Key takeaways
- Describe the requested departure from the ordinary document process precisely.
- Check the proposed indemnifier's identity, authority and financial standing.
- Obtain the appropriate legal, insurance and commercial review before action.
Define the request in concrete terms
Start with the action someone wants the carrier or another party to take. Identify the vessel, cargo, bill references, delivery place and intended recipient. Distinguish a request connected with missing original bills from a request to deliver elsewhere or another proposed arrangement. Different circumstances should not be forced into a familiar template without review.
Record who made the request and on whose behalf. An operational contact may be relaying a request from another company. The proposed indemnifier and the party communicating the instruction may differ, so establish the relationship explicitly before drafting names into a document.
Prepare a concise factual summary with the relevant cargo documents and correspondence. The legal and commercial reviewers should be able to understand what action is proposed and why without reconstructing a long email chain. Keep the original messages available behind that summary.
Treat standard wording as one part of the review
The International Group's revised LOI forms address specified delivery circumstances. UK P&I's circular explains that using standard wording does not remove the stated P&I-cover consequences and urges attention to the indemnifier's financial standing. Obtain advice for the particular request rather than assuming the form solves the underlying risk. UK P&I circular on revised IG wordings.
Use the wording approved for the actual transaction by the appropriate advisers. Do not reconstruct a form from memory or copy clauses from an old email. Record the source and revision of the approved document and highlight any requested amendments for review.
Keep the factual preparation separate from legal drafting. A coordinator can verify that a bill reference is correct and identify a missing party address. Deciding the adequacy of the undertaking, governing law or enforcement position requires the authorised legal review.
Verify the indemnifier and signatory
Confirm the proposed indemnifier's full identity through the established counterparty process. Avoid relying solely on a trading name in a forwarded message. Obtain the information the commercial and legal reviewers require to assess authority and financial standing, and keep the assessment status visible.
Check the intended signatory and the evidence of authority required by the approving team. A familiar email address or scanned signature should not be treated as conclusive evidence that the company has authorised the undertaking. Follow the organisation's verification procedures and preserve the supporting records.
If bank participation or other support is proposed, have its scope and form reviewed directly through the appropriate channels. Do not assume that a bank name on a draft means a bank has undertaken an obligation. Record what has actually been confirmed and what remains proposed.
Use an LOI request decision table
| Preparation area | Question to answer | Evidence for the reviewer |
|---|---|---|
| Requested action | Exactly what is being requested? | Written instruction and factual summary |
| Cargo identity | Which shipment and documents are involved? | Bills, cargo references and voyage details |
| Delivery identity | Who is intended to receive the cargo? | Verified recipient information |
| Indemnifier | Which entity offers the undertaking? | Counterparty and authority records |
| Wording | Is the selected document approved for this request? | Controlled draft and amendments |
| Approval | Who authorises action and on what conditions? | Legal, insurance and commercial decisions |
An unanswered question should have a named owner and a clear escalation route. The table is not a scoring system that permits action when most boxes are complete. A single unresolved identity or authority issue may be central to the decision.
Keep the approval record specific to the request. A previous LOI from the same company may provide useful background, but it does not establish that the current cargo, recipient or wording has been reviewed. Link the approval to the exact draft revision.
Coordinate the operational instruction separately
Once the appropriate decision is made, prepare a clear operational instruction reflecting its conditions. Identify who may communicate it to the master, agent or terminal. The existence of a signed LOI in an email chain should not itself be treated as permission for everyone copied to act.
Ensure that the intended recipient and cargo references in the instruction match the approved documents. If the delivery proposal changes, pause the release of revised instructions and obtain the necessary review. Changing a company name or location can alter the very request for which the undertaking was considered.
Retain evidence of what was actually done, by whom and under which instruction. The document file should connect the approved request with the operational event. Do not assume that paperwork alone proves the cargo was delivered to the intended party or that all approval conditions were followed.
Maintain the file after the immediate request
Assign responsibility for any subsequent document retrieval, follow-up or closure steps specified by the approved process. An LOI file should not disappear from attention once the vessel completes discharge. Keep the undertaking, approval record, delivery evidence and later correspondence together.
Where original documents arrive later, route them through the established verification and handling process. Do not infer that the undertaking can be cancelled or released simply because someone forwards a scan. Obtain the authorised decision on closure and record the evidence supporting it.
If a demand, conflicting instruction or claim emerges, preserve the records and notify the responsible advisers promptly. The coordinator should avoid making substantive assurances about enforceability or insurance coverage in routine correspondence. Clear factual information is the useful contribution at that stage.
Fictional case: a last-minute change of receiver
In this fictional case, a trader requests delivery without presenting the original bill and supplies an LOI draft. The review is nearing completion when the agent receives a message naming a different receiving company. The draft and operational instruction no longer describe the same proposed delivery.
The preparer flags the change and keeps the instruction pending. The responsible teams verify the revised recipient and reconsider the request against the approved document process. Only the reviewed version is released through the authorised communication channel.
The file retains the original request, the change, the revised approval and evidence of the eventual operation. This does not establish that an LOI is enforceable or that a claim is covered. It ensures the decision was made on the actual request rather than an earlier, materially different proposal.
Common mistakes
Do not treat a standard template as proof that the request is acceptable. Another mistake is assuming a known trader's commercial reputation resolves the identity and authority of the entity signing the undertaking. Verify the actual party and obtain the required review.
Avoid changing recipient details informally after approval or treating receipt of a signed document as automatic authority to deliver. Finally, an LOI should not be used as a clerical justification for knowingly false bill particulars. Escalate such requests instead of preparing inaccurate documents for signature.
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Educational information only; not legal, financial or trading advice. Contract wording and applicable rules control. Verify current requirements and obtain qualified advice before acting.
Frequently asked questions
Does standard wording remove the need for review?
No. The request, parties, circumstances and any amendments still require assessment. The cited P&I circular also explains that standard wording does not overcome the cover position it describes. Use the approved advisers and document process for the specific proposed action.
Who should approve an LOI request?
Follow the organisation's authority structure, involving legal, insurance and commercial reviewers as appropriate. The preparer assembles the factual package and tracks decisions. Operational participants need an explicit instruction from the authorised channel rather than an assumption based on a document appearing in their inbox.
Can an earlier LOI be reused for the same customer?
Use it only as background unless the authorised reviewer directs otherwise. Check the current cargo, bill references, recipient, wording and indemnifier details. A previous acceptance does not establish that a new request has the same facts or approval conditions.
When can the file be closed?
When the responsible team confirms that the approved follow-up and closure requirements have been met. Retain the evidence supporting that decision. Do not equate vessel departure, receipt of a scan or completion of delivery with automatic release of the undertaking or resolution of every outstanding issue.