A charter party is the contract by which an entire ship, or a principal part of it, is let by the owner to another person for a specified time or use. The distinction that decides most litigation is not commercial but legal: WHICH KIND of charter was agreed, because only one of them changes the standard of care the owner owes. A BAREBOAT or DEMISE charter transfers the FULL POSSESSION, COMMAND, AND NAVIGATION of the vessel to the charterer for the period agreed. The charterer mans, victuals, and navigates the ship at its own expense, and becomes the owner PRO HAC VICE — owner for that voyage or period. The legal consequence is decisive: the shipowner ceases to be a common carrier as to that vessel and becomes a PRIVATE CARRIER, so the extraordinary diligence standard and the presumption of negligence no longer apply, and the ordinary rules on obligations govern instead. The charterer, not the owner, is liable to third parties for the negligent navigation of the vessel. A TIME CHARTER and a VOYAGE (or trip) charter are entirely different. In both, the shipowner RETAINS possession, command, and navigation; the crew remains the owner's; and the charterer merely acquires the right to have its cargo carried, for a period in the case of a time charter or for a particular voyage in the case of a voyage charter. Because the owner retains control, it REMAINS A COMMON CARRIER, still bound to extraordinary diligence and still covered by the presumption of negligence when the goods are lost or damaged. This is why a shipowner cannot escape common carrier liability merely by pointing to a charter agreement; the court will look at whether possession and control actually passed. Two further points. A charter party does not, of itself, affect the rights of a third-party SHIPPER holding a bill of lading who is not a party to the charter: as between the carrier and that shipper, the bill of lading governs. And the Code of Commerce provisions on charter parties, including the requirement of a written charter and the obligations of the parties on loading, demurrage, and deviation, apply suppletorily to the Civil Code.
The Only Distinction That Matters
A charter party lets an entire ship, or a principal part of it, to another. Which KIND was agreed decides whether the owner remains a common carrier.
Bareboat / Demise Charter
Transfers full possession, command, and navigation to the charterer, who mans, victuals, and navigates at its own expense and becomes owner PRO HAC VICE. The owner then becomes a PRIVATE CARRIER — no extraordinary diligence, no presumption of negligence — and the CHARTERER answers to third parties for negligent navigation.
Time and Voyage Charters
The owner RETAINS possession, command, and navigation; the crew stays the owner's. The charterer only acquires the right to have cargo carried — for a period (time charter) or a particular voyage (voyage charter). The owner therefore REMAINS A COMMON CARRIER, still bound to extraordinary diligence and the presumption of negligence.
You Cannot Charter Your Way Out of Liability
A shipowner cannot escape common carrier liability by pointing to a charter agreement. The court examines whether possession and control actually passed.
Third-Party Shippers
A charter party does not by itself affect a third-party shipper holding a bill of lading who is not a party to it — as between carrier and that shipper, the bill of lading governs. Code of Commerce rules on written charters, loading, demurrage, and deviation apply suppletorily.
Frequently Asked Questions
What is a bareboat charter? One that transfers full possession, command, and navigation of the vessel to the charterer, who becomes owner pro hac vice. The shipowner then becomes a private carrier rather than a common carrier.
Does a charter party reduce the shipowner's liability? Only a bareboat or demise charter does. Under a time or voyage charter the owner retains possession and control and remains a common carrier bound by extraordinary diligence.
Who is liable to third parties under a bareboat charter? The charterer, as owner pro hac vice, is liable for the negligent navigation of the vessel rather than the registered owner.
Does a charter party bind a shipper holding a bill of lading? Not of itself. As between the carrier and a third-party shipper who is not a party to the charter, the bill of lading governs.
This commentary is for general informational purposes only and does not constitute legal advice. For guidance specific to your situation, please consult a licensed attorney.
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