Charterparty is a contract concluded between the shipowner and the charterer with the purpose to employ an entire vessel or some principal part of her for a voyage or series of voyages or for a period of time.
A charter may operate as a demise or lease of the ship itself, to which the services of the master and crew may or may not be superadded. Or it may be that all that the charterer acquires by the charter is the right to have his goods conveyed by a particular vessel, and, as subsidiary thereto, to have the use of the vessel and the services of the owner’s master and crew. There are accordingly three main categories of charterparty:
1. A voyage charterparty
whereby the vessel is chartered for a specified voyage and the charterer has the right to have his or shipper’s goods conveyed by a particular vessel between nominated ports as stated in charterparty. The charterer’s use of vessel begins when the owner tenders his vessel ready on arrival at (first) load port and ends when vessel departs (drops last outward pilot) from the (last) port of discharge.
Dry cargo voyage charterparty forms: NORGRAIN
Tanker voyage charterparty forms (ASBATANKVOY and SHELLVOY6)
Go to Voyage charterparties section (will open in new tab)
2. A time charterparty
whereby the vessel is chartered for a specified period of time, the control and management of the crew and vessel remaining with the shipowner. a time charterparty whereby the vessel is chartered for a specified period of time, the control and management of the crew and vessel remaining with the shipowner. Charterer undertakes to pay monthly hire, usually in advance. Time charter party can operate for months or several years. Sometimes parties agree time charter terms when the vessel is still under construction on the shipyard but obligation to pay hire begins only on delivery of the vessel into service at nominated geographical position. Time charter ends on re-delivery when charter period comes to end. Charterer obliged redeliver vessel within agreed geographical range.
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3. A charterparty by demise (or bareboat charterparty)
whereby the vessel is leased to the charterer. By this type of charter, the shipowner leases his entire vessel and the charterer has the responsibility of operating it as though it were his own vessel. The shipowner has, for the period covered by the charter party, lost control of his vessel. The charterer pays all expenses: fuel, stores, provisions, harbour dues, pilotage, etc. and employs and pays the crew. There may, however, be a clause in the charter party that the master and the chief engineer must be approved by the shipowner. The charterer is responsible for the upkeep, preservation and safety of the vessel. Before delivery to the charterer the vessel is surveyed representatives of both parties and the same is done on redelivery.
Unlike the bills of lading, the charterparties are not subject to both mandatory application of the Hague and the Hague-Visby Rules and to statutory obligations contained in the Carriage of Goods by Sea Act 1992 unless and until a bill of lading issued thereon is transferred to an innocient third party, i.e. to a consignee. Thus a charterparty is a contract which is negotiated in a free market where bargaining strength of the parties is highly dependent on the factor of supply and demand and governed by the ordinary law of contract.
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