Kinds of Charter Party

A charter party is a document of contract by which a shipowner agrees to lease, and the charterer
agrees to hire, a vessel or all the cargo space, or a part of it, on terms and conditions forth in the charter
party. If permitted to do so by the terms of charter party, the charterer may enter into subcontracts with
other shippers.

There are three basic types of charter party: voyage charter party, time charter party and Demise
charter party. In each case, the contract between the shipper (or charterer) and the shipowner is called
the “charter party.”

Voyage Charter Party:

This is a charter party for the carriage of a full cargo, not for a period of time, but at a stipulated rate per
ton, for one voyage only, between named ports to be named on arrival in a given area.
In a voyage charter party the charterer assumes no responsibility for the operation of the vessel but
generally pays stevedoring expenses in and out. A statement to that effect will be included in the charter
party. 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 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.

Time Charter Party:

A time charter is a contract whereby the lessor delivers a fully furnished and manned ship to the lessee
for a specified period of time. A time charter party is a property lease agreement signed between the
shipowner and charterer, which specifies the following: shipowner name, charterer, ship name,
tonnage, capacity volume, registration capacity, seaworthiness of the ship, time and place of delivery,
return, charter time, chartered sea area, charter, distribution of a number of operating expenses of
ships like fuel, freshwater.

Demise Charter Party:

Demise charter is a contract whereby the ship owner leases its vessel to the charterer for a period of
time during which the whole use and management of the vessel passes to the charterer. In such a
situation, the charterer pays all expenses for the operation and maintenance of the vessel. Officers and
crew become servants of the charterer. A demise charter whereby the charterer has the right to place
its own master and crew on board of the vessel is called a bareboat charter.
Clauses of Charter Party

A charter party may contain these clauses;

1. Bunker clause

2. Ship clause

3. Ice clause

4. Lighter age clause

5. Negligence clause

6. Ready berth clause

Bunker Clause:

A bunker clause stipulates that the charterer shall accept and pay for all fuel oil in the vessel's bunkers at
port of delivery and conversely, (owners) shall pay for all fuel oil in the vessel's bunkers at port of re-
delivery at current price at the respective ports. It is customary to agree upon a certain minimum and
maximum quantity in bunkers on re-delivery of the vessel. Since the OW Bunker test case, ship
operators need to take care to ensure that bunker supply terms are suitable.

Ship Clause:

The object of this clause is to ensure that in the event the insured vessel comes into collision or receives
salvage services from another vessel belonging wholly or in part to the same owners or under the same
management, the assured shall have the same rights under the policy as they would have had if the
other vessel was entirely the property of other shipowners.