Charter Parties

Question 1

What is a charter party?

Answer 1

A document containing written terms of a charter agreement between shipowner and a charter. It defines the obligations, right and liabilities in clauses

Question 2

What is a voyage charter?

Answer 2

A contract for the carriage of cargo between named places.

The shipowner is liable for crew and all running and voyage costs

Question 3

What is a time charter?

Answer 3

A contract of hire for a named vessel for a specified period of time.

The shipowner is liable for all running expenses of the vessel and voyage costs

Question 4

What is Bareboat charter?

Answer 4

The owner provides the ship only and is not liable for any further costs

Question 5

What are the two common towage contracts?

Answer 5

TOWCON - Towage contract for a lump sum payment

TOWHIRE - Towage contract for day rate hire

Question 6

What are the three main charter types?

Answer 6

Voyage charter

Time charter

Bareboat charter

Question 7

When is a ship seaworthy in charter terms?

Answer 7

1. Vessel is maintained and fit for sea. All surveys and inspections are completed and passed. (Technically seaworthy)
2. Cargo spaces fit for reception and carriage of cargo. Cargo is properly loaded and stowed (Cargoworthy).
3. Vessel is equipped and supplied for the duration of the voyage (Fittedness for voyage)

Question 8

What is included in a deviation clause?

Answer 8

The ship can deviate to tow and/or assist vessels and to save life and/or property.

Question 9

What are laydays?

Answer 9

The period in which the vessel must be presented for loading

Question 10

What is laytime?

Answer 10

The period of time allowed to the charterers for cargo operations without additional payment to the owner.

Question 11

What is an arrived ship in terms of a charter party?

Answer 11

The ship has reached the berth or an official waiting area for a berth

Question 12

What is a notice of readiness?

Answer 12

The ship has arrived at the port or berth and is ready to load or discharge cargo

Question 13

What is demurrage?

Answer 13

An amount payable when the ship is detained longer than the laytime.

Question 14

What is despatch?

Answer 14

When the cargo operations are completed before the end of the laytime and a reward is paid to the charterer.

Question 15

What is maritime lien?

Answer 15

When the carrier holds the cargo in lieu of owed payment.

Question 16

What conditions could render the ship unseaworthy?

Answer 16

1. Statutory certificates expired or invalid
2. Holds or cargo equipment not fit for cargo
3. Cargo is not properly stowed or secured
4. Not enough crew or crew not qualified/certified
5. Missing charts
6. Not enough food/water/bunkers for the voyage

Question 17

What is a bill of lading?

Answer 17

A bill of lading is

1. A receipt of goods
2. Evidence of and terms of a contract between the shipper and the carrier
3. A document of title (Legal right to possession)
4. It may be negotiable, in which case it is an accurate description of the goods to be sold.

Question 18

When is a bill of lading dirty?

Answer 18

When it has been claused by marking on it any deficiencies or damage to the cargo.

Question 19

Can the Master accept a letter of indemnity from the shipper to allow a clean bill of lading to be signed?

Answer 19

No. The Master should never accept this. They should call the P and I rep for advice.

Question 20

What is a mates receipt?

Answer 20

It is an accurate description of the quantity and quality of the goods loaded on the ship. It is used by the Master to complete the Bill of Lading.

Question 21

What should the Master check on the Bill of lading to ensure it is correct?

Answer 21

1. That the goods have actually been shipped
2. Date of shipping is correct
3. Bill of lading is not marked with “freight paid” or “freight prepaid” if its not true
4. Any clausing from the mates receipt is added
5. Reference to the charter party is true
6. The number of original bills is stated

Every original must be signed by the Master

Question 22

What should the Master do if any goods are damaged or missing?

Answer 22

1. Reject the cargo
2. Accept the cargo in exchange for a claused Bill of Lading
3. Contact the P and I club

Question 23

When is a letter of protest issued?

Answer 23

When any disagreement arises and it should be stapled to the Bill of Lading

Question 24

What should the Master never do regarding bills of lading?

Answer 24

1. Sign blank Bills of Lading
2. Amend or re issue Bills of lading
3. pre date or post date

Contact the P and I club if any of these are demanded.

Question 25

What are the two most common trade terms for cargo shipping?

Answer 25

1. CIF
2. FOB

Question 26

What is CIF?

Answer 26

Cost, Insurance, Freight.

The seller pays all costs for the shipment to a named discharge port and provides all the shipment documentation.

Risk for the cargo passes from the seller to the buyer when the cargo is loaded onboard a ship

The seller retains title to the goods until the buyer has paid for them so if the buyer goes bankrupt, the seller can ask for the goods to be returned.

Question 27

What is FOB?

Answer 27

Free on board.

The buyer arranges for and pays for the shipment and insurance. The seller packs the goods and delivers them to a named ship. Title passes from the seller to the buyer when the goods are loaded on board.

The goods are then free to be traded by the buyer whilst in transit.