Report Outline:

Chapter V: Charter Parties

Charter Party - a contract by virtue of which the owner or agent binds himself to
transport merchandise or persons for a fixed price.

- a contract by which an entire ship, or some principal part thereof

is let/leased by the owner to another person for a specified time or
use. (Planters Products, Inc. vs. CA, 226 SCRA 476)

- Parties:
o Ship owner or ship agent
o Charterer

Types of Charter Party

a. Bareboat Charter - the shipowner will merely deliver the possession of

the vessel to a charterer. Its up to the charterer to provide the crew,
supplies and provisions, fuel for the duration of the charter. He might
choose the regular crew to man the vessel but that is his choice.

The charterer becomes the owner of the vessel pro hac vice, just for
that one particular purpose only. Because the charterer is treated as
owner pro hac vice, the charterer assumes the customary rights and
liabilities of the shipowner to third persons and is held liable for the
expense of the voyage and the wages of the seamen.

In a bare boat charter, the vessel ceases to be a common carrier, it becomes

a private carrier. It is the charterer who will be liable to the holders of the
goods if the goods get lost. And since it is a private carrier, if the charterer
does not pay the shipowner the stipulated fees, the shipowner cannot ask
that the cargoes be sold to satisfy his claims because he has no lien on the
goods.

b. Contract of Affreightment - A contract whereby the owner of the vessel

leases part or all of its space to haul goods for others.

The shipowner retains the possession, command and navigation of the

ship, the charterer merely having use of the space in the vessel in return for
his payment of the charter hired.

Kinds of Contract of Affreightment:

o Time Charter - vessel is chartered for a fixed period of

time or duration of voyage.

o Voyage Charter - the vessel is leased for one or series of

voyages usually for purposes of transporting goods for
charterer.
Forms and Contents of Charter Party

a. The kind, name and tonnage of the vessel

b. Her flag and port of registry.
c. The name, surname and domicile of the captain.
d. The name, surname and domicile of the ship agent; and if the latter should
make the charter party.
e. The name, surname and domicile of the charterer; and if he states that he is
acting by commission, that of the person for whose account he makes the
contract.
f. The port of loading and unloading.
g. The capacity, the number or tons or weight, or measure which they
respectively bind themselves to load and transport, or whether it is the total
cargo.
h. The freightage to be paid, stating whether it is to be a fixed amount for the
voyage or so much per month, or for the space to be occupied for the
weight or measure of the goods which cargo consists, or in any other
manner whatsoever agreed upon.
i. The amount of primage to be paid by the captain.
j. The days agreed upon for loading and unloading.
k. The lay days and extra lay days to be allowed and the rate of demurrage.

Requisites of a Valid Charter Party

a. Consent of the contracting parties

b. Existing vessel which should be placed at the disposition of the shipper
c. Freight
d. Compliance with Article 652 of the Code of Commerce

Obligations of the Shipowner

a. If the vessel is chartered wholly, not to accept cargo from others;

b. To observe represented capacity;
c. To unload cargo clandestinely placed;
d. To substitute another vessel if load is less than 3/5 of capacity;
e. To leave the port if the charterer does not bring the cargo within the lay
days and extra lay days allowed;
f. To place in a vessel in a condition to navigate; and
g. To bring cargo to nearest neutral port in case of war or blockade.

Obligations of the Charterer

a. To pay the agreed charter price;

b. To pay freightage on unboarded cargo;
c. To pay losses to others for loading uncontracted cargo and illicit cargo;
d. To wait if the vessel needs repair;
e. To pay expenses for deviation. (Arts. 679-687)
Rescission of Charter Parties

a. at Charterer's request: (Art. 688)

1. By abandoning the charter and paying half of the freightage;
2. Error in tonnage or flag;
3. Failure to place the vessel at the charterers disposal;
4. Return of the vessel due to pirates, enemies or bad weather;
5. Arrival at a port for repairs.

b. at Shipowner's request: (Art. 689)

1. If the extra lay days terminate without the cargo being placed
alongside the vessel;
2. Sale by the owner of the vessel before loading by the charterer;

c. Fortuitous Causes: (Art. 690)

1. War or interdiction of commerce;
2. Blockade;
3. Prohibition to receive cargo;
4. Embargo; and
5. Inability of the vessel to navigate.