Charter party

"Charter party" is an agreement by which shipowner agrees to place an entire ship or part thereof at the disposal of a merchant for the conveyence of good for a particular time or place for a sum of money.

It is a document contains expressed terms of an agreement for the charter of a ship.

The term "charter party" stands for the contract between the owner of a vessel and the charterer, that is the one that takes over the vessel for a certain amount of time or voyage. Three are the main types of charter:

1) The Voyage Charter. The charterer hires the vessel for a single voyage. The owner and his crew manage the vessel.

Shipowners obligation:

	To provide seaworthy ship.
	Arrive in loading port in agreed date
	To load the agreed cargo
	Carry the cargo to the agreed discharge port
	To discharge and deliver the cargo.

Ship's running cost, voyage cost, loading and discharging cost with the exception of free in and out FIO terms are agreed.

Charterer's obligation:

	To provide agreed cargo in agreed port
	To load the cargo within laytime.
	To pay the freight at the agreed time.

2) The Time Charter. Here the vessel is hired for a specific amount of time. The owner still manages the vessel but the charterer selects the ports of destination and controls the operation of the ship. It is a more permanent arrangement than the voyage charter and more representations are made about the ship to the charterer.

Shipowners obligation:

Owner shall bear all running costs e.g.

	Costs of crewing
	Repair, maintenance, survey and certification costs
	Stores
	Hull and machinery insurances.

Charterer's obligation:

Charterer will bear following costs

	Bunker, fuel, canal dues, port charges.
	Pilotage, towage, agency fees
	All loading, stowing, trimming and discharging costs
	Agents and stevedores

Two types of time charter,

	Trip time charter - For one voyage only.
	Period time charter - For a period only.

3) Demise or Bareboat Charters. This arrangement is completely different from the previous two. The charterer takes full control of the vessel along with the legal and financial responsibility for it. The demise shifts the control and possession of the vessel.

Charter party

Updated: September 17, 2007