Week 13 Special Contracts of Maritime Commerce

SPECIAL CONTRACTS OF
MARITIME COMMERCE
ATTY. PABLITO A. CARPIO
SPECIAL CONTRACTS OF MARITIME
COMMERCE
1. Charter party
2. Bill of lading
3. Contract of transportation of passengers
on sea voyages
4. Loan on bottomry
5. Loan on respondentia
6. Marine insurance
CHARTER PARTY
Contract by which an entire ship, or
some principal part thereof is let by the
owner to another person for a specified
time or use for the conveyance of goods,
in consideration of the payment of
freight (Caltex Phils. vs. Sulpicio Lines, 315
SCRA 709)
LEASE
• If for a definite period, lessee cannot
give up lease by paying a portion of the
amount agreed upon
• If the leased property is sold to one
who knows of the existence of the
lease, the new owner must respect the
lease
CHARTER PARTY
• Charterer may rescind charter party
by paying half of freightage agreed
upon
• The new owner is not compelled to
respect the charter party so long as
he can load the vessel with his own
cargo
PARTIES
1. SHIP OWNER OR SHIP AGENT
2. CHARTERER
CLASSES
1. Bareboat or Demise Charter
• Charterer provides crew, food
and fuel. The charterer is liable as
if he were the owner, except when
such arises from the
unworthiness of the vessel
CLASSES
•Owner pro hac vice – a demise
charterer, in spite of the fact that
somebody else is the owner of the vessel,
is treated as the owner of the
chartered vessel, just for that one
particular purpose only.
CLASSES
Effect: charterer assumes customary
rights and liabilities of the ship-owner
to third persons and is held liable for
the expense of the voyage and the
wages of the seamen 2. Contract of
Affreightment
CLASSES
• Owner leases the boat or part of it for the
carriage of goods
A. Time charter – vessel is chartered for a
period of time or duration of voyage
B. Voyage or trip charter – contract
for hire of vessel for one or series of
voyages
BAREBOAT/DEMISE
• Charterer becomes liable to others
caused by its negligence
• Charterer regarded as owner pro hac
vice for the voyage
• Owner of vessel relinquishes possession,
command and navigation to charterer
• Common carrier becomes private
AFFREIGHTMENT
• Owner remains liable as carrier and
must answer for any breach of duty
• Charterer is not regarded as owner
• Owner retains possession, command
and navigation of the ship
• Common carrier remains as such
FREIGHT
Parties may fix the manner or form
in which the charter price shall be
satisfied Lay days – period when
vessel will be delayed in the port
for loading and unloading
PRIMAGE
bonus to be paid to the
captain after the successful
voyage
DEADFREIGHT
where the charterer failed to
occupy the leased portion of
the vessel, he may thereby be
made liable by the ship-owner
DEMURRAGE
sum due, by express contract, for the
detention of the vessel, in loading and
unloading, beyond the time allowed in
the contract of affreightment, and to
any other improper detention or delay
beyond the time set for loading
LAY DAYS
days allowed to charter parties for
loading and unloading the cargo.
EXTRA LAY DAYS

days which follow after the lay days
have elapsed.
CONTRACT OF AFFREIGHTMENT
A contract whereby the owner of the
vessel leases part or all of its space to
haul goods for others.
• The shipowner retains the possession,
command and navigation of the ship, the
charterer merely having use of the space in
the vessel in return for his payment of the
charter hired.
KINDS
a. Time charter: vessel is chartered
for a fixed period of time or duration
of voyage.
b. Voyage or trip charter: the vessel is
leased for one or series of voyages
usually for purposes of transporting
goods for charterer.
USUAL FORMS OF
CONSUMMATING CONTRACTS
1. C.I.F. – cost, insurance and freight:
2. F.O.B. - free on board:
3. F.A.S. - free alongside ship; and
4. C. & F. - cost and freight.
TRANSHIPMENT OF GOODS
• The act of taking cargo out of one ship
and loading it in another, or the transfer
of goods from the vessel stipulated in the
contract of affreightment to another
vessel before the place of destination
named in the contract has been reached,
or the transfer for further
transportation
• It is not dependent on the
ownership of the transporting
ships or in the change of carriers,
but rather on the fact of actual
physical transfer of cargo from
one vessel to another
• If done without legal excuse, however
competent and safe the vessel into which
the transfer is made, is a violation of
contract and infringement of right of
shipper and subjects carrier to liability if
freight is lost event by cause otherwise
excepted. (Magellan Manufacturing vs. CA,
201 SCRA 102)
BAREBOAT OR DEMISE
CHARTER
• CHARTERER BECOMES LIABLE TO
OTHERS CAUSED BY ITS NEGLIGENCE
• CHARTERER REGARDED AS OWNER PRO
HAC VICE FOR THE VOYAGE
BAREBOAT OR DEMISE
CHARTER
• OWNER OF VESSEL RELINQUISHES
POSSESSION, COMMAND AND
NAVIGATION TO CHARTERER
• COMMON CARRIER IS CONVERTED TO
PRIVATE CARRIER
CONTRACT OF
AFFREIGHTMENT
• OWNER REMAINS LIABLE AS CARRIER
AND MUST ANSWER FOR ANY BREACH
OF DUTY
• CHARTERER IS NOT REGARDED AS
OWNER
CONTRACT OF
AFFREIGHTMENT
• THE VESSEL OWNER RETAINS
POSSESSION, COMMAND AND
NAVIGATION OF THE SHIP
• COMMON CARRIER IS NOT
CONVERTED TO A PRIVATE CARRIER
PERSONS WHO MAY MAKE A
CHARTER
1. Owner or owners of the vessel, either in
whole or in majority part, who have legal
control and possession of the vessel
2. Charterer may sub-charter entire vessel
to 3rd person only if not prohibited in
original charter. (Art.679)
PERSONS WHO MAY MAKE A
CHARTER
3. Ship agent if authorized by the owner/s or given
such power in the certificate of appointment.
(Art.598)
4. Captain in the absence of the ship agent or
consignee and only if he acts in accordance with
the instructions of the agent or owner and
protects the latter’s interests. (Art.609)
REQUISITES OF A VALID
CHARTER PARTY
1. Consent of the contracting parties
2. Existing vessel which should be placed at
the disposition of the shipper
3. Freight
4. Compliance with Art. 652 of the Code of
Commerce
BOTTOMRY AND
RESPONDENTIA
bottomry
loan made by ship-owner or ship
agent guaranteed by the vessel
itself and repayable upon arrival
of vessel at destination (Art. 719)
respondentia
loan, taken on security of the
cargo laden on a vessel, and
repayable upon safe arrival of
cargo at destination (Art. 719)
Common requisites
1. Borrows money for use, equipment or
repair of vessel
2. For a definite term
3. With extraordinary interest called
premium
4.Secured by pledge of vessel or portion
thereof (in bottomry) or goods
(respondentia)
Common requisites
5. Loan repayment depends or conditioned
on the safe arrival of the vessel
(bottomry) or goods (respondentia)
6. Obligation to repay extinguished if
vessel is lost due to specific marine perils
in the course or voyage within a limited
time, or if pledged goods are lost
Formal requirements
1. By means of public instrument
2.Policy signed by the
contracting parties and the
broker taking part therein
3. Private instrument
Who may contract:
• Bottomry – ship owner or ship
agent. Outside of the residence
of the owners, the captain.
Who may contract:
• Respondentia – only the owner of the cargo,
except: (i) on the portion of the vessel he
owns, provided no money has been previously
borrowed on the whole vessel, nor exists any
other kind of lien or obligation chargeable
against her; (ii) when he is permitted to do so,
he must necessarily state what interest he has
in the vessel
Hypothecary nature of
bottomry/respondentia
GENERAL RULE: The obligation of the
borrower to pay the loan is extinguished if
the goods given as security are absolutely
lost by reason of an accident of the sea,
during the voyage designated, and if it is
proven that the goods were on board.
EXCEPTIONS:
1. Loss due to inherent defect;
2. Loss due to the barratry (fraud / gross
negligence) on the part of the captain;
3. Loss due to the fault or malice of the
borrower;
EXCEPTIONS:
4. The vessel was engaged in
contraband; and
5. The cargo loaded on the vessel be
different in from that agreed upon
Concurrence of marine
insurance & loan on
1. The insurable interest of the owner of a
ship hypothecated by bottomry is only the
excess of the value over the amount
secured by bottomry. (Sec. 101, Insurance
Code)
Concurrence of marine
insurance & loan on
2. The value of what may be saved in case
of shipwreck shall be divided between
the lender and the insurer in
proportion to the interest of each one.
(Art. 735)
Concurrence of marine insurance &
loan on bottomry/respondentia
Note: If a vessel is hypothecated by bottomry
only the excess is insurable, since a loan on
bottomry partakes of the nature likewise of an
insurance coverage to the extent of the loan
accommodation. The same rule would apply to
the hypothecation of the cargo by respondentia.
(Pandect of Commercial Law and Jurisprudence,
Justice Jose Vitug, 1997 ed.)
Exception to the
hypothecary nature
1. Loss due to inherent defect
2. Loss due to the barratry on the part
of the captain
3. Loss due to the fault of malice of the
borrower
Exception to the
hypothecary nature
4. Vessel was engaged in
contraband
5. Cargo loaded on the vessel be
different in form that agreed upon
When bottomry/respondentia
regarded as simple loan
1. Lender loaned an amount
larger than the value of the
object due to fraudulent means
employed by borrower (Art. 726)
When bottomry/respondentia
regarded as simple loan
2. Full amount of the loan is not used for the
cargo or given on the goods if all of them
could not have been loaded, the balance
will be considered a simple loan (Art. 727)
3. If the effects on which the money is taken
is not subjected to any risk (Art. 729)
Bottomry/respondentia
• May or may not have a collateral
• Collateral may be any property
• Absolutely repayable
• Loss of collateral does not
extinguish the loan
Bottomry/respondentia
• Need not be in writing but interest
shall not be due unless expressly
stipulated in writing
• Need not to be registered to bind
third persons
Ordinary loan
• Must have collateral
• Must be vessel or cargo subject
to maritime risks
• Depends upon the safe arrival
of the collateral at the port
Ordinary loan
• Must be in writing
• Must be recorded in the registry of
vessels of the port of registry of
the vessel
• Loss of collateral extinguishes the
same
Marine insurance
• Indemnity is paid after the loss has
occurred
• In case of loss of the vessel due to a
risk insured against, the obligation
of the insurer becomes absolute
• Consensual contract
Loan on bottomry/respondentia
• Indemnity is paid in advance by a
way of loan
• In case of loss of the vessel due to a
marine peril, the obligation of the
borrower to pay is extinguished
• Real contract
END

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SPECIAL CONTRACTS OF

EXTRA LAY DAYS

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