Some Maritime Terms

Here are some terms useful in maritime commerce, transportation and insurance law.

Charter Party

An agreement where the ship is let to the charterer by the shipowner. There are 3 kinds:

1.) Bareboat/demise charter

The charterer provides his own captain and crew. He may also employ the shipowner's own captain and crew but they will be under the orders of the charterer's employees and agents. The charterer becomes pro hac vice owner of the vessel and assumes the shipowner's liabilities and rights as far as third parties are concerned.

2.) Voyage/time charter

The captain and crew are under the shipowner's employ. The ship carries the charterer's cargo for one particular voyage or series of voyages.

3.) Time charter

The charterer uses the vessel for a certain period of time for one or several specific voyages. The captain and crew are employees of the shipowner.

Loan on Bottomry

This is a loan where the ship itself is given as a collateral and payable only if the ship completes the agreed voyage safely. If the ship is lost at sea, the owner doesn't have to pay but he won't be indemnified for the loss.

The interest rate is higher than usual because of the risk of not recovering anything. The shipowner's insurable interest hypothecated by bottomry is the excess of its value over the amount that was secured by the bottomry. Check this related article out.

Loan on Respondentia

This is a loan where the ship's cargo, not the ship itself, becomes the collateral.

Averages

This is a collection of damages that are unique to maritime commerce. There are 2 kinds:

1.) General

Damages deliberately caused by the captain in order to save the ship. Since all the persons with interest in the cargo and the ship have benefitted from such damage, they will all bear the loss; the insurer himself will be liable for his proportion of all general average loss. An example is jettisoning cargo in order to save the ship.

2.) Particular

Not everybody benefits from this kind of damage. The loss will be borne by the shipowner or the owner of the cargo. And unless there is a stipulation to the contrary, the insurer will be liable for particular average loss. An example is the damage the ship suffers throughout the voyage until it reaches its destination.