5/25/2020 Charty party forms in a charter agreement between shipowner and charterer

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Charty party forms in a charter agreement between shipowner and charterer

Defining a charter party

A charter party (commonly abbreviated to “C/P”)

i) is a document containing the written terms of a charter agreement between a shipowner and a charterer, who are
usually respectively referred to in the text in the plural, i.e. as “Owners” and “Charterers”.

ii) defines the obligations, rights and liabilities of the shipowner and charterer.

iii) is usually drawn up by the broker representing the charterers following negotiation and agreement of terms
between both parties.

iv) is usually based on a particular edition of a recognised standard form (e.g. GENCON, BALTIME, NYPE).

v) is sometimes based on a specified charter party already performed by another vessel at an earlier date, in order
to save effort and time in negotiating many of the terms.

vi) usually comprises a set of standard clauses on a printed form, with additional typed rider clauses appended if
the standard clauses fail to cover all aspects of the parties’ agreement. Where there is a conflict between standard
and rider terms, the rider clauses override the standard clauses.

vii) may have many amendments to the standard clauses, as agreed by the parties. Generally, the more
amendments there are, the more scope for legal disputes, and it is preferable to have as few amendments as
possible.

viii) may be in a modern “boxed” layout, with plain wording of clauses (as with BIMCO-designed forms), or in a
more traditional style with (sometimes) rather archaic wording.

ix) may contain annexes dealing with special arrangements (as with CRUISEVOY, which has five annexes).
x) may have sensitive clauses in an addendum and/or side letter. Side letters are legally not so important as
addenda.

xi) should be signed by a broker representing each party to the contract, unless their principals sign instead.

xii) should ideally be balanced so that it does not favour one party to the disadvantage of the other. (Some charter
parties, such as SUGAR CHARTER 1999, are sometimes accused of being biased.)

Numerous charter party forms are in use for different trades and purposes. The use of an “off-the-shelf” form which
has been carefully drafted, amended and improved over the years to avoid legal pitfalls is generally preferred by
brokers and shipping practitioners to creating a totally new document for an individual charter.

Many forms have more than one edition, having been amended and improved over the years. Brokers may still use
an older version, however, in preference to a newer version that has not gained their confidence.

Modern charter party forms drafted by BIMCO9 generally have boxed layouts, whereas older forms are in
“conventional” layout. In a BIMCO boxed layout form, variable information is contained in boxes in Part I, while
standard terms are contained in printed terms in Part II. Legally, the contract is generally contained in the Part I
details, and in any other variable details in rider clauses, etc.

Voyage charter party forms

Examples of voyage charter party forms used in various trades are as follows:

Codename //Trade // Remarks

AFRICANPHOS // Moroccan phosphates //Charterers’ form.

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AMWELSH // Coal // Americanized Welsh coal C/P. Widely used.

ASBATANKVOY // Tanker // American form.

AUSTWHEAT // Australian wheat // Australian Wheat Board form.

BEEPEEVOY // Tanker //BP form, used by many companies.

CHEMTANKVOY // Chemicals // BIMCO form. Boxed layout.

CRUISEVOY // Cruising // BIMCO form for cruise ship charter

C”ORE”7 // Iron ore // Full name: Mediterranean Iron Ore C/P.

FERTIVOY // Fertilisers // Unknown origin.

GENCON // General purpose // BIMCO form. 1922, 1976 and 1994 revisions.

GRAINVOY // Grain // BIMCO form.

INTERTANKVOY // Tanker Intertanko form, used by independent owners.

NORGRAIN // North American grain American form.

NUBALTWOOD // Timber // Used in Baltic trade.

OREVOY // Iron ore // BIMCO form with boxed layout.

PANSTONE // Stone (UK/Eire and N Continent trade) //BIMCO form last amended 1995 but retaining traditional
layout.

SHELLVOY // Tanker // Shell form, used by many companies. Various editions.

Time charter party forms

Examples of time charter party forms in use are as follows:

Codename // Trade // Remarks

ASBATIME // Dry cargo tramp or liner // American form.

BALTIME // Dry cargo tramp or liner // BIMCO form. Boxed layout. Popular in short sea trades.

BEEPEESUPPLYTIME // Offshore service // BP form.

BEEPEETIME // Tanker // Widely used BP form with various versions.

GENTIME 1999 // Dry cargo tramp or container // Designed to replace BALTIME 1939 and LINERTIME, and as an
alternative to NYPE.

INTERTANKTIME // Tanker // Intertanko form. Used by independent owners.

LINERTIME // Dry cargo // liner BIMCO form. Boxed layout.

NEW YORK PRODUCE EXCHANGE (NYPE) // Dry cargo tramp or liner Most commonly used time C/P form. 1946
version more popular than 1993 version.

SHELL VESSEL TIME // Offshore service // Shell form. 1986 revision of SHELL SUPPLY.

SHELLTIME // Tanker // Shell form, but widely used. Various versions.

SUPPLYTIME // Offshore supply // BIMCO form.

TEXACOTIME // Tanker // Texaco form. Various versions.

Defining a sub charter

It is common for the terms of both time and voyage charters to permit the charterers to sub-let the vessel in whole
or in part, on condition that the head charterer remains responsible to the shipowner for the performance of the
original charter. It would be possible, therefore, for a vessel to be:
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1. owned by a bank or finance house;

2. leased or bareboat chartered to Company A;

3. time-chartered from Company A by Company B;

4. voyage-chartered from Company B by Company C;

5. employed by Company C in its own liner service, or even sub-chartered from Company C by Company D.

* Any reference in a charter party to a “disponent owner” refers to the time or bareboat charterer of a sub-let
vessel, who assumes, in relation to the sub-charterer, the responsibilities of a real owner.

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Various chaterparty freight clauses- How they are calculated

Freight may be of the following kinds: Ordinary or charter party freight ; pro-rata freight; Advance or pre-paid
freight;Back freight; Ad valorem freight, Lumpsum freight; bill of lading freight; Ad valorem freight;Dead
freight etc...

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Laydays and the cancelling date in a charter party agreement & laytime clause

The cancelling date is the final layday and the date beyond which, if the chartered vessel has not been
presented for loading, the charterers may reject her and cancel the charter. Will usually be found in a
Cancelling Clause, which provides that the charterers will not be entitled to cancel the charter before the stated
cancelling date, even when it is obvious that the vessel cannot arrive at the loading port by this date.

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Various charter party clauses

Despatch clause : If cargo operations are completed before expiry of the laytime, a monetary reward, termed
despatch or despatch money, is normally payable by the owners to the charterer. Despatch money or despatch
is defined as an agreed amount payable by the owners if the vessel completes loading or discharging before
the laytime has expired.

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Specifying notice of readiness

notice to the charterer, shipper, receiver or other person as required by the charter party that the vessel has
arrived at the port or berth, as the case may be, and is ready to load or discharge.

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Charter related problems at loading ports

If charterers repeatedly reject the vessel on grounds of unclean holds or tanks most charter parties have
clauses dealing with cleaning of compartments before loading.

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Carriers lien on cargo

In common law, a carrier may exercise a possessory lien on any part of the cargo in respect of which freight is
owing at the destination, and also for money which has been spent in protecting the cargo (e.g. where reefer
goods have been warehoused by the shipowner while a damaged reefer vessel has been drydocked).

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Cargo ships employment in the liner trades

As a liner, either in a passenger trade or a cargo trade, a ship is operated on one or more fixed routes, with
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Liability as a carrier in time charter agreement

When cargo is shipped, the shipper may be given a mate’s receipt (or equivalent document) as
acknowledgement. The information in a mate’s receipt forms the basis of a bill of lading, which in many non-
liner trades is prepared by the shipper.

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Rules governing carrier's obligations and liability

Some States have not, for one reason or another, adopted any of the sets of rules, leaving it open to the
carrier, in the absence of any domestic legislation in the port State, to decide which set of rules, if any, will be
incorporated into the contract of carriage.

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Sales of goods stoppage in transit

The seller must give the ship written instructions (e.g. by telex or fax) which should be retained by the master
as evidence. The carrier is then obliged to return the goods to the port of shipment, the seller being liable for
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Sales of goods stoppage in transit

To determine whether the vessel has become an “arrived ship” within the charter party terms the master will
need to know whether the charter party is a “port charter party” or a “berth charter party”. Which of the
parties bears the risk of delay following arrival of the vessel will depend on which of the two types the charter
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Summarized below seagoing cargo ship various employment guide:

1. Charty party forms

defines the obligations, rights and liabilities of the shipowner and charterer. Recognised standard form (e.g.
GENCON, BALTIME, NYPE)
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Nature of a time charter

The charterers agree to hire from the shipowner a named vessel, of specified technical characteristics, for an
agreed period of time, for the charterer’s purposes subject to agreed restrictions.
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2. Voyage charter advantages

contract for the carriage by a named vessel of a specified quantity of cargo between named ports or places.
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3. Terms of Bareboat charter and lease arrangement

The vessel owners put the vessel (without any crew) at the complete disposal of the charterers and pay the
capital costs, but (usually) no other costs.
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4. Seaworthiness of vessel

A vessel must be fit to encounter the “ordinary perils of the sea” (e.g. bad weather) and other incidental risks
to which she will be exposed on the voyage..
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5. International trade terms (INCOTERMS) in sea transportation

INCOTERMS is a set of rules, published by the International Chamber of Commerce, for the uniform
interpretation of the most commonly used trade terms used in international trade contracts.
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6. Money transfer procedure in sea transport

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5/25/2020 Charty party forms in a charter agreement between shipowner and charterer

Money transfer system commonly used in overseas trade to enable sellers to obtain early payment, i.e. soon
after shipment of the goods.
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7. Contract between cargo seller and buyer

The contract of sale between the seller and the buyer of the goods is separate from the contract of carriage
which one party or the other, or a third party (such as a freight forwarder), will make with the carrier .
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8. Parties involved in sea transportation of goods

Forming links in the transport chain- Sea carrier, Freight forwarder, shipper, consignee,agent & banks
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9. Carriage of goods by sea act 1992 (COGSA 92)

Section 3 of COGSA 92 lays down guidelines establishing when liabilities under a bill of lading, sea waybill or
ship’s delivery order will be transferred to a party who is not an original party to the contract of carriage (i.e.
an endorsee or transferee). The party who takes or demands delivery of the goods to which a bill of lading, sea
waybill or ship’s delivery order relate becomes subject to the same liabilities as the original shipper..
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10. Laytime interpretation rules

Rules, which were issued jointly by BIMCO, CMI, FONASBA and INTERCARGO, replace the Charter party
Laytime Definitions 1980.
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11. CIF ( Cost, Insurance and Freight ) used in international trade terms (INCOTERMS)

“CIF” means Cost, Insurance and Freight (paid to a named place), e.g. CIF London.- is a contract based on the
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12. FOB ( free on board ) used in international trade terms (INCOTERMS)

“FOB” means Free On Board (named port of shipment), e.g. “FOB Newcastle NSW”. It is one of the most
commonly used term (INCOTERMS) in sales contracts involving sea transportation of goods.
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13. Ships employment baltic exchange

Baltic Exchange members undertake to abide by a strict code of business practice, enshrined in the famous
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14. Ships charter market place

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15. Common Chartering abbreviations

Many terms commonly used by shipbrokers and others involved in ship chartering, mainly to save time and
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16. Tanker freight worldscale

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