TTM15120 | Background material: Shipping contracts

Time charterparties

A time charterparty is an agreement to hire a vessel for a period of time. The shipowner agrees that the ship named in the charterparty, including her master and crew, will be placed at the disposal of the charterer for his use and employment over a defined period of time. A fundamental feature of such charterparties is that the time charterer has no possession or control of the ship. The master and crew remain in the employment of the shipowner and at all times are his servants in law.

The charterer will be responsible, subject to any restrictions by the owner, for the cargo to be carried, bunkers, and the ship’s loading and unloading. Remuneration paid to the owner is described as the ‘hire’ and expressed as an amount per day or per deadweight tonne per month.

Because a ship operator who time charters in has no control over the crew, and thus a more limited control of the ship, a limit has been placed on charters in ‘otherwise than on bareboat charter terms’ (time and voyage charters) to the extent of not exceeding 75% of the tonnage operated.

Standard time charters are produced by organisations such as BIMCO, which may be modified by the addition or subtraction of particular clauses. The Tonnage Tax Technical Adviser can provide further details.

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