What is a charterparty?

What is a charterparty?

A charterparty, often referred to as a maritime contract, is a legal agreement entered into between a shipowner and a charterer for the hire of a ship or yacht. This contractual arrangement pertains to the transportation of passengers, cargo, or leisure activities.

In the realm of cargo transportation, a charter party serves as a detailed contract specifying the rights and obligations of both the ship owner and the charterer. Any disputes that may arise between them are typically resolved in a court of law or another agreed-upon forum, based on the terms and conditions articulated in the charter party. The term charterparty finds its origin in the French charte partie, meaning split paper, reflecting the practice of creating a document in duplicate for each party involved.

There are several types of charterparties, each designed for specific purposes:
  1. Demise (bareboat) charter: The charterer assumes responsibility for crewing and maintaining the ship during the charter period, effectively taking on the legal responsibilities of the owner.
  2. Time charter: The vessel is hired for a specified duration. While the shipowner manages the vessel, the charterer gives orders for its employment and may sub-charter the vessel.
  3. Voyage charter: The charterer hires the vessel for a single journey, with the shipowner providing the master, crew, bunkering, and supplies.

A significant distinction arises in a demise charter, where the charterer has complete control. In time and voyage charters, the shipowner retains operational control but may transfer certain responsibilities to the charterer during port stays, subject to agreed-upon laytime. Exceeding the laytime may result in demurrage payments.

From a legal perspective, charterparties and contracts of carriage differ. A charterparty establishes the agreement between a shipowner and a charterer, while a contract of carriage pertains to the shipper and the carrier. Legislation such as the US Carriage of Goods by Sea Act (COGSA) and the UK Carriage of Goods by Sea Act 1971, which incorporates the Hague-Visby Rules, does not apply directly to charterparties but does apply to bills of lading.

In cases where a bill of lading is issued to a charterer, questions may arise regarding the dominant document. The legal framework, including COGSA, may come into play depending on the circumstances. Lawsuits arising from charterparty breaches fall within admiralty jurisdiction, and if a breach creates a maritime lien, the suit may be in rem.

In the context of pleasure boating, bareboat yacht charters are prevalent, allowing individuals or companies to charter yachts without crew. Other clauses that may be included in charterparties involve bunkering, ship seaworthiness, ice, lighterage, negligence, and ready berth.

In summary, charterparties play a crucial role in the shipping industry, outlining the terms, responsibilities, and rights of parties involved in the chartering of vessels for various purposes.
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