity allows the purchaser to take immediate delivery of the goods, thus saving himself time, additional demurrage, storage expenses, insurance costs, etc.

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