Charter Party
The deal between the ship owner and charterer – General Discussions
We now come to the all important area of the commercial-relationship that the ship owner gets into with the charterer, for the carriage of “goods by sea”. As the name indicates, this commercial-relationship is by way of a “charter”, documented by way of a “charter party”, which is nothing but a contract for the hire of a vessel (including other forms of transportation), for a mentioned journey or a mutually agreed period of time. As far as maritime matters are concerned, “charters” usually are:-
(i) Contracts for carriage of specified amounts of cargo, in specified vessels, between specified ports, called “voyage charters”, and,
(ii) Contracts for hire of specified vessels, including, “time charters” and “bareboat charters” (named also as “bareboat charters”).
In short, it is a “standard form” (e.g. NYPE 2015: a dry-cargo charter party that indicates contemporary commercial practice and the legal developments that have taken place in the past 20 years, which takes proper stock of the most commonly applied amendments and additional clauses as used by the practitioners in the dry-cargo sector) containing the “written terms” of a charter agreement, between a ship owner and a charterer. It defines the obligations, rights and liabilities of the ship owner and charterer, and, is usually drawn-up by the concerned broker representing the charterers, following discussions and arriving of agreement of terms between both the parties. It is normally seen to comprise of a set of “standard clauses” on a printed form, with additional typed “rider clauses” appended, if the “standard clauses” fail to cover all aspects of the parties’ agreement.
The terms and conditions ought to be ideally balanced, so that it does not lead to favouring one party, to the disadvantage of the other. Even though the “standard clauses” are the ones that principally govern the charter party, there may be a number of “amendments” to these clauses, as may be mutually agreed to, by the parties. Needless to state, the more the amendments, the more shall be the scope for legal disputes.
Should there be a conflict between the standard clauses and rider terms, the rider terms shall override the standard clauses.
A good-many “charter party forms” are in circulation for various purposes. It is obvious that a form which is “readily available” and that which has been meticulously drafted and improved-upon with time-tested use, so that legal pitfalls are not encountered, are usually preferred by brokers / shippers/ship owners, rather than a new document which has hardly been put to use. A number of forms have amended versions, which necessarily does not mean that the ones which are “recently amended”, have gained greater acceptance by brokers.
Usually, the latest charter party forms as drafted by the BIMCO, have “boxed” configurations, as contrary to the archaic forms, the layouts of which are conventional.
We will now quickly recall the basic types of charters.A Charter Party (C/P) is defined as a contract between a ship owner and charterers for the use of a ship or her cargo space. –Employment Contract
There are several methods available in today’s freight market to employ vessels. Some of them are short term contracts while others are for the longer term. The main employment methods for vessels are as below:
- Voyage chartering
- Consecutive voyages
- Time chartering
- Contracts of affreightment
- Bareboat chartering
- Joint ventures
- Parceling
- Shipping pools
- Project cargoes
- Slot chartering
A brief explanation of the various employment methods is given in the respective topics.
Some examples of Charters for special purposes
TOWCON: it is an international ocean towage agreement for a lump sum, used in the professional towage industry;
TOWHIRE: is an ocean towage agreement for a daily hire rate
SLOTHIRE: is a BIMCO form on which a “slot charterer”(a shipping line chooses to buy certain number of slots, i.e. space on board a ship, from the principal vessel operators on every vessel. These slots, may or may not be fixed for a voyage), hires a number of container bays on a containership’s
sailings, but not the entire cargo capacity.
HEAVYCON: the standard transportation contract for the heavy and voluminous cargoes.