A charter party is the contract document setting out the terms for chartering all or part of a ship for a specific voyage or period. There are three basic types: the voyage charter, the time charter and the bareboat (demise) charter. It is used for project cargo and bulk cargo where scheduled liner services cannot meet the transport requirement.
Its equivalent in Turkish law
The Turkish Commercial Code regulates three contract types separately. Under a ship lease (bareboat) contract, the lessor leaves the use of the ship to the charterer for a certain period against hire; the document is called a "bareboat charter party" (gemi kira çarter partisi) (TTK Art. 1119–1120). Under a time charter, the owner hands over the commercial management of the equipped ship for a certain period while retaining the technical management (TTK Art. 1131). Under a voyage charter, the carrier undertakes to carry the goods by making available all or part of the ship or a specific space on it (TTK Art. 1138); the parties may request that a voyage charter party be drawn up (TTK Art. 1139).
The types compared
| Criterion | Voyage charter | Time charter | Bareboat |
|---|---|---|---|
| What is chartered | Carriage for a specific voyage | Use of the ship for a certain period | Ship without crew |
| Payment | Freight (per tonne or lump sum) | Daily hire | Hire |
| Fuel and port costs | Usually the shipowner | Charterer | Charterer |
| Crew | Shipowner | Shipowner | Charterer |
| Common standard form | GENCON | NYPE | BARECON |
The laytime and demurrage clause
The part of a voyage charter that causes the most disputes is the loading and discharging time. Laytime starts to run on the basis of the notice of readiness given when the ship is ready (TTK Art. 1152–1153); the starting point and excepted days are specified separately in the charter party. If the time is exceeded, the charterer pays the demurrage agreed in the contract. Under the TTK, if the contract provides for demurrage without specifying its duration, that period is ten days; if no amount has been agreed, the carrier's necessary and useful expenses can be claimed (TTK Art. 1154–1155). Despatch, paid for quick discharge, is a premium for early completion. So as not to confuse it with demurrage in container shipping, see the entry on demurrage.
Standard forms
Instead of drafting the contract from scratch, the parties use BIMCO's standard forms. GENCON is BIMCO's general-purpose voyage charter form; it was first drawn up in 1922, last revised in 1994 and comprehensively renewed in 2022. The bill of lading accompanying GENCON 2022 is CONGENBILL 2022. NYPE is common for time charters and BARECON for bareboat charters. "Rider" clauses added to the forms carry job-specific terms.
Difference from liner shipping
In scheduled (liner) shipping, the ship calls at regular ports according to a published schedule; the terms are set by the carrier's bill of lading conditions and the cargo owner merely buys space. In chartering, the ship, ports, dates and handling conditions are determined by negotiation. If the bill of lading refers to the charter party, a copy of the charter party must be presented to the new holder when the document is transferred (TTK Art. 1237).
Use for project and bulk cargo
- Heavy and out-of-gauge equipment: the ship's cranes, deck area and stowage plan are chosen according to the cargo; usually a part charter or a full ship is chartered. See breakbulk cargo.
- Bulk cargo: for cargo such as grain, ores or coal, a full-ship voyage charter is standard; the entry on bulk cargo transport explains the methods.
- Cargo owners usually obtain offers through a shipbroker; the project schedule is built around vessel availability.
Common mistakes
- Leaving unclear on which days laytime runs (weekends, holidays, weather exceptions)
- Planning without linking delays on the road leg to ship demurrage
- Not aligning the delivery terms in the sales contract with the charter terms
The charter option is assessed in project logistics planning together with the port, road transport and customs steps.