CHARTER PARTY

CHARTER-PARTY contracts. A contract of affreightment in writing, by which the owner of a ship or other vessel lets the whole, or a part of her, to a merchant or other person for the conveyance of goods, on a particular voyage, in consideration of the payment of freight. This term is derived from the fact, that the contract which bears this name, was formerly written on a card, and afterwards the card was cut into two parts from top to bottom, and one part was delivered to each of the parties, which was produced when required, and by this means counterfeits were prevented.  A C/P is therefore 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.  The charterer takes over the vessel for either a certain amount of time (a time charter) or for a certain point-to-point voyage (a voyage charter), giving rise to these two main types of charter agreement. There is a subtype of time charter called the demise or bareboat charter. 

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 subtype of 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 at that time, iis known as the disponent owner.

In a voyage charter, the charterer hires the vessel for a single voyage, and the vessel's owner (or disponent owner) provides the master, crew, bunkers and supplies.

A Charter Party is formed in two stages.  First, ,the "main terms" are negotiated through brokers.  These terms usually include the name of the charterer, name of the owner, the ship and its particulars, the time and date of delivery, duration of the charter, place of redelivery, hire rate and the printed form upon which the contract is based, and any other term that a party deems important.  Once the main terms are agreed upon, a fixture has been reached.  The second part is after the fixture, when the two parties continue to negotiate the details of the charter  and amend the printed form of the contract specified in the fixture.  These minor issues include issues like fuel used and bunkering options, speed of vessel, condition of ship's holds or tanks, Remaining on Board quantities, time of delivery to charterers and etc. When no amendment of details is agreed upon, the terms of the Charter Party printed form will govern.

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