Charter Parties

The term "charter party" stands for the contract between the owner of a vessel and the charterer, that is the one that takes over the vessel for a certain amount of time or voyage. Three are the main types of charter:

1) The Voyage Charter. The charterer hires the vessel for a single voyage. The owner and his crew manage the vessel;
2) The Time Charter. Here the vessel is hired for a specific amount of time. The owner still manages the vessel but the charterer selects the ports of destination and controls the operation of the ship. It is a more permanent arrangement than the voyage charter and more representations are made about the ship to the charterer;
3) Demise or Bareboat Charters. This arrangement is completely different from the previous two. The charterer takes full control of the vessel along with the legal and financial responsibility for it. The demise shifts the control and possession of the vessel.

Charters are not in themselves subject to Cogsa but bills of lading issued in conjunction with a charter are. As a practical matter, many charter party forms stipulate the applicability of Cogsa or the Harter Act to the relations between owner and charterer. Such stipulation is valid and enforceable even without the issuance of a bill of lading. Suits brought for the breach of an obligation under a charter party are generally within the admiralty jurisdiction. As long as the agreement is executory, for inadequate performance the remedy is in personam which allows the plaintiff to go to state court under the saving clause. If, however, a charter breach creates a maritime lien, the suit is in rem with exclusive admiralty jurisdiction.

What has been said above mostly applies to commercial operations and voyages. In pleasure boating, the most frequent charter arrangement is the bareboat charter. The voyage or time charter is only used for larger yachts and is more the exception than the rule. Charter fleets are mostly made up of boats belonging to individuals or companies who only use their boats on a part time basis or as an investment. a recent arrangement in recreational boating is the time-share chartering in which several charterers are assigned a certain number of days per month or season in a manner which resembles time-share for residential resorts.


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