When a whole or most of a ship is let to one person, the contract used is in the form of a Charterparty.
There are two (2) basic Charterparty Types:
1- Voyage Charterparty: in which the ship is let for a voyage.
2- Time Charterparty: in which the ship is let for a period of time
Shipowners and Charterers need to be aware of common Charterparty Clauses, Wordings, and Rider Clauses, so as to act advantageously toward prospective ventures.
The Charterparty records all the details of the agreement reached between the two contracted parties. If all terms are mutually agreed between the Shipowners and Charterers, then the Charterparty is Signed by the authorized persons on behalf of the Shipowner and Charterer.
The Charterparty contract includes the responsibilities, rights, and demands of the Shipowner and Charterer. The Charterparty includes all the terms expressly agreed on by the contracting parties, Shipowner and Charterer, as well as implied terms and rider clauses or special terms that may have not been included in the firm offer but are subsequently agreed on to cover certain eventualities such as what happens in the event of war.
Under a Time Charterparty, the shipowner agrees to place the ship at the Charterer’s disposal for a period of time, during which the charterer may freely employ the ship for its own account.
The shipowner is remunerated by way of hire, paid usually in advance at regular intervals, while still being required to operate the ship. The responsibility for arranging the ship’s employment, purchasing bunkers, and paying port charges, stevedores, and other expenses related to the voyage passes to the Charterer.
The responsibility for the operating expenses of the ship such as crewing, insurance, repairs and maintenance, stores and lubricants, etc. remains with the Shipowner. The Time Charterer becomes the Disponent Owner and, as such, is entitled to receive any freight earned by the ship.
The Time Charterer is entitled to issue voyage instructions to the Ship Master, despite the fact that the Ship Master is employed by the shipowner.
Trip-Time Charterparty (TCT) is a variation of the Time Charterparty. Under the terms of this arrangement, the ship is let out on a Time Charter form contract for a voyage, or trip, with the shipowners being remunerated by way of hire.
Under a Trip-Time Charterparty (TCT), the Shipowner is obliged to send the ship on the agreed voyage. The Charter is terminated on completion of the voyage.
This is unlike a Period Time Charter, which ends when the agreed time has passed.
In a Bareboat Charterparty, the charterer takes over possession of the ship from the shipowner. The Charterer essentially becomes the Disponent Owner of the ship and, as such, operates the ship while paying for all operating and voyage expenses. The only costs still paid by the Actual Shipowner are the capital costs of the ship.
Time Charterparty Forms: New York Produce Exchange (NYPE 1993), Baltime 1939 (revised 2001), Gentime Linertime Boxtime 2004, BPTime 3, Shelltime 4, Supplytime 2005
Bareboat Charter Forms (Demise): Barecon 2001
Contract Of Affreightment Forms: Intercoa, Volcoa