Bareboat Charter

Bareboat Charter although lawyers prefer the expression ‘Demise’ because that word is more akin to such words as ‘transfer’ or even ‘abdicate’. As the name suggests, a bareboat charter ‘transfers’ the entire job of operating the ship to the charterer so that it is fair to equate this to the original owner ‘abdicating’ from his responsibility. It is quite usual for the charterer even to change the ship’s port of registry and flag for the period of the charter. Such a contract can best be compared to a long-term lease of a house or an office block. To all intents and purposes the bareboat charterer acts as the
owner and the outside world looks upon him as such. In most cases a bareboat charter is, in effect an alternative way of financing where the charterer finds it more convenient or beneficial to pay a monthly hire out of revenue rather than raise the capital to buy a ship himself. Bareboat Charter parties are something of a rarity in the life of the average chartering person and, paradoxically, when a broker does encounter one it is probably more likely to be in the Sale & Purchase department where some sort of sale-and-lease-back deal is involved.