Introduction

A charter party is a written charter agreement or, in other words, the contract of carriage whereby
a ship-owner or a despondent owner of a vessel agrees to place his ship, or part of it, at the
disposal of a merchant/cargo owner known as charterer, for the carriage of goods by sea from
one port to another port on being paid freight, or to let his ship for a specified period, his
remuneration being known as hire. The terms under which the goods are carried as well as the
obligations of contracting parties are set out in the charter party, which is a legally binding and
internationally recognized document.1 When a ship owner agrees to carry goods by water and
receives freight the contract is called a contract of affreightment rather than a charter party.
While it is possible to have a charter party of less than the entire ship, as a general rule a charter
party deals with the full reach of a ship while a contract of affreightment deals with carriage of
goods forming only part of the cargo and coming under a bill of lading.2

Types of Charter

Voyage Charter
In this type of chartering, the ship-owner undertakes the obligation against the shipper to
transport a certain quantity of cargo from an agreed port to an agreed port of landing at a fixed
amount fare, the amount of which is determined by the conditions of the freight market (freight
market). The parties to a charter are free to choose whatever type of charter wish they want to do
conversion in order to serve their interests. Some of them are the date and place signature of the
charter party. Also, in charter agreements, the majority, data such as the approximate date of
arrival of the ship in (first) port of loading, the amount of cargo that the charterer is obliged to
ship the type and description of the cargo to be carried, as well as the cargo port or ports of
loading and unloading.3 The master is particularly concerned with voyage charter parties because
of the lay time, dispatch and demurrage clauses and the necessity of tendering the Notice of
1
Evi Plomaritou,” A Review of Shipowner’s & Charterer’s Obligations in Various Types of Charter”
Page-1,
<https://www.researchgate.net/publication/304579107_A_Review_of_Shipowner's_and_Charterer's_Obligations_
in_various_types_of_Charter> accessed November 19, 2019.
2
ROMAN T. KEENAN, “CHARTER PARTIES AND BILLS OF LADING” page-346,
<http://scholarship.law.marquette.edu/cgi/viewcontent.cgi?article=2917&context=mulr/>
3
CHARTERING-TYPES OF CHARTERING, page-20, accessed November 19, 2019.
<https://maredu.gunet.gr/modules/document/file.php/MAK265/Dissertations%20in%20English/Types%20of
%20Chartering.pdf > accessed November 19, 2019.

1
Readiness to load or discharge. In this type of charter, the charterer contracts to provide a cargo
at a given rate per day. The charter is generally for bulk cargo, stipulated in tons or cubic feet, for
all or part of the carrying capacity of the vessel. 4 An example of a widely used model for a
voyage charter is the GENCON, developed by BIMCO. Some charters are commodity specific
(LNGVOY, CEMENTVOY, FERTICON). The workings of BIMCO are discussed in the section
‘Organization’s influencing charter model contracts’. The specifics of the GENCON model form
are considered in the section ‘GENCON Voyage Charter’.5

Time Charter

The ship is manned and navigated by the owner but her capacity is let to the charterer for a
specified time. The time charter permits the charterer to have tonnage under his control for a
fixed period of time without undertaking long term financial commitments of a ship owner or the
responsibilities of ship management and navigation.6 In this case, the charterer, undertakes the
commercial employment of the vessel, while the ownership and the commercial operation of the
vessel remain with the ship-owner. This means that master and crew are appointed by the ship-
owner who is responsible for all costs appertaining to the running and manning of the vessel plus
the capital cost. The charterer determines the trading voyages of the ship and he nominates the
ports. The charterer pays for all voyage expenses and cargo handling costs. Most of all, the
charterer is responsible for arranging and paying for bunkers.7 The ship-owner is the one to
provide the charterer with a ship and crew. He also takes care of the insurance. The charterer
then simply pays the owner the agreed rate for the hire of vessel and crew. How much money the
charterer can earn, is then completely up to him. However, the responsibility of the owner does
not end there, considering he can still be involved through instructions on how the vessel
performs during the voyages.8

4
CHARTER PARTIES, page-3, < https://www.pfri.uniri.hr/bopri/documents/12_Charter_Parties.pdf> accessed
November 20, 2019.
5
Artem Chernoshtan, “Charter Party clauses anno 2016: time for a new standard?” page-7,
<https://pdfs.semanticscholar.org/69da/355079e5241449230f29fba49535d38d4f7d.pdf > accessed November 20,
2019.
6
ROMAN T. KEENAN, “CHARTER PARTIES AND BILLS OF LADING” page-347
<http://scholarship.law.marquette.edu/cgi/viewcontent.cgi?article=2917&context=mulr/> accessed November 20,
2019.
7
CHARTERING-TYPES OF CHARTERING, page- 313
<https://maredu.gunet.gr/modules/document/file.php/MAK265/Dissertations%20in%20English/Types%20of
%20Chartering.pdf > accessed November 21, 2019.

2
The Booking-Note

In some cases, instead of a charter party, a much simpler document is used namely the booking
note. The booking-note is used in the liner trade for the shipment of important goods for which
tonnage was reserved long in advance. The booking note is usually issued by the booking agent.
The booking-note has the advantage of being less complicated than the charter party and it
usually refers to the clauses and conditions of the bill of lading, a document which is essential to
the implementation of the contract. The conditions of the bill of lading are generally those that
are applied on regular lines and which are called liner term so that one could define the booking
note as a shortened charter party with liner term.9

Important Clauses of Charter

Deviation : Liberty of vessel to call at ports in any order; liberty of vessel to tow and assist
vessels; liberty of vessel to deviate for purpose of saving life or property or other purposes.10
Freight : Rate and amount of payment of freight.11
Loading/Discharging Costs: Responsibility for costs of loading and/or discharging of cargo.
Bunkers : Charterers’ obligation to buy bunkers remaining on board at delivery port; owners’
obligation to buy bunkers r.o.b. at redelivery port; minimum quantity of bunkers to be on board
at redelivery.12

Laytime : Duration of laytime allowed; exceptions to laytime; commencement of laytime; time

and manner of tendering of notice of readiness.13

Demurrage : Duration of demurrage period allowed; whether demurrage allowed at loading

and/or discharge ports.14
8
Artem Chernoshtan, “Charter Party clauses anno 2016: time for a new standard?” page-8,
<https://pdfs.semanticscholar.org/69da/355079e5241449230f29fba49535d38d4f7d.pdf > accessed November 21,
2019.
9
MARINE INSURANCE AND CHARTERING, page- 12,
<https://maredu.gunet.gr/modules/document/file.php/MAK265/Dissertations%20in%20English/marine
%20insurance%20and%20chartering.pdf> accessed November 21, 2019.
10
General Cargo Ship.com, <http://generalcargoship.com/voyage-charter-party-clauses.html> accessed November
22, 2019.
11
ibid
12
Time charter party clauses for cargo ships employment, <http://generalcargoship.com/time-charter-party-
clauses.html> accessed November 22, 2019.
13
General Cargo Ship.com, <http://generalcargoship.com/voyage-charter-party-clauses.html> accessed November
23, 2019.
14
ibid

3
Lien : Whether the owners are to have a lien on cargo for freight, deadfreight, demurrage and/or
damages for detention; whether the charterers are to be responsible for freight and demurrage,
etc. incurred at the discharge port.15
Laydays and Cancelling : Laydays; cancelling date; conditions under which charterers have
option to cancel charter; charterers’ obligation to declare intention to exercise option to cancel, if
applicable.16

Master: Master’s speedy prosecution of voyages; master’s and crew’s assistance to charterer;
master’s obedience of charterers’ orders relating to vessel’s employment, agency, etc.;
charterers’ indemnification of owners against consequences of owners’ servants signing bills of
lading or other documents, or complying with charterers’ orders, etc.; exclusion of owners’
liability for cargo claims; owners’ agreement to investigate charterers’ complaints about crew.17

General Average : Rules under which any General Average is to be settled; obligation of cargo
owners to pay cargo’s share of General Average expenses.18
Agency: Owner’s (or charterer’s) obligation to appoint agents at loading and discharge ports.19
Brokerage : Amount of brokerage commission due and party or parties to whom payable.20

Responsibility and Exemption: Conditions under which owners will be responsible for delay in
delivery, delay during the charter, or loss or damage to cargo; owners’ exclusion of responsibility
in all other circumstances; charterers’ responsibility for loss or damage to vessel or owners
caused by improper or negligent loading, bunkering or other acts on their or their servants’ part.21
Strikes : Allocation of responsibility for consequences of strikes or lock-outs preventing
fulfilment of obligations.22
War Risks : Liberty of owner to cancel charter in event of outbreak of war; liberty of master to
sail from loading port before completion of loading in event of outbreak of war.23
15
ibid
16
ibid
17
Time charter party clauses for cargo ships employment, <http://generalcargoship.com/time-charter-party-
clauses.html> accessed November 23, 2019.
18
ibid
19
ibid
20
ibid
21
Time charter party clauses for cargo ships employment, <http://generalcargoship.com/time-charter-party-
clauses.html> accessed November 23, 2019.
22
General Cargo Ship.com, <http://generalcargoship.com/voyage-charter-party-clauses.html> accessed November
19, 2019.
23
ibid

4
Ice : Liberties of master in event of inaccessibility of, or threat of trapping at, loading and/or
discharge ports due to ice.24

Arbitration: Reference of disputes to arbitration in London or other agreed place; nomination of

arbitrators by parties; umpire’s decision where arbitrators disagree.25
Clause Paramount : Identity of liability regime applying to bills of lading issued.26

24
ibid
25
Time charter party clauses for cargo ships employment, <http://generalcargoship.com/time-charter-party-
clauses.html> accessed November 23, 2019.
26
General Cargo Ship.com, <http://generalcargoship.com/voyage-charter-party-clauses.html> accessed November
19, 2019.