A charter party is a document of contract by which a ship-owner 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, they may enter into subcontracts with other shippers.Various types of charters are listed below.
A contract (C/P) for hire of the use of a vessel to make a specific voyage between two identified terminal ports. The charterer pays the vessel owner on a per-ton or lump-sum basis. The owner pays the port costs (excluding stevedoring), fuel costs and crew costs. The payment for the use of the vessel is known as freight. A voyage charter specifies a period, known as laytime for loading and unloading the cargo. If laytime is exceeded, the charterer must pay demurrage. If laytime is saved, the charter party may require the ship owner to pay dispatch to the charterer.
Contract for Affreightment
This contract is similar to a voyage charter, but here ship-owner undertakes to carry a number of cargoes within a specified period of time on a specified route. Agreed frequency of cargoes may require more than one ship.
Contract to hire a vessel for a specific period of time; here the owner manages the vessel but the charterer selects the ports and directs the vessel where to go. The charterer pays for all fuel the vessel consumes, port charges, commissions, and a daily hire to the owner of the vessel.
Trip Time Charter
Contract for hiring of vessel for short time agreed for a specified route only.
Demise or Bareboat Charter
Contract where the charterer obtains possession and full control of the vessel along with the legal and financial responsibility for it. The charterer pays for all operating expenses, including fuel, crew, port expenses, P&I and marine insurance. Administration or technical maintenance is not included as part of the agreement. A demise charter is a form of hire-purchase from the owners, who may well have been the shipbuilders. Demise chartering is common for tankers and bulk-carriers.
This type of contract is made on the basis of the port or dock where the vessel is received by the charterer upon leasing or the owner while retuning. The exchange happens in areas which are essentially suited to the size of vessel and are called commercial area of the port.