Negotiations in Chartering (Shipping)

What is Chartering:  Chartering in shipping is the hiring of a ship and crew for a voyage between a load port and a discharge port. The charterer pays the vessel owner on a per-ton or lump-sum basis. The owner pays the port costs (excluding stevedoring), fuel costs and crew costs. The payment for the use of the ship is known as freight.
charter party is the contract by which the owner of a ship lets it to others for use in transporting a cargo. The shipowner continues to control the navigation and management of the vessel, but its carrying capacity is engaged by the charterer.


The negotiations between a charterer and a ship owner is in terms and conditions, or based on terms and conditions, some of which are written below.

1. Contractual Partner
Contractual partners are the  ship Charter Operator or ship owners and the Charterer – as mentioned in the Contract. The ship Charter Operator is the Owner of the ship chartered by the Charterer or a person authorised by the latter.2. Acceptance of the Contract and its Conditions
a) The Agency is authorised to set up this Contract as representative of the Charter Operator and duly sign it.
b) The Charterer confirms that he has read the Contract and that he understood the nautical terminology used therein. Moreover, the Charterer agrees with the General Conditions of the Contract including the special characteristics of chartering a craft and with this type of sportive activity.3. Charter Fee
The charter fee encompasses the use of the vessel and its inventory. Extras and incidental expenses will be calculated separately and will not be taken into consideration in case of possible refunding of charter costs. The following items are not included in the charter fee: Port charges, fuel, gas, water and all expenditures for measures which are required for the proper operation of the craft during the trip. Obvious mistakes in calculating the charteer fee or inadequacies referring to some of the terms in the Contract do not justify exiting from the Contract; rather, corrections may be duly undertaken, based on the current list of fees and the current contractual conditions of the agency. Irregularities in equipment or gear (non-correspondence with inventory or equipment lists supplied to Charterer) do not authorise the Charterer to make any deductions – provided safety and operation of the craft as such and functioning equipment are guaranteed.

4. Journey to Location of ship Check-in
The journey to the location is not part of the Contract. If the start of the journey is delayed because the Charterer or a member of the crew arrives late, there shall be no refunding of costs. Charterer and crew are aware of the fact that they are leasing an “instrument” to exercise boating and that the terms agreed on differ from laws and regulations governing the tourist sector.

5. Charterer´s Exiting from the Contract
Should the Charterer for any reason whatsoever cancel the charter, the Charterer can after making a prior agreement with the organization,  find another person to take on its rights and obligations. Should the Charterer fail to find a third party to replace him/her, the cancellation costs shall be deducted as follows:
– 50% charter price if a reservation has been cancelled more than a month prior to the first charter day.
– 100% charter price if a reservation has been cancelled less than a month prior to the first charter day
a) The period of validity of the Contract can only be changed in agreement with the ship charter organization and according to the existing possibilities.
b) Cancellation by the Charterer up to four weeks before the start of the journey: cancellation fee depending on the payments already made. After this deadline the full amount has to be paid. It is highly recommended to the Charterer to take up a special insurance in case of cancellation.
o If there is a possibility to recharter the craft for full week, (either in part or in full), 20% of the charter fee will be withheld to cover relevant expenses. If rechartering is just partial and not for full week, 20% of the charter fee + pro rata of remaining charter will be withheld. The remaining sum will be refunded to the Charterer by the ship owner.
c) Defects, incorrect recordings of instruments or other problems with gear or equipment do not entitle the Charterer to either refuse check-in, stop the trip or raise financial claims – provided correct navigation is possible by applying classical navigation methods, such as position fixing by bearing, dead-reckoning navigation etc. and if safety of ship and crew is guaranteed by good seamanship.

6. Check-in and Check-out of ship
a) The ship owner is obliged to properly instruct the Charterer or the person nominated by him (Skipper) about all technical details concerning gear and equipment, using a check- or inventory-list. Trial trip may also be effected. By signing the checklist the Charterer/Skipper confirms that he has taken over the craft in good condition, clean, with full tanks (fuel, water) and fully functioning gear and equipment. Possible defects, damages or missing parts of gear and/or equipment must be laid down in writing.
b) The Charterer may refuse check-in if safety standards do not comply with national rules and regulations or if hull, bonding deck to hull, rig, sail or steering gear are damaged to such an extent that safety of both ship and crew can no longer be guaranteed. In this case item 6a comes to bear.
c) The shio owner may refuse to hand over the ship if:
• the fee has not been fully paid
• deposit has not been made or replaced by an insurance
• necessary documents are missing or insufficient (no license or a license not valid for the chartered craft, etc.)
• during the process of check-in or during a trial trip it turns out that the Charterer does not have the required qualification for this job.
d) in the latter case or if there are licensing problems, the journey may be started with another skipper , expenses paid by the Charterer.

7. Delayed Check-in Procedure
a) If the ship owner cannot supply the craft or ship or an appropriate replacement (meaning a type similar in dimensions, gear and equipment) and the delay exceeds ¼ of the total charter time or a maximum of three (3) days, the Charterer has the right to withdraw from the Contract. In this case payments already made will be refunded to him. No further claims may be raised.
b) If it is an established fact before the start of the trip that neither craft nor replacement will be available on the agreed date, the ship owner shall be obliged to inform the Charterer as soon as the former knows the facts. In this case both parties may withdraw from the Contract before the assumed start of the trip. Payments made by the Charterer will be refunded as above. No further claims may be raised.
c) If check-in time is delayed by the ship owner for reasons he is responsible for, the Charterer will get a pro rata refund from the ship owner
• provided either the check-in procedure had originally been agreed to take place in the second part of the day including an overnight stay on the craft or ship.
• or if a replacement and/or actual check-in has not occurred until noon the next day the latest
• or if the check-in of the ship had originally been agreed to take place during the first part of the day but in reality was delayed for more than 12 hours.

Key Note: A skipper is the captain of a Ship.

8. Insurance and Deposit
The chartered yacht is insured against third party damage, fire, lightning, explosion, theft or robbery or damage caused by natural disasters, marine and collision risks, and against any loss or damage except equipment expressed in this contract.
The financial liability of the client (charterer) for loss or damage caused by him or a crewmember is limited with the agreed deposit. Agreed deposit can also be insured by the insurance company.
Exceptions are mentioned in this contract.
a) The insurance premium for the ship chartered is included in the charter price or separately charged as extra costs.
b) The insurance does not cover accidents of crew members, losses or damage to their personal belongings. We recommend taking up a special insurance for this purpose.
c) If the insurance comes to bear in case of damage, terms state that the damage had not been caused deliberately or by gross negligence or that the charterer did not set a behavior, which release the insurer to fulfill its contractual obligation.
It is expressly stipulated that in case of gross negligence or deliberate act the liability of the Charterer is not limited by the deposit. The Charterer may be forced to pay the full sum of the damage.

9. Use of the ship, Obligations, Damages
a) The Charterer agrees to navigate the craft with special consideration of good seamanship and careful observation of all legal regulations and provisions as applicable in all the countries visited
b) The Charterer  nominated by the Charterer are committed
• not to accept more than the maximum number of persons permitted on board and to inform the ship owner and the relevant authorities about any changes in the crew
• not to allow the ship to be used for transporting passengers nor for commercial fishing nor for any other gainful activity
• not to take part in races without the express agreement of the ship owner and not to recharter the ship.
• not to use the ship for towing other ships or to be towed or rescued by other ships except in cases of emergency; should such an emergency arise, orders have to come from the ship owner(or a person authorised by him). Should this not be possible, the Charterer has to establish contact with the owner of the other vessel and come to an agreement about costs of towing or other rescue operations before help is accepted.
• to write a logbook in which the following items have to be recorded in chronological order: course, maneuvres, logs, proper handling of sails/engine, positions, checks, maintenance and repairs, important events or observations (accidents)
• no to let the engine run if the ship sails in a sloping position and to use the engine only as long as it is necessary; sails should be adapted to the rig and to the existing wind forces
• to leave a protected harbour only if the principles of good seamanship allow this
• to leave unsafe anchorage places or moorings if the weather forecast, the existing weather conditions or the foreseeable development makes it necessary.
• to take care that while the ship is anchored or moored danger to the craft has to be recognisable at all times, thus allowing measures to be taken to avoid danger.
c) If there is damage on the craft due to material wear, the Charterer has to arrange for a replacement of the parts or repair as instructed by the  ship owner or his deputy. If neither can be reached, Charterer  are authorised to organise repair or replacement – provided the amount does not exceed 100 Euros. This sum will be refunded at the end of the journey after submitting the bill except if the damage is due to incorrect operation of the ship, faulty or negligent handling by Charterer or the crew. Parts that had to be exchanged are not to be disposed of. If the craft or ship has to stay in port because of repairs, the Charterer is not entitled to raise any claims if the delay does not exceed ¼ of the entire charter period. Otherwise the Charterer has to be reimbursed on a pro-rata basis. There are no further claims to be raised.
d) In case of major sea damage or accident, possible delay or loss of maneuverability of the craft, the ship owner has to be informed at once. The Charterer has to undertake everything in his power to reduce the effects as well as to avoid consequential damage (for instance breakdown, etc.).In concerted agreement with the ship owner, the Charterer has to organise the necessary repair work, to document all the facts, to monitor the repair work and to negotiate price and payment. Moreover, the Charterer is obliged to keep a record of the details of the damage and – provided there are claims of third parties – to have all the data confirmed by the relevant
authorities. The Charterer may be obliged to pay for the entire costs if the aforementioned conditions are not properly adhered to. The Charterer is fully liable for all direct and consequential costs such as confiscation of the ship if it is within the scope of responsibility of the Charterer or members of the crew.
e) If there is reason to assume that the ship is damaged in the part under water, the ship has to be navigated to the nearest port where the services of a diver must be engaged, the supply of a crane organised or a slip up arranged. The costs have to be borne by the Charterer.
f) Theft of the ship or of part of the gear or equipment has to be reported to the nearest police precinct
g) Animals may be taken aboard only with the express permission of the ship owner.



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