What is the difference between Bareboat Charter and Demise Charter?

Bareboat Charter Vs. Demise Charter

A ship might be owned, operated, employed and managed by separate companies. A ship might be owned by a bank that provided financing. The bank might lease the ship to a ship operator. A ship operator might charter out the ship to charterer of cargo for a voyage or for time charter. Banks usually finance the ship and has no practical connection to ship. Ship is operated by the lessee or ship operator.

Ship operators steams where and when charterers directs. Ships are usually owned by a single company that owns 100% of the interest in the ship and holds complete title to the ship. However, a ship can be owned by separate companies or individuals each holding a partial interest in the ship.

A ship may have more than one title holder, each in proportion to the entity’s interest in the ship. Shipowners sometimes also operate their own ships. Many ship owners hire out or lease out the ship to another party.

What is the difference between Bareboat Charter and Demise Charter?

If ship owners lease the ship with ship owner’s crew members it is called Demise Charter. If ship owners lease the ship without crew members it is called Bareboat Charter.

Ship Managers (Ship Management Companies) provide technical management services. Usually, Ship Managers (Ship Management Companies) outsource crewing of the ship to Crewing companies. Ship management companies generally work as agents for the shipowner or for the ship operator.

Bareboat Charterer (Lessee) might be considered as the owner of the ship for certain purposes. Specifically, when a titleholder enters into a lease with another person in the form of a Bareboat Charterparty or Bareboat Charter, then the charterer or lessee is viewed under the law as the owner. Bareboat charterers is the one who stands in the place of the shipowner for the voyage or service contemplated and bears the owner’s responsibilities, even though ship owners remains the legal owner of the ship. Under the Bareboat Charterparty, the ship title holder conveys most of the incidents of practical ownership of the ship to the charterer, including hiring and supervising the crew, maintaining the ship, and procuring insurance for the ship. Bareboat Charters are usually long-term. Many bareboat charters are based on one of several standard forms published by the Baltic and International Maritime Council (BIMCO).

Baltic and International Maritime Council (BIMCO) Bareboat Charter Form is referred to as BARECON, with year indicating the last major revision to the form like BARECON 2001.

In Bareboat Charter, ships may be chartered or leased for a Voyage Charter or a Time Charter. A charterer generally obtains the use of the whole or part of a ship for a voyage under a voyage charter. A charterer generally obtains the use of the whole of a ship for a period of time under a time charter.

In shipping law, both voyage charters and time charters, as well as bills of lading, may be sometimes referred to as Contract of Affreightment (COA). But the term Contract of Affreightment (COA) is more commonly used to refer to any contract for the movement of specified goods to specified ports without necessarily specifying the ship’s name. Shipowners or ship operators subcontract some parts of their duties or functions ship operations.

It is common for Shipowners or Bareboat Charterers to subcontract ship operations to ship managers. Usually, ship managers outsource or subcontract ship crewing or other functions. Ship crewing contracts are produced by Baltic and International Maritime Council (BIMCO). The most commonly used crewing forms are SHIPMAN and CREWMAN Forms. Shipowner, ship operator and ship manager structures can be highly effective for commercial purposes. Ship management companies make efficient use of specialties and reduce the costs of ship owners. Due to economies of scale, one ship management company may manage through the operation of many ships for many owners and reduce costs per ship.


What is the difference between Bareboat Charter and Demise Charter?

Bareboat charter and demise charter are often used interchangeably, as they both refer to the same type of charter arrangement. In this type of charter, the shipowner leases the vessel to the charterer for a specified period, transferring control, possession, and management of the ship to the charterer. During the charter period, the charterer assumes the role of the shipowner, responsible for the vessel’s operation, including crewing, maintenance, insurance, and other operational expenses.

Despite being essentially the same concept, the terms “bareboat charter” and “demise charter” can sometimes emphasize different aspects of the arrangement:

  1. Bareboat Charter: The term “bareboat charter” highlights that the vessel is leased without crew, equipment, or provisions. It emphasizes the charterer’s responsibility for providing and managing the crew, equipment, and supplies necessary for operating the vessel during the charter period.
  2. Demise Charter: The term “demise charter” focuses on the transfer of possession, control, and management of the vessel from the shipowner to the charterer. It implies a more complete transfer of rights and responsibilities to the charterer, who effectively steps into the shoes of the shipowner during the charter period.

In the practice of maritime law, both terms describe the same type of charter arrangement, where the charterer takes on the full responsibility for operating the vessel and bears the associated costs and risks. Regardless of the terminology used, it is essential for parties entering into a bareboat/demise charter agreement to clearly define their rights and obligations in the contract to ensure smooth operations and avoid potential disputes.

Shipbrokers Must Exercise Caution

In the realm of ship chartering, shipbrokers must exercise caution to ensure that a lease agreement between ship owners and charterers is accurately categorized. If the ship owners lease the vessel along with their crew members, this arrangement is known as a Demise Charter. Conversely, if the ship owners lease the vessel without crew members, this is referred to as a Bareboat Charter. In the field of shipping law, it is not uncommon for legal practitioners to employ the terms Bareboat Charter and Demise Charter interchangeably