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50+ SAMPLE Charter Agreement
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What Is a Charter Agreement?
Before we get familiarized with the agreement document, we need to know what chartering is all about. What is this term all about? Well, in shipping terminology, chartering refers to a sort of operation in which a shipowner rents out the use of their vessel to a charterer. In other words, a charterer may own goods and hire a shipbroker to find a vessel that will carry the cargo to a certain place for a set price, known as the freight rate. Chartering can also entail a party without a cargo hiring a vessel for a fixed duration from the owner and then trading the ship to transport cargoes at a profit over the rental fee.
Depending on a number of factors, such as the type of vessel being rented out, and the type of cargo to be delivered (if one is involved), an agreement will have to be put into place between the parties involved. One such agreement is known as the charter agreement. A charter agreement is a legal document that defines a commercial relationship with another individual or business. This arrangement is often made when one party wishes to charter a means of transportation or service from another party for a set period of time. These documents can be used for a variety of objectives, including the sale of products and services, cargo delivery, and the formation of new joint ventures, among others. This agreement is required because it specifies the obligations of the parties that are involved before, during, and after the agreement takes effect, as well as protecting the parties’ interests during the duration of the agreement should any issues develop.
What’s In a Charter Agreement?
Here are the key terms and clauses that should be present when a charter agreement is being drafted:
How to Create a Charter Agreement
Here are the steps to be followed when a charter agreement is to be created:
1. Identify the Parties and their Roles
The first step in creating the charter agreement is to identify the parties involved along with their respective roles and responsibilities in the agreement. In a charter agreement, the parties involved are the person or entity who will be chartering the vessel, known as the charterer, and the owner of the vessel that is to be acquired by the charterers, known as the owner. Some of the responsibilities of the charterer include taking care of the chartered vessel, using it in accordance with the provisions that are to be stated in the agreement, and not making any changes to the vessel without consent from the owner. Some of the responsibilities of the owner include ensuring that the vessel is in good condition prior to delivery and making sure that all the documentation is updated and accurate prior to delivery.
2. Writing the Main Provisions
After identifying the parties involved in the agreement along with their respective roles and responsibilities, it’s time to write down the main provisions that make up the charter agreement. Some of the main provisions of the charter agreement include the vessel description, the charter term, the area of use, and the terms for maintenance. The vessel description includes details such as the name of the vessel, where it is registered and the flag it flies, the registration number, the call sign of the vessel, the company it is entered with, and the classification of the said vessel. The charter term describes the date on which the agreement will take effect and the date when the agreement will end, the area of use should describe in detail the areas in which the vessel being chartered may be used, and the terms for maintenance state the responsibilities of the charterer during the maintenance of the vessel being chartered.
3. Writing the Secondary Provisions
After writing the main provisions of the charter agreement, proceed to write the secondary provisions that make up the charter agreement. These are also known as the boilerplate clauses. Some of the boilerplate clauses of the charter agreement include the liability and indemnity, the termination terms, the governing law, and the confidentiality clause. The liability and indemnity clause states that the charterer assumes all risk of liability of operating the vessel and shall indemnify the owner from all loss and damages from operating the vessel. The termination terms specify the situations in which a termination may be necessary, the governing law states that the charter agreement shall be governed by the place in which the agreement was written, and the confidentiality clause states that all information about the parties involved shall be treated as confidential and shall not be disclosed without consent.
4. Final Steps
The final steps in creating this agreement would be to verify and check if the document is free of any form of errors and inconsistencies. A great practice in this step is to have someone qualified (such as a lawyer) look over the agreement. Once the agreement has been verified clear of errors, the parties can then proceed to sign the document so that it can take effect.
When is this document usually needed?
The most common scenario that requires a charter agreement is when an entity such as an individual, company, or organization needs a specific product or cargo to be delivered from one area to another in a given period. Having this agreement in place allows the charterer to safely and securely transport the cargo as specified by the client while making sure that the terms and conditions are followed and the interests of the charterer and the vessel owner are protected at all times.
What is a voyage charter?
The hire of a vessel and crew for a journey between a load port and a discharge port is known as a voyage charter. The charterer compensates the vessel owners on a per-ton or lump-sum basis in this type of charter. The port charges (excluding stevedoring), fuel costs, and personnel costs are all paid by the owner. Freight is the fee for the use of the vessel under this type of charter.
What is a bareboat charter?
A bareboat charter, sometimes known as a demise charter, is a vessel rental agreement in which no administration or technological upkeep is involved. The charterer takes possession of the vessel and assumes all legal and financial obligations for it. The charterer is responsible for all operational costs, including fuel, personnel, port expenditures, and hull insurance, under this form of charter.
Whenever an entity requires something that cannot be fulfilled through simple means, such as getting multiple pieces of cargo delivered to a specific location within a given period of time, a charter agreement may have to be drafted. This document ensures that all the duties and responsibilities of the parties involved in the agreement are fulfilled while protecting all their interests in case something goes wrong. This article has plenty of sample templates to help you have a further understanding as to what this document is all about as well as to serve as guides to help you in writing one should you have the need to do so.