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Contract between shipowner and charterer -Nature of a voyage charter

Defining a voyage charter

A voyage charter - is a contract for the carriage by a named vessel of a specified quantity of cargo between named ports or places.

It may be thought of as equivalent to the hire of a taxi for a single journey, or for a series of several consecutive journeys in the case of a consecutive voyage charter.

i) The shipowner basically agrees that he will present the named vessel for loading at the agreed place within an agreed period of time and, following loading (responsibility for which will be as agreed between the parties), will carry the cargo to the agreed place, where he will deliver the cargo.

ii) The charterer, who may be the cargo owner or may be chartering for the account of another party such as the shipper or the receiver, agrees to provide for loading, within the agreed period of time, the agreed quantity of the agreed commodity, to pay the agreed amount of freight, and to take delivery of the cargo at the destination place.

iii) In effect the charterers hire the cargo capacity of the vessel, and not the entire vessel, and to this extent a voyage charter agreement can be considered as the maritime equivalent of a taxi hire agreement. (Control of the ship’s operations remains with the shipowner.)

iv) In some trades, e.g. chemical tankers, several cargo parcels carried on one voyage may have been fixed with several different charterers.

v) Theshipowner must provide the master and crew, act as carrier and pay all running and voyage costs, unless the charter party specifically provides otherwise.

On the loaded voyage

During a loaded voyage a vessel must normally proceed to the destination port or place with “due despatch” (but sometimes “utmost despatch”) and always without deviation from the contracted voyage, which includes ports of loading and discharge (and their rotation), dates of loading and discharge where stipulated, voyage route and other agreed elements.

If the vessel deviates in any respect (e.g. by discharging at a port other than that originally agreed, unless with the charterer’s consent, or in the wrong rotation of ports) there is a serious breach of contract and the owners will not be able to rely on any of the exceptions in the contract. The owners will be reduced to the status of “common carrier” and will be have no protection against liability for loss of or damage to the goods carried other than the “common law exceptions”

. The owners would also have to prove that the loss/damage would inevitably have occurred even if the contract had not been breached; this applies whether the loss/damage occurred before, during or after the deviation.

Read more on : Voyage charter party clauses

Voyage charter party laytime calculation

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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