Letter of indemnity

A letter of indemnity (LOI) is a written promise to compensate a party for the consequences of acting outside the strict documentary position, used most often when a carrier delivers cargo without the original bill of lading or issues a clean bill against goods that warrant a clause. It is a personal contractual undertaking, so its worth depends on the giver’s covenant, and carriers commonly require it to be countersigned by a first-class bank. Delivery without the bill of lading is a breach of the carriage contract that voids P&I cover, which is why the LOI exists and why clubs warn it carries real risk.