CHARTER PARTIES

CHARTER PARTIESCharter Party is a special contract

between one cargo owner or one charterer with the shipowner for the hire of the ship.

It is a contract whereby a shipowner agrees to place his ship, or part of it, at the disposal of a merchant or other person (known as the charterer)

CHARTER PARTIESfor the carriage of the goods from one port to another on being paid freight

or to let his ship for a specific period his remuneration being known as hire money.

The terms, conditions and exceptions under which the goods are carried are set out in the charter party.

There were two types of charter parties;

1) Demise (Bareboat) CP: Charterer is responsible for

providing the cargo and crew, shipowner provides the vessel.

Charterer appoints the crew,taking over full responsibility for the operation of the vessel.(generally for long period)

Pays all expenses occured.

There were two types of charter parties;

2. Non-Demise CP Shipowner provides the vessel and her crew. Charterer supplies the cargo. It may be a voyage charter;for a particular

voyage,which ship owner agrees to carry cargo between specified ports for a pre-arranged freight.

It may be a time charter; for a stated period or voyage for a remuneration known as hire money.

*** In both voyage and time charter parties the shipowner continues to manage his own vessel under the charterer’s instructions.

TIME CHARTERCharter for a time period; 3

months, one year etc.Charterer can manage and operate

the vessel as an owner in the time period.

Bunker and port charges on charterer’s account, other charges on shipowner’s.

Voyage charges > Charterer

TIME CHARTERDaily operating cost & capital

expenditures > ShipownerShipowner operates the vessel

according to charterer’s instructions.

Mostly prefered by oil carriers.C/P form selection is in shipper’s

initiative.

VOYAGE CHARTEROne way carriage for a specific cargoOpposite to time charter; voyage charges

are also on shipowners account.Charterer paid freight per ton to

shipowner; for the carriage of the cargo from one port to another

All charges regarding the service are on shipowners account.

Mostly prefered by dry bulk carriers to time charter

Several types of non-demise voyage charter;

1) Gross form of charter: The shipowner pays all the expenses incurred in loading and discharging and also all port charges. The most common form of charter used by tramp ships.

2) F.I.O. (Free In and Out) charter: Charterer pays for the cost of loading and discharging the cargo where the shipowner is still responsible for the payment of all port charges.

Several types of non-demise voyage charter;

1) Lump sum charter: Charterer pays a lump sum money for the use of the ship, and the shipowner guarantees a certain space (eg;bale cubic feet) will be available for cargo. It can be either on gross or f.i.o basis.

2) Net form charter: In addition to paying for the cost of loading and discharging, the charterer also pays all the port charges for the time the vessel is ready to load up until the completion of discharge.

PERIOD Generally Long One or more voyage

DIFFERENCES Ship Details LaytimeFuel Consumption Demurrage

Spot

PROBLEMS Charterers Charterers ShipownersShipowners

FORMS Specialized Standart Standart

TIME OF USAGE

Items may negotiated again

Items may negotiated again

Generally as financial instrument or account management

Before the market decrease;by shipowners

In increasing market; by shipowners

Long-Mid-Short Term

Important Ship Details

Exceptions: Geography and Cargo

Commencement and Expiration Dates

TYPEBAREBOAT CHARTER

TIME BASED CHARTER

VOYAGE BASED CHARTER

Contracts of Affreightment-CoA)

Shipowner carries the goods the vessel that he determined, on determined route and period.

Difference; in CoA vessel is not designed specially and voyages are not on round basis.

CoA is also defined as tender contract, contract carriage or contractual carriage.

Contracts of Affreightment-CoA)

At the end of period if the negotiated quantity were not carried penalty occurs.

Charter can be on time operation voyage basis.

Shipowner may suffer in case of increase in exchange rate and bunker in long term; however will guarantee business.