Maritime Law: Contracts Of Carriage Of Goods By Sea

Goods By Sea






The transportation of goods by sea is one of the most popular, cost effective and efficient methods of carriage of goods. Contracts of carriage of goods by sea which are generally referred to as contracts of affreightment traditionally fall into two categories:-

Those evidenced by a document referred to as charterparty and those evidenced by bill of lading.




A chaterparty can be defined as “the common written form in which the contract of affreightment is expressed-viz the hiring of the whole or part of a ship for the conveyance of goods” (chambers 20th Century Dictionary 1983 p.213.) Professor Wilson remarks that when a shipowner agrees to make available the whole or part of the carrying capacity of his vessel for a specified period of time or for particular voyage, the arrangement normally takes form of a chaterparty. (Carriage of Goods by sea 1988 Ed.p.3).  Like a normal contract, it is negotiated by the parties or their agents and it takes various forms although there are standard forms (per Kalgo J.C.A in P.A. Awolaja V. seatrade Groningen B.V. (The Normadic) Vol.4 N.S.C. p.384 at 390.)




There are two main type of carriage charter.  These are:


(a)              The time charter

(b)             The voyage charter


With both forms, the shipowner retains control of the equipping and management of the vessel and merely provides a carriage facility.


4.0           WHAT IS A TIME CHARTER?


(i)                Under a time charter, the shipowner places his vessel for an agreed time at the disposal of the charterer who is free to employ it for his own purposes within the agreed contractual limits.  A time charter transfers to the charterer no interest in or right to possession of the vessel; it is a contract for services to be rendered to the charterer by the shipowner through the use of vessel by the shipowner, own servants the master and the crew acting in accordance with such directions as to the cargoes to be loaded and the voyages to be undertaken as by the terms of the charterparty the charterer is entitled to give them.  (Per Lord Diplock in Scandinavian Trading Tanker Co. ABv. Fola Protroleva Ecvatoriana ‘The Scaptrade (1983) 2 A.C. 694).


(ii)             With a time charter, hire is payable according to the amount of time the vessel is placed at the disposal of the charterer.


(iii)           The time charter is in control of the commercial function of the vessel during the period of the charter.


(iv)           The risks under a time chaterparty are generally shared as follows:


Shipowners account                          Charterers account

Depreciation                                     Hire money

Insurance                                          Bunkers

Overheads                                         Port and Canal Dues

Crew Wages, Victualling                            Stevedoring

Running Costs                                  Ballast

Cargo Claims                                    Cargo Claims

Brokerage                                         Dunnage

(See generally Luddeke Marine Claims 1993 Ed.p.167)





Although the shipowner and prospective charterer are free to contact in    their own terms, it is more usual for one of the several types of standard forms of charterparties available on the market to be adopted.

Typical examples are the:


(i)     Baltime 1939 a general purpose time charterparty produced by the Baltic and International Maritime Conference, BIMCO which is a shipowners and ship brokers association.

(ii)             New York Produce Exchange Form 1993 another general purpose time chaterparty.

(iii)           BP Time, Shell Time. Tanker charterparties used by major oil-trading companies.

(iv)           Boxtime: BIMCO time charterparty for use with containerships

(v)             Slothire: BIMCO form for slot-chartering of space in containerships. 


                                                                                                      To be continued tomorrow