Charter
A charter party is a contract whereby the shipowner agrees to place his/her ship or part of the ship, at the disposal of the merchant (charterer) for the carriage of goods from one port to another on being paid freight or to let his/her ship being used for a specified period on payment of hire.
The act of hiring the ship is called Chartering.
Demise Charterparty
A demise charterparty arises when the charterer is responsible for providing crew and cargo, whilst the ship owner provides the vessel. The charterer takes full responsibility for the operation of the vessel and pays all expenses incurred. It is generally for a long period of time and is also known as BAREBOAT Charter.
It is a lease of the ship for a time period and the charterer takes care of the vessel as if he is the owner, the charterer carries out all maintenance, survey, and other operational responsibilities. He is responsible for any losses to goods or others like pollution liability.
Any earning for carriage of cargo or salvage belongs to the charterer, who pays a pre-agreed hire charge to the shipowner. Financers who wish to invest in ships but do not have the expertise to operate ships find this method suitable.
BIMCO has published BARECON 89 as a standard charterparty.
Non-Demise Charterparty
A non-demise charterparty arises when the shipowner provides the vessel and its crew, whilst the charterer only provides cargo.
It may be a VOYAGE charterparty for a particular voyage in which the shipowner agreed to transport cargo between two ports for a pre-agreed freight usually paid on a per tonne basis or lump sum. The shipowner bears all expenses such as port charges, fuel costs, canal dues, loading and unloading charges, etc.
It may be a TIME charterparty for a stated period for remunerations called as hire usually in advance at regular pre-determined intervals of 15 or 30 days. The charterer pays for expenses related to the voyage such as fuel and port-related costs.