Bareboat Charter Agreement: Example, BARECON 2017, Clauses and Ship Registry

A bareboat charter is one of the most responsibility-heavy arrangements in commercial ship chartering. Unlike a voyage charter, where the shipowner carries cargo on an agreed voyage, or a time charter, where the shipowner continues to provide the master, crew, and technical operation of the ship, a bareboat charter transfers possession and operational control of the ship to the charterers for the agreed period. The shipowner remains the legal owner, but the charterers operate the ship in a much deeper and more independent way.

For this reason, a bareboat charter should not be treated as a simple hiring arrangement. It is closer to a long-term lease of the ship, supported by detailed obligations on delivery, redelivery, hire, insurance, class, technical management, crew, trading limits, registry, compliance, repairs, and termination. The charterers may control the ship commercially and technically, but the shipowner still has a major interest in protecting title, value, insurance, financing, and final redelivery condition.

A properly drafted bareboat charter offer must therefore be complete, precise, and commercially realistic. It should identify the ship, the contracting parties, the intended period of employment, the delivery and redelivery positions, the hire structure, the agreed form, the insurance requirements, the trading limits, and the technical responsibilities that will apply during the charter period. Any uncertainty at the offer stage can later become an expensive charterparty dispute.

A firm offer for a bareboat charter will normally include the following items:

• Ship’s name and full particulars, including flag, class, year of build, deadweight, gross tonnage, net tonnage, dimensions, machinery, speed and consumption, cargo capacity, cargo gear, certificates, and any technical description required for the intended trade

• Name of shipowner in full legal style, including the correct registered company name and the capacity in which the shipowner is contracting

• Name of the charterers in full legal style, including the correct company name, registered address, and any guarantor or parent company support required by the shipowner

• Description of the charter engagement, including the intended employment of the ship, charter period, permitted commercial use, and the degree of operational control granted to the charterers

• Place of delivery and redelivery, stating whether the ship will be delivered and returned at a named port, anchorage, range, shipyard, or other agreed location

• Laydays/canceling day for delivery, confirming the delivery window and the final date on which the charterers may cancel if the ship is not ready

• Intended trade and geographical limits, including lawful trades, safe port restrictions, sanctions exclusions, war-risk areas, ice limits, prohibited cargoes, and any flag or insurance limitations

• Quantity of bunkers on board on delivery and redelivery, including fuel grades, estimated quantities, pricing method, sampling procedure, and settlement basis

• Hire and hire payment conditions, including daily or monthly hire, currency, payment schedule, advance payment requirements, grace period, bank details, default interest, and consequences of non-payment

• Maintenance, repairs, class, surveys, drydocking, certificates, spare parts, and technical management obligations during the charter period

• Insurance requirements, including hull and machinery, protection and indemnity, war risks, mortgagee interest insurance, deductibles, approved insurers, loss payable provisions, and evidence of cover

• Other clauses the shipowner wishes to negotiate, including inspection rights, reporting obligations, mortgagee consent, financial covenants, guarantees, sanctions clauses, redelivery condition, and default provisions

• Charter party form, including whether the transaction will be based on BIMCO BARECON, BARECON 2017, or another agreed bareboat charterparty document

• Commissions, including brokerage commission, address commission if applicable, payment basis, and the parties entitled to receive commission

A bareboat charter offer is different from a contract of affreightment offer. A contract of affreightment is focused on the movement of cargo over one or more shipments. A bareboat charter is focused on the use, possession, and operation of the ship itself. This distinction is fundamental because the legal and commercial risk is allocated in a very different way.

A firm offer for a contract of affreightment will usually include the following items:

• Ship’s name and particulars, if a specific ship is nominated or relevant to the shipment

• Name of shipowner or contractual carrier in full legal style

• Name of the charterers in full legal style

• Cargo quantity and description of the commodity

• Loading and discharging ports and berths

• Laydays/canceling day

• Loading and discharging rates

• Demurrage and dispatch rates

• Freight amount and conditions for payment of freight

• Clauses governing time counting, ice, strikes, congestion, force majeure, NOR, berth nomination, and other operational matters

• Charter party form

• Commissions

The commercial difference is clear. A contract of affreightment is cargo-centered. A bareboat charter is ship-centered. Under a bareboat charter, the charterers do not merely book space or cargo-carrying capacity. The charterers take over the ship and assume the responsibilities that come with operating it.

What is Bareboat Charter?

A bareboat charter is a charter arrangement under which the shipowner lets the ship to the charterers without crew, stores, technical management, or operational services. The charterers take possession of the ship and operate it during the charter period. The shipowner keeps legal ownership, but the charterers assume day-to-day control.

The central feature of a bareboat charter is the transfer of possession. The charterers normally appoint the master and crew, arrange technical management, pay operating expenses, maintain class, keep the ship insured, trade the ship within agreed limits, and return the ship at the end of the charter in the required condition. The shipowner’s role becomes closer to that of an asset owner receiving hire, while the charterers become responsible for practical operation.

Bareboat chartering is often used when charterers want long-term control of a ship without purchasing it immediately. It may also be used in ship finance, sale-and-leaseback structures, industrial shipping projects, government employment, offshore operations, newbuilding deliveries, and fleet expansion strategies.

Bareboat Charterparty

A bareboat charterparty is the contract that records the rights and obligations of shipowner and charterers under a bareboat charter. It governs delivery, possession, hire, crewing, maintenance, insurance, trading, registry, class, surveys, redelivery, default, termination, and dispute resolution.

Because the charterers take over the operation of the ship, a bareboat charterparty must be more detailed than many ordinary charter forms. It must clearly state who is responsible for technical management, crew, repairs, drydocking, statutory certificates, class recommendations, spare parts, pollution liabilities, insurance claims, port expenses, cargo liabilities, and third-party claims.

A bareboat charterparty must also protect the shipowner’s title. The charterers must not sell, mortgage, pledge, abandon, or dispose of the ship. The charterers must also prevent unpaid suppliers, crew claims, repair invoices, bunker claims, port charges, or other maritime liens from prejudicing the shipowner’s ownership interest. Where the ship is mortgaged, lender consent and mortgagee protection clauses may be required.

Bareboat Charter Agreement

A bareboat charter agreement is another expression for a bareboat charterparty. The terms “bareboat charter agreement,” “bareboat charterparty,” and “bareboat charter contract” are often used to describe the same type of document. The name matters less than the substance. The agreement must accurately record the commercial deal and allocate operational risk with clarity.

A bareboat charter agreement usually includes:

• Identification of the ship

• Identification of shipowner and charterers

• Delivery place, delivery date, and delivery condition

• Charter period and any extension options

• Hire rate and hire payment terms

• Bunkers, lubricants, stores, and spare parts

• Trading limits and permitted employment

• Crew and technical management obligations

• Maintenance and repair obligations

• Class, flag, survey, and certificate obligations

• Insurance requirements

• Inspection rights

• Drydocking obligations

• Taxes, dues, and operational expenses

• Redelivery place, date, and condition

• Default, withdrawal, and termination rights

• Law and arbitration

• Commissions

A bareboat charter agreement should never be treated as a short informal lease. It can expose both parties to major financial and legal risk. The shipowner may lose practical control of the ship for years, while the charterers may become responsible for expensive repairs, insurance liabilities, crew claims, regulatory problems, operational losses, and redelivery disputes.

What are the 4 Types of Ship Charter?

The four main types of ship charter are voyage charter, time charter, bareboat charter, and contract of affreightment. Each form allocates control, cost, and risk differently.

Voyage Charter: Under a voyage charter, the shipowner agrees to carry a specified cargo from one port or range to another port or range. Freight is usually paid per metric ton, per unit, or as a lump sum. The shipowner normally performs the voyage and remains responsible for the ship’s operation. Laytime, demurrage, freight, cargo description, loading port, discharge port, and Notice of Readiness are central issues.

Time Charter: Under a time charter, the charterers hire the commercial use of the ship for a period. The shipowner continues to provide the master, crew, insurance, maintenance, and technical operation. The charterers direct the ship’s commercial employment and usually pay voyage expenses such as bunkers, port costs, and canal dues, depending on the charterparty terms.

Bareboat Charter: Under a bareboat charter, the charterers take possession and control of the ship. The charterers normally provide crew, pay operating expenses, maintain the ship, arrange insurance, and operate the ship during the charter period. The shipowner retains ownership but gives up day-to-day possession and control.

Contract of Affreightment: Under a contract of affreightment, the shipowner or carrier agrees to transport an agreed quantity of cargo over one or more voyages within a defined period. The focus is the movement of cargo, rather than the employment of one specific ship throughout the whole contract.

Ship Bareboat Charter Example

A practical ship bareboat charter example may involve a shipowner that owns a bulk carrier and charterers that want to operate the ship for three years in a defined trade. The shipowner delivers the ship at an agreed port, in class, with valid certificates and an agreed bunker quantity. The charterers take delivery, appoint crew, arrange technical management, pay hire monthly in advance, insure the ship, maintain class, operate the ship within the agreed trading limits, and return the ship at the end of the charter period in the condition required by the charterparty.

A simplified ship bareboat charter example may be structured as follows:

• Ship: M/V HandyBulk Gul

• Shipowner: HandyBulk Gul Shipping Ltd.

• Charterers: X Bulk Chartering Ltd.

• Charter Period: 36 months, plus or minus 30 days in charterers’ option

• Delivery: Rotterdam, passing pilot station, in class and with valid trading certificates

• Redelivery: Singapore-Japan range, safe port, in similar good working condition, ordinary wear and tear excepted

• Hire: USD 9,500 per day, payable monthly in advance

• Bunkers: To be taken over on delivery and returned on redelivery at agreed prices

• Trading Limits: Worldwide lawful trading within agreed insurance limits, excluding sanctioned countries, prohibited war-risk areas unless agreed, and unsafe ports

• Crew: For charterers’ account

• Maintenance: For charterers’ account during the charter period

• Insurance: Hull and machinery, P&I, war risks, and other agreed covers for charterers’ account, with shipowner and mortgagee interests protected

• Form: BIMCO BARECON 2017, amended as agreed

This example is only a commercial illustration. A real bareboat charter must be adapted to the ship, flag, financing structure, insurance requirements, class status, registry position, governing law, and commercial purpose.

Bareboat Charter Clause Samples

Bareboat charter clause samples must be drafted with care because small wording differences can produce major legal consequences. The following examples are simplified clause samples for commercial explanation and should be adapted to the ship, trade, jurisdiction, and transaction.

Delivery Clause Sample:

The Owners shall deliver the ship to the Charterers at the agreed delivery place during the agreed delivery period. On delivery, the ship shall be in class, with valid certificates required for the intended service, and in the condition agreed under this Charter. Delivery shall be confirmed by a Protocol of Delivery and Acceptance signed by both parties.

Redelivery Clause Sample:

The Charterers shall redeliver the ship to the Owners at the agreed redelivery place upon expiry or lawful termination of the Charter. On redelivery, the ship shall be in the condition required by this Charter, fair wear and tear excepted, with class maintained and certificates valid unless otherwise agreed.

Hire Payment Clause Sample:

The Charterers shall pay hire at the agreed rate monthly in advance to the Owners’ nominated bank account. If hire is not received when due, the Owners may give notice requiring payment within the agreed grace period. Failure to pay within that period shall entitle the Owners to exercise the remedies available under this Charter.

Maintenance Clause Sample:

During the charter period, the Charterers shall maintain the ship, machinery, equipment, class, certificates, and trading condition at their own cost. The Charterers shall perform all repairs, replacements, surveys, and maintenance necessary to keep the ship in the condition required by this Charter.

Insurance Clause Sample:

The Charterers shall arrange and maintain, at their own expense, hull and machinery insurance, protection and indemnity insurance, war-risk insurance, and any other insurance required under this Charter. The Owners and any mortgagee shall be named or protected as required by the insurance provisions.

Trading Limits Clause Sample:

The Charterers shall employ the ship only in lawful trades between safe ports and safe places within the agreed trading limits. The ship shall not be ordered to any port, country, place, zone, cargo, or trade prohibited by this Charter, applicable law, sanctions, insurance restrictions, or flag-state requirements.

No Lien Clause Sample:

The Charterers shall not allow any lien, claim, charge, encumbrance, or debt to arise against the ship in a manner that may prejudice the Owners’ title or interest. The Charterers shall promptly discharge any such claim and shall indemnify the Owners against consequences arising from the Charterers’ employment or operation of the ship.

Inspection Clause Sample:

The Owners or their appointed representatives may inspect the ship at reasonable times and places, provided that the inspection does not unreasonably interfere with the ship’s commercial operation. The Charterers shall provide reasonable access, assistance, and documentation for such inspection.

BIMCO BARECON

BIMCO BARECON is one of the best-known standard forms for bareboat chartering. It is designed for a structure where the charterers obtain possession and control of the ship and assume wide operational, technical, financial, and insurance responsibilities. BARECON is widely used in commercial shipping, offshore projects, ship finance, long-term leasing structures, and bareboat registry arrangements.

The value of BARECON is that it gives the parties an organized contractual framework. It deals with the major issues that typically arise in bareboat chartering, including delivery, redelivery, hire, maintenance, operation, inspection, insurance, title protection, mortgagee interests, default, termination, and dispute resolution. However, the printed form is rarely the entire agreement. Most bareboat charters require rider clauses to reflect the ship, trade, financing, registry, insurance, and commercial deal.

Using a recognized standard form can reduce drafting uncertainty, but it does not remove the need for careful negotiation. The parties must ensure that the recap, printed clauses, rider clauses, insurance arrangements, financing documents, and registry documents are consistent.

BIMCO Bareboat Charterparty

A BIMCO bareboat charterparty is commonly used when shipowner and charterers want a familiar standard form as the foundation of their contract. In practice, the BIMCO form is often amended to include special terms on mortgagee consent, bareboat registry, technical management, tax, drydocking, insurance deductibles, sanctions compliance, purchase options, early termination, and guarantees.

The advantage of a BIMCO bareboat charterparty is that it provides a structured starting point. It helps the parties avoid missing important areas such as class, maintenance, insurance, redelivery, and default. The risk is that parties may assume the standard form is automatically sufficient. It is not. A bareboat charterparty must be adapted to the ship and the commercial purpose.

For example, a newbuilding bareboat charter may require clauses dealing with delivery from the shipyard, builder warranties, pre-delivery inspection, construction defects, refund guarantees, and assignment of shipbuilding rights. An older ship may require closer attention to class records, machinery condition, upcoming surveys, steel renewal, spare parts, existing defects, and redelivery standards.

BARECON 2017 Standard Bareboat Charter Party Document

BARECON 2017 is a modern standard bareboat charter party document used for bareboat and demise charter arrangements. It was designed to reflect current commercial practice and to provide a detailed contractual framework for the transfer of possession and control of the ship to the charterers.

BARECON 2017 may be used for ordinary operating bareboat charters, finance-related leases, offshore employment, long-term projects, and transactions where the ship is subject to a mortgage, bareboat registry, or purchase option. It is especially useful where the parties need a recognized structure for hire, maintenance, insurance, class, redelivery, default, and termination.

Important practical points in a BARECON 2017 negotiation include:

• Whether the ship is delivered from trading service or directly from a shipyard

• Whether the charterers have inspected and accepted the ship

• Whether the ship is subject to a mortgage or financing arrangement

• Whether the ship will change flag through bareboat charter registration

• Who arranges hull and machinery insurance

• Who arranges P&I insurance

• How insurance proceeds are paid after casualty

• How drydocking and class surveys are handled

• What happens if the charterers default on hire

• What happens if the ship becomes a total loss

• How and where the ship must be redelivered

BARECON 2017 should not be treated as a document that only needs names, dates, and figures inserted. It should be reviewed as a complete allocation of commercial, technical, insurance, and legal risk.

BIMCO Bareboat Charterparty Types

BIMCO bareboat charterparty types can be understood by looking at the commercial purpose of the charter. The core idea is always the same: the charterers take possession and control of the ship. However, the structure may differ depending on the transaction.

Ordinary Operating Bareboat Charter: The charterers lease the ship for commercial operation and return the ship at the end of the charter period.

Finance Bareboat Charter: The bareboat charter forms part of a finance or lease structure. The shipowner may be a finance owner or special-purpose company, while the charterers are the commercial operators.

Newbuilding Bareboat Charter: The ship may be delivered directly after completion by the shipyard. The charter may interact with the shipbuilding contract, delivery protocol, builder warranties, and financing documents.

Bareboat Charter with Purchase Option: The charterers may have a right or obligation to purchase the ship at the end of the charter period or upon certain agreed events.

Bareboat Charter with Bareboat Registry: The ship may be temporarily registered under another flag during the charter period while ownership remains recorded in the underlying registry.

The correct structure depends on the commercial purpose. A short operating bareboat charter and a long finance lease with a purchase option require different levels of drafting detail.

BIMCO Bareboat Charterparty Differences

The main differences between BIMCO bareboat charterparty structures are usually commercial rather than cosmetic. The parties should focus on how the agreement deals with control, finance, registry, insurance, purchase rights, maintenance, default, and termination.

Important differences may include:

• Whether the ship is a trading ship, offshore unit, or newbuilding

• Whether the charterers have a purchase option

• Whether mortgagee approval is required

• Whether the ship changes flag during the charter

• Whether insurance is placed by the charterers or controlled by the shipowner

• Whether technical management is fully transferred or supervised

• Whether drydocking dates are fixed or flexible

• Whether early termination compensation applies

• Whether total loss proceeds are payable to the shipowner, mortgagee, or another loss payee

• Whether the charterers must provide a parent company guarantee, bank guarantee, or other security

These differences matter because a bareboat charter may operate as a commercial lease, a financing tool, a long-term operating agreement, or a purchase structure.

Bareboat Charter Registry

Bareboat charter registry is a legal arrangement under which a ship registered in one state may be temporarily registered under another state’s flag during the bareboat charter period. The original registry is often described as the underlying registry or primary registry. The temporary registry is often described as the bareboat registry.

The purpose of bareboat charter registry is to allow the ship to fly the flag of the bareboat registry while ownership remains recorded in the underlying registry. During the bareboat registration period, the ship may receive the nationality of the bareboat registry for operational and regulatory purposes. The underlying registry may suspend the ship’s right to fly its original flag while the temporary registration is active.

Bareboat charter registry may be required for commercial, regulatory, cabotage, financing, tax, insurance, or project reasons. However, not every flag state permits bareboat-in or bareboat-out registration, and each registry has its own rules. The parties should therefore check registry requirements well before delivery.

Bareboat Charter Registration

Bareboat charter registration is the administrative process by which a ship is entered into a bareboat registry for the duration of the bareboat charter. This process often requires coordination between the shipowner, charterers, underlying registry, bareboat registry, mortgagee, insurers, classification society, and technical managers.

Documents commonly required may include:

• Application for bareboat registration

• Copy of the bareboat charterparty

• Consent of the shipowner

• Consent of the underlying registry

• Consent of mortgagee or lender if the ship is mortgaged

• Certificate of ownership or transcript from the underlying registry

• Evidence that the ship is not bareboat registered elsewhere

• Corporate documents of the charterers

• Class certificates

• Insurance evidence

• Flag suspension or deletion suspension confirmation where required

• Tonnage certificate and statutory certificates

Bareboat charter registration should be planned before delivery. Delays in registry approval can delay the charter commencement, insurance attachment, trading permission, or delivery protocol. The charterparty should also state whether hire starts upon physical delivery, documentary delivery, registry completion, or another agreed event.

Bareboat Charter Agreement Template Sample & Example

A bareboat charter agreement template can help parties understand the structure of the contract, but no template should be used without adaptation. A proper agreement must reflect the ship, the trade, the flag, the financing structure, the insurance requirements, and the commercial bargain.

A practical bareboat charter agreement template may include the following sections:

1. Parties

This section identifies the shipowner and charterers in full legal style.

2. Ship Description

This section identifies the ship by name, IMO number, flag, class, tonnage, dimensions, machinery, certificates, and other technical particulars.

3. Charter Period

This section states the fixed period, extension options, delivery window, and redelivery flexibility.

4. Delivery

This section states where, when, and in what condition the ship must be delivered.

5. Hire

This section states the hire amount, currency, payment interval, bank details, grace period, and default mechanism.

6. Trading Limits

This section states where the ship may trade and which ports, countries, cargoes, or activities are excluded.

7. Operation and Crewing

This section confirms that the charterers provide the master, officers, crew, and operational management during the charter period.

8. Maintenance and Class

This section requires the charterers to maintain the ship, preserve class, complete surveys, and keep certificates valid.

9. Insurance

This section states what insurance must be maintained, who pays premiums, how deductibles are handled, and how the shipowner and mortgagee are protected.

10. Inspection

This section gives the shipowner the right to inspect the ship at reasonable times.

11. Bunkers, Stores, and Spare Parts

This section explains how bunkers, lubricants, stores, spare parts, equipment, and inventories are handled on delivery and redelivery.

12. Redelivery

This section states where, when, and in what condition the ship must be returned.

13. Default and Termination

This section explains what happens if hire is unpaid, insurance lapses, class is suspended, the ship is misused, or another serious breach occurs.

14. Law and Arbitration

This section states the governing law and dispute resolution procedure.

15. Commissions

This section records brokerage commission, address commission if applicable, and the method of payment.

A real bareboat charter agreement should be reviewed by experienced maritime lawyers, shipbrokers, insurers, technical managers, and lenders where necessary.

What is a Bareboat Charter Agreement?

A bareboat charter agreement is the legal contract under which the shipowner gives possession and control of the ship to the charterers for an agreed period in return for hire. The charterers operate the ship and assume the expenses and obligations allocated to them under the contract.

The agreement determines who bears the risk of:

• Crew employment and crew claims

• Technical breakdowns

• Class recommendations

• Drydocking

• Hull damage

• Machinery failure

• Pollution incidents

• Collision liability

• Cargo claims

• Insurance deductibles

• Port state control detention

• Sanctions breaches

• Unpaid suppliers

• Maritime liens

• Redelivery defects

• Total loss

A bareboat charter agreement must therefore do more than summarize the commercial deal. It must convert the fixture into enforceable rights and obligations.

Bareboat Charter Agreement Sample Contracts

Bareboat charter agreement sample contracts can be useful for understanding the common structure of a bareboat charter, but they should not be copied without adaptation. A sample contract may show typical wording for delivery, hire, maintenance, insurance, redelivery, and termination, but every transaction has its own commercial and technical risk.

When reviewing sample contracts, the parties should ask:

• Is the ship a bulk carrier, tanker, container ship, offshore unit, tug, barge, passenger ship, yacht, or specialized ship?

• Is the charter short-term or long-term?

• Is there a purchase option?

• Is the ship mortgaged?

• Will the flag change?

• Who controls insurance?

• Who pays for drydocking?

• Are there existing defects?

• Are there upcoming class surveys?

• Are there trading restrictions?

• Are sanctions and compliance clauses sufficient?

• What happens if the charterers fail to pay hire?

• What happens if the ship is detained?

• What happens if the ship becomes a total loss?

Sample contracts should be treated as learning tools, not final charterparty documents.

Bareboat Charters Explained

Bareboat charters can be explained simply as ship leases where the charterers take over the ship and operate it at their own cost. The shipowner owns the ship, but the charterers control the ship during the charter period.

The charterers usually become responsible for:

• Crew wages and crew management

• Bunkers and lubricants

• Port charges and canal dues

• Repairs and maintenance

• Class and statutory certificates

• Insurance premiums

• Technical management

• Trading decisions

• Operational compliance

• Cargo and commercial employment

The shipowner usually remains responsible for:

• Ownership title

• Mortgage obligations unless otherwise agreed with lenders

• Receiving hire

• Protecting the ownership interest

• Exercising inspection rights

• Receiving the ship back at redelivery

Because the charterers operate the ship, they may be described commercially as disponent owners during the charter period. The precise legal effect depends on the contract and governing law.

Understanding Bareboat Charters

Understanding bareboat charters requires focusing on possession and control. The key question is not only who pays hire or who gives employment orders. The more important question is who crews, manages, maintains, insures, and operates the ship.

In a bareboat charter, the charterers usually decide how the ship is commercially employed, who manages the ship, who crews the ship, where the ship trades within agreed limits, and how the ship is maintained. The shipowner does not normally manage daily operations. This makes bareboat chartering attractive to charterers who need operational control, but it also creates substantial responsibility.

Bareboat charterers should inspect the ship carefully before delivery. They should review class records, drydock history, machinery condition, certificate status, spare parts, insurance requirements, crew requirements, flag rules, trading limits, and expected operating costs. Shipowners should examine the charterers’ financial strength, technical competence, insurance arrangements, compliance systems, and ability to preserve the ship.

Understanding Bareboat Charterparties

Understanding bareboat charterparties means reading them as complete risk-allocation documents. The parties should not focus only on hire and period. They must also understand how the contract operates if something goes wrong.

Key questions include:

• What is the exact delivery condition?

• What happens if delivery is delayed?

• When does hire begin?

• Can hire ever be suspended?

• What is the grace period for late payment?

• Who pays for repairs discovered after delivery?

• Who pays for pre-existing defects?

• Who maintains class?

• Who pays for drydocking?

• Who controls insurance claims?

• Who chooses repair yards?

• What happens after a major casualty?

• What happens if the ship is arrested?

• What happens if the charterers become insolvent?

• What happens if registry approval is delayed?

• What is the redelivery standard?

The answers should be clear before the ship is delivered.

Insurance Related Problems in Bareboat Charter Agreements

Insurance is one of the most sensitive areas in bareboat charter agreements. Since the charterers operate the ship, they often arrange or pay for insurance. However, the shipowner still owns the ship and may have lenders or mortgagees whose interests must be protected. This creates a three-sided risk between shipowner, charterers, insurers, and financiers.

Common insurance-related problems include:

Failure to Maintain Insurance: If the charterers fail to maintain required insurance, the shipowner may be exposed to uninsured loss. The charterparty should require evidence of cover before delivery and throughout the charter period.

Wrong Insured Parties: Insurance policies must correctly protect shipowner, charterers, managers, mortgagees, and other required parties. If the wrong party is insured, a claim may become difficult or disputed.

Unacceptable Insurers: The shipowner or mortgagee may require insurers with acceptable financial strength, approved markets, or recognized P&I club standing. Cheap or unsuitable cover may not satisfy the charterparty.

Deductible Disputes: The agreement should state who pays deductibles. In many bareboat charters, the charterers pay deductibles because they operate the ship, but the wording must be clear.

Trading Outside Insurance Limits: If the charterers send the ship outside insured trading limits or into excluded areas, insurance cover may be prejudiced. The charterparty should require strict compliance with insurance warranties.

War-Risk and Sanctions Issues: War-risk areas, sanctioned trades, and prohibited cargoes may create serious insurance problems. The charterers should not expose the ship to uninsured or unlawful risk.

Loss Payable Problems: If the ship suffers major damage or total loss, the charterparty must state how insurance proceeds are paid and who controls repair or settlement decisions.

Non-Disclosure: If material facts are not disclosed to insurers, cover may be challenged. Shipowners and charterers must cooperate in providing accurate information.

P&I Gaps: Protection and indemnity cover is essential for third-party liabilities, including pollution, collision, crew claims, cargo claims, wreck removal, and fines. A gap in P&I cover can produce serious financial exposure.

Mortgagee Requirements: If the ship is mortgaged, lenders may require mortgagee interest insurance, assignment of insurance proceeds, notice of cancellation, and specific policy wording.

Insurance clauses should be checked before delivery. A weakness in insurance wording may only become visible after a casualty, when the commercial damage has already occurred.

Bareboat Charters Sample Clauses

Bareboat charter sample clauses should cover ordinary operation, default, damage, insurance, and termination. The following additional sample clauses illustrate the type of drafting commonly considered in bareboat charter negotiations.

Class Maintenance Sample Clause:

The Charterers shall, at their own cost, maintain the ship in class with the agreed classification society and shall comply with all class recommendations, conditions, memoranda, and survey requirements within the time permitted by class.

Certificates Sample Clause:

The Charterers shall maintain all statutory, trading, safety, pollution prevention, radio, and other certificates required for the lawful operation of the ship during the charter period.

Crew Sample Clause:

The Charterers shall provide, employ, pay, and manage the master, officers, and crew. The Charterers shall be responsible for crew wages, repatriation, victualling, training, certification, and compliance with applicable labour requirements.

Compliance Sample Clause:

The Charterers shall operate the ship in compliance with applicable laws, flag-state rules, port-state rules, class requirements, sanctions, environmental regulations, and the requirements of the ship’s insurers.

Arrest Sample Clause:

If the ship is arrested, detained, or threatened with arrest as a result of the Charterers’ operation, debts, employment, crew, cargo, bunkers, repairs, or other obligations, the Charterers shall promptly secure release of the ship and indemnify the Owners.

Redelivery Survey Sample Clause:

Before redelivery, the parties shall arrange a joint redelivery survey to determine the condition of the ship, bunkers, spare parts, equipment, certificates, class status, and any deficiencies for which the Charterers are responsible.

Total Loss Sample Clause:

If the ship becomes an actual, constructive, compromised, or agreed total loss, the Charter shall terminate in accordance with the total loss provisions, without prejudice to accrued rights and obligations. Insurance proceeds shall be applied according to the insurance and loss payable provisions.

Bareboat Charter Offer Example

A bareboat charter offer example should be clear enough to form the commercial basis of the fixture. It should not leave essential issues vague or subject to later misunderstanding.

A simplified bareboat charter offer may read as follows:

Owners offer firm, subject details, the M/V Example Trader for bareboat charter to Example Chartering Ltd. as follows:

• Ship: M/V HanyBulk Trader

• Owners: HanyBulk Trader Shipping Ltd.

• Charterers: X Chartering Ltd.

• Period: 5 years, plus 3 months in charterers’ option

• Delivery: Hamburg, in owners’ option, between 1/10 June 2026

• Canceling: 10 June 2026, 1700 hours local time

• Redelivery: Rotterdam-Antwerp range, safe port, in owners’ option

• Hire: USD 11,000 per day, payable monthly in advance

• Bunkers: Charterers to take over bunkers on delivery and owners to take over bunkers on redelivery at agreed prices

• Trading: Worldwide lawful trading within agreed insurance limits, excluding sanctioned countries, prohibited cargoes, unsafe ports, and war-risk areas unless prior written agreement

• Crew: For charterers’ account

• Maintenance: For charterers’ account

• Insurance: Hull and machinery, P&I, war risks, and mortgagee interest requirements to be maintained as per charterparty

• Class: Charterers to maintain class throughout the period

• Registry: Bareboat charter registration to be arranged if required and subject to flag-state approval

• Form: BIMCO BARECON 2017, suitably amended

• Commission: 2.5 percent total commission to named brokers

• Subjects: Subject charterers’ board approval, owners’ approval of charterers, insurance approval, and full charterparty details

This type of offer should be followed by a complete charterparty with all necessary rider clauses.

Bareboat Charter Order Example

In chartering communication, the word “order” may be used informally when a charterer describes the ship required, the intended period, and the commercial employment. A bareboat charter order is therefore an instruction or market inquiry, not the final contract.

A simplified bareboat charter order may read as follows:

Charterers require one geared multipurpose ship or handysize bulk carrier for bareboat charter. Period minimum 3 years, maximum 5 years. Delivery Mediterranean or Continent range. Required for lawful dry cargo trading. Ship to be in class, with valid certificates, suitable for worldwide trading within agreed limits. Charterers to consider ships built 2010 onwards. Purchase option at end of period may be considered. Owners to indicate hire, delivery position, class status, next drydock, insurance requirements, and preferred bareboat charter form.

A clear order helps brokers and shipowners understand the charterers’ requirements. It should identify ship type, age, size, cargo capability, gear, trading area, delivery range, period, budget, registry requirements, and whether a purchase option is desired.

Demise Charter vs. Bareboat Charter Explained

Demise charter and bareboat charter are often used as interchangeable expressions. Both usually describe a charter in which the shipowner gives possession and control of the ship to the charterers, and the charterers become responsible for crewing, maintaining, insuring, and operating the ship.

The expression “demise charter” is often used in legal discussion, while “bareboat charter” is widely used in commercial shipping practice. The core concept is the same: the ship is chartered without crew and without the shipowner’s usual operational services.

The important distinction is not usually between demise charter and bareboat charter. The important distinction is between bareboat or demise charter and other charter types. In a time charter, the shipowner still controls nautical and technical operation through the master and crew. In a voyage charter, the shipowner performs a cargo-carrying voyage. In a bareboat or demise charter, the charterers assume possession and operational control.

The practical consequences are substantial:

• Bareboat charterers usually appoint crew

• Bareboat charterers usually maintain the ship

• Bareboat charterers usually insure the ship or pay for insurance

• Bareboat charterers usually pay operating expenses

• Bareboat charterers may be treated commercially as disponent owners

• Shipowners retain legal ownership but lose day-to-day possession

This is why bareboat chartering requires careful due diligence before delivery.

Termination on Bareboat Charter of Ship Sample Clauses

Termination clauses are essential in a bareboat charter because the charter period may be long and the shipowner’s asset is in the charterers’ possession. The contract must state when termination is permitted, what notice is required, whether the default can be remedied, and what happens after termination.

Termination for Non-Payment Sample Clause:

If the Charterers fail to pay hire when due and such failure continues beyond the agreed grace period after notice from the Owners, the Owners may terminate the Charter and require immediate redelivery of the ship, without prejudice to the Owners’ right to recover unpaid hire, damages, costs, and any other amounts due.

Termination for Insurance Default Sample Clause:

If the Charterers fail to maintain the insurance required under this Charter, or if any required insurance is cancelled, avoided, suspended, or materially prejudiced by the Charterers’ act or omission, the Owners may require immediate remedy. If the default is not remedied within the agreed period, the Owners may terminate the Charter.

Termination for Loss of Class Sample Clause:

If the ship loses class or if class is suspended as a result of the Charterers’ failure to maintain, repair, survey, or operate the ship in accordance with this Charter, the Owners may require the Charterers to restore class immediately. If class is not restored within the agreed period, the Owners may terminate the Charter.

Termination for Insolvency Sample Clause:

The Owners may terminate the Charter if the Charterers become insolvent, enter liquidation, commence bankruptcy proceedings, make an arrangement with creditors, cease business, or become unable to pay debts as they fall due.

Termination for Prohibited Employment Sample Clause:

If the Charterers employ the ship in prohibited, unlawful, sanctioned, uninsured, unsafe, or excluded trade, the Owners may order the Charterers to cease such employment immediately. If the breach is serious or not promptly remedied, the Owners may terminate the Charter.

Termination for Total Loss Sample Clause:

If the ship becomes a total loss, the Charter shall terminate on the date specified in the total loss provisions. Termination shall not affect rights and obligations accrued before the termination date.

Termination on Bareboat Charter

Termination on bareboat charter may occur by expiry of the agreed period, mutual agreement, total loss of the ship, non-payment of hire, insurance default, insolvency, unlawful employment, failure to maintain class, serious breach, or another contractual event. Because the charterers have possession of the ship, termination must be managed carefully.

A proper termination clause should address:

• Notice requirements

• Grace periods

• Right to remedy

• Immediate termination events

• Redelivery obligations after termination

• Payment of outstanding hire

• Compensation for early termination

• Costs of repossession

• Treatment of bunkers, stores, spare parts, and equipment

• Class and certificate status

• Insurance continuation until redelivery

• Dispute resolution

• Preservation of accrued rights

Shipowners should avoid unclear termination wording because repossessing a ship can be difficult, especially if the ship is abroad, under another flag, carrying cargo, subject to arrest, or located in a jurisdiction where court assistance is required. Charterers should also seek fair notice and remedy periods for defaults that can realistically be cured.

Common Commercial Uses of Bareboat Chartering

Bareboat chartering is used in many commercial situations. A shipping company may want to expand its fleet without buying a ship immediately. An industrial group may need long-term control of tonnage for raw materials transportation. A finance house may own the ship and lease it to an operator. A shipowner may want steady hire income without managing daily operations. A government or project company may need a ship under a particular flag or operational structure.

Common uses include:

• Long-term fleet expansion

• Ship finance and leasing

• Sale-and-leaseback transactions

• Newbuilding delivery and employment

• Offshore support projects

• Industrial shipping programs

• Government or public-sector employment

• Bareboat registry arrangements

• Charter with purchase option

• Temporary transfer of operational control

The commercial attraction is flexibility. The commercial risk is that the party operating the ship must have the technical, financial, and managerial ability to preserve and employ the ship properly.

Due Diligence Before Signing a Bareboat Charter

Before signing a bareboat charter, both sides should carry out detailed due diligence. The shipowner should investigate the charterers, and the charterers should inspect the ship.

Shipowner due diligence may include:

• Charterers’ financial strength

• Operating history

• Technical management experience

• Insurance arrangements

• Proposed crew managers

• Trading plan

• Compliance procedures

• Sanctions screening

• Parent company support

• Bank guarantee or corporate guarantee

Charterers’ due diligence may include:

• Physical inspection of the ship

• Class records

• Survey status

• Drydock history

• Machinery condition

• Steel condition

• Certificate validity

• Fuel consumption records

• Existing defects

• Spare parts inventory

• Insurance requirements

• Mortgagee restrictions

• Registry requirements

Careful due diligence reduces disputes over delivery condition, hidden defects, maintenance obligations, operating costs, and redelivery standards.

Delivery and Redelivery in Bareboat Charterparties

Delivery and redelivery are two of the most important events in a bareboat charter. Delivery is the point at which possession and operational responsibility pass to the charterers. Redelivery is the point at which the ship returns to the shipowner’s control.

At delivery, the parties should sign a delivery protocol recording:

• Date and time of delivery

• Place of delivery

• Ship condition

• Bunker quantities

• Lubricating oil quantities

• Stores and spare parts

• Class and certificate status

• Known defects

• Documents handed over

• Crew handover arrangements

• Registry status if relevant

At redelivery, the parties should conduct a redelivery survey and record:

• Date and time of redelivery

• Place of redelivery

• Ship condition

• Class status

• Certificate status

• Bunkers and lubricants

• Spare parts and equipment

• Damage or deficiencies

• Outstanding repairs

• Claims reserved by either party

Disputes often arise because the delivery condition was not clearly documented. A properly prepared delivery and redelivery protocol protects both sides.

Hire, Default, and Withdrawal in Bareboat Chartering

Hire is the financial foundation of a bareboat charter. Since the shipowner gives up possession and practical control of the ship, regular hire payment is essential. Bareboat hire is often paid monthly in advance, although the parties may agree another payment structure.

The charterparty should state:

• Exact hire amount

• Currency

• Payment interval

• Payment date

• Bank account

• Whether hire is payable in advance

• Whether deductions are allowed

• Grace period for late payment

• Default interest

• Right of termination or withdrawal

• Guarantees or other security

A shipowner should be cautious about broad deduction rights from hire. Charterers may seek deduction rights for disputed claims or owner’s breaches, but bareboat chartering usually depends on predictable lease income. If deductions are allowed, the wording should be narrow and precise.

Maintenance, Repairs, Class, and Drydocking

Maintenance and class obligations are central to bareboat chartering. Because the charterers control the ship, they normally assume responsibility for keeping the ship in class and maintaining it in proper working condition.

The charterparty should address:

• Ordinary maintenance

• Emergency repairs

• Class surveys

• Statutory surveys

• Drydocking

• Spare parts

• Machinery overhauls

• Steel repairs

• Planned maintenance systems

• Reporting to shipowner

• Approval of major repairs

• Selection of shipyards

• Treatment of pre-existing defects

Drydocking can be a major cost. If drydocking becomes due during the charter period, the agreement should state who pays, where the ship may be drydocked, how long the drydock may last, whether hire continues during drydock, and who controls repair decisions. In long-term bareboat charters, drydock planning should be addressed before delivery.

Trading Limits, Sanctions, and Compliance

A bareboat charter should clearly define the permitted trading area and the prohibited employment of the ship. Since charterers operate the ship, shipowners must protect themselves against unlawful, unsafe, or uninsured employment.

Trading limits may include:

• Geographical limits

• Safe port requirements

• Safe berth requirements

• Ice restrictions

• War-risk restrictions

• Sanctioned country exclusions

• Prohibited cargoes

• Flag-state restrictions

• Insurance warranty limits

• Class restrictions

• Environmental restrictions

Sanctions clauses have become especially important in modern shipping. A bareboat charter should prohibit employment that may expose the shipowner, charterers, managers, insurers, mortgagees, or the ship to sanctions risk. The contract should also allow refusal of unlawful employment, suspension of performance, or termination if performance becomes prohibited.

Redelivery Condition and Claims

Redelivery condition is a frequent source of dispute. The shipowner expects the ship to be returned in the condition required by the charterparty. The charterers may argue that deterioration is ordinary wear and tear. The difference can be commercially significant.

A strong redelivery clause should address:

• Physical condition

• Class condition

• Certificate validity

• Machinery performance

• Hull condition

• Cargo hold condition

• Deck equipment

• Navigation equipment

• Spare parts

• Damage repairs

• Cleaning

• Bunker quantities

• Outstanding recommendations

• Survey procedure

• Compensation for deficiencies

The phrase “fair wear and tear excepted” should not be used to excuse poor maintenance. Ordinary wear is different from neglect, misuse, delayed repairs, class failure, or damage caused by improper operation.

Bareboat Charter and Ship Finance

Bareboat chartering is often connected with ship finance. A finance owner may purchase a ship and lease it to an operator under a long-term bareboat charter. The operator pays hire, and that hire may support the financing cost. In some structures, the charterers may have a purchase option or purchase obligation at the end of the charter.

Finance-related bareboat charters often include:

• Mortgagee consent

• Assignment of earnings

• Assignment of insurances

• Loss payable clauses

• Financial covenants

• Minimum insurance values

• Restrictions on sub-chartering

• Restrictions on flag change

• Purchase option provisions

• Early termination compensation

• Event of default provisions

In such structures, the bareboat charter is not only an operating agreement. It is part of a wider financing package. The charterparty must therefore align with loan documents, security documents, insurance documents, and registry requirements.

Practical Checklist for Bareboat Charter Negotiation

Before concluding a bareboat charter fixture, the parties should review the following checklist:

• Is the ship correctly described?

• Are shipowner and charterers correctly named?

• Is the delivery window clear?

• Is the canceling date clear?

• Is the charter period fixed?

• Is redelivery flexibility agreed?

• Is hire payable in advance?

• Is there a clear default mechanism?

• Are bunkers and lubricants addressed?

• Are trading limits clear?

• Are sanctions clauses included?

• Are insurance requirements detailed?

• Is class maintenance clearly allocated?

• Are drydocking obligations clear?

• Are inspection rights included?

• Is bareboat registry required?

• Is mortgagee approval required?

• Are guarantees required?

• Are commission terms agreed?

• Is the charterparty form identified?

• Are rider clauses consistent with the printed form?

This checklist should be reviewed before subjects are lifted and before the final charterparty is signed.

Conclusion

A bareboat charter is a flexible but demanding shipping arrangement. It gives the charterers possession and operational control of the ship while the shipowner remains the legal owner. This makes the structure useful for fleet expansion, finance leasing, long-term industrial transportation, bareboat registration, ship projects, and operational control without immediate purchase.

A well-drafted bareboat charter agreement should not only state the ship, hire, and period. It should regulate delivery, redelivery, registry, insurance, class, maintenance, technical management, trading limits, sanctions, default, termination, and financial protection. Whether the parties use BIMCO BARECON, BARECON 2017, a customized bareboat charterparty, or a transaction-specific agreement, the document must be built around the actual ship, the intended trade, the financing structure, and the risk profile of the charterers.

In commercial practice, bareboat chartering should never be handled casually. The party taking the ship must be capable of operating, maintaining, insuring, and redelivering the ship properly. The party providing the ship must protect ownership, insurance, finance, registry, and redelivery rights from the start of the negotiation.