Charter-party

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CHARTER PARTY (Lat. charta partita, a legal paper or instrument, divided, i.e. written in duplicate so that each party retains half), a written, or partly written and partly printed, contract between merchant and Shipowner, by which a ship is let or hired for the conveyance of goods on a specified voyage, or for a defined period. Also, a written contract between Shipowner and Charterer whereby a ship is hired; all terms, conditions and exceptions are stated in the contract or incorporated by reference.

A charter party is the contract between the owner of a vessel and the charterer for the use of a vessel. The charterer takes over the vessel for a certain amount of time or for a certain point-to-point voyage. There are two main types of charter, a voyage charter and a time charter. There is a subtype of time charter called the demise or bareboat charter.

In a voyage charter, the charterer hires the vessel for a single voyage, while the vessel's owner (or disponent owner) provides the master, crew, bunkers and supplies. In a time charter, the vessel is hired for a specific amount of time. The owner still manages the vessel but the charterer givers orders for the employment of the vessel, and may sub-charter the vessel on a time charter or voyage charter basis. The demise or bareboat charter is a time charter in which the charter takes responsibility for the crewing and maintenance of the ship during the time of the charter, assuming the legal responsibilities of the owner and is known as a disponent owner.

[edit] US Law

(Note the US regime below can also be applied into charterparties or contracts of carriage subject to the laws of other jurisdictions.)

COGSA, the Carriage of Goods by Sea Act, does not apply of its own force to charter parties, but does apply to bills of lading issued to a shipper by the charterer (in the US) in conjunction with charterer's operations. As a practical matter, many charter party forms stipulate the applicability of COGSA or the Harter Act to the relations between owner and charterer. Such a stipulation is valid and enforceable even without the issuance of a bill of lading. Law suits brought for the breach of an obligation under a charter party are generally within the admiralty jurisdiction. As long as the agreement is executory, for inadequate performance the remedy is in personam which allows the plaintiff to go to state court under the "saving to suitors" clause. If, however, a charter breach creates a maritime lien, the suit is in rem, against the vessel itself, with exclusive admiralty jurisdiction.

What has been said above mostly applies to commercial operations and voyages. In pleasure boating, the most frequent charter arrangement is the bareboat charter. The voyage or time charter is only used for larger yachts and is more the exception than the rule. Charter fleets are mostly made up of boats belonging to individuals or companies who only use their boats on a part time basis or as an investment. a recent arrangement in recreational boating is the time-share chartering in which several charterers are assigned a certain number of days per month or season in a manner which resembles time-share for residential resorts.