Charter-party
A charter-party is a legal agreement between the owner of a ship and a third party, typically a buyer, allowing the ship owner to lease their vessel and crew for a specified duration to transport goods. This arrangement is often more cost-effective than purchasing and crewing a personal ship, making it a popular choice in maritime commerce. There are three main types of charter parties: demise charters, time charters, and voyage charters. A demise charter grants the buyer temporary ownership of the ship, allowing them to manage its operations and pay for related expenses. In contrast, a time charter retains ownership with the ship owner while allowing the buyer some control over the cargo and destination for a set timeframe. Voyage charters are the most limited, covering a single journey with the buyer typically responsible for operational costs. The Carriage of Goods by Sea Act in the United States provides legal protection for parties involved in charter agreements, enabling them to seek redress in state or admiralty courts for any breaches of contract. This framework underscores the importance of charter parties in facilitating international trade and shipping logistics.
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Charter-party
Charter parties are legal agreements between a buyer and the owner of a ship. They allow ship owners to contract out their vessel and crew for a specified period. In most cases, the ship owner is contracted to facilitate the transportation of trade goods.
When a buyer and owner sign a charter party, each is given a copy of the document. If the buyer fails to deliver proper payment or the owner fails to deliver the goods, the victimized party can produce the charter party to sue. In the United States, this legal action takes place in a state court or admiralty court.
Background
Humans have used small boats for shipping since before recorded history. However, those boats were not suitable for long ocean voyages. They were most often used for travel along coastlines or inland rivers. Despite these limitations, travel over waterways was usually much faster than travel over land. Additionally, bandits and other violent criminals made traveling by land just as dangerous as traveling by sea.
Once early civilizations developed ships that could spend more time at sea, they began to use them to transport goods. The Roman Empire built fleets of large ships that could cross the Mediterranean Sea. They mapped out defined naval shipping routes, which provided a relatively safe, reliable means of shipping grain, lumber, and other trade goods over long distances. They also made major strides in naval navigation, developing ship instruments that allowed captains to chart their location at sea with greater accuracy than ever before.
Centuries later, Arabic shipbuilding techniques allowed for the creation of larger, oceangoing vessels. They refined Roman navigation techniques, allowing their ships to chart their locations when they were too far away to see land. European shipbuilders and navigators further refined these practices, building even larger ships that could carry many tons of cargo. These ships could easily travel over the open ocean and routinely completed long journeys to other continents. Many intercontinental trade routes would have been impossible without large oceangoing vessels.
Several European nations, including Great Britain and the Netherlands, were particularly successful at maritime trading. They created massive trading companies, granting them monopolies over shipping goods. These companies grew powerful enough to finance their own navies, which forged new trade routes and protected these routes from both pirates and the navies of hostile nations.
Modern maritime shipping vessels can be used to carry massive amounts of cargo. They can easily traverse large bodies of water and carry cargo from multiple charters at once. In many cases, shipping large quantities of goods by ocean is far less expensive than shipping them by air or land is.
Overview
Charter parties are legally binding agreements between the owner of a ship and a third party. The two parties negotiate a purchase of the ship's time for a set duration. These durations vary wildly among contracts, as do the obligations of both parties. However, signing a charter party is usually more cost effective for shipping goods than purchasing and crewing a personal ship.
Three commonly encountered varieties of charter parties are used today. In most cases, these are similar to the chart parties that have been used in the past. Although the means of naval shipping have changed considerably over the years, the process still involves a merchant attempting to convince a ship owner to carry their goods.
A demise charter involves the buyer taking temporary ownership of the ship. They are sometimes called bareboat charters. After a demise charter is signed, the permanent ship owner sails the vessel to the buyer. At this point, the buyer arranges for any necessary repairs, supplies, or other miscellaneous costs the ship and crew will need for the duration of the contract. The buyer is responsible for paying all of these expenses in full. These costs are normally the responsibility of the permanent ship owner. In exchange for paying all extra expenses, the buyer is temporarily treated as the owner of the ship. This gives the buyer much more control over the ship's day-to-day operations. The buyer may now decide the ship's destinations, course, and cargo for the duration of the contract.
Demise charters are less common than other types of charters. Most buyers do not want to pay the extra money associated with demise charters. Additionally, many buyers believe that a ship's permanent owner does not need assistance running, staffing, or maintaining their vessel. In these scenarios, the buyer may purchase a time charter.
As their name suggests, time charters allow a buyer to procure a vessel's service for a specified period. The permanent ship owner retains full control of both the crew and the vessel in question. Yet, during the duration of the time charter, the buyer may still mandate the type of cargo that may be carried and the final destination of the cargo.
The third type of charter used is commonly called a voyage charter. These are often the shortest, most limited charters available. Voyage charters apply only to a single trip from one point to another, usually exchanging monetary goods for cargo to be delivered to a specific destination. They do not grant the buyer any particular control of the ship, its route, or its crew during this journey. Additionally, in modern voyage charter parties, the buyer is often required to pay for the general operating costs of the vessel, including fuel and repairs, for the duration of the contract.
In the United States, the Carriage of Goods by Sea Act protects charter parties. Even though the ocean off the coastline is not considered the property of any particular state, the Carriage of Goods by Sea Act allows members of charter parties to pursue any breaches of contract in state courts. Should that process fail, the aggrieved party may attempt to sue the accused party through an admiralty court.
Bibliography
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