Charter Contract

CHARTER CONTRACTS IN MARITIME LAW
In maritime law, a charter contract is a type of freight contract for the transportation of a cargo. While the charter contract only gives the charterer the right to benefit from the carrying capacity of the ship, the shipowner continues to retain the navigation and management of the ship. In this type of contract, there are two types as full charter and partial charter according to the volume of space allocated to the shipper. In full charter, the entire ship is kept. In partial charter, a certain part of the ship is allocated to the carrier. According to the way the ship is used, voyage charter and time charter are divided into two types. Voyage charter refers to the hiring of a ship to carry a certain cargo from one port to another port. Here, the ship may also be chartered to make more than one voyage. In a time charter, the ship is chartered for a certain period of time and the freight is determined according to the time scale. In this contract, the charterer pays the warehouse and provision expenses and also benefits from a limited authority of instruction in the commercial field against the master and seamen.

According to the law, the charter contract is not bound to a special form in terms of form. In practice, it is concluded through brokers engaged in maritime affairs and under the conditions set forth in the type-contracts. The parties or authorized persons acting on their behalf prepare the written contract after briefly determining the important conditions of the contract with a document called “fixing letter”. Although there is no legal obligation to have a written contract, this method is widely used as a means of proof. Each party may request to be given a document (in Turkish law, a charter party) regarding the freight contract. (Turkish Commercial Code, Art. 1017). While preparing the written contract, the formulas prepared by the Ba’k States and International Maritime Conference (BIMCO) and the United Kingdom Chamber of Shipping (Chof Sh) are followed. When a dispute arises, the relevant court examines the charterparty document and clarifies the matter. However, in practice, disputes are usually resolved through arbitration. The most important clauses of the charter contracts are the ones regarding the number of days for loading and unloading the goods and who will bear the expenses, and clarification of these elements will result in favorable results for the parties.

CHARTER CONTRACT
Article 1- Section 1;

Ship broker
Place and date
Shipper/trading center (Kl.1)
Shipper/commercial center (Kl.1)
Name of the vessel (Kl.1)
GT/NT(Kl.1)
Summer line cargo capacity in M/Ton – dwt (Kl.1)
Location of the vessel at the current time (Kl.1)
Estimated date of readiness for loading (Kl.1)
Port or place of loading (Cl.1)
Port or place of discharge (Cl.1)
Cargo (if agreed, specify the amount and share in the carrying option; if full and sufficient cargo is not agreed, record “partial cargo”) (Kl.1)
Freight amount (specify whether freight is payable in advance or on delivery of the cargo (Kl.1)
Freight payment (specify the foreign currency type of payment, beneficiary and bank account number (Kl.1)
If the ship’s cranes will not be used, please specify (Kl.1)
Stoppage time (if separate periods for loading and unloading have been investigated, fill in a) and b), if a total period for loading and unloading has been agreed, fill in only c) (Cl. 6)
(a) Staging time for loading

(b) Staging time for unloading

Shipper/commercial center (Kl.6)
Agent (Loading) (Kl.6)
Agent (Unloading) (Kl.6)
Prolongation amount – method of payment (loading and unloading) (Kl.7)
Termination date (Cl.9)
Place of allocation of common average (Kl.12)
Freight tax (specify if on the carrier’s account) (Cl. 13c)
Broker commission and to whom it is paid (Kl.14)
Governing law and arbitration (indicate which of Kl.19 (a), (b) or (c) has been chosen; if (c) has been chosen, indicate the place of arbitration) (if not completed, 19 (a) shall apply (Kl.19)
Specify the ceiling amount for limited compensation/shortened arbitration (Kl.19)

Additional clauses on special rules, where agreed
It is mutually agreed in this document that the contract consists of 2 parts and will be performed in accordance with the written terms. In case of contradiction and limited to the contradiction, the terms in Section 1 shall prevail over the terms in Section 2.

Signature of the Carrier

Signature of the Shipper

1.5. The following has been agreed between the carrier named in Box 3 and the shipper shown in Box 4 of the vessel whose name is indicated in Box 5, gross and net tons in Box 6, summer season cargo carrying capacity in metric tons in Box 7, current position in Box 8 and estimated date of readiness for loading in relation to a contract in Box 9.

As soon as the preceding undertakings have been fulfilled, the said ship shall proceed to the port(s) or berth(s) of loading specified in Box 10 or to the nearest place thereof, provided that it can reach there safely and remains afloat at all times, and shall take on board the full and in all respects sufficient cargo (if agreed, the risk and responsibility for the deck cargo shall be that of the carrier) specified in Box 12, which the carrier is obliged to deliver, loaded in accordance with the instructions given at the time the bills of lading are signed. The Carrier shall take the full and in all respects sufficient cargo specified in Box 12 (if agreed, the risk and responsibility for the deck cargo shall be borne by the Carrier) and shall deliver the cargo loaded in accordance with the instruction given at the time of signature of the bills of lading by proceeding in accordance with the instructions given at the time of signature of the bills of lading to the unloading port(s) or berth(s) specified in Box 11 or to the nearest place thereof, provided that he is able to reach there safely and remains afloat at all times.

Article 2- Liability of the Carrier Clause ;

The Carrier shall be liable for loss of, damage to or delay in delivery of the Cargo only if he or his appointed manager has failed to exercise due diligence to make the ship seaworthy in all respects, to remove ice, to provide fuel, oil and food provisions, to provide seamen as required, or if he or his appointed manager has been guilty of any personal fault or negligence.

The carrier shall not be liable for any other cause whatsoever, not even for loss, damage or delay caused by the fault or negligence of the master or other seamen or other persons employed on board or ashore for whose acts the carrier is liable under this clause, or by the unseaworthiness of the ship at the time of loading or at the commencement of the voyage or at any time thereafter.

Article 3- Deviation clause ;

The ship is free to deviate for any reason whatsoever, without being subject to any order, to call at any port or ports, to navigate without a pilot, to tow or assist another ship and to save life and/or property.

Article 4- Payment of freight;

(a) Freight is calculated in the unit in Box 13 for cargo taken on board.

(b) Payment in advance: If the freight is payable after loading in accordance with Box 13, it shall be deemed to have accrued and shall be non-refundable whether or not the vessel and/or the loss is incurred.

Unless actually paid, no bill of lading shall be required from the carrier or his agent to bear a record that the freight has been paid in advance.

(c) Payment on delivery: The freight or part thereof payable at the port of destination in accordance with Box 13 does not accrue until the cargo is delivered. In such a case, notwithstanding the provision in (a), if the carrier is notified before the vessel berths and the weight/quantity of the cargo is determined by an official weighing or by a joint water-cut measurement or tally, the shipper may pay the freight on the weight/quantity delivered.

Upon request, the shipper shall advance in advance at the highest daily exchange rate for the ordinary expenses of the ship at the port of loading, subject to a surcharge of … (%…) to cover insurance and other expenses.

Article 5- Loading/unloading ;

(a) Expenses/Risks

The Shipper brings, loads, stacks and/or straightens, tally, fixes and/or immobilizes the cargo and takes it from the warehouse and unloads it without any risk, responsibility and expense on the part of the Carrier. The Shipper shall be responsible for the removal of the support icing following the unloading of the cargo carried in accordance with this contract and shall pay the expenses incurred for this reason, and the time counting shall continue until the removal of this icing.

(b) Cranes

Unless the ship is without cranes or it has been agreed that the cranes will not be used and this is stated in Box 15, the carrier shall make the ship’s cranes available for use and provide the necessary energy for this purpose, without any compensation, during the period when loading/unloading activities are in progress. The cranes shall be in working condition. Unless caused by the fault of the stevedores, time lost due to crane failure or power failure – in proportion to the total number of cranes required for loading/unloading in accordance with this contract – shall not be counted as stoppage and deadtime. If requested, the carrier will provide operators for the use of the cranes from among the crew, without any compensation. If local legislation prevents this, the workers provided from the shore shall work for the account of the carrier. Crane operators operate at the risk and responsibility of the carrier and, as stevedores, are considered as auxiliaries of the carrier, but are always under the supervision of the master.

The shipper is liable for any damage (which cannot be considered as normal wear and tear) caused by the stevedores to any part of the ship. However, if the master fails to report such damage to the shipper or his agent and stevedores as soon as possible, the shipper cannot be held liable. The master shall endeavor to obtain a written document from the stevedore regarding the acceptance of responsibility.

The shipper is obliged to repair all kinds of stevedore damages before the completion of the voyage and the stevedore damages affecting the seaworthiness or class of the ship must be repaired before the ship leaves the port where it occurred or determined. All additional expenses incurred for this reason shall be borne by the carrier and the carrier shall make payment to the shipper for the time lost.

Article 6- Starry period ;

(a) Separate stays for loading and unloading:

If weather conditions permit, the cargo shall be loaded and unloaded in the number of continuous days/hours specified in Box 16. If operations are carried out on Sundays and holidays, the time used will be counted, otherwise these days will not be taken into account.

(b) Joint staging time for loading and unloading:

Weather permitting, cargo is loaded and unloaded during the number of continuous days/hours specified in Box 16. If work is performed on Sundays and holidays, the time used will be counted, otherwise these days will not be taken into account.

The stoppage time shall commence at …. if the preparation notice is given by ….. hours, or at ….. hours on the next working day if the notice is given during working hours after ….. hours. Notice at the port of loading shall be given to the shipper whose name is written in Box 17, if there is no name here, to the carrier and its agent whose name is written in Box 18; notice at the port of discharge shall be given to the consignee, if this is not known, to the carrier and its agent whose name is written in Box 19.

If all berths are occupied at the time the ship arrives at the port of loading/unloading or its border, the ship may give the preparation notice during working hours, whether or not the ship is in free practice, whether or not customs clearance has been completed. If the master declares that the ship is actually ready for loading/unloading, the stays and time periods shall run as if the ship was docked and in all respects ready for loading/unloading. The time spent to reach from the waiting place to the pick-up place will not be counted as starboard.

If, at the end of the inspection, it is found that the ship is not ready for loading/unloading, the time from that moment until the ship is ready again shall not be counted as stays.

Time used before the start of the stoppage period shall be counted.

Indicate which of the alternatives (a) and (b) is selected in the box.
Article 7- Startime ;

The time delay charge at the port of loading and unloading to be paid by the Shipper shall be calculated in the unit specified in Box 20 and pro rata per day or any fraction of a day as specified therein. The invoice for the time delay charge per day shall be paid when it reaches the carrier, otherwise the carrier shall notify the carrier in writing to make the payment within uninterrupted …. hours. In the event of non-payment of the dry docking fee at the end of this period, if the ship is at the port of loading or waiting outside this port, the carrier shall have the right to terminate the contract at any time and claim the damages incurred in this way.

Article 8- Pledge clause ;

The carrier shall have the right of pledge over the freight, dead-freight, surcharges, claims for damages for losses incurred and all sums accrued under this contract, including the expenses incurred for the collection thereof and all sub-carriage freight payable for the cargo and cargo.

Article 9- Termination clause ;

(a) The shipper shall be entitled to terminate this contract if the ship is not ready for loading (whether or not docked) on the date of termination written in Box 21.

(b) If, despite due diligence, the carrier is satisfied that the ship will not be ready for loading on the date of termination, he shall without delay notify the shipper of the estimated date on which the ship will be ready for loading and ask him whether he will exercise his right of termination and whether he accepts a new termination date.

The shipper shall exercise his right of choice in this regard within … uninterrupted hours from the date of receipt of the carrier’s notice. If the Shipper fails to exercise his right of termination, this contract shall be deemed amended and the day ….. following the estimated date of preparation for loading specified in the carrier’s notice shall be deemed to be the new termination date.

The rule in sub-clause (b) shall apply only once and in case of further delay of the vessel the shipper shall be entitled to terminate this contract in accordance with sub-clause (a).

Article 10- Bills of lading ;

Without prejudice to this contract, bills of lading shall be drawn up using the 1994 version of the “Congenbill” form and shall be signed by the master or the carrier’s agent (this document shall also be sent to the carrier) provided that the carrier has given a written authorization certificate. The shipper shall indemnify the carrier for any consequences and liabilities arising out of and limited to the extension or change of the carrier’s contractual liability due to the content and conditions of the signed bills of lading.

Article 11- Joint liability clause in case of collision;

If a ship collides with another ship both through the fault or negligence of the master, seaman, pilot or any of the carrier’s auxiliaries in the technical management or administration of the ship and through the fault of the other ship, the cargo carried in connection with this contract shall, to the extent of their loss or damage, indemnify and assume full responsibility for all damages paid or payable or to be paid or set off to them by the other ship and its icing or recovered from the ship carrying the cargo or its icing as part of the claim of the other ship or its icing.

The foregoing provisions shall also apply in respect of any other ship or ships or objects, other than or in addition to the colliding ships, or the carriers, operators or authorized persons of any other ship or ships or objects whose negligence caused the collision or contact.

Article 12- General average and new jason clause ;

Unless otherwise agreed in Box 22, the apportionment of general average shall be made in London and in accordance with the York-Anvers Rules 1994 or any subsequent version thereof. The cargo’s share of general expenses shall be paid by those concerned in the cargo, even if such expenses are caused by the fault or negligence of the carrier’s auxiliaries.

If the allocation of general average is to be made in accordance with American law and practice, the following clause shall apply. In the event of an accident, peril, damage or disaster occurring before or after the commencement of the voyage, from whatever cause, including negligence (the carrier is not liable for the consequences of negligence or fault by reason of law, contract or otherwise), the shipper, consignee or owner of the cargo shall share with the carrier all sacrifices, losses and expenses in the nature of common avarage incurred or to be incurred, and shall pay the salvage-assistance charge and special expenses in respect of the cargo. If the salvage vessel is owned or operated by the carrier, the salvage-assistance fee shall be paid in full as if such vessel or vessels were owned by a foreign person. If requested, such security as the carrier or its agent may deem sufficient for the approximate share of contribution, salvage and special charges to be borne by the cargo shall be furnished by the shipper, consignee, consignee or owner of the cargo before delivery.

Article 13- Tax and duty clause ;

(a) Those belonging to the ship: The carrier shall pay all duties, charges and taxes customarily due to the ship, however determined.

(b) Those pertaining to the cargo: The shipper pays all debts, charges and taxes customarily due to the cargo, however the amount is determined.

Article 14- Agency ;

In any case the carrier may appoint his own agent for both the port of loading and the port of discharge.

Article 15- Commission fee ;

The proportion of the freight, dead freight and time and overtime charge as specified in Box 24 shall be paid to the party specified therein as commission fee. If the contract is not performed, the party causing this shall pay to the broker at least /… of the commission fee per estimated freight amount in return for its costs and labor. Where more than one voyage is involved, the compensation shall be determined mutually.

Article 16- General strike clause ;

(a) If the actual embarkation of the cargo or part thereof at the time when the ship is ready to sail from the last port to the port of loading or at any stage of the voyage to the port or ports of loading or at the time when the ship arrives at the port of loading is affected or prevented by a strike or lock-out, the master or carrier may require the carrier to notify the shipper that it will accept the stays as if there were no strike or lock-out. If the shipper fails to notify the carrier in writing (by telegram if necessary) within …. hours, the carrier shall be entitled to terminate this contract. If part of the cargo is loaded, the carrier is obliged to start the voyage with this cargo (freight is paid only on the loaded quantity), but he is free to take other cargo on his own account en route.

(b) If the actual discharge of the cargo or part thereof is affected or prevented by a strike or lock-out at the time the ship reaches the port of discharge or the limit thereof, and this situation cannot be ended within …. If the actual discharge of the cargo or part thereof is affected or prevented by the strike or lockout at the time of reaching the port of discharge or its limit, and the strike or lockout cannot be terminated within …. hours, the carrier has the right to keep the ship waiting until the strike or lockout is over or to send the ship to a safe port where the cargo can be safely discharged without the risk of strike or lockout within …. hours after the master or the carrier notifies the carrier of the strike or lockout. If the cargo is delivered at such a port, the same amount of freight shall accrue as if the discharge had taken place at the original port, without prejudice to the terms of the contract and bill of lading. If the distance to the subsequently designated port is more than …. nautical miles, the freight accrued on the cargo delivered therein shall be increased in proportion thereto.

Article 17- War risks (*Voywar 1993″) ;

(1) For the purposes of this clause

(a) The term “carrier” includes icebreakers, ship operating contractor, sub-carrier, operator and other persons concerned in the management of the ship and the master.

(b) The term “war risks” means any war (whether actually existing or threatened) in which any person, group, terrorist organization, political group or government of any rank or form is a party which, in the reasonable judgment of the master and/or carrier, is or may become dangerous or likely to become dangerous to the ship, cargo, crew and other persons on board, an act of war, civil war, hostilities, revolution, insurrection, internal hostilities, warlike action, laying of mines (whether actually present or reported), piracy, hostile or malicious action, blockade (whether of all ships or of ships flying particular flags, of the owners or of particular cargoes or of crews of particular nationalities).

(2) If at any time before the ship commences to take on the cargo, in the reasonable judgment of the master and/or carrier, the performance of this contract may expose the ship, cargo, crew or other persons on board to risks of war, the carrier may give notice of termination or refrain from performing that part of this contract which exposes or is likely to expose the ship, cargo, crew or other persons on board to risks of war; provided, however, that if the port or ports of loading or discharging pursuant to this contract are to be selected from within a territory, and the ship, cargo, crew or other persons on board may or are likely to expose the ship, cargo, crew or other persons on board to risks of war in the port or ports designated by the carrier, the carrier may first request the shipper to designate any other safe port within the territory in question for loading or discharging and may terminate the contract only after receipt of such request by the carrier… . if a safe port or ports have not been designated within hours.

(3) If, after the commencement of loading or at any stage thereafter, it appears to the reasonable judgment of the master and/or the carrier that the ship, the cargo, the seamen or any of the persons on board are likely to encounter any of the hazards specified in the first clause, the carrier shall not be obliged to proceed with the loading and sign the bill of lading, nor shall he be required to cause the ship to commence or continue the voyage or any part thereof, or to pass through any channel or strait for that purpose, or to proceed to any port or place or to remain therein. In such case the carrier shall request the shipper to designate a safe port for the discharge of the cargo or part thereof, and if the shipper fails to designate such port within …. hours after receipt thereof by the carrier, the carrier may discharge the cargo in any other port of its choice (including the port of loading) in absolute performance of this contract of carriage. The carrier shall be entitled to claim the additional costs of such unloading, if this is a port other than the port of loading, the full freight as if the cargo had been carried to the port of discharge specified in the contract and, if there is a difference of more than … miles between the actual port of discharge and the contractual port of discharge, the freight for the additional voyage (determined by applying the contractual voyage/additional voyage distance ratio to the freight), as well as a contractual lien on the cargo for the collection of the specified items.

(4) If, at any stage after the discharge of the cargo, in the reasonable judgment of the master and/or the carrier, there is a possibility that the ship, cargo, seamen or other persons on board may encounter war hazards on any part of the normal and customary route to be used for the performance of the contract (including strait or canal crossings) and the alternative route to the port of discharge is longer, the carrier shall notify the carrier that this route will be used. If the total additional distance is more than … miles as a result thereof, the carrier shall be entitled to the freight for the additional voyage (determined by applying the contractual voyage/additional voyage distance ratio to the freight).

(5) Ship,

(a) To comply with all orders, instructions or recommendations given by the government of the state whose flag the carrier flies or to whose laws the carrier is subject or by any other government or by any authority or group competent to ensure that its instructions or recommendations are carried out, including instructions or recommendations not to proceed to the port of discharge or to proceed with delay or to proceed to another port, as well as all orders, instructions or recommendations as to the ports where the ship will be located for the purpose of carrying out loading/unloading activities during the performance of the contract or the ports to be called during the voyage, the route to be used and the areas to be passed through;

(b) to comply with all orders, instructions or recommendations of insurance companies authorized under the terms of their insurance against war risks;

(c) to comply with all resolutions of the Security Council of the United Nations, all directives of the European Community, all orders of any other supranational authority competent in this respect, the legislation of the state to which the carrier is subject and to which the carrier is obliged to comply for the performance thereof, and the orders and directives of other bodies charged with enforcement,

(d) discharging in any other port all or part of the cargo which may lead to confiscation of the ship for smuggling;

(e) to call at any other port for the purpose of replacing the ship’s crew or some of them or other persons on board the ship who are likely to face detention, imprisonment or other sanctions;

(f) where cargo is not loaded or discharged by the carrier pursuant to any provision of this Clause, to take other cargo for the account of the carrier and to carry it to any other port or ports outside the normal and usual route or in the opposite direction

is free to do so.

(6) If, as a result of compliance with clauses (2) to (5) of this clause, any matter is or is not fulfilled, this shall not be regarded as a deviation but as a proper performance of this contract.

Article 18- General ice clause ;

Port of Loading

(a) If, at the time when the ship is ready for the voyage from the last port to the port of loading, or at any time during the voyage or at the time when the ship arrives at the port of loading, it is not possible to enter the port because of icing, or if icing begins after the ship has arrived there and there is apprehension of frost, the master is free to leave the port without taking the cargo and the contract is void.

(b) If, in the opinion of the master, it is necessary to leave the port with the quantity that can be loaded in order to prevent the ship from being stranded in the port by icing at the time of loading, he is free to leave it and proceed to any port or ports for the purpose of taking cargo for the account of the carrier to the places left vacant for carriage to any other port or ports. Without prejudice to the other terms of the contract, the partial cargo received under this contract shall be delivered to the place of destination at the ship’s expense and at no additional cost to the carrier, for freight calculated according to the quantity of cargo delivered (in the case of lump sum freight, the rate).

(c) If there is more than one port of loading and one or more of them are closed due to icing, the master or carrier is free to load the partial cargo at the open port and take cargo for the account of the carrier to the vacant spaces as provided in (b) or to declare the contract void if the shipper does not agree to give full cargo at the open port.

Port of Discharge

(a) If the ship is unable to reach the port of discharge because of icing, the consignee has the right to hold the ship for a time charter charge until it is cleared or to send the ship to a safe and immediately accessible port where the cargo can be safely discharged without danger of icing within …. hours after the master or the carrier has been notified of the icing.

(b) If, in the master’s opinion, it is necessary to leave the port with the remaining quantity in order to prevent the ship from being stranded in the port due to icing during unloading, he is free to leave and proceed to the nearest accessible port where the cargo can be safely discharged.

(c) If the cargo is delivered at such a port, without prejudice to the terms of the bill of lading, a separate amount of freight shall accrue as if the discharge had taken place at the original port. If the distance to the subsequently designated port is more than …. nautical miles, the freight accrued on the cargo delivered therein shall be increased accordingly.

Article 19- Governing law and arbitration ;

(a) This contract shall be governed by ….. law and shall be construed accordingly; if a dispute arises out of this contract, it shall be subject to arbitration at …… in accordance with the arbitration legislation of …… or any statutory amendment or replacement thereof. If the parties are unable to agree on a single arbitrator, each party shall appoint one arbitrator and the arbitrators so appointed shall appoint a third arbitrator, and the decision of the panel of three arbitrators, or a majority decision, shall be final. Upon receipt of a party’s written designation of an arbitrator, the other party shall designate its own arbitrator within …. days, otherwise the decision of the sole designated arbitrator shall be final. If the damages claimed by either party do not exceed the amount set out in Box 25, the arbitration shall be ….. shall be conducted under the limited indemnity procedure organized by the Association of Marine Arbitrators.

(b) This agreement shall be governed by and construed in accordance with ………………………………………………., and in the event of a dispute arising out of this agreement, the matter shall be submitted to three arbitrators at ………., where each party shall appoint one arbitrator and the third arbitrator shall be selected by the arbitrators so appointed, whose decision or majority decision shall be final and shall be taken into account by the court in enforcing the award. Procedure shall be governed by the rules of the Association of Maritime Arbitrators. If the damages claimed by either party do not exceed the amount set out in Box 25, the arbitration shall be conducted under the abbreviated arbitration procedure set out by the Association of Maritime Arbitrators.

(c) Any dispute arising out of this contract shall be subject to arbitration at the place shown in Box 25 and under the rules of procedure applicable therein. The legislation of the place shown in Box 25 shall apply to this contract.

(d) If the first part of Box 25 is not completed, subparagraph (a) of this clause shall apply.

(a), (b) and (c) are alternatives and Box 25 indicates which one is accepted.

If there is no information in the first part of the box, this condition shall cease to apply, but the other conditions of this clause shall remain in full force and effect.

Name and surname of the Carrier Name and surname of the Shipper

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Charter Contract

Charter Contract

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