Ship Bareboat Charter

Demise or Bareboat Charter which must be distinguished from the types of charter already discussed in that it operates as a lease of the vessel and not as a contract of carriage. It differs from other charterparties in much the same way as a contract to hire a selfdrive car differs from a contract to engage the services of a taxi. Whereas in an ordinary time charter the shipowner retains control over the operation of the vessel, under a demise charter the charterer displaces the owner and, for the period of the ‘lease’, takes possession and complete control of the ship. Under this type of contract, the charterer mans and equips the vessel and assumes all responsibility for its navigation and management. For all practical purposes bareboat charterers acts as owner for the duration of the charter and is responsible for all expenses incurred in the operation of the vessel, and also for insuring her. The demise charter is suitable for use in connection with government shipping activities, particularly in time of war or other emergency. In the private sector it is available to the shipowner who wishes to supplement his fleet for a limited period of time without incurring the financial commitments associated with actual ownership, but at the same time requiring to have full control of the chartered vessel. It can also be used as a form of ‘hire-purchase’ contract, providing security for the financing company while the purchase price of the vessel is being repaid by installments. Demise charters are not so frequently encountered as the other two forms of carriage charter, although there has been an increase in their use over recent years, particularly in the oil tanker trade and in government hire. As the charterer by demise is virtually acting as owner of the vessel, demise charterers will be regarded as the ‘carrier’ for the purposes of the Hague and Hague/Visby Rules. Demise Charterers will be responsible for damage to the cargo and liable under bills of lading signed by the master. Conversely, he will be entitled to any salvage earned by the vessel.