Regarding the parties that are going to carry out goods transport by sea, other than using the services from shipping companies, they can lease or charter the ship for that purpose. Ship for that leasing agreement between the ship owner and the party who leases it is called Charter Party.A contract of affreightment, signed between the shipowner and the charterer whereby the former hires the vessel to the letter for the carriage of goods, etc., either for a period of time known as time charter or demise or bareboat charter or voyale charter.
In the demise or bareboat charter the whole management and runing expenses of the ship are automatically handed over to the charterer until the expiry date of charter.
In some charters the insurance is the owner's responsibility, in other the payment of premiums is equally shared. The charterers have a free hand as to where and how to do business, including limitation of voyage so long as they honour the contract. Charter rate is calculated on a lump sum basis or on a calender month or annual basis depending on the lenght of the charter time.
The vessel is to be returned to her owner's in the same condition as she was when delivered to the charterer's. Therefore surveys are effected on delivery and redelivery. Surveys are done before delivery and immediately after redelivery to assess any repairs which may be necessary. In time Charterers the Ship's cargo capacity is temporarily allotted to the charterers for a fixed time and committed to limited ports of call while trading. Insurance remains the responsibility of the owners . Food, stores bunkers, port expenses, etc., are to be borne by the charterers. Charter rate is calculated on a lump sum basis per month or so much per deadweight ton per calendar month.
In a voyage charter all expenses are provide and paid for by the owners unless otherwise agree upon by the parties. There are numerous code form of charterparties and each one is used in relation to the particular trade and are allocated
There are 3 kinds of Charter Party, Namely;
1. Voyage Charter is the ship leasing agreement from a port to another port for a single trip. The Expense is determined between the ship owner and the charterer. In this case the charterer acts only as shipper without being charged with other responsibilities.
2. Time Charter is the ship chartering agreement for a certain period of time
Chartering expenses are based on a number cases, including. A) Duration of charter. B) Fuel consumption. C) Size, kind and specification of chartered ship.
The above matters are being considered, because in time charter, the charterer is responsible for matters associated with load and fuel, while the ship owner is still responsible for the salary payment of the crew, ship insurance coverage and repair and service expense.
3. Bareboat Charter, also called Demise Charter is the ship charter agreement where the charterer is full responsible for the entire ship. This will bring consequences that the charterer shall provide the crew, pay the crew’s salary and bear other expenses. He shall act as if he is the ship owner. Bareboat charger shall last usually for one (1) year minimum.
This kind of Charter Party is usually carried out by the government of a State in order to fill the gap of urgent or emergency ship space, for example in war time and in order to overcome congestion at the port.
