Charter Party Agreement Forms and Clauses: A Guide for Shipowners and Charterers
Charter party agreements are contracts used in the shipping industry to determine the terms and conditions of the use of a vessel by the charterer from the shipowner. These agreements are legally binding and establish the rights and responsibilities of both parties involved. As such, it is essential that the charter party agreement is well-drafted and contains relevant clauses that protect the interests of both parties. In this article, we will discuss the essential clauses that should be included in a charter party agreement form.
The Charter Party Agreement Form
The charter party agreement form records the terms and conditions of the charter party, and the agreement may be in writing or agreed to orally. However, it is recommended that the agreement be in writing to avoid misunderstandings and to facilitate enforcement in the event of a dispute. A typical charter party agreement form will contain the following elements:
1. Parties: The names of the parties involved should be clearly identified.
2. Description of the vessel: A detailed description of the vessel, including its size, capacity, and classification, should be included.
3. Place of delivery / redelivery: The location and time of delivery and redelivery of the vessel should be specified.
4. Duration of the agreement: The period for which the vessel will be used by the charterer should be clearly stated.
5. Freight and payment: The payment to be made by the charterer and the calculation should be clearly stated.
6. Insurance: The insurance requirements and who is responsible for obtaining insurance should be specified.
7. Liability: The parties` liability and responsibilities should be defined, including who is responsible for losses and damages.
8. Termination: The conditions under which the agreement may be terminated by the parties should be clearly stated.
9. Applicable law and jurisdiction: The governing law and jurisdiction of the charter party agreement should be stated.
Charter Party Agreement Clauses
In addition to the above elements of the charter party agreement form, certain clauses should be included to protect the interests of both parties. Some of the crucial clauses are:
1. Laytime and demurrage clauses: These are clauses that specify the time allowed for a vessel to load and unload goods and the penalty to be paid by the charterer for exceeding the allowed time.
2. Anti-piracy clauses: These clauses offer the parties protection in the event of piracy attacks.
3. Force majeure clause: This clause covers unforeseen events that may prevent the parties from fulfilling their obligations.
4. Option clauses: These clauses give one of the parties the option to extend or terminate the agreement.
5. War risk clauses: These clauses outline the risks and liabilities associated with war or armed conflict.
6. Bunkering clause: This clause specifies the responsibility for the supply and payment of fuel.
7. Inspection clause: This clause allows for the inspection of the vessel by the charterer before finalizing the agreement.
In conclusion, a well-drafted charter party agreement form is essential to avoid disputes and protect the interests of both shipowners and charterers. The form should contain the essential elements of the agreement, and the clauses should cover contingencies that may arise during the period of the agreement. Shipowners and charterers should carefully review and negotiate the terms of the charter party agreement before signing to ensure they are protected and avoid any unforeseen issues that may arise during the period of the agreement.