CHARTERING

INTRODUCTION TO CHARTERING

THE CHARTERING PROCEDURE AND PRACTICE

VOYAGE CHARTERS

TIME CHARTERS

BARBOAT CHARTERS
 INTRODUCTION TO CHARTERING

1.Types of Chartering
2. Chartering Participators
3. Vessels and Cargoes
4. Standard Charter Party Forms
5. Charter Market
6.Comparison of Liner and Chartering
7. Associated Shipping Organizations
Section 1 Types of
chartering

1 Voyage chartering
2 Time chartering
3 Time charter on trip basis (TCT)
4 Contract of affreightment (COA)
5 Bareboat chartering
Chartering
Chartering is an activity within the shipping
industry. In some cases a charterer may own
cargo and employ a shipbroker to find a ship to
deliver the cargo for a certain price, called freight
rate.
Freight rates may be on a per-ton basis over a
certain route or alternatively may be expressed
in terms of a total sum - normally in U.S. dollars -
per day for the agreed duration of the charter.
Chartering
A charterer may also be a party without a
cargo who takes a vessel on charter for a
specified period from the owner and then
trades the ship to carry cargoes at a profit
above the hire rate, or even makes a profit
in a rising market by re-letting the ship out
to other charterers.
 Chartering
Depending on the type of ship and the
type of charter, normally a standard
contract form called a charter party is used
to record the exact rate, duration and
terms agreed between the shipowner and
the charterer.
 1 Voyage chartering
1.1 Introduction
(1)Meaning
The voyage chartering means that the ship-owner promises to

carry on board a specific ship a particular cargo for a single

voyage from one or more loading ports to one or more
discharging ports.
The payment is called freight and the contract is called a voyage

charter party. Voyage charters are concluded between the

shipowner or disponent owner and the charterer. The person who
charters the ship is known as voyage charterer. The person who
charters out his ship is known as shipowner or disponent owner.
Usually this form of contract is selected when the charterer has no

experience in the operation of ship or he has just one consignment

of cargo needed to be transported from one place to the other.
 (2) Costs
Under a voyage charter, the shipowner retains the
operational control of the vessel and is responsible for
all the operating expenses such as port charges,
bunkers, vessels insurance, taxes, etc.
The charterers costs are usually costs and charges
relating to the cargo.
Loading and discharging costs are divided between
the ship-owner and the charterer in accordance with
the agreement from case to case.
 (3) Contents
A voyage charter party shall mainly contain
the names of the parties, the name and
nationality of the ship, its deadweight and
bale or grain capacity, description of the
goods to be loaded, port of loading and
discharge, laydays, time for loading and
discharge, payment of freight, demurrage,
despatch and other relevant matters.
 (4) Forms
There are more standard forms of voyage charter
party than any other form of contract of carriage.
The Uniform General Charter code name GENCON
is the most popular and widely used general purpose
voyage charter party on a global basis for all kinds of
trades and for numerous types of cargoes.
When used these forms are likely to have several
additional clauses attached to cover eventualities not
covered by the printed clauses.
 1.2 Manners of Voyage Chartering

1.2.1 Single Voyage Chartering

1.2.2 Return Voyage Chartering
1.2.3 Consecutive Single Voyage
Chartering
1.2.4 Consecutive Return Voyage
Chartering
 1.3 Characteristics of Voyage Chartering

1.3.1 Specific vessel, specific cargo, specific port and specific

route.
1.3.2 Rights, duties and responsibilities of ship-owners and
charterers are determinded by the charter party.
1.3.3 The charterer should be responsible for the arrangement
of the cargo, payment of freight calculated according to the
quantity of the cargo loaded or carried and other expenses
concerned.
1.3.4 The shipowner possesses and controls the vessel and
takes charge of the operation of the vessel and the manning
and management of crew.
 1.3 Characteristics of Voyage
Chartering

1.3.5 The shipowner should bear the operational expenses of

the vessel.
1.3.6 The payment by the charterer to the shipowner for
chartered vessel is usually called freight instead of hire.
1.3.7 The ship-owner charters out the whole vessel or part of
her space to the charterer.
1.3.8 There are the provisions for the laytime, demurrage
and dispatch.
2. Time chartering
2.1 Introduction
(1)Meaning
The time chartering means that the ship-owner provides a
designated manned ship to the charterer, and the charterer
employs the ship for a specific period against payment of
hire instead of for a certain number of voyages or trips.
Time charter generally does not include loading and
unloading costs in the charter rate.
Period
A single voyage
Several months or years
(3) Reasons for time charter
The time charterer may be a shipowner who for a time needs to
enlarge his fleet or a cargo owner with a continuous need for
transport, who does not want to invest money in a ship but
wants to have the control of the commercial operation of the
vessel. The charterer may be a speculator taking a position in
anticipation of a change in the market
(4) Costs
The charterer is liable for costs directly connected with the use
of the vessel, for example, bunker costs and port charges and
pays for the loading and discharging. Under a time charter the
crew is employed by the shipowner, who is also responsible for
the nautical operation and maintenance of the vessel and
supervision of the cargo.
 (4) Forms
Although considerably fewer in number than the wide
choice available for voyage chartering, there is an
adequate number of time forms for use in the time
chartering business.
The two major forms are NYPE and BALTIME.
When used these forms are likely to have several
additional clauses attached to cover eventualities not
covered by the printed clauses.
By far the largest number of time chartering are fixed
on the basis of the NYPE Charter Party.
 2.2 Characteristics of Time
Chartering
2.2.1 The shipowner should be responsible for the manning
of crew and bears the wages and provisions thereof.
2.2.2 The master shall be under the orders and directions of
the charterer as regards employment and agency. If the
charterer shall have reasonable cause to be dissatisfied
with the conduct of the master or officers, the ship-
owner shall on receiving the complaint make a change in
the appointments, if necessary.
2.2 Characteristics of Time
Chartering
2.2.3 The charterer should be responsible for the operation of
the vessel and bear the variable operational costs such as
bunkers, port charges, handling charge and canal tolls etc.
2.2.4 The shipowner should bear the fixed operational costs
such as costs relating to the vessel capital, ships
maintenance and stores, insurance premium and so on.
2.2.5 The ship is chartered as a whole/part and the hire is
calculated and collected according to the duration of
chartering and the agreed hire rate.
2.2.6 There are the provisions for the delivery/redelivery of
vessel.
3.Distinctive features of voyage
and time chartering
Use of ship
Voyage C/P, use vessel for one voyages
Time C/P, use vessel for period of time
Operation
Voyage C/P, the actual operation of the vessel is left to the shipowner.
Time C/P, the actual operation of the vessel is left to the charterer.
Operating costs
Voyage C/P, are borne by the shipowner.
Time C/P, are borne by the charterer
Remuneration
Voyage C/P, freight is fixed in proportion to cargo quantity
Time C/P, hire is fixed in proportion to the time occupied.
The risk of loss of time
Voyage C/P in principle borne by the shipowner
Time C/P is normally for the charterers account.
 4. TCT
Time Charter on Trip Basis
TCT means that the charterers employ vessels on a time charter basis for
the period of a specific voyage and for the carriage of a specific cargo and
this practice has given rise to the term time charter on trip basis: TCT.
TCT is similar to voyage chartering with regard to the fact that the
intention of the parties is to employ the vessel for one or two voyages. The
period of TCT is depend on the voyage and not fixed as time chartering.
There the similarity ends and the roles of charterer and ship-owner are
identical to those assumed for time charter.
There are no charter party forms designed purely for trip charters, and
trip chartering is negotiated and basis on standard time charter forms
and adapted slightly where appropriate.
The important feature of the time charter is still there, the charterer has
to pay hire according to the time spent in performance of the voyage.
 TCT
A time charter on trip basis is the simplest form of
time charter. During the time the vessel is on
charter the owner is paid an agreed daily rate, for
example $20,000 a day. The vessel is directed by
the charterer, who tells it where to load cargo, and
where to discharge it. The advantage of the TCT is
that it allows the charterer to provide greater
flexibility than a voyage charter under which the
contract involves the transport of a specific cargo.
 5 COA
5.1 Introduction
(1)Meaning
Contract of affreightment is a generic term which covers all
contracts for the carriage of goods by sea ( both charter parties and
bills of lading are contracts of affreightment).
It is also used in a more limited sense when it means a contract,
by which the shipowner promises to satisfy the charterers need
for transport capacity over a certain period of time, often one year
or several years.
 (2)Advantages
The advantage of such a contract to the shipowner
is that security of employment is obtained for his
vessel for duration of the contract, especially
valuable if the shipowner considers that freight
rates are about to fall.
But the charterers may also be able to obtain
financial advantage (security of transportation) in
the event that market freight rates rise once they
have committed shipowner or operator on the
contract.
 5.2 Characteristics of
Contract of Affreightment
5.2.1 Contract of affreightment can often be related to
voyage charter.
5.2.2 The length of the chartering period lies on the total
quantity of cargo to be transported
5.2.3 Cargoes carried under COA are usually bulky dry/liquid
cargoes
5.2.4 The risk of delay in sailing should be borne by the
shipowner
5.2.5 The freight should be calculated based on the quantity
of cargo
5.2.6 The partition of cost of loading and/or discharge is
usually as same as that of voyage chartering.
 5.3 Difference
At first glance a consecutive voyage contract and a contract of
affreightment may appear to be almost identical but the vital
difference is that the first is based around a named vessel
whereas the latter is based around the cargo.
Should the named vessel become a total loss the contract
would end because the contract become frustrated and the
shipowner would not be under any further obligation to the
charterer. In the second case it may be that the shipowner had
intended to carry the cargo in his own vessel even though he
had the option to use any vessel. If his vessel becomes a total
loss he could not terminate the contract and would be obliged
to charter in tonnage to fulfil his contract with the charterer.

6.Bareboatchartering
6.1Introduction
(1)Meaning
The bareboat chartering is a charter of a different type. This

contract amounts to a lease of the ship from the shipowner to

the charterer.
The bareboat chartering ordinarily means that the vessel is put

at the disposal of the charterer for a long period employment

without any crew.
The charterer thus will take over almost all of the shipowners

functions except for the payment of capital cost. This means

that the charterer will have the commercial as well as the
technical responsibility for the vessel and will pay for
maintenance, crew costs and insurance, etc.
 (2)Reason
Bareboat chartering is less common than other types of
contract.
It is sometimes used where a shipowner or ship operator
wishes to operate ships or to supplement his fleet for a period
of time without incurring the financial commitments of actual
ownership, but at the same time requires to have full control of
the chartered vessel, including control of its navigation and
management.
Further, bareboat chartering is sometime employed in
connection with the financial arrangements for purchase of the
vessel on installment terms. The bareboat charter then serves as
a hire/purchase contract, by which the shipowner/seller retains
formal ownership and thereby security in the vessel until the
full purchase price is paid.
 (3)form
There is only one standard form of bareboat charter
party used to any great extent and that is the
BARECON form designed by BIMCO.
A close examination of this form will show up the
fact that there are a number of clauses, which are
commonly found in time charter parties. In particular
the clauses relating to delivery, canceling, trading
limits, surveys, inspections, hire, redelivery, general
average, war, commission and law and arbitration
would be equally effective if used in a time charter
party.
 6.3DistinctivefeaturesofTime
charteringandbareboatchartring
A time charter is distinguished from a bareboat
charter by the employment of the master and crew.
With a time charter the master and crew remain
the employees of the shipowner, although they
will be subject to the directions of the time
charterer.
The time charterer therefore does not take
possession of the vessel. With a bareboat charter
the master and crew are employed by the
charterer, therefore he takes possession of the
vessel.
 7.Charterchains

7.1 Rightofsub-letting
It is customary to stipulate in both voyage and time charter
parties that the charterer has the right of sub-letting the whole or
part of the vessel, subject to the charterer remaining responsible
to the shipowner for the due fulfillment of the original charter
party.
This right is of considerable importance to the charterer since it
gives him a certain freedom to utilize the vessel in the way that
is most economical to him. Sub-letting frequently occurs in
practice;
 7.2Reasonsforsub-letting
The charterer may have chartered the vessel for the sole purpose of
making a profit by re-chartering or otherwise sub-letting it;
The charterer may find that the cargo which he intended to ship is not
available or, alternatively, that he is not in a position to utilize the
vessel for the original intended purpose, in which case he will seek
other employment for it in order to be covered for the freight which he
is due to pay the shipowner;
The charterer may also find, because of a rise in freight market rates,
that it is more profitable for him to re-charter the vessel than to utilize
it in the way originally intended.
A vessel may at the same time be involved in several different
contracts. The following example illustrates such a chain.
 7.3Chains
A is the registered or real owner of the vessel. Since
he is only interested in investing money in shipping,
he may have made a bareboat charter with B.
B, in his turn, has time chartered the ship to C. In the
relation B/C, B is act as a disponent owner, while C
is the time charterer.
C in his turn has chartered the vessel to D under a
voyage charter. In the relationship C/D, C is the time
chartered owner, and D is the voyage charterer.
 7.4Position
It is common that such charter chains exist, and it is important
that each party makes clear his respective position when
something happens. The action of each party must be based on
the contract in which he is involved. It is also important for a
charterer negotiating a sub-charter to be careful and take into
consideration the framework set by his charter with the
shipowner.
An important factor from a practical point of view which can
lead to complications is the use of bills of lading. This may
involve one or several of the parties directly in relation to the
owner of cargo or consignees. The connected questions will
be discussed later.
Section2.CharteringParticipators

Charterer
Shipowner
Chartering brokers
 1.Charterer
Meaning
The person entering into the charter party with the shipowner is

known as the charterer who in search of vacant cargo space for

transporting his commodity.
Kinds of charterers
Individuals operating small corporations

Major international trading-houses

The owner of the goods to be carried.

The seller or the buyer of a commodity.

Intermediary between buyer and seller(third party)

Shipowners/NVOCC/MTO

Forwarders
 2.Shipowner
Meaning
The person entering into the charter party with the charterer is
known as the shipowner or owner who owns or operate ships.
Kinds of shipowners
Some owners are of a single ship, others of large fleets. Some
concentrate on ships of a particular type or size. Many ships are
owned, in the legal sense, by financial institutions. This is
usually because the ships are being purchased under a hire
purchase arrangement. Some shipowners are state-controlled or
run their ships under the flag of the country in which they
reside, while others operate ships under a convenient flag.
 Disponent owner
Operators who employ a ship and then re-employ that vessel
for further business chartering her out in a new role are
described as disponent owners or time charter owners.
A disponent owner is a party deemed to be the shipowner
having control of the vessel by time charter.
We have seen that from time to time the party acting as the
owner may, in fact be the disponent owner such as the
party who has the ship on time charter. Occasionally there may
be more than one link in the chain between the actual
shipowner and the disponent owner involved in the immediate
fixture.
 3.CharteringBroker

3.1 Concept of chartering broker

The individuals or corporations who identify supply and

demand for ships and cargoes and thereby help the main-
players to secure cargoes for their ships and ships for their
cargoes are called shipbrokers or chartering brokers.

The existence of chartering brokers greatly facilitates the speed

and efficiency of the chartering process. The task of the
chartering broker is to provide expertise and information at the
time these are required by his clients. The expertise takes the
form of a knowledge and understanding of ships and trades that
enables him to meld the two to the mutual satisfaction of
shipowner and charterer.
 3.2 The Role of Chartering
Broker
The chartering broker should keep both the shipowner and the
charterer continuously informed about the market situation and
the market development, about available cargo proposals and
shipment possibilities.
The chartering broker should in all respects work loyally for his
principal and should carry out the task of negotiations and other
work connected with the charter scrupulously and skillfully.
The chartering broker should act strictly within given authorities
in connection with the negotiations and they have no authority to
quote q ship or a cargo, unless duly authorized by their
principals.
The chartering broker may not withhold any information from
his principal or give him wrong information.
 3.3 Number of Broker Involved
A typical deep-sea dry cargo fixture will involve at least two
chartering brokers - one representing the shipowner, the other
representing the charterer.
Sometimes there will be more brokers in the chain.
Whereas it is comparatively unusual for just one chartering
broker to be employed on a deep-sea dry cargo fixture, for
short-sea and some specialized trades occasionally only one
chartering broker will be engaged between two principals.
3.4Remuneration
The chartering brokers income is in the form of the
reward of commission or brokerage paid for a successful
introduction and negotiation between shipowner and
charterer leading to a fixture.
Even after hard work and expense, a negotiation that does
not lead to a fixture will normally result in no payment of
any kind to the broker in the middle. Thisistheshipping
practice.
 3.4Remuneration
Unless otherwise expressly agreed, commission is payable
only on freight or hire earned and paid; it is customary in a
voyage charter for this to be extended by agreement to allow
commission to be payable on deadfreight and/or demurrage, if
any. On time charter similarly it can be extended to a ballast
bonus.
In chartering it is the usual (though not invariable) practice for
a commission clause to appear in the contract (the
charterparty) and the commission is customarily payable by
the shipowner to the charterer's broker as well as to the owner's
broker.
 3.5InternationalBrokersCommission
Contract
In order to protect the broker interests The Federation of National Associations
of Ship Brokers and Agents (FONASBA) published an international brokers
commission contract which was recommended by BIMCO.

NOW IT IS HEREBY AGREED AS FOLLOWS:

1. The Owner shall pay commission to or otherwise remunerate the Broker:
(Delete as appropriate)
(a) In accordance with the relevant provisions of the Charter Party.
(b) As follows_________________________________________
2. Any dispute arising out of this Contract shall be referred to Arbitration at
_____________________and shall be subject to the law and procedures applicable
there.

For and on behalf of For and on behalf of

(Owner) (Broker)
Section3DescriptionoftheVessels
andCargoes
1. Description of the Vessels
Dimensions, Tonnages, Cubic capacity,
Classification, Nationality, Types of
ships
2. Description of the Cargoes
Commodities traded by sea, Bulk
cargo , General cargo
 1. Description of the Vessels
Description of the vessel is one of the most important items in
a charter party. The need for the description of the vessel in
the charter party very much depends on the circumstances.
The type of cargo and the intended ports and sea-ways
especially determine what details about the vessel must be
mentioned during the negotiations and in the charter party.
Normally the vessels name, dimensions, year of build, flag
of nationality, deadweight, gross and net tonnage, cargo
capacity, number of hatches, type of hatch covering and
length and breadth of hatch openings, and sometime the speed
and bunker consumption (time chartering and bareboat
chartering) are stated in the charter party.
 1.1 Vessels Dimensions

For chartering purpose, we need to know the size and dimensions of

ships. The most important dimensions of vessel are vessels length,
beam, and draft.
Vessels length is, as the name suggests, the length of the vessel
measured from the extremes fore and aft, which be expressed in
terms of LOA (Length Overall).
Vessels beam is the breadth of the ship measured at the widest part
of the hull, which be expressed in terms of BM (Breadth Molded).
Vessels draft is the distance from the waterline to the bottom of the
keel. For chartering purposes it is usual to refer to the draft of the
vessel when loaded to her maximum summer deadweight. The draft
will determine whether a ship can get into a particular port, or
transit a particular channel. The draught, of course, will vary with
the amount of cargo, fuel etc, aboard at any one time.
1.2 Vessels Tonnages
The specification of the vessels tonnage is
important, and it can be described in several ways
such as the deadweight (DWT), summer
deadweight (SDWT), deadweight all told
(DWAT) and deadweight cargo capacity
(DWCC). Gross Tonnage (GT), Net Tonnage
(NT).
 1.3 Vessels Cubic Capacity

The vessels cubic capacity is usually stated both in grain

capacity and in bale capacity. The grain capacity, which is
always bigger than the bale capacity, measured in either cubic
feet or cubic meters. It is the total volume of cargo space
contained inside the hull including also those parts of the
cargo holds that can be filled out with floating cargo, such as
grain, phosphates, etc.
The bale capacity is the volume of a vessels holds to carry
packaged dry cargo such as bales, pallets, boxes, cartons etc.
The bale capacity is therefore the grain capacity less any
space unusable for such cargoes. The vessels cubic capacity
is very important figures for the vessel loaded light cargoes.
1.4 Classification of Vessel

Classification of vessel in the charter

party is applied to ensure the
seaworthiness of the carrying vessel,
because classification of a vessel could
serve as the index indicating the
technology condition of the vessel
recognized by relative departments of
inspection e.g. ships classification
societies.
 1.5 Vessels Nationality
The nationality of a vessel is demonstrated through its flag
hoisting. It represents the relation between the vessel and
the flag state.
All ships must be registered to one of the nations of the
world in order that responsibility for violations of
international law and convention may be assigned. These
ships then fall under the jurisdiction of their nation of
registry. Shipping concerns adopted the practice of
shopping around for nations that would give them the best
deal on taxes, wages, and legal restrictions.
They "conveniently" register their ships with these
countries which include Liberia, Panama, Honduras, the
Bahamas, and operate ships under a convenient flag.
1.6 Types of Vessels
1.6.1 Dry Bulk Carrier
Capesize, Panamax, Handymax, Handysize
1.6.2 General Cargo Ship
1.6.3 Tanker (VLCC, ULCC)
1.6.4 Container Ship (TEU)
1.6.5 Other Ships
 2001

5446TEU
280
39.8
24.5
148527


pure care
carrier
(PCC)
1504 ft and 226 ft
564,763 tons ULCC



 350 42.8 9499TEU
30
10.9 14.5
25.4 4
COSCO( ) O 3
 2. Description of Cargo
The basis of the very existence of maritime transport is the
cargo. Over 90% of world trade is carried by the international
shipping industry. The maritime transportation industry is
fundamental to international trade. Without shipping the
import and export of goods on the scale necessary for the
modern world would not be possible.
According to the form in which the cargoes are transported,
cargoes may be classified bulk cargoes and general cargoes.
Further more, the bulk cargo can be classified dry bulk cargoes
and wet bulk cargoes. Chartering business mainly deal with
this kind of cargoes.
2.1 The Commodities Traded by Sea

2.1.1 Energy Trades

2.1.2 Agricultural Trades
2.1.3 Metal Industry Trades
2.1.4 Forest Products Trades
2.1.5 Other Industrial Materials
2.1.6 Other Manufactures
 2.2 Bulk Shipping
2.2.1 Dry Bulk Cargo
Dry bulk cargoes are used by many industries such as
manufacturing and construction and are divided into major
bulk commodities and minor bulk commodities. Major bulks
consist of iron ore, coal and grain. Minor bulks cover a wide
variety of commodities, such as forest products, iron and steel
products, fertilizers, agricultural products, ores, minerals and
petcoke, bauxite and alumina, cement, other construction
materials and salt
2.2.2 Liquid Bulk Cargo
Crude oil and oil products vegetable and animal oils,
wine, chemicals, etc.
 2.3 General Cargo

General cargo refers to the commodities that are shipped

wholly or partly by liner in accordance with the parcel size
distribution function. The transport of general cargo is a very
different business.
General cargo consists of consignments of less than ship or
hold size and, therefore, too small to justify setting up a bulk
shipping operation.
In addition there are often high-value or delicate cargoes that
require special shipping service and for which the shipper
requires a fixed tariff rather than a fluctuating market rate.
General cargoes usually loaded into containers and are carried
by the container ships.
 Section 4 Standard Charter
Party Forms

The economics of chartering business not only depend on the

rates, but also on the transport terms and conditions stipulated
in the relevant charter parties. In order to simplify
negotiations between the parties, these charter parties are
based on standard forms contract forms designed and
published by international bodies containing specific clauses
for a given trade.
Charter party forms are perhaps one of the most important
facilitators of trade and transport. They are an essential tool
for sea trading and the avoidance of disputes between the two
parties that are involved, and they can be tailored to virtually
every kind of trade or ship-type.
 1. The development of standard
charter party form

It was in the nineteenth century that shipowners and

charterers first concerned themselves with the drafting
of standard charter party forms. Such forms were
originally drafted and employed by individual
contracting parties, but joint action was later
undertaken by groups of shipowners and charterers. An
early development began with parties involved in
chartering in particular trades co-operating on the joint
issue of agreed documents.
BIMCO
 2. Types of standard
charter party form

The international bodies have issued or approved a great number

of charter party forms many of which are so-called standard
charter party form, as they result from negotiations between
charterer and shipper interests, on the one hand, and shipowner
interests, on the other. These are generally referred to as
official forms that they have been inspected and passed by an
authoritative body.
A further type of standard charter party form is so-called
private form, which is issued and employed by individual
firms, usually charterers enjoying more or less of a monopoly in
a particular trade and therefore in a position generally to impose
their own form on the shipowner. Such private forms, of which
there exist a great number, are common in, for example, the ore,
fertilizer and oil trades.
 3 General aspects of standard
charter party form
The charter party is the written charter agreement. It contains all
the terms and conditions which govern the relationship between
the shipowner and charterer. Several charter parties have a code
name, often printed at the top of the form. The clauses are
numbered and sometimes every line is numbered, this is the case
with, e.g., Gencon Form.
In the modern charter party forms the box layout system is used,
which means that the written agreement is divided into two main
parts, the box part with all specifications for the relevant vessel
and the voyage, and the text part with all the printed clauses.
In most cases the charter party also has a third part, the rider and
addenda, where additional, photocopied standard clauses or
typewritten clauses are inserted by the parties if they think
necessary .
 Standard charter party forms
Name Date Code name Publisher

Uniform General 1922,1976,1994 GENCON BIMCO

North American 1973(amended NORGRAIN 89 ASBA
Grain 1989)
Uniform Time 1939(amended BALTIME BIMCO
Charter 1974)
New York 1993 NYPE 93 ASBA
Produce
Exchange T/C
Standard 2001 BARECON BIMCO
Bareboat
4.Advantages of using standard charter
party forms

To standardize clauses.
To simplify the negotiation.
To reach international uniformity.
To reduce the risk of misunderstanding
and disputes arising in respect of the
matters covered by the contract.
 5. Classification of contractual terms
In determining whether the innocent party has
the right to treat the contract as discharged it
seems that regard must first be had to the
nature of the contractual term that has been
breached.
For this purpose the breached term may be
placed in one of three categories, namely
conditions, warranties and intermediate terms.
 5.1 Conditions

A condition in this context is a term of the contract that is of such

important that any breach of it will entitled the innocent party to treat
the whole contract as discharged.
-Where the obligation is designated as a condition in a statute.
-Where the obligation is specifically designated in the contract as a
condition.
-Where the obligation has been held to be a condition in another case.
-Where the supposed intention of the parties, as indicated from the
terms and general background of the contract, so indicate.
 5.2 Warranties

A warranty in this context is a term of the contract of

such minor importance that no breach of it will entitle
the innocent party to treat the whole contract as
discharged. For breach of such a term the innocent
party can make only a claim for damages.
The following express terms are usually held to be
warranties; maintenance of vessel; redelivery of
vessel; size of bunkers; vessels speed.
 5.3 Intermediate terms

Any term of the contract which cannot be classified as a

condition or a warranty will be classified as an intermediate
term.
Whether a breach of such a term does or does not entitle the
innocent party to treat the contract as discharged depends on
the nature and consequences of the particular breach that has
occurred.
The court will enquire whether the event resulting has the
effect of depriving the other party of substantially the whole
benefit which it was the intention of the parties that he should
obtain from the contract. If the event has this effect, The
innocent party may treat the contract as discharged; otherwise
he can make only a claim for damages.
6. Principles of interpretation
of charter party
Courts and arbitrators may apply various principles or
methods in their interpretation.
The primary consideration in construing any contract is the
intention of the contracting parties. Thus, a charter party must
be construed in the light of the particular undertaking with
which it is concerned.
One interpretation principles is generally considered to be that
clauses hinged to stamped on or typewritten into the charter
party will apply before the printed original text. In this cases
the written, stamped on or typed clause should usually prevail,
as clearly expressing the intention of the parties.
 6. Principles of interpretation
of charter party
Where both clauses are printed or both typewritten,
a clause specifically designed to deal with a limited
range of circumstances will, so far as concerns
matters falling within that range, prevail over a
clause of general application.
Another principle that may be applied is that
imprecise and ambiguous wording will be construed
against the party who furnished the provision.
 6. Principles of interpretation
of charter party
The rule of interpretation know as the ejusdem generis rule is
often applied. That is to say, general words which are tacked on
to specific words are to be construed as referring only to things
or circumstances of the same kind as those described by the
specific words. The ejusdem generis rule may be excluded by
apt words in the document.
The words must be construed in their ordinary meaning, but
technical words must be given their technical meaning. Where
the words are capable of two constructions, the reasonable
construction is to be preferred as representing the presumed
intention of the parties.
 Section 5 Charter Market
Meaning of chartering market
The chartering market is a definite geographical area

where demand and supply of tramp services are

confronted with each other and a price of transport is
established.
1. Characteristics of chartering market
1. The charter markets are highly competitive
2. The charter market is complex and often
volatile
3. Tramp shipping has relatively few barriers
to entry .
4. Information systems in bulk shipping
business are very open
5. Trade growth is influenced by the world
business cycle and is very volatile and
unpredictable.
2. Influence Factors on Charter market
Fleet supply
Commodity demand
Seasonal pressures
Bunker prices
Choke points
 3. Classification of
chartering market
According to ship type and size and to particular commodities
dry cargo market, heavy-lift market, reefer market, tanker
market.
The chartering market is divided by length of charter
the short-term spot market ------ voyage charters or trip time
charters.
the longer-term period market -------- consecutive voyage
charters ; time charters and long-term bareboat charters.
Area
the Baltic Mercantile and Shipping Exchange in London Market
N.Y. Maritime Exchange in New York Market
North Europe Market
Asian Markets including Tokyo, Hong Kong and Shanghai and
 Section 6 Comparison of liner
and chartered shipping
Merchant shipping, considered from the standpoint of
types of service provided, may be divided into two
major categories: Liner Service and Tramp Shipping.
While there are some similarities, the differences in
the theory and techniques of management of these
two types of marine transportation are notable. The
service rendered, the geographic area covered, the
operating problems, the relationship between vessel
owner and vessel user, and the actual employment of
the ship, vary markedly between the two categories.
 1. Liner Service

1.1Liner shipping is to provide regular services between specified ports

according to time-tables and prices advertised well in advance. The
service is, in principle, open to all shippers and in this sense it resembles a
public transportation service.
1.2 Liners are common carriers, required by law to accept without
discrimination between offerers any legal cargo which the ship is able to
transport.
1.3 Goods carried in liner-service ships usually are of higher value than the
cargo hauled in tramps, and are charged higher freight rates.
1.4 A liner-service company issues a standard (or uniform) contract of
carriage or bill of lading.
1.5 Freight rates in the liner-service are stabilized by setting identical charges
for all shippers of the same item aboard a certain ship.
1.6 Carriers liability follows the principle of tackle to tackle.
 2. Chartering

2.1 Sailings are based on cargo commitments that vary with the vessels
employment, and are usually different for every voyage.
2.2 Tramps are contract (private) carriers, and normally carry full shiploads of a
single commodity, usually in bulk.
2.3 Cargoes carried in tramps generally are those which can be transported in
bulk and have low intrinsic value.
2.4 The owner of tramp ship must negotiate separate contract for each
employment of his vessel, and the terms of the charter party vary from ship
to ship, depending upon the bargaining abilities of shipowner and charterer,
and the general trend of the market.
2.5 Freight rates for tramps vary according to the supply of and demand for
ships. Rates and services are determined by negotiation between shipowner
and charterer, and reflect the specific requirements of the contracting
parties.
 3. Cost elements in chartering and
Liner
Bareboat charter Time charter Voyage charter

Master appointed & Master appointed by Master appointed and

directed by charterer owner, directed by charterer directed by owner

Revenue depends on: Revenue depends on: Revenue depends on:

Hire rate & duration Hire rate & duration Quantity of cargo & rate

Costs paid by owner: Costs paid by owner: Costs paid by owner :

Capital Capital Capital Brokerage Brokerage Wages
Brokerage Wages Provisions Maintenance
Provisions Repairs Stores & supplies
Maintenance Lube oil Water
Repairs Insurance Overheads
Stores & supplies Port charges
Lube oil Stevadoring charges
Water Cleaning holds
Insurance Cargo claims Light dues
Overheads Canal dues Bunker fuel
 Section 7 Associated Shipping
Organizations
1. United Nations International Maritime Organization
(IMO)
2. The International Chamber of Shipping (ICS)
3. The International Association of Dry Cargo Shipowners
(INTERCARGO)
4. The International Association of Independent Tanker
Owners (INTERTANKO)
5. The Baltic and International Maritime Council (BIMCO)
6. The Federation of National Associations of Ship Brokers
and Agents (FONASBA)