Charter Party shipping contract in Bangladesh at 2020: A Complete guide

Tahmidur Rahman, Senior Associate, Counsels Law Partners

2 Jan 2020

This post in details will explain in details about charter party shipping contract in Bangladesh. The Charter Party Shipping Contract is very important for all Admiralty and Maritime personnels, investors and to all those interested in this business. Parties to the Charter Process must be vigilant while drawing up such an agreement. The charter party must represent the interests of the parties and be free from ambiguity and confusion. This article offers an description of the general terms and conditions of the Charter Group Agreement.

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What is Charter and Charter Party?

 

In shipping it is often referred to as being on charter when a ship is contracted. The ship’s owner is always referred to as the owner and the charterer is referred to as the one who hires the ship or space thereof. The instrument of agreement is called the “charter party,” generally referred to as C / P.

There are common models for different types of charter developed by various foreign trade organizations and chambers of commerce including the ICC, BIMCO and the Baltic Exchange. C / P is usually drawn by mutual agreement (ship-owner and charterer or their agents) to separate clauses in each of the particular types with special conditions or exception / exemption indicated by lines.

Conventionally there are three major types of charter:

  1. Demise or Bare-boat charter
  2. Time charter
  3. Voyage charter

 

What is a Charter Party Shipping Contract?

 

The charter party is a contract document by which the shipowner agrees to lease, and the charterer agrees to hire, a vessel or all cargo space, or part of it, on the terms and conditions of the charter party.

If this is permitted under the terms of the charter party, the charterer may do so, enter subcontracts with other shippers. If your vessel is chartered, it is of the utmost importance that you read the charter party carefully, in particular the added clauses, until it is fully understood. It is advisable for the officers to read it as a matter of information and instruction, and it will do no harm to discuss it with them, in particular with the Chief Officer.

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Types of Charter Parties in a shipping contract in  Bangladesh

 

Bare Charter or Demise:

 

Charter of the Bareboat Party. The shipowner, by this type of charter
Leases his entire vessel, and the charterer is responsible for
Operating it as if it were his own vessel. 

The charterer operates the vessel (in lawful trade) in a manner as if s/he is the owner. The charterer can even put his/ her own marking on the funnel.

However, the charterer can not raise any cash / finance against the ship because he / she is still not the owner of the ship. Some countries also allow the registration of a ship under bare-boat charter for the charter period or if the C / P leads to the eventual sale of the ship to the charterer.

However, the C / P must have a clause allowing the charterer to register a ship under a different flag for the charter period. Obviously, the administration of the bare-boat registry will seek the consent of the primary registry before the vessel is registered under the bare-boat registry. (Charter Shipping contract in bangladesh)

 

Time Charter:

The ship is chartered for a specific period , say about six months to one year, at a fixed rate (usually a daily rate) with the option of extending the period to complete the voyage. The Charter may be renewed or extended for a further period of time on mutual consent.

Charter hire is usually paid in advance, say about 15 or 30 days at a time. The owner keeps the master and the crew and keeps paying their wages.

The owner continues to pay for the insurance (hull and machinery and crew P&I). The charterer may take advantage of the P&I coverage for freight or other claims. There are special P&I charter clubs to provide coverage of the charterer ‘s requirements. (Charter Shipping contract in bangladesh)

Voyage Charter:

It is, in fact, an agreement between the owner (carrier) and the charterer (shipper) to transport a certain quantity of cargo from point A to point B at the agreed rate of freight per ton. It usually refers to a quantity with a + /-2 per cent option for either party.

The ship will serve the “Notice of Readiness” upon arrival at the loading port when it is ready for loading. If it is on liner terms, the owner (carrier) uses stevedores at both ends and pays for them.

However, the charterer must deliver the cargo to the loading hook and away from the hook at the discharge port. In most travel charters, however, loading and unloading is done by the charterer. (Charter Party Shipping contract in bangladesh)

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What are the terms to be present in a Charter Party Shipping Contract?

 

If applicable, these are the terms that should be present in a Charter Party shipping contract.

  • Name of the Vessel: The name must be mentioned in the Charter Shipping contract.                
  • Charter Period: The period of the voyag
  • Lay days/Cancelling: This term must include the Commencement date of the  voyage and the Cancelling date. 
  • Place of Delivery: The port of destination must be mentioned here. 
  • Cargo history: The previous history of the cargo need to mention before the  voyage starts.
  • Place of Re delivery: if applicable
  •  Bunkers on Delivery and Re delivery: if applicable
  • Rate of Hire: The rate of hire and the overtime hire rate must be mentioned in the Charter Party Shipping contract in bangladesh.
  •  Owners’ Payment Details: Owner’s bank details must be provided.
  •  Bunker Specifications: A detailed specification of the bunker must be provided.
  • Product description: A detailed description of the products along with the amount of products
  • Trading Limits: The limits of the voyage must be clearly mentioned so that the vessel does not depart from the original route.
  • Additional Clauses: Any other additional clauses as demanded by the ship owner or the investors in a Charter Party Shipping contract in bangladesh.
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Additional clauses that also should be present in a shipping contract in  Bangladesh

  1. SPEED OF THE VESSEL: Permitted speed of the vessel along with route must be inserted in the Charter Party Agreement.
  2. CARGOES: Permitted items as well as the capacity of the items in cargo must be mentioned. The consequences of carrying illegal items in the cargo should also be declared.
  3. Payment: It must be mentioned when the payment must be made and also when the advanced payment has to be made. The consequence of failure to pay must also be mentioned.
  4. OWNERS’ OBLIGATIONS: A detailed list of the obligations of the shipowner must be mentioned.

  5. CHARTERER’S OBLIGATIONS: A detailed list of the obligations of the charterer must be mentioned.

Additional terms in a Shipping contract in Bangladesh

 

  1. MASTER AND CREW: The powers, rights and obligations of the master and crew.

     

  2. LIEN: It must be noted that all freight, hire, sub-hire, freight and sub-freights shall be liable to the Owners for any amounts owed by the Charterers.

     

  3. PERFORMANCE OF VESSEL: Owners warrant that the vessel is and remains capable of maintaining, throughout the Charter period, speeds and bunker consumption for propulsion under normal working conditions and in moderate weather conditions.
  4. OFF-HIRE: It must be mentioned that the Vessel shall be off hire on each and every occasion that there is a loss of time arising out of or In connection with the Vessel being unable to comply with Charterers’ instructions (whether by way of interruption or reduction in the Vessel’s services, or in any other manner).
  5. SUB-LET: Charterers will not sub-let the Vessel without prior written permission from the Owner.

Further Important Terms of shipping contract in Bangladesh

  1. VESSEL/CARGO INSPECTIONS/BUNKER SURVEYS: 

    It must be noted that charterers are entitled, at their own time and expense, to cause their representative (which includes any independent surveyor appointed by charterers) to carry out inspections of the vessel and/or to observe the cargo operations and/or to ascertain the quantity and quality of the cargo, water and residues on board, including the collection of cargo samples, inspection and copying.

     

  2. OUTBREAK OF WAR:

    Either party should be allowed to cancel the Agreement on the outbreak of war or hostilities during the period of the Charter Party.

  3. DAMAGE:

    It has to be clarified who bears responsibility in the event of accident, danger, damage or disaster before or after the commencement of the voyage.

     

  4. LAW:

    It must be mentioned which law governs the Charter Party Agreement and where the dispute will be resolved.

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Frequently Asked Questions about Charter Shipping contract in bangladesh

In regards to Charter Shipping contract in bangladesh people also ask these questions frequently, hence this FAQ content block is dedicated to answering your questions.

General Questions about Charter Shipping contract in bangladesh

What is charter party in shipping?

Charter party, contract by which the owner of a ship allows it to be used by others for the transport of a cargo. The shipowner continues to control the navigation and management of the vessel, but the charterer is responsible for its carrying capacity.

Is Charter Party a contract of carriage?

A charter party (sometimes a charter party) is a maritime contract between a shipowner and a charterer to hire either a passenger ship or a cargo ship or a pleasure yacht. The charter party is a contract for the transport of goods in the case of the employment of a tramp.

What are the types of Charter Parties?

There are three major types of charter parties: i) Voyage charter parties, ii) time parties, iii) bare boat parties.

What are the basic terms of a voyage charter party?
  • expected date of readiness to load
  • identity of parties
  • identity of vessel
  • warranty of seaworthiness 
  • present position of vessel 
  • obligation to proceed to loading port or place
  • identity of and safety of loading port or place
  • amount and nature of cargo to be loaded
What are the differences between voyage and time charter party?

A voyage charter is to hire a vessel and a crew to move between a load port and a discharge port. Time charter is the hiring of a vessel for a fixed period of time; the owner still owns the vessel, but the charterer chooses the ports and guides the vessel where to go.

What is the difference between Charter party Bill of Lading and Marine Bill of lading?

Differences Between the Charter Party Bill of Lading and the Marine Bill of Lading: Charter Party Bill of Lading includes a rule specifying that it is subject to a Charter Party. The Marine bill of charge does not contain such a clause or a similar wording.

How to find the Charter party in a bill of lading?

Charter party bill of lading is another form of bill of lading used in the maritime mode of transport. If a shipper or group of shippers arranges for their goods to be chartered to their final destination, a vessel shall be chartered. This chartered vessel is intended to carry the goods solely for certain shippers or shippers.

What is Laytime in Charter Shipping contract?

Legislation can be specified as the amount of time permitted for a ship in a charter for the loading and unloading of cargo at a port. If the ship fails to complete the work within this allocated time and the ship is forced to remain at the port for a longer period of time, then the ship owner will be liable to demolition (fine).

What is freight payable in a Charter party?

“Freight” means the remuneration owed by the charterers to the owners for the performance of the contract. In the contract, it may be referred to as charter party freight. “Freight” is always payable in part in advance under the terms of the charter party, e.g. on loading or on the issue of bills of lading.

Charter Party Shipping Contract at CLP:

The legal team of Counsels Law Partners CLP are highly experienced in providing all kinds of services related to Admiralty and Maritime legal services. For queries or legal assistance, please reach us at:

E-mail: tahmidur@counselslaw.com
Phone: +8801727983838

Address: House 39, Road 126 (3rd Floor) Islam Mansion, Gulshan 1, Dhaka

 

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