Charter Party Contract In Shipping (Bareboat or demise/Voyage/Time)

Charter party plays major role in Maritime law. Here we are going to explain main types of charter parties commonly use in shipping industry. Let’s explain details from the basic details. Therefore firstly we are going to identify what are the contract of carriage goods by sea in brief.

Contract of carriage goods by sea?

There are 2 types contract of goods carriage by sea.

1.contract under evidence of Bill of lading

When not need whole ship to cargo owner and cargo owner need only the space of the ship, cargo owner hire ship space only that process generally called as a contract under the bill of lading.

2.Contarcts under the charter party.

When need whole ship to cargo owner. He can hire a ship under the contract of charter party.

What is chartering?

• The simple meaning of chattering is hiring or leasing a vessel or ship.
• In the shipping industry, there are few amounts of vessels available due to the cost of purchasing vessels and the vessel maintenance cost also high. Therefore, all the shippers cannot be affordable to buy a vessel while may it’s not essential. Therefore, ship chartering comes in the scenario as a contract of hiring a vessel between the vessel owner and the hiring party. If there is a lot of cargo to transport by sea cargo owner hires a full vessel. It’s called a charter party contract, charter party agreement, and vessel chartering.
• Vessel chartering process there should be an agreement between two parties called the vessel owner and hiring party. That agreement is a charter party agreement which is a maritime contract for vessel leasing process.

Who are the involving main persons in charter party agreement?

• Vessel owner or ship owner-Who is owned by vessel.
• Charterer-party who willing to hire a vessel.
• Shipbroker-who is the person create a link between shipowner and charterer.

What are the main Types of charter parties?

Next, discuss about available main type of charter parties. There are 3 charter parties as below list,

1. Demise or bareboat
2. Voyage charter party
3. Time charter party

1.Voyage Charter Party

Before the discuss about voyage charter party. It is necessary to  know the meaning of “voyage”.

What is a voyage?

The meaning of voyage is a long-distance journey by sea.

Let’s explain the voyage charter party.

• Voyage Charter party is an agreement for a specific voyage or voyages.
• Charterer leased out a ship from a shipowner for a specific voyage or voyages.

Payment methods of voyage charter party

There are two methods of payments. They are as below,

Per ton basis-charterer is liable to pay every ton of cargo or freight that are transported during the voyage. This method is suitable for when cargo tonnage is lower than gross maximum cargo tonnage of the vessel.

A lump sum basis-If there is a high volume of cargo to be carried it is needed to pay as a lump sum basis. In this case, should be transported cargo tonnage within in a acceptable limits of the ship.

• Vessel owners need to provide crew and master, and also need to get responsibility of navigation and operations of the ship during agreed voyage.
• Charters pay agreed freight amount only. If any case, he is liable to pay demurrage for delay of the ship at loading and unloading process at port. Other all expenses are borne by vessel owner. So, voyage charter party has minimum control of the vessel to charterer.
• More suitable for bulk cargo carriage.

2.Time charter party

• As the name suggests time charter party is involved in the fixed time period that is agreed with shipowner to lease a ship by charterer. So, charterer is free to sail any port and any kind of cargo according to the legal agreement.
• Ship controls responsibility has charter during the time period. But maintenance done by shipowner. Ship owner has liable to pay maintenance cost only. Other expenses are borne by the charterer.
• When the ship repairs occurring time, do not pay for the shipowner. This not working time called as off hire time.

3. Bareboat/demise charter party

• All the responsibility of the vessel bared by the charter. Shipowner’s loss of control the ship operation for agreed time.
• Charter paying g all the expenses of the vessel: such as fuel, stores, port chargers ,pilotage, and also employees and crews payments.
• Though chatterer is paying for employees and crews, master and chief engineer is appoint by the shipowner.
• Normally bareboat charter party is a long-term agreement.

Comparison of charter parties-Voyage/Time/Bareboat

What do main obligations of shipowner need to fulfil before ship giving to charter?

1. Ship mush arrived to the destination which is agreed before charter
2. Ship must be in fit condition to load cargo
3. And also ship must be ready to have cargo

What is port charter party?

Some of the charter party agreements state the name of the port to be processed on the ship. That kinds of charter parties are called port charter parties.

What is berth charter party?

Some of the charter party agreements state that ships are to proceed to a specific place of the port such as a quay or berth in the port. That’s why it is called a berth charter party.

Difference between B/L and the charter party?

contract under evidence of Bill of lading

When not need whole ship to cargo owner and cargo owner need only the space of the ship, cargo owner hire ship space only that process generally called as a contract under the bill of lading.

Contracts under the charter party.

When need whole ship to cargo owner. He can hire a ship under the contract of charter party.