Charter Party Shipping Contract is very important to know for all the Admiralty and Maritime lawyers and everyone relating to this business. Parties to a charter party must be careful in drafting such an agreement. The charter party must reflect the intention of the parties and be free from ambiguity and uncertainty. This article provides an overview of the standard terms and conditions of a Charter Party Agreement.

 

Charter Party Shipping Contract

 

A Charter Party Shipping Contract is a crucial agreement in Admiralty and Maritime Law, where a ship owner leases their vessel to a charterer for cargo transport. This contract details essential terms such as the name of the vessel, charter period, lay days, place of delivery, cargo history, rate of hire, and trading limits.

Additional clauses cover the vessel’s speed, permissible cargo, payment terms, and obligations of both parties. It also includes provisions for off-hire periods, sub-letting, inspections, and damage responsibilities. Properly drafted, this contract ensures clarity and prevents disputes, adhering to legal standards and protecting the interests of all parties involved in maritime operations. For legal assistance, Counsels Law Partners (CLP) offers expert services in Admiralty and Maritime Law in Bangladesh.

 

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What is a Charter Party Shipping Contract?

 

A Charter Party Shipping Contract is a contract by which the Owner of a ship lets it to a Charterer for use in transporting cargo. The ship owner continues to control the navigation and management of the vessel. However, its carrying capacity and specifics during the voyage are engaged and controlled by the Charterer.

The following terms must be present in a Charter Party Shipping Contract –

  1.           Name of Vessel                     
  2.           Charter Period: The period of the voyage
  3.           Lay days/Cancelling: This term must include the Commencement date of the voyage and the Cancelling date.      
  4.           Place of Delivery: The port of destination must be mentioned here.            
  5.           Cargo history: The previous history of the cargo needs to be mentioned before the voyage starts.
  6.           Place of Re-delivery: if applicable
  7.           Bunkers on Delivery and Re-delivery: if applicable
  8.           Rate of Hire: The rate of hire and the overtime hire rate must be mentioned.
  9.          Owners’ Payment Details: The owner’s bank details must be provided.
  10.           Bunker Specifications: A detailed specification of the bunker must be provided
  11.           Product Description: A detailed description of the products along with the number of products
  12.           Trading Limits: The limits of the voyage must be clearly mentioned so that the vessel does not depart from the original route.
  13.           Additional Clauses: Any other additional clauses as demanded by the ship owner or the charterer.

 

In addition to the above mandatory clauses, the following clauses should also be included in the Charter Party-

 

  1. SPEED OF THE VESSEL: The permitted speed of the vessel along with the route must be inserted in the Charter Party Agreement.
  2. CARGOES: Permitted items as well as the capacity of the items in cargo must be mentioned. The consequences of carrying illegal items in the cargo should also be declared.
  3. Payment: It must be mentioned when the payment must be made and also when the advanced payment has to be made. The consequence of failure to pay must also be mentioned.
  4. OWNERS’ OBLIGATIONS: A detailed list of the obligations of the shipowner must be mentioned.

  5. CHARTERER’S OBLIGATIONS: A detailed list of the obligations of the charterer must be mentioned.

 

Additional Terms:

 

  1. MASTER AND CREW: The powers, rights and obligations of the master and crew.
  2. LIEN: It must be mentioned that the Owners shall have a lien upon all cargoes, hire, sub-hire, freights and sub-freights for any amounts owed by Charterers.
  3. PERFORMANCE OF VESSEL: Owners warrant that the Vessel is and shall remain capable of maintaining, throughout the Charter Period, the speeds and bunker consumption for propulsion under normal working conditions and in moderate weather.
  4. OFF-HIRE: It must be mentioned that the Vessel shall be off-hire on every occasion that there is a loss of time arising out of or In connection with the Vessel being unable to comply with Charterers’ instructions (whether by way of interruption or reduction in the Vessel’s services or in any other manner) on account of:-
  5. SUB-LET: Charterers will not sub-let the Vessel without prior written permission from the Owner.

 

Further Terms:

 

  1. VESSEL/CARGO INSPECTIONS/BUNKER SURVEYS: It must be mentioned that Charterers at their time and expense shall be entitled to cause their representative (which term includes any independent surveyor appointed by Charterers) to carry out inspections of the Vessel and/or observe cargo operations and/or ascertain the quantity and quality of the cargo, water and residues on board, including the taking of cargo samples, inspection and copying of the Vessel’s logs, documents at any loading and/or discharge port.
  2. OUTBREAK OF WAR: Either party should be allowed to cancel the Agreement on the outbreak of war or hostilities during the period of the Charter Party.
  3. DAMAGE: It has to be clarified who bears responsibility in the event of an accident, danger, damage or disaster before or after the commencement of the voyage.
  4. LAW: It must be mentioned which law governs the Charter Party Agreement and where the dispute will be resolved.

If you want to know more about please click Maritime or Admiralty Law in Bangladesh  or  Admiralty Maritime and Ship Arrest in Bangladesh or   Admiralty Act 2000

 

Charter Party Shipping Contract at CLP:

 

The legal team of Counsels Law Partners CLP is highly experienced in providing all kinds of services related to Admiralty and Maritime legal services. For queries or legal assistance, please reach us at:

E-mail: info@counselslaw.com Phone:+8801700920980 (WhatsApp) | +8801947470606, Address: House 39, Road 126 (3rd Floor) Islam Mansion, Gulshan 1, Dhaka

 

Frequently Asked Questions (FAQ) about Charter Party Shipping Contracts

 

1. What is a Charter Party Shipping Contract?

A contract where a ship owner leases their vessel to a charterer for transporting cargo.

2. What key terms must be included in a Charter Party Shipping Contract?

  • Name of vessel
  • Charter period
  • Lay days and cancelling date
  • Place of delivery
  • Cargo history
  • Rate of hire
  • Owner’s payment details
  • Trading limits

3. What additional clauses are typically included in a Charter Party?

  • Vessel speed
  • Permissible cargo and capacity
  • Payment terms
  • Obligations of the ship owner and charterer
  • Master and crew rights
  • Lien rights
  • Vessel performance guarantees
  • Off-hire conditions

4. Who controls the vessel during the charter period?

The ship owner controls navigation and management; the charterer controls carrying capacity and specifics.

5. Can the charterer sub-let the vessel?

Only with prior written permission from the owner.

6. What happens if there is an outbreak of war?

Either party may cancel the agreement.

7. What laws govern the Charter Party Agreement?

The governing law and dispute resolution venue should be specified in the contract.

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