Triplicate

Letter of indemnity (LOI) for delivery without the original bill of lading

When a ship reaches the discharge port before the original bills of lading, the receiver often asks the carrier to deliver against a letter of indemnity (LOI) instead. The LOI promises to cover the carrier's losses, but it does not remove the carrier's liability to the lawful holder of the bill of lading, and that liability is not covered by P&I insurance.

Checked against official sources: 2026-10

At a glance

What it isA written promise by the party asking for delivery to indemnify the carrier for delivering the cargo without the original bill of lading
Why it is usedShips often arrive at the discharge port before the original bills of lading
Carrier's riskThe bill of lading is the 'key to the warehouse'; the carrier stays liable if the cargo goes to the wrong party
P&I coverLiabilities from delivery without the original bill of lading are not covered by P&I insurance
Standard formsInternational Group of P&I Clubs forms, such as INT GROUP C for delivery at another port without the original bill of lading
LawThe International Group forms are governed by English law, with the High Court of England as forum
BankP&I clubs recommend that the LOI be countersigned by a first-class bank
Clean bills of ladingAn LOI given to obtain a clean bill of lading for goods known to be damaged may be unenforceable (Brown Jenkinson v Percy Dalton, 1957)

Why carriers ask for an LOI

A carrier must deliver the cargo to the holder of an original bill of lading. Ships now often arrive before the paperwork, and cargo may be traded while the ship is at sea, so the receiver asks for delivery against an LOI. If someone else later presents the original bill of lading, the carrier is liable for misdelivery, and P&I insurance does not cover that liability; the LOI is then the carrier's only protection, worth only as much as the party that gave it.

What the International Group standard LOI contains

What it means for exporters and buyers

For an exporter who keeps the original bills of lading until it is paid, delivery against an LOI means the goods can reach the buyer before payment; the carrier remains liable to the lawful holder of the bill of lading. For a buyer, signing an LOI means taking on the carrier's risk, including security if the ship is arrested, until the original bills of lading are surrendered.

Step by step

  1. Send the original bills of lading early, or agree a telex release or sea waybill when payment is already settled.
  2. If delivery against an LOI is needed, use the International Group standard wording.
  3. Expect the carrier to ask for a bank countersignature, and arrange it with your bank in time.
  4. Hand the original bills of lading to the carrier as soon as they arrive.
  5. As an exporter, do not agree to delivery against an LOI before you are paid.
  6. Never give an LOI to obtain a clean bill of lading for goods you know are damaged.

Documents you usually need

Common problems and how to avoid them

The ship arrives before the original bills of lading.

What to do: Ask for delivery against a standard-form LOI, ideally bank countersigned, or use a telex release or sea waybill for future shipments.

The carrier refuses an LOI without a bank countersignature.

What to do: P&I clubs recommend a first-class bank's countersignature; arrange it with your bank.

The buyer took delivery against an LOI before paying the exporter.

What to do: The carrier remains liable to the lawful holder of the bill of lading; contact the carrier and take legal advice.

A carrier is asked for a clean bill of lading against an LOI despite damage.

What to do: Such an LOI may be unenforceable because the bill of lading would misstate the goods; clause the bill of lading instead.

Sources

  1. Letters of indemnity (10 September 2020) UK P&I Club
  2. Missing B/L? Remember the risks (2017) The Baltic Exchange
  3. International Group standard letter of indemnity INT GROUP C The Swedish Club

Rules change often. This note is practical guidance based on the sources above, not legal advice. Confirm current requirements with the authority, your importer or a licensed customs broker before you ship.

Share with a colleagueWhatsAppLinkedInX

Trade notes

Bill of Lading Meaning: Original B/L 3/3 vs Telex Release vs Sea Waybill, Which Is Safe?Original B/L 3/3, telex release (surrendered B/L), sea waybill, house vs master and straight vs to order bills, and which is safe on T/T, copy…Bill of Lading Draft Check: SI, VGM, UCP 600, US ISF and EU ICS2Check a B/L draft before issue: parties, ports, goods, marks, weights, freight terms, on-board date, UCP 600 credit rules, US manifest and ISF, EU…Carrier liability limits for lost cargo: Hague-Visby, COGSA, Montreal, CMRHow much a carrier pays for lost or damaged cargo: Hague-Visby 666.67 SDR per package or 2 SDR per kg, US COGSA USD 500 per package, Montreal 26…

Had this problem? Share how you solved it

Tell us what happened and what worked. We read every message. With your permission we may add your case to this note, without your name or company.

Common questions

What is a letter of indemnity in shipping?

A written promise to compensate the carrier for any liability, loss, damage or expense from delivering cargo without the original bill of lading or at another port.

Is delivery without the original bill of lading covered by P&I insurance?

No. Liabilities from such misdelivery are not covered by P&I insurance, so the carrier relies on the LOI.

Does an LOI need a bank countersignature?

It is not always required, but P&I clubs recommend that it be countersigned by a first-class bank.

Which law governs the International Group standard LOI?

English law, and each person liable must submit to the jurisdiction of the High Court of England at the carrier's request.

Can an LOI be used to get a clean bill of lading?

An LOI given so that the bill of lading misstates the condition of the goods may be unenforceable, as in Brown Jenkinson v Percy Dalton (1957).

More free tools

Triplicate AI: your trade assistantCBM calculatorContainer loading calculatorPallet calculatorVolumetric weight calculatorAmount in words converterIncoterms 2020 chartWhich Incoterm should I use?Incoterms 2020 quizFree commercial invoice, packing list and proforma invoice templatesFree commercial invoice templateFree packing list templateFree proforma invoice templateFree shipping instruction (SI) templateFree export sales contract templateFree certificate of origin templateFree export price quotation templateFree purchase order template for importersExport email templatesFree sample invoice template (no commercial value)Shipping container dimensionsContainer number check and trackingDemurrage and detention calculatorPort code lookup (UN/LOCODE)Shipping Mark GeneratorCarton label generatorHS code lookupLetter of Credit ChecklistCertificate of Origin GuideLanded Cost & Import Duty CalculatorLanded cost per unit calculatorExport price calculator (Incoterms quotation)Currency ConverterTrade notesTrade & Shipping GlossaryInvoice & packing list generator

Triplicate is free and keeps getting better. Found it useful? Support Triplicate ♥