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Time charter party clauses for cargo ships employment

What is Time charter party

A time charter - is a contract for the hire of a named vessel for a specified period of time. - may be thought of as equivalent to the hire of a chauffeur-driven car (the ship’s crew being “the chauffeur”).

A general purpose dry cargo time charter party will usually incorporate clauses covering at least the basic provisions tabulated below. The provisions may be covered in different charter parties by clauses bearing different names, or by numbered clauses without names.


Clause name & matters covered by clause

Preamble :Identity of parties; identity and technical specifications of vessel; present position of vessel.

Period/ Port of Delivery/ Time of Delivery: specifies the period of hire, the port or place of delivery, and the date and time of delivery.
The place, time and conditions of delivery and redelivery of the vessel are key points in a time charter agreement, since the amount of the owners’ and charterers’ income may hinge upon them, and disputes can easily arise in cases of misunderstanding. The charter party’s provisions covering these matters should be carefully noted and adhered to by the master.

Trade :Legality of vessel’s employment; legality of cargoes carried; safety of ports used; prohibition of cargoes injurious to ship.

Owners to Provide : Owners’ obligation to pay for specified items.

Charterers to Provide :Charterers’ obligation to pay for specified items.

Bunkers : Charterers’ obligation to buy bunkers remaining on board at delivery port; owners’ obligation to buy bunkers r.o.b. at redelivery port; minimum quantity of bunkers to be on board at redelivery.

Hire : Charterers’ obligation to pay hire at the specified rate at the specified intervals until redelivery; owners’ right to withdraw vessel for default on hire payments.

Redelivery : Charterers’ obligation to re-deliver vessel in same condition as when delivered (fair wear and tear excepted); redelivery place, date and time; giving of notice of redelivery by charterers; provisions where vessel is on a voyage at agreed redelivery time.

Cargo Space : Agreement that entire carrying capacity of vessel will be at charterers’ disposal.

Master : Master’s speedy prosecution of voyages; master’s and crew’s assistance to charterer; master’s obedience of charterers’ orders relating to vessel’s employment, agency, etc.; charterers’ indemnification of owners against consequences of owners’ servants signing bills of lading or other documents, or complying with charterers’ orders, etc.; exclusion of owners’ liability for cargo claims; owners’ agreement to investigate charterers’ complaints about crew.

Directions and Logs :Charterers’ obligation to provide master with voyage instructions and information; obligation of master and engineers to make voyage logs available to charterers and their agents.

Suspension of Hire, etc. :Suspension of hire payment for duration of any “downtime” of vessel in specified circumstances; charterers’ responsibility for loss of time in specified circumstances.

Cleaning Boilers :Owners’ obligation to clean boilers with vessel in service, if possible; charterers’ obligation to allow boiler cleaning time where necessary; suspension of hire when boiler cleaning time extends beyond specified time.

Responsibility and Exemption: Conditions under which owners will be responsible for delay in delivery, delay during the charter, or loss or damage to cargo; owners’ exclusion of responsibility in all other circumstances; charterers’ responsibility for loss or damage to vessel or owners caused by improper or negligent loading, bunkering or other acts on their or their servants’ part.

Advances :Charterers’ obligation to advance necessary funds to master for ordinary disbursements at any port; deduction of advances from hire.

Excluded Ports :Prohibition on charterers from ordering vessel to a place where disease is prevalent or which would be beyond the agreed limits of the Crew Agreement, or to any ice-bound place.

Loss of Vessel :Cessation of hire from date of loss of vessel.

Overtime :Owners’ obligation to make vessel available for work 24h per day if required; charterers’ obligation to reimburse owners for crew overtime.

Lien :Owners’ lien for claims under the charter on cargoes, sub-freights and bill of lading freight.

Salvage :Equal sharing of salvage money after deduction of master’s and crew’s proportions and other expenses.

Sublet :Charterers’ option to sublet vessel; original charterers’ responsibility for due performance of charter.

War :Prohibition on charterers from using vessel in war zones or for carriage of goods which will expose her to risks of capture, etc.; charterers’ responsibility to pay any war risks premiums, hire for time lost due to warlike operations and increased costs due to war zone operations; liberty of vessel to comply with flag State orders during war; cancellation of charter by either party, and redelivery of vessel, if flag State becomes involved in war.

Cancelling :Charterers’ option of cancelling charter if vessel is not delivered by agreed date; charterers’ obligation to declare intention to cancel.

Arbitration: Reference of disputes to arbitration in London or other agreed place; nomination of arbitrators by parties; umpire’s decision where arbitrators disagree.

General Average :Rules under which any General Average is to be settled; non-contribution of hire to General Average.

Commission :Amount of (brokerage) commission to be paid by owners, and party to whom payable.


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Summarized below seagoing cargo ship various employment guide:
  1. Charty party forms

  2. defines the obligations, rights and liabilities of the shipowner and charterer. Recognised standard form (e.g. GENCON, BALTIME, NYPE)
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    Nature of a time charter
    The charterers agree to hire from the shipowner a named vessel, of specified technical characteristics, for an agreed period of time, for the charterer’s purposes subject to agreed restrictions.
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  3. Voyage charter advantages

  4. contract for the carriage by a named vessel of a specified quantity of cargo between named ports or places.
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  5. Terms of Bareboat charter and lease arrangement

  6. The vessel owners put the vessel (without any crew) at the complete disposal of the charterers and pay the capital costs, but (usually) no other costs.
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  7. Seaworthiness of vessel

  8. A vessel must be fit to encounter the “ordinary perils of the sea” (e.g. bad weather) and other incidental risks to which she will be exposed on the voyage..
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  9. International trade terms (INCOTERMS) in sea transportation

  10. INCOTERMS is a set of rules, published by the International Chamber of Commerce, for the uniform interpretation of the most commonly used trade terms used in international trade contracts.
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  11. Money transfer procedure in sea transport

  12. Money transfer system commonly used in overseas trade to enable sellers to obtain early payment, i.e. soon after shipment of the goods.
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  13. Contract between cargo seller and buyer

  14. The contract of sale between the seller and the buyer of the goods is separate from the contract of carriage which one party or the other, or a third party (such as a freight forwarder), will make with the carrier .
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  15. Parties involved in sea transportation of goods

  16. Forming links in the transport chain- Sea carrier, Freight forwarder, shipper, consignee,agent & banks
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  17. Carriage of goods by sea act 1992 (COGSA 92)

  18. Section 3 of COGSA 92 lays down guidelines establishing when liabilities under a bill of lading, sea waybill or ship’s delivery order will be transferred to a party who is not an original party to the contract of carriage (i.e. an endorsee or transferee). The party who takes or demands delivery of the goods to which a bill of lading, sea waybill or ship’s delivery order relate becomes subject to the same liabilities as the original shipper..
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  19. Laytime interpretation rules

  20. Rules, which were issued jointly by BIMCO, CMI, FONASBA and INTERCARGO, replace the Charter party Laytime Definitions 1980.
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  21. CIF ( Cost, Insurance and Freight ) used in international trade terms (INCOTERMS)

  22. “CIF” means Cost, Insurance and Freight (paid to a named place), e.g. CIF London.- is a contract based on the discharge port
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  23. FOB ( free on board ) used in international trade terms (INCOTERMS)

  24. “FOB” means Free On Board (named port of shipment), e.g. “FOB Newcastle NSW”. It is one of the most commonly used term (INCOTERMS) in sales contracts involving sea transportation of goods.
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  25. Ships employment baltic exchange

  26. Baltic Exchange members undertake to abide by a strict code of business practice, enshrined in the famous Baltic motto “Our Word Our Bond”.
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  27. Ships charter market place

  28. Most ships employed in the charter markets are dry bulk carriers, tankers, combination carriers (e.g. OBOs), or reefer vessels, although there is also a charter market for container ships and for vessels of various special purpose types
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  29. Common Chartering abbreviations

  30. Many terms commonly used by shipbrokers and others involved in ship chartering, mainly to save time and effort in communications. Shipmasters may come across many of the acronyms and abbreviations in documents relating to charters, e.g. in telexed voyage orders and market reports..
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  31. Tanker freight worldscale

  32. "Worldscale" is the code name for the “New Worldwide Tanker Nominal Freight Scale”, published by the Worldscale Association (London) Limited and the Worldscale Association (NYC) Inc
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