Charter Party

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Charter party is a written contact between a ship owner and a merchant. This legal document is written when a merchant is hiring a ship from its owner for the delivery of goods (or passengers) for a particular specified voyage for an agreed period.

The agreement between charterer and the ship owner can be either for a certain period of time (time charter) or for a certain point-to-point voyage (voyage charter).



Time Charter

If it is a time charter agreement then the ship is hired for a certain period of time where the ship owner is still managing the ship. Demise charter is a subtype of time charter which gives the responsibility of the ship maintenance and the responsibility of the crew to the charterer.

Voyage Charter

In a voyage charter, the charterer hires the ship for a particular voyage but still the ship owner has to provide the ship master, crew, bunkers and supplies.

Information Included

  1. Name and tonnage of the vessel.
  2. Name of the captain.
  3. Names of the letter to freight and the freighter.
  4. Place and time agreed upon for the loading and discharge.
  5. Price of the freight.
  6. Demurrage or indemnity in case of delay.
  7. Other conditions as the parties may agree upon.

Clauses Included in a Charter Party Agreement

Bunker clause

This clause describes who is bearing the fuel costs. The charterer shall pay for all fuel oil in the ship’s bunkers at the port of delivery and vice versa. Ship owner has to pay for all the fuel oil at the port of re-delivery at current price at the respective ports. Usually ship owner and charterer agree upon the minimum and maximum values of fuel quantities that they are going to provide on behalf.

Ship clause

Under this clause the ship owner has to clearly specify whether the ship is sea-worthy for the voyage at every respect. He has to verify that the ship can safely make a voyage between selected two destinations.

Ice clause

This part of the agreement can be inserted either in charter party or in the bill of lading. The clause is inserted to any of the above documents when a ship is bounded for a port or a number of ports which are closed for shipping activities due to ice after the arrival of the ship or on arrival of the ship.

Negligence clause

This clause is used to exclude the ship owners of carrier’s liability for any loss or damage during the voyage as a result of a mistake made by master, mariner, pilot or the servants of the carrier.

Ready berth clause

This part is inserted into the charter party when the ship is arrived to the port of loading or discharging whether it is in berth or not. Since now it has started counting the laydays the clause protects the ship-owner’s interests against the delays made in waiting for berth.

Parties involved

Basically ship owner and the charterer are the main parties involving. Apart from them this agreement can be also sighed among these parties too. Carrier, Consignee, Consignor, Shipbroker, Ship-manager, Shipper, Stevedore

Judiciary

In case of violence a case can be filed at Admiralty court or vice admiralty court.

Conventions That Describe the Charter Party

Hague-Visby Rules, Hamburg Rules, Rotterdam Rules, UNCLOS, Maritime Labor Convention

Organizations Involved Providing the Standards

International Maritime Organization and London Maritime Arbitrators Association




--Gishan Chaturanga (talk) 21:39, 12 July 2012 (IST)