SECTION II Loans on Bottomry and Respondentia

ARTICLE 719. A loan on bottomry or respondentia shall be considered that which the repayment
of the sum loaned and the premium stipulated, under any condition whatsoever, depends on the
safe arrival in port of the goods on which it is made, or of their value in case of accident.

ARTICLE 720. Loans on bottomry or respondentia may be executed:

1. By means of a public instrument.

2. By means of a bond signed by the contracting parties and the broker who took part therein.

3. By means of a private instrument.

Under whichever of these forms the contract is executed, it shall be entered in the certificate of
the registry of the vessel and shall be recorded in the commercial registry, without which
requisites the credits originating from the same shall not have, with regard to other credits, the
preference which, according to their nature, they should have, although the obligation shall be
valid between the contracting parties.

The contracts made during a voyage shall be governed by the provisions of Articles 583 and 611,
and shall be effective with regard to third persons from the date of their execution, if they
should be recorded in the commercial registry of the port of registry of the vessel before eight
days have elapsed from the date of her arrival. If said eight days should elapse without the
record having been made in the commercial registry, the contracts made during the voyage of a
vessel shall not have any effect with regard to third persons, except from the day and date of
their entry.

In order that the bonds of the contracts celebrated in accordance with No. 2 may have legal
force, they must conform to the registry of the broker who took part therein. In those celebrated
in accordance with No. 3 the acknowledgment of the signature must precede.

Contracts which are not reduced to writing shall not be the basis for a judicial action.

ARTICLE 721. In a bottomry or respondentia bond there must be stated:

1. The kind, name, and registry of the vessel.

2. The name, surname, and domicile of the captain.

3. The names, surnames, and domicile of the person giving and of the person receiving the loan.

4. The amount of the loan and the premium stipulated.

5. The time for repayment.

6. The goods pledged to secure repayment.

7. The voyage for which the risk is run.

ARTICLE 722. The bonds may be issued to order, in which case they shall be transferable by
indorsement, and the assignee shall acquire all the rights and run all the risks corresponding to
the indorser.

ARTICLE 723. Loans may be made in goods and in merchandise, their value being fixed in order
to determine the amount of the loan.

ARTICLE 724. The loans may be constituted jointly or separately:

1. On the hull of the vessel.

2. On the rigging.

3. On the equipment, provisions, and fuel.

4. On the engine, if the vessel is a steamer.

5. On the cargo.

If the loan is constituted on the hull of the vessel, there shall be understood as also subject to
the liability of the loan, the rigging, equipment and other goods, provisions, fuel, steam engines,
and the freight earned during the voyage subject to the loan.

If the loan is made on the cargo, all that constitutes the same shall be subject to the repayment;
and if on a particular object of the vessel or of the cargo, the object exclusively and specifically
mentioned only shall be liable.

ARTICLE 725. No loans can be made on the salaries of the crew, nor on the profits which it is
expected to earn.

ARTICLE 726. If the lender should prove that he loaned a larger amount than the value of the
article liable for the bottomry loan, by reason of fraudulent measures employed by the borrower
the loan shall only be valid for the amount at which said object is appraised by experts.

The surplus principal shall be returned with legal interest for the whole period of the duration of
the disbursement.

ARTICLE 727. If the full amount of the loan contracted to load the vessel should not be made use
of for the cargo, the surplus shall be returned before clearing.

The same procedure shall be observed with regard to the goods taken as a loan if they could not
all have been loaded.

ARTICLE 728. The loan which the captain takes at the point of residence of the owners of the
vessel shall only affect that part of the latter which belongs to the captain, if the other owners or
their agents should not have given their express authorization thereto or should not have taken
part in the transaction.

If one or more of the owners should be requested to furnish the amount necessary to repair or
provision the vessel, and should not do so within twenty-four hours, the interest which the
parties in default may have in the vessel shall be liable for the loan in the proper proportion.

Outside of the residence of the owners the captain may contract loans in accordance with the
provisions of Articles 583 and 611.

ARTICLE 729. Should the goods on which money is taken not be subjected to any risk, the
contract shall be considered an ordinary loan, the borrower being under the obligation to return
the principal and interest at the legal rate, if the interest stipulated should not have been lower.

ARTICLE 730. Loans made during the voyage shall have preference over those made before the
clearing of the vessel, and they shall be graduated by the inverse order to that of their dates.

The loans for the last voyage shall have preference over prior ones.

Should several loans have been made at a port made under stress and for the same purpose, all
of them shall be paid pro rata.

ARTICLE 731. The actions which may be brought by the lender shall be extinguished by the
absolute loss of the goods on which the loan was made, if said loss arose from an accident of the
sea at the time and during the voyage designated in the contract, and should it be proven that
the cargo was on board; but this shall not take place if the loss were caused by the inherent
defect of the thing or through the fault or malice of the borrower, or through barratry on the
part of the captain, or if it were caused by damages suffered by the vessel as a consequence of
being engaged in contraband, or if it arose through loading the merchandise on a vessel other
than that designated in the contract, unless this change should have been made by reason of
force majeure.

The proof of the loss is incumbent upon the person who received the loan, as well as the proof
of the existence in the vessel of the goods declared to the lender as the object thereof.

ARTICLE 732. Lenders on bottomry or respondentia shall suffer in proportion to their respective
interest, the general average which may take place in the goods on which the loan was made.

In particular averages, in the absence of an express agreement between the contracting parties,
the lender on bottomry or respondentia shall also contribute in proportion to his respective
interest, should it not belong to the kind of risks excepted in the foregoing article.

ARTICLE 733. Should it not have been stated in the contract for what period the lender runs the
risk, the said risk shall last with regard to the vessel, engines, rigging, and equipment from the
moment said vessel puts to sea until she drops anchor in the port of destination, and with regard
to the merchandise, from the time it is loaded on the shore or wharf of the port of shipment
until unloaded in the port of consignment.

ARTICLE 734. In case of shipwreck the amount liable for the return of the loan shall be reduced
to the proceeds of the goods saved, after the costs of the salvage have been deducted.

If the loan were on the vessel or any of her parts, the freightage earned during the voyage for
which said loan was contracted shall also be liable for its payment, as far as it is available.

ARTICLE 735. If the same vessel or cargo should be the object of a loan on bottomry or
respondentia and marine insurance, the value of what may be saved shall be divided, in case of
shipwreck, between the lender and the underwriter, in proportion to the legitimate interest of
each one, taking into consideration, for this purpose only, the principal with relation to the loan,
and without prejudice to the right of preference of other creditors in accordance with Article
580.

ARTICLE 736. If there should be delay in the repayment of the principal or premiums of the loan,
the former only shall bear legal interest.

TITLE IV Risks, Damages and Accidents of Maritime Commerce

SECTION I Averages

ARTICLE 806. For the purposes of this Code the following shall be considered averages:

1. All extraordinary or accidental expenses which may be incurred during the navigation for the
preservation of the vessel or cargo, or both.

2. All damages or deterioration the vessel may suffer from the time she puts to sea from the port
of departure until she casts anchor in the port of destination, and those suffered by the
merchandise from the time it is loaded in the port of shipment until it is unloaded in the port of
consignment.

ARTICLE 807. The petty and ordinary expenses of navigation, such as pilotage of coasts and
ports, lighterage and towage, anchorage dues, inspection, health, quarantine, lazaretto, and
other so-called port expenses, costs of barges, and unloading, until the merchandise is placed on
the wharf, and any other expenses common to navigation shall be considered ordinary expenses
to be defrayed by the shipowner, unless there is a special agreement to the contrary.

ARTICLE 808. Averages shall be:

1. Simple or particular.

2. General or gross.
ARTICLE 809. Simple or particular averages shall be, as a general rule, all the expenses and
damages caused to the vessel or to her cargo which have not redounded to the benefit and
common profit of all the persons interested in the vessel and her cargo, and especially the
following:

1. The damages suffered by the cargo from the time of its embarkation until it is unloaded,
either on account of the nature of the goods or by reason of an accident at sea or force majeure,
and the expenses incurred to avoid and repair the same.

2. The damages suffered by the vessel in her hull, rigging, arms, and equipment, for the same
causes and reasons, from the time she puts to sea from the port of departure until she anchored
in the port of destination.

3. The damages suffered by the merchandise loaded on deck, except in coastwise navigation, if
the marine ordinances allow it.

4. The wages and victuals of the crew when the vessel should be detained or embargoed by a
legitimate order or force majeure, if the charter should have been for a fixed sum for the voyage.

5. The necessary expenses on arrival at a port, in order to make repairs or secure provisions.

6. The lowest value of the goods sold by the captain in arrivals under stress for the payment of
provisions and in order to save the crew, or to cover any other requirement of the vessel against
which the proper amount shall be charged.

7. The victuals and wages of the crew during the time the vessel is in quarantine.

8. The damage suffered by the vessel or cargo by reason of an impact or collision with another, if
it were accidental and unavoidable. If the accident should occur through the fault or negligence
of the captain, the latter shall be liable for all the damage caused.

9. Any damage suffered by the cargo through the faults, negligence, or barratry of the captain or
of the crew, without prejudice to the right of the owner to recover the corresponding indemnity
from the captain, the vessel, and the freight.

ARTICLE 810. The owner of the goods which gave rise to the expense or suffered the damage
shall bear the simple or particular averages.

ARTICLE 811. General or gross averages shall be, as a general rule, all the damages and expenses
which are deliberately caused in order to save the vessel, her cargo, or both at the same time,
from a real and known risk, and particularly the following:

1. The goods or cash invested in the redemption of the vessel or cargo captured by enemies,
privateers, or pirates, and the provisions, wages, and expenses of the vessel detained during the
time the arrangement or redemption is taking place.
2. The goods jettisoned to lighten the vessel, whether they belong to the vessel, to the cargo, or
to the crew, and the damage suffered through said act by the goods kept.

3. The cables and masts which are cut or rendered useless, the anchors and the chains which are
abandoned in order to save the cargo, the vessel, or both.

4. The expenses of removing or transferring a portion of the cargo in order to lighten the vessel
and place her in condition to enter a port or roadstead, and the damage resulting therefrom to
the goods removed or transferred.

5. The damage suffered by the goods of the cargo through the opening made in the vessel in
order to drain her and prevent her sinking.

6. The expenses caused through floating a vessel intentionally stranded for the purpose of saving
her.

7. The damage caused to the vessel which it is necessary to break open, scuttle, or smash in
order to save the cargo.

8. The expenses of curing and maintaining the members of the crew who may have been
wounded or crippled in defending or saving the vessel.

9. The wages of any member of the crew detained as hostage by enemies, privateers, or pirates,
and the necessary expenses which he may incur in his imprisonment, until he is returned to the
vessel or to his domicile, should he prefer it.

10. The wages and victuals of the crew of a vessel chartered by the month during the time it
should be embargoed or detained by force majeure or by order of the Government, or in order
to repair the damage caused for the common good.

11. The loss suffered in the value of the goods sold at arrivals under stress in order to repair the
vessel because of gross average.

12. The expenses of the liquidation of the average.

ARTICLE 812. In order to satisfy the amount of the gross or general averages, all the persons
having an interest in the vessel and cargo therein at the time of the occurrence of the average
shall contribute.

ARTICLE 813. In order to incur the expenses and cause the damages corresponding to gross
average, a previous resolution of the captain, adopted after deliberation with the sailing mate
and other officers of the vessel, and with a hearing of the persons interested in the cargo who
may be present, shall be required.

If the latter shall object, and the captain and officers, or a majority, or the captain, if opposed to
the majority, should consider certain measures necessary, they may be executed under his
liability, without prejudice to the freighters exercising their rights against the captain before the
judge or court of competent jurisdiction, if they can prove that he acted with malice, lack of skill,
or negligence.

If the persons interested in the cargo, being on the vessel, should not be heard, they shall not
contribute to the gross average, which contribution shall be paid by the captain, unless the
urgency of the case should be such that the time necessary for previous deliberation was lacking.

ARTICLE 814. The resolution adopted to cause the damages which constitute a general average
must necessarily be entered in the log book, stating the motives and reasons therefor, the votes
against it, and the reasons for the disagreement should there be any, and the irresistible and
urgent causes which moved the captain if he acted of his own accord.

In the first case the minutes shall be signed by all the persons present who could do so before
taking action if possible, and if not at the first opportunity; in the second case by the captain and
by the officers of the vessel.

In the minutes and after the resolution there shall be stated in detail all the goods cast away, and
mention shall be made of the injuries caused to those kept on board. The captain shall be
obliged to deliver one copy of these minutes to the maritime judicial authority of the first port
he may make within twenty-four hours after his arrival, and to ratify it immediately by an oath.

ARTICLE 815. The captain shall supervise the jettison, and shall order the goods cast overboard in
the following order:

1. Those which are on deck, beginning with those which embarrass the handling of the vessel or
damage her, preferring, if possible, the heaviest ones and those of least utility and value.

2. Those in the hold, always beginning with those of the greatest weight and smallest value, to
the amount and number absolutely indispensable.

ARTICLE 816. In order that the goods jettisoned may be included in the gross average and the
owners thereof be entitled to indemnity, it shall be necessary in so far as the cargo is concerned
that their existence on board be proven by means of the bill of lading; and with regard to those
belonging to the vessel, by means of the inventory made up before the departure, in accordance
with the first paragraph of Article 612.

ARTICLE 817. If in lightening a vessel on account of a storm, in order to facilitate her entry into a
port or roadstead, part of her cargo should be transferred to lighters or barges and be lost, the
owner of said part shall be entitled to indemnity, as if the loss has originated from a gross
average, the amount thereof being distributed between the entire vessel and cargo which
caused the same.

If, on the contrary, the merchandise transferred should be saved and the vessel should be lost,
no liability can be demanded of the salvage.
ARTICLE 818. If, as a necessary measure to extinguish a fire in a port; roadstead; creek, or bay, it
should be decided to sink any vessel, this loss shall be considered gross average, to which the
vessels saved shall contribute.