1 - LO4 - 1a Charter Parties

LO4
Charter Parties
Contract between the owner of a vessel and the charterer

for the use of a vessel
BIMCO Documents and Clauses

https://www.bimco.org/contracts-and-clauses/bimco-contracts
Definitions
Charter – Document granting rights.
Charterer – Person or group of persons who get the rights to use the ship’s
services.
Charter Party – ‘Charta Partita’ a legal paper or instrument, divided, ie
written in duplicate; a copy for each party.
A written, or partly written, and partly printed, contract between a merchant
and shipowner, by which a ship is let or hired for the conveyance of goods on
a specified voyage, or for a definite period, including all terms, conditions
and exceptions.
COSTS
Variable Costs:
A cost of labour, material or overhead that changes according to the change
in the volume of production units.
Ship variable costs?

Bunkers, Victualling, Stores, Repairs Port Fees, Agent Fees, Crew
Travel, Pilot Hire, Canal Costs, Tug Hire, etc
Fixed Costs:
A cost that does not vary depending on production or sales levels, such as
rent, property tax, insurance, or interest expense.
Ship fixed costs?

Ship Mortgage, Hull and Machinery, P&I, Loans, Crew Salary, etc
Semi-Variable Costs (Stepped Costs):

Fixed until a level is reached and then incur further cost.
Ship Semi-variable costs?

Ferry – Safe Manning increases when passenger number reaches a
critical value.
COSTS
Voyage costs:
Associated with the commercial employment of the ship -

•Includes bunkers, port and canal dues, pilotage, tug hire, agency fees and
loading/discharge costs.
Operating/Running costs -
Costs which fall between capital and voyage costs:

•Include crewing, storing, ship maintenance, insurance and administration.
•Responsibility of the shipowner or manager.
Charter Parties
http://www.portpictures.nl/D05_5380.JPG
Common Carrier
‘Vessel on Liner Trade’
At Common Law, carrying goods for everyone on regularly scheduled routes

(and are usually obliged by licencing requirements or regulation to do so)
Shipper is Strictly liable for loss of or damage to goods except for an Act of
God, Queen’s Enemies, Inherent Vice or defect of the cargo.
Act of God – un-anticipatable act of nature beyond the control of either party.
Queen’s enemies – eg, through an act of war
Inherent Vice – ‘the risk of deterioration of the goods shipped as a result of their
natural behaviour, in the ordinary course of the contemplated voyage without the
intervention of any fortuitous external accident or casualty’
https://www.nepia.com/articles/inherent-vice/
Charter Parties
1. Voyage – Contract of Carriage (Bulk commodities)
2. Time – Contract of Hire
3. Bareboat (Demise) – Contract of long term hire/ownership
BIMCO
Baltic and International Maritime Council - largest of the international shipping
associations representing shipowners over 65% of world tonnage. Members
in more than 120 countries – also including managers, brokers and agents.
Provide the Standard for charter parties and other maritime related contracts.
Task
Using the BIMCO website, find a contract for one of the following:
1. Voyage Charter
2. Time Charter
3. Bareboat Charter
•What is the purpose of that charter party?

•Who would use that charter party?
•Identify different types are there of that charter party (eg for different
vessels)?
•How long would you expect it to last?
•Who pays for (which) voyage costs?
•Who pays for (which) operating costs?
Voyage charter
A voyage charter operates in a similar
https://www.purdieworldwide.co.uk/removals/
fashion to the use of a removal or
haulage firm.
When moving house you may hire a

removal company to transport your
belongings, furniture etc. to your new
home. In doing so you have agreed for
the company to collect your things
from your previous address and
transport them to your new one, on a
given day and within an agreed time.
Voyage charter
Agreement between a shipowner and a charterer for carriage by a
named vessel of a specified quantity of a specified commodity from
a named place(s) to another named place(s), in return for agreed
sum of freight.
Shipowner pays all vessel operating expenses (running costs and

voyage expenses) except where otherwise agreed.
http://www.portforce.nl/Jun16_6.JPG
VOYAGE STANDARD C/Ps (examples)
AMWELSH Coal Americanized Welsh coal C/P. Widely used.

ASBATANKVOY Tanker American form.
AUSTWHEAT Australian wheat Australian Wheat Board form.
BEEPEEVOY Tanker BP form, used by many companies.
CRUISEVOY Cruising BIMCO form for cruise ship charter
C’ORE’7 Iron ore Full name: Mediterranean Iron Ore C/P.
FERTIVOY Fertilisers
GENCON General purpose.
GRAINVOY Grain BIMCO form.
NUBALTWOOD Timber Used in Baltic trade.
Time charter
https://en.wikipedia.org/wiki/Chauffeur#/media/File:Japanese_chauffeur.jpg
Hiring a vessel under Time Charter is
similar to having a chauffeur driven car.
You rent the use of the car and driver in
order to transport yourself for an agreed
period, but the car and driver remain
under the ownership and employ of the
owner.
You may or may not be required to pay

parking, tolls, fuel, etc.
Time charter
• Agreement between shipowner and charterer whereby shipowner
agrees to let and charterer agrees to hire a named vessel for agreed
duration in return for an agreed sum of hire.
• Charterer is responsible for all voyage expenses (bunkers, canal dues,

cargo-handling, berth dues, light dues, pilotage, harbour towage,
line-handling, etc).
• Charterer hopes to make profit from ship.
http://www.portpictures.nl/porttankers12_118.JPG
STANDARD TIME C/Ps (examples)
BALTIME Dry cargo tramp or liner BIMCO form. Boxed layout. Popular
in short sea trades.
BEEPEETIME Tanker Widely used BP form with various versions.
GENTIME 1999 Dry cargo tramp or container
INTERTANKTIME Tanker Intertanko form. Used by independent
owners.
LINERTIME Dry cargo liner BIMCO form. Boxed layout.
NEW YORK PRODUCE EXCHANGE (NYPE) Dry cargo tramp or liner Most
commonly used time C/P form. 1946 version more popular than 1993
version.
SHELL VESSEL TIME Offshore service Shell form. SHELLTIME Tanker
Shell form, but widely used.
BAREBOAT CHARTER
A bareboat charter is similar to taking a long term car lease

(or even PCP).
You pay the owner a fee and all running and operating costs,
including maintenance, insurance, fuel, etc.
Just like such leases a purchase option may be included at

the end of the bareboat charter hire period.
https://www.sixt.co.uk/long-term-car-hire/#/
https://globalforwarding.com/blog/bareboat-charter
BAREBOAT CHARTER
A bareboat charter (sometimes called a

charter by demise or demise charter) is
a contract for the hire of a vessel for an
agreed period during which the
charterers acquire most of the rights and
responsibilities of the owners.
Charterer pays Voyage & Running

Costs – becomes the virtual (and in
some cases legal) owner.
https://www.teekay.com/blog/
2020/03/27/teekay-announces-new-
bareboat-contract-for-the-foinaven-
fpso/
Contract of Afreightment
Contract between a shipowner and charterer, where the
shipowner agrees to carry goods for the charterer, or to give
use of the whole or part of the ship's cargo-carrying space for
the carriage of goods on a specified voyage.
Container trade, parcel tankers, etc
http://www.portpictures.nl/porttankers12_103.JPG

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LO4

Contract between the owner of a vessel and the charterer

BIMCO Documents and Clauses

Ship variable costs?

Ship fixed costs?

Semi-Variable Costs (Stepped Costs):

Ship Semi-variable costs?

Associated with the commercial employment of the ship -

Costs which fall between capital and voyage costs:

At Common Law, carrying goods for everyone on regularly scheduled routes

Queen’s enemies – eg, through an act of war

1. Voyage – Contract of Carriage (Bulk commodities)

2. Time – Contract of Hire

3. Bareboat (Demise) – Contract of long term hire/ownership

•What is the purpose of that charter party?

When moving house you may hire a

Shipowner pays all vessel operating expenses (running costs and

AMWELSH Coal Americanized Welsh coal C/P. Widely used.

You may or may not be required to pay

• Charterer is responsible for all voyage expenses (bunkers, canal dues,

• Charterer hopes to make profit from ship.

A bareboat charter is similar to taking a long term car lease

Just like such leases a purchase option may be included at

A bareboat charter (sometimes called a

Charterer pays Voyage & Running

Container trade, parcel tankers, etc

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