Charterer Practice PDF

1\. The merchant There are six key disciplines involved in the shipping business: dry cargo chartering, [tanker](https://icsonline.academy/mod/glossary/showentry.php?eid=6&displayformat=dictionary) chartering, sale and purchase, ship management, port agency and [liner](https://icsonline.academy/mod...

1\. The merchant There are six key disciplines involved in the shipping business: dry cargo chartering, [tanker](https://icsonline.academy/mod/glossary/showentry.php?eid=6&displayformat=dictionary) chartering, sale and purchase, ship management, port agency and [liner](https://icsonline.academy/mod/glossary/showentry.php?eid=343&displayformat=dictionary) agency.There are relationships between the disciplines. The merchant A merchant is defined as 'someone who sells and buys goods'. For each merchant who sells, there will be a merchant who buys.They agree a price and arrangements for transferring the goods from seller to buyer.Transfer arrangements cover finance, insurance, [customs](https://icsonline.academy/mod/glossary/showentry.php?eid=354&displayformat=dictionary) clearance and transport.The shipping business has evolved to support the merchants, whether sellers or buyers, by providing an economical means of transport using ships. The level of demand for shipping depends on the amount of cargo being moved, so shipping demand is secondary to the demand created by merchants. An oversupply of shipping capacity will occur and transport costs (known as freight) will fall if merchants reduce their volume of business. Market adjustments on the supply side are slow as ships take time to build and, once built, they will have a life expectancy of between 25 and 40 years. Changes in derived demand and supply of ship capacity, in a free market economy, determine the value of freight. 2\. The broker The broker acts as a negotiator between the shipowner and the [charterer](https://icsonline.academy/mod/glossary/showentry.php?eid=216&displayformat=dictionary), and will act on behalf of one of the parties.There are three types of brokers:  - Brokers who are staff members of the [charterer](https://icsonline.academy/mod/glossary/showentry.php?eid=216&displayformat=dictionary)'s or shipowner's own business - Brokers employed by companies who provide exclusive services to a principal - Competitive brokers The broker who is a staff member of a major commodity house or shipowner will work within the organisation's own chartering department. Chartering departments of major commodity houses or shipowners are located in the world's maritime centres such as London, New York, Piraeus, Hong Kong and Singapore. An exclusive broker is a broker who is selected by a [charterer](https://icsonline.academy/mod/glossary/showentry.php?eid=216&displayformat=dictionary) or shipowner to look after all their business. An exclusive broker may have several c[lien](https://icsonline.academy/mod/glossary/showentry.php?eid=315&displayformat=dictionary)ts.The exclusive broker will acquire a wide range of market intelligence allowing independent advice to be given to a principal, without conflict of interest. The third type of broking arrangement is the competitive broker. Some principals are confident of their own ability to assess the market.They do not want advice from brokers; they need speed to 'fix' a ship or cargo.To achieve speed, the principal will place their business on the market through several brokers who are in competition with each other.The advantage of the system of having competitive brokers is the ability to cover the market in the shortest possible time. However, even the most ethical broker is likely to shy away from advising the principal to hold off while the market is moving in the principal's favour, recognising that a competitor may take on that business. In addition to providing specialist [shipbroker](https://icsonline.academy/mod/glossary/showentry.php?eid=219&displayformat=dictionary)s, the larger broking houses will provide other services to their c[lien](https://icsonline.academy/mod/glossary/showentry.php?eid=315&displayformat=dictionary)ts, including derivative products, financial services and research. The work of the broker is to negotiate the details of an agreement between a shipowner and [charterer](https://icsonline.academy/mod/glossary/showentry.php?eid=216&displayformat=dictionary), which are then embedded into a contract known as the [charter party](https://icsonline.academy/mod/glossary/showentry.php?eid=15&displayformat=dictionary). 3\. The chartering market A [charter party](https://icsonline.academy/mod/glossary/showentry.php?eid=15&displayformat=dictionary) is a contract established between two parties, the shipowner and the [charterer](https://icsonline.academy/mod/glossary/showentry.php?eid=216&displayformat=dictionary), for the use of a ship.The [charter party](https://icsonline.academy/mod/glossary/showentry.php?eid=15&displayformat=dictionary) is subject only to the current state of the market and the bargaining strengths of the two parties.The terms (clauses) in a [charter party](https://icsonline.academy/mod/glossary/showentry.php?eid=15&displayformat=dictionary) are free from statutory interference. It is impractical to develop individual contracts for each transaction. In practice, the shipowner and [charterer](https://icsonline.academy/mod/glossary/showentry.php?eid=216&displayformat=dictionary) adopt a standard form of [charter party](https://icsonline.academy/mod/glossary/showentry.php?eid=15&displayformat=dictionary) that has been developed for a particular trade.The charter rate and any changes in the terms established in the standard form will be agreed by negotiation between the parties.   The dry cargo charter market The dry cargo market is concerned with the carriage of bulk raw materials, such as iron ore, grain and coal. Chartering takes place throughout the world, with London holding a dominant position due to its history and, importantly, a location that enables brokers and traders to do business with Asia in the morning and with America in the afternoon. The steady development in communication systems over recent years has meant that chartering is no longer carried out face-to-face through institutions such as the [Baltic Exchange](https://icsonline.academy/mod/glossary/showentry.php?eid=191&displayformat=dictionary) in\ London. Intelligence that was once gathered by brokers on the floor is now reported through networked computer systems, internet-based information pages and conversations between brokers. Information networks are crucial for the shipbroking community. Brokers identify supply and demand for ships and cargoes, helping the main players secure cargoes for their ships and ships for their cargoes. In other words, [shipbroker](https://icsonline.academy/mod/glossary/showentry.php?eid=219&displayformat=dictionary)s provide the lubrication that enables market mechanisms to function. A [shipbroker](https://icsonline.academy/mod/glossary/showentry.php?eid=219&displayformat=dictionary)'s income is in the form of a commission, known also as a brokerage, paid for a successful introduction and negotiation between shipowner and [charterer](https://icsonline.academy/mod/glossary/showentry.php?eid=216&displayformat=dictionary) leading to a fixture. Even after much hard work and expense, a negotiation that does not lead to a fixture will normally result in no payment of any kind to the [shipbroker](https://icsonline.academy/mod/glossary/showentry.php?eid=219&displayformat=dictionary). Near misses, however exciting, are not only profitless but a drain on time, energy and resources. A [shipbroker](https://icsonline.academy/mod/glossary/showentry.php?eid=219&displayformat=dictionary) in one centre may co-operate with correspondent brokers to seek suitable tonnage or cargoes in another centre. Most brokers will act competitively if they find a suitable non-exclusive ship for a non-exclusive cargo during their forays into the international market. And a few merchants will not employ brokers in an exclusive role but prefer to treat all brokers as competitors, releasing details of their requirements onto the freight market as widely as possible and negotiating with the owners of any suitable ship that is proposed to them through whatever broking channel the owner selects. It is therefore important for [shipbroker](https://icsonline.academy/mod/glossary/showentry.php?eid=219&displayformat=dictionary)s to circulate details of new business as soon as possible, and to maintain good and close contact not only with those principals providing business but also with correspondent brokers and those representing shipowners whose vessels they may need to fix.\  \ The [charterer](https://icsonline.academy/mod/glossary/showentry.php?eid=216&displayformat=dictionary)'s broker will usually draw up the [charter party](https://icsonline.academy/mod/glossary/showentry.php?eid=15&displayformat=dictionary), while the owner's and [charterer](https://icsonline.academy/mod/glossary/showentry.php?eid=216&displayformat=dictionary)'s broker will deal with amendments and organise financial exchanges, such as payments of freights, voyage balances and hires. Larger brokerages will maintain a post-fixture department to handle concluded fixtures, leaving the front-line broker to concentrate on fixing further business.\   The [tanker](https://icsonline.academy/mod/glossary/showentry.php?eid=6&displayformat=dictionary) chartering market **[Tanker](https://icsonline.academy/mod/glossary/showentry.php?eid=6&displayformat=dictionary) chartering is highly specialised, and the failure rate in negotiations is high** The [tanker](https://icsonline.academy/mod/glossary/showentry.php?eid=6&displayformat=dictionary) market is a specialist sector within the chartering business.[Tanker](https://icsonline.academy/mod/glossary/showentry.php?eid=6&displayformat=dictionary) chartering subdivides into separate specialisms including crude oil, petroleum products, chemicals and liquefied gas.The [tanker](https://icsonline.academy/mod/glossary/showentry.php?eid=6&displayformat=dictionary) broker requires good negotiation skills, team-working ability and market knowledge, including the availability of tankers that are available (open) for charter and cargoes coming into the market so that the right tankers can be placed before potential [charterer](https://icsonline.academy/mod/glossary/showentry.php?eid=216&displayformat=dictionary)s. The [tanker](https://icsonline.academy/mod/glossary/showentry.php?eid=6&displayformat=dictionary) market is dominated by the oil majors, including Shell, BP, ExxonMobil, Chevron and Total, by oil traders and by state-owned oil companies such as Saudi Aramco. At one time, the oil majors owned large fleets supplemented by many ships on long-term [time charter](https://icsonline.academy/mod/glossary/showentry.php?eid=218&displayformat=dictionary).\ The recent trend has been for oil majors to reduce their owned fleets and develop their own chartering departments to charter ships from independent owners. In the oil majors, it is usual for only one broker to be involved between the owner and the [charterer](https://icsonline.academy/mod/glossary/showentry.php?eid=216&displayformat=dictionary). Specialist [shipbroker](https://icsonline.academy/mod/glossary/showentry.php?eid=219&displayformat=dictionary)s have developed their own services. The approach to fixing is dictated by the [charterer](https://icsonline.academy/mod/glossary/showentry.php?eid=216&displayformat=dictionary) and will depend on whether the order and fixture need to be kept confidential. If it is a market order, the [charterer](https://icsonline.academy/mod/glossary/showentry.php?eid=216&displayformat=dictionary) might need to be\ openly giving all suitable vessels a chance to offer. Alternatively, the [charterer](https://icsonline.academy/mod/glossary/showentry.php?eid=216&displayformat=dictionary) may have so many cargoes that the brokers keep them informed of available ships and their rate ideas, just in case the [charterer](https://icsonline.academy/mod/glossary/showentry.php?eid=216&displayformat=dictionary) can put the business together on a date and a rate at which it will all be accepted. With a normal market quote, typically oil for a main trade route, the order will first be quoted to the oil company's panel brokers, usually by telephone or email, providing sufficient information to fill the first line of an order, such as: "[VLCC](https://icsonline.academy/mod/glossary/showentry.php?eid=27&displayformat=dictionary) [AG](https://icsonline.academy/mod/glossary/showentry.php?eid=462&displayformat=dictionary)/West October 15-17 account Big Oil". Depending on how far ahead the dates are, there could be a lot of ships able to achieve the laydays. Owners with ships in position will then receive numerous calls from brokers, giving them these barest details. What the owner's broker will need to know at the outset is the cargo size and description, the load and discharge port ranges, size or other restrictions, a breakdown of grades, [charterer](https://icsonline.academy/mod/glossary/showentry.php?eid=216&displayformat=dictionary)'s rate ideas, commissions and whether the cargo is firm and ready to work. What the owner's broker really needs to be able to do is tell the principal whether the ship is definitely workable.The dimensions, [deadweight](https://icsonline.academy/mod/glossary/showentry.php?eid=130&displayformat=dictionary), dates, age or other factors may make another vessel preferable.There is no sense in getting an owner interested if his ship is not going to be suitable. On the other hand, a [charterer](https://icsonline.academy/mod/glossary/showentry.php?eid=216&displayformat=dictionary) will be wary of publicising too many restrictions or preferences, because that will show the [charterer](https://icsonline.academy/mod/glossary/showentry.php?eid=216&displayformat=dictionary)'s hand and limit the number of ships that will offer, thereby reducing competition and the chances of keeping the rate down. A good broker should have a strong sense of what is fair in spite of the need to earn commission. First-class principals will avoid a broker with a bad reputation, and that broker will end up only working the most difficult end of the market. It is important to remember that [ethics](https://icsonline.academy/mod/glossary/showentry.php?eid=322&displayformat=dictionary) are crucial for the smooth operation of the [tanker](https://icsonline.academy/mod/glossary/showentry.php?eid=6&displayformat=dictionary) market. The failure rate on negotiations is very high, particularly in competitive broking, because of the size of the market and the alternatives available. A [charterer](https://icsonline.academy/mod/glossary/showentry.php?eid=216&displayformat=dictionary) may often withdraw an enquiry completely if market conditions prevent a profitable cargo sale. The next decision for the owner is the rate to offer (in almost all cases, the owner makes the first offer). For a market cargo or well-known trades, the brokers and the owner will usually know the last level done as well as the market level.The decision will be further influenced by the number of ships available and perceptions of whether the market is rising, falling or steady. Typically, the first firm offer will be sent by email, with negotiations continuing by telephone. When the [charterer](https://icsonline.academy/mod/glossary/showentry.php?eid=216&displayformat=dictionary) gives the first counter, it will invariably be on their standard terms, so the format of the offer from the owner and the counter from the [charterer](https://icsonline.academy/mod/glossary/showentry.php?eid=216&displayformat=dictionary) will be substantially different. Under a [time charter](https://icsonline.academy/mod/glossary/showentry.php?eid=218&displayformat=dictionary), the owner hires out a vessel for a certain period during which time the [time charter](https://icsonline.academy/mod/glossary/showentry.php?eid=218&displayformat=dictionary)er is responsible for the commercial operation of the ship.The [charterer](https://icsonline.academy/mod/glossary/showentry.php?eid=216&displayformat=dictionary) arranges for payment of [bunkers](https://icsonline.academy/mod/glossary/showentry.php?eid=74&displayformat=dictionary), port and canal dues, fixing the cargo and arranges the required voyage orders.The [charterer](https://icsonline.academy/mod/glossary/showentry.php?eid=216&displayformat=dictionary) takes the risks on any time lost in port or at sea.Thus, the profitability or otherwise of the charter will depend not only on the market rates and the ready availability of cargo, but also on weather conditions and the [charterer](https://icsonline.academy/mod/glossary/showentry.php?eid=216&displayformat=dictionary)'s ability to maximise the employment of a vessel by good programming. 4\. Charter parties A [charter party](https://icsonline.academy/mod/glossary/showentry.php?eid=15&displayformat=dictionary) is a contract established between a shipowner and a [charterer](https://icsonline.academy/mod/glossary/showentry.php?eid=216&displayformat=dictionary) for the use of the ship.There are three basic forms of [charter party](https://icsonline.academy/mod/glossary/showentry.php?eid=15&displayformat=dictionary), namely:   Voyage [charter party](https://icsonline.academy/mod/glossary/showentry.php?eid=15&displayformat=dictionary)   Time [charter party](https://icsonline.academy/mod/glossary/showentry.php?eid=15&displayformat=dictionary)   Demise [charter party](https://icsonline.academy/mod/glossary/showentry.php?eid=15&displayformat=dictionary) (sometimes known as the [bareboat charter](https://icsonline.academy/mod/glossary/showentry.php?eid=217&displayformat=dictionary)) The [charter party](https://icsonline.academy/mod/glossary/showentry.php?eid=15&displayformat=dictionary) contains written terms of agreement, known as clauses, between the shipowner and the [charterer](https://icsonline.academy/mod/glossary/showentry.php?eid=216&displayformat=dictionary). A [charter party](https://icsonline.academy/mod/glossary/showentry.php?eid=15&displayformat=dictionary) is often of a standard form, sometimes with [box](https://icsonline.academy/mod/glossary/showentry.php?eid=19&displayformat=dictionary)ed layout allowing key information to be inserted in a logical and prescribed format.The clauses incorporated into a charter party state the rights, liabilities and obligations of the shipowner and the charterer.The clauses are separated from the [box](https://icsonline.academy/mod/glossary/showentry.php?eid=19&displayformat=dictionary)ed layout. Additional clauses and amendments to standard clauses can be agreed between the shipowner and the [charterer](https://icsonline.academy/mod/glossary/showentry.php?eid=216&displayformat=dictionary). Standard charter parties have been established for different trades and different cargoes, and are identified by specific code names. Charter parties are regularly revised and, when negotiating a fixture, the shipowner and [charterer](https://icsonline.academy/mod/glossary/showentry.php?eid=216&displayformat=dictionary) must work from the same edition. Historically, most standard forms of charter party were developed by [charterer](https://icsonline.academy/mod/glossary/showentry.php?eid=216&displayformat=dictionary)s who were also merchants.The [charterer](https://icsonline.academy/mod/glossary/showentry.php?eid=216&displayformat=dictionary) as a merchant needed a [charter party](https://icsonline.academy/mod/glossary/showentry.php?eid=15&displayformat=dictionary) to complement the contract of sale of the commodity. [Charterer](https://icsonline.academy/mod/glossary/showentry.php?eid=216&displayformat=dictionary)s are static and are normally in a stronger position than an individual shipowner to establish the terms and conditions of the [charter party](https://icsonline.academy/mod/glossary/showentry.php?eid=15&displayformat=dictionary).They found it possible to co-operate with other [charterer](https://icsonline.academy/mod/glossary/showentry.php?eid=216&displayformat=dictionary)s, including competitors, to devise terms for the carriage of specific commodities to their advantage. In some trades, individual [charterer](https://icsonline.academy/mod/glossary/showentry.php?eid=216&displayformat=dictionary)s have achieved a position of virtual monopoly. Present-day merchants do not have the power they once had. National bodies -- such as the UK's Chamber of Shipping -- and international organisations -- such as Bimco -- form rallying points for shipowners to fight the more unfair [charterer](https://icsonline.academy/mod/glossary/showentry.php?eid=216&displayformat=dictionary)s' terms set out as clauses within a [charter party](https://icsonline.academy/mod/glossary/showentry.php?eid=15&displayformat=dictionary).The result is greater agreement between shipowners and [charterer](https://icsonline.academy/mod/glossary/showentry.php?eid=216&displayformat=dictionary)s. In some cases, it is the shipowners in collaboration with Bimco, with its active and successful documentary committee, who have published standard form charter parties for a particular trade. Once accepted by shipowners, modified [charterer](https://icsonline.academy/mod/glossary/showentry.php?eid=216&displayformat=dictionary)s' clauses are adopted for general use as standard clauses. Despite best efforts, a standard clause will not suit everybody. Some of the convenience of having standard clauses is lost because amendments and additional clauses are needed to make the [charter party](https://icsonline.academy/mod/glossary/showentry.php?eid=15&displayformat=dictionary) fit the precise needs of the [charterer](https://icsonline.academy/mod/glossary/showentry.php?eid=216&displayformat=dictionary) or shipowner. In certain trades, the standard [charter party](https://icsonline.academy/mod/glossary/showentry.php?eid=15&displayformat=dictionary) form has become a framework on which to 'hang dozens\ of extra clauses. But many printed clauses have stood the test of time' with legal precedent ensuring that ambiguous wording is avoided. Reading a full copy of the various time and voyage charter parties described below is instructive and recommended. 5\. The voyage charter party There are many voyage charter forms. Some are specific to a particular trade. Like all charter parties, the voyage [charter party](https://icsonline.academy/mod/glossary/showentry.php?eid=15&displayformat=dictionary) is identified by a code that can relate specifically to a specific trade. Examples are shown below ([charter party](https://icsonline.academy/mod/glossary/showentry.php?eid=15&displayformat=dictionary) names are usually shown in capitals, but we have avoided this for reasons of clarity). **Austwheat **-- Australian Wheat Board form voyage [charter party](https://icsonline.academy/mod/glossary/showentry.php?eid=15&displayformat=dictionary)\ **Grainvoy **-- Bimco Grain voyage charter party \ **Norgrain **-- North American Grain voyage [charter party](https://icsonline.academy/mod/glossary/showentry.php?eid=15&displayformat=dictionary) \ **Nubaltwood **-- Baltic T[imb](https://icsonline.academy/mod/glossary/showentry.php?eid=190&displayformat=dictionary)er trade voyage charter party \ **Orevoy **-- Iron Ore voyage [charter party](https://icsonline.academy/mod/glossary/showentry.php?eid=15&displayformat=dictionary) [Gencon](https://icsonline.academy/mod/glossary/showentry.php?eid=437&displayformat=dictionary) 1994** ** The Gencon voyage [charter party](https://icsonline.academy/mod/glossary/showentry.php?eid=15&displayformat=dictionary) dates back to the 1920s and is a general-purpose voyage [charter party](https://icsonline.academy/mod/glossary/showentry.php?eid=15&displayformat=dictionary) form intended for cargoes or trades for which no specific form exists. It is associated with a single voyage in which a shipowner agrees to load a specific quantity of a commodity cargo at port A and carry it to port B for agreed consideration known as the freight. As Gencon is designed for non-specialised trades, the shipowner or [charterer](https://icsonline.academy/mod/glossary/showentry.php?eid=216&displayformat=dictionary) may insist on additional clauses particular to their requirements. Shipowners and [charterer](https://icsonline.academy/mod/glossary/showentry.php?eid=216&displayformat=dictionary)s are conservative and prefer to use a radically amended Gencon [charter party](https://icsonline.academy/mod/glossary/showentry.php?eid=15&displayformat=dictionary) form than use the modern and more even-handed Multiform charter published by the Federation of National Associations of [Ship Broker](https://icsonline.academy/mod/glossary/showentry.php?eid=219&displayformat=dictionary)s and Agents (Fonasba). The [charterer](https://icsonline.academy/mod/glossary/showentry.php?eid=216&displayformat=dictionary)s are expected to give full details of the cargo. If they have fixed the ship for 'a full and complete cargo', they can expect the [master](https://icsonline.academy/mod/glossary/showentry.php?eid=374&displayformat=dictionary) and owners to demand sufficient cargo to bring the ship down to its loadline or to fill the cargo space. If the [charterer](https://icsonline.academy/mod/glossary/showentry.php?eid=216&displayformat=dictionary)s fail to satisfy this request, they will be liable to pay dead freight on the shortfall as if it had been loaded. [Box](https://icsonline.academy/mod/glossary/showentry.php?eid=19&displayformat=dictionary) 8 describes the position of the ship relative to the charter and [Box](https://icsonline.academy/mod/glossary/showentry.php?eid=19&displayformat=dictionary) 9 states the date the ship will be 'expected ready to load'. If a shipowner states a date in [Box](https://icsonline.academy/mod/glossary/showentry.php?eid=19&displayformat=dictionary) 9 and takes on intervening business that causes the ship to miss the date, the shipowner will be guilty of misrepresentation. **This document is a computer generated [GENCON](https://icsonline.academy/mod/glossary/showentry.php?eid=437&displayformat=dictionary) 1994 form printed by authority of [BIMCO](https://icsonline.academy/mod/glossary/showentry.php?eid=192&displayformat=dictionary). Any insertion or deletion to the form must be clearly visible. In the event of any modification made to the pre-printed text of this document which is not clearly visible, the text of the original [BIMCO](https://icsonline.academy/mod/glossary/showentry.php?eid=192&displayformat=dictionary) approved document shall apply. [BIMCO](https://icsonline.academy/mod/glossary/showentry.php?eid=192&displayformat=dictionary) assumes no responsibility for any loss, damage or expense as a result of discrepancies between the original [BIMCO](https://icsonline.academy/mod/glossary/showentry.php?eid=192&displayformat=dictionary) approved document and this computer generated document.** [Gencon](https://icsonline.academy/mod/glossary/showentry.php?eid=437&displayformat=dictionary) consists of two parts, and details inserted in the [box](https://icsonline.academy/mod/glossary/showentry.php?eid=19&displayformat=dictionary)es of Part I are generally negotiable. Many will feature during negotiation when offers and counter-offers are traded. Although the most fiercely contested area in negotiation is the level of freight, the dates and time allowed for cargo operation can also be crucial. Date and time have an impact on the profitability of the voyage for both shipowner and [charterer](https://icsonline.academy/mod/glossary/showentry.php?eid=216&displayformat=dictionary).\  \ [Box](https://icsonline.academy/mod/glossary/showentry.php?eid=19&displayformat=dictionary) 13 gives details of the freight payable, in dollars per tonne or a dollar lump sum; prepaid or payment on delivery. Information regarding the currency used, method of payment, beneficiary and bank account are to be stated in [Box](https://icsonline.academy/mod/glossary/showentry.php?eid=19&displayformat=dictionary) 14. Options regarding payment of freight are stated in printed clause 4.\  \ [Gencon](https://icsonline.academy/mod/glossary/showentry.php?eid=437&displayformat=dictionary) envisages the shipper paying for loading and the consignee for discharge.The term 'free in and out' ([FIO](https://icsonline.academy/mod/glossary/showentry.php?eid=448&displayformat=dictionary)) recognises that loading and discharge are free of expense to the shipowner. In trades where it is customary for a shipowner to contribute to the cost of loading or discharge, a typed clause would have to replace clause 5(a), which describes Costs and Risks. In the case of a ship having its own cargo-handling [gear](https://icsonline.academy/mod/glossary/showentry.php?eid=58&displayformat=dictionary), cranes or derricks, provision can be made to make use of it for loading or discharging cargo under clause 5(b). Clause 5(c) states that [charterer](https://icsonline.academy/mod/glossary/showentry.php?eid=216&displayformat=dictionary)s are responsible for putting right any stevedore damage noted by the [master](https://icsonline.academy/mod/glossary/showentry.php?eid=374&displayformat=dictionary) during cargo handling.\  \ Clause 6 introduces [laytime](https://icsonline.academy/mod/glossary/showentry.php?eid=236&displayformat=dictionary), a word that is exclusive to the world of chartering. [Laytime](https://icsonline.academy/mod/glossary/showentry.php?eid=236&displayformat=dictionary) refers to the time agreed by both parties for loading or discharging. Clause 6 may seem long, but significant sections of maritime law are devoted to time-counting and disputes about the arrived ship. [Laytime](https://icsonline.academy/mod/glossary/showentry.php?eid=236&displayformat=dictionary) can be expressed in different ways including time (days, hours and minutes) or the tonnage to be loaded or discharged per day. Clause 6 covers separate [laytime](https://icsonline.academy/mod/glossary/showentry.php?eid=236&displayformat=dictionary) for loading and discharging, total [laytime](https://icsonline.academy/mod/glossary/showentry.php?eid=236&displayformat=dictionary) for loading and discharging, and the start of [laytime](https://icsonline.academy/mod/glossary/showentry.php?eid=236&displayformat=dictionary).\  \ Disputes can also occur from misunderstandings about separate and total loading and discharging times, and the impact of bad weather. Clause 6 has been refined over the years in the light of successive legal and commercial disputes but there is still scope for disagreement.\  \ The compensation for exceeding the time allowed for loading and discharging is stated in [Box](https://icsonline.academy/mod/glossary/showentry.php?eid=19&displayformat=dictionary) 20, with details described in clause 7.The compensation is known as [demurrage](https://icsonline.academy/mod/glossary/showentry.php?eid=204&displayformat=dictionary) and is agreed during the [charter party](https://icsonline.academy/mod/glossary/showentry.php?eid=15&displayformat=dictionary) negotiations. As a ship only earns income when at sea, a shipowner will wish to minimise the time spent in loading and discharging. If the [charterer](https://icsonline.academy/mod/glossary/showentry.php?eid=216&displayformat=dictionary) exceeds the agreed time, then the shipowner will expect compensation. A claim for [demurrage](https://icsonline.academy/mod/glossary/showentry.php?eid=204&displayformat=dictionary) may be made by the shipowner for every day or part of a day by which the agreed time is exceeded.\  \ In some dry cargo trades, the converse may apply whereby the [charterer](https://icsonline.academy/mod/glossary/showentry.php?eid=216&displayformat=dictionary) will earn a bonus if the load or discharge from the ship is faster than agreed.The bonus is known as dispatch and, if agreed, will be inserted as a typed clause in the Gencon form.\  \ Clauses 5, 6 and 7 cover dispute-prone areas of a ship's time in port, namely, loading and discharging, [laytime](https://icsonline.academy/mod/glossary/showentry.php?eid=236&displayformat=dictionary) and [demurrage](https://icsonline.academy/mod/glossary/showentry.php?eid=204&displayformat=dictionary). Reference is made within the clauses to certain shipping words, the meanings of which are described below:\  \ **[Trimming](https://icsonline.academy/mod/glossary/showentry.php?eid=438&displayformat=dictionary) **applies to bulk cargoes such as grain, where the surface of the loaded cargo needs to be levelled out to make best use of the space available and to minimise the danger of the cargo shifting in the hold during the voyage. **[Dunnage](https://icsonline.academy/mod/glossary/showentry.php?eid=215&displayformat=dictionary) **is t[imb](https://icsonline.academy/mod/glossary/showentry.php?eid=190&displayformat=dictionary)er or other material used to prevent contact between the cargo and the ship's hold. It allo[ws](https://icsonline.academy/mod/glossary/showentry.php?eid=235&displayformat=dictionary) drainage, ventilation and protection of the cargo as well as minimising movement. **[Tallying](https://icsonline.academy/mod/glossary/showentry.php?eid=210&displayformat=dictionary) **is the name given to the procedure of checking the number of packages as they are loaded on board or discharged from a ship. **Stevedores**: Although technically the term stevedore refers to persons whose work involves the loading or discharge of cargo, it is often used to describe all labour involved with the loading or discharging operation. **The agents **referred to in clause 6 are not the [port agent](https://icsonline.academy/mod/glossary/showentry.php?eid=198&displayformat=dictionary)s appointed by the shipowner to look after the ship's interests but the [charterer](https://icsonline.academy/mod/glossary/showentry.php?eid=216&displayformat=dictionary)'s agents who are responsible for co-ordinating the cargo operations at each end of the voyage.The appointment of [port agent](https://icsonline.academy/mod/glossary/showentry.php?eid=198&displayformat=dictionary)s by the shipowner is dealt with in clause 14.The name of the [port agent](https://icsonline.academy/mod/glossary/showentry.php?eid=198&displayformat=dictionary) may be stated in a typed clause attached to the [charter party](https://icsonline.academy/mod/glossary/showentry.php?eid=15&displayformat=dictionary). **The [Lien](https://icsonline.academy/mod/glossary/showentry.php?eid=315&displayformat=dictionary) clause**: Clause 8 is designed to protect shipowners from non-payment of freight, [demurrage](https://icsonline.academy/mod/glossary/showentry.php?eid=204&displayformat=dictionary) and other such sums due to them. Clause 9 concerns the **cancelling **date and is stated in [Box](https://icsonline.academy/mod/glossary/showentry.php?eid=19&displayformat=dictionary) 21. If the ship has not presented itself for loading by the cancelling date, the [charterer](https://icsonline.academy/mod/glossary/showentry.php?eid=216&displayformat=dictionary)s have the option to cancel the charter party. Cancellation tends to be a last resort in most instances, as [charterer](https://icsonline.academy/mod/glossary/showentry.php?eid=216&displayformat=dictionary)s are then faced with having to find another suitable vessel. Similarly, the shipowner will have to find other employment for the ship, which may already be on its way to the expected loading port. **General Average **is covered by printed clause 12 and is the procedure whereby, if a ship is involved in an extraordinary expenditure to avoid damage to the ship and its cargo, the cargo owners, as well as the shipowner, will contribute to that expenditure. The parties responsible for paying **taxes and dues **on the vessel, cargo or freight are stated in clause 13.Taxes paid on freight are usually for the [charterer](https://icsonline.academy/mod/glossary/showentry.php?eid=216&displayformat=dictionary)'s account but, if for the shipowner's account, the fact must be stated in [Box](https://icsonline.academy/mod/glossary/showentry.php?eid=19&displayformat=dictionary) 23: Freight Tax. **Brokerage commission **and to whom payable is stated in [Box](https://icsonline.academy/mod/glossary/showentry.php?eid=19&displayformat=dictionary) 24 with details covered in clause 15.The commission refers to that earned by the brokers involved in the fixture and is their reward for bringing the negotiation between the shipowner and [charterer](https://icsonline.academy/mod/glossary/showentry.php?eid=216&displayformat=dictionary) to a satisfactory conclusion.The amount of brokerage involved is usually between 1.25% and 3.75% of the gross freight depending on whether one or more brokers are involved. Most charter parties, including Gencon, include brokerage on [demurrage](https://icsonline.academy/mod/glossary/showentry.php?eid=204&displayformat=dictionary) and dead freight. The remaining clauses in Part II, clause 11 and clauses 16-18 deal with eventualities that might be experienced during the voyage. Clause 11 covers collision between ships, clause 16, strikes and lockouts, clause 17, war risks, including hostilities and acts of [piracy](https://icsonline.academy/mod/glossary/showentry.php?eid=289&displayformat=dictionary), and clause 18 is concerned with issues associated with ice at the port of loading or discharge. The final printed clause, clause 19, concerns Law and Arbitration. It establishes the jurisdiction that will apply in the case of legal dispute or arbitration and is stated in [Box](https://icsonline.academy/mod/glossary/showentry.php?eid=19&displayformat=dictionary) 25 of Part I.This is an important consideration in international trading.  In summary, a voyage [charter party](https://icsonline.academy/mod/glossary/showentry.php?eid=15&displayformat=dictionary) form covers: - Date  - Names of the parties - Name and description of the ship - Loading port - Nature and quantity of the cargo  - Discharge port; laydays/cancelling dates - Rate of freight and manner of payment - Loading/discharging costs - Rates of loading and discharging ([laytime](https://icsonline.academy/mod/glossary/showentry.php?eid=236&displayformat=dictionary)) - Dispatch and [demurrage](https://icsonline.academy/mod/glossary/showentry.php?eid=204&displayformat=dictionary) rate - Brokerage commissions Consecutive voyages and contracts of affreightment ([COA](https://icsonline.academy/mod/glossary/showentry.php?eid=157&displayformat=dictionary)) While a single voyage [charter party](https://icsonline.academy/mod/glossary/showentry.php?eid=15&displayformat=dictionary) is commonly used, many [charterer](https://icsonline.academy/mod/glossary/showentry.php?eid=216&displayformat=dictionary)s will have more than one cargo to move. It may be convenient, particularly with an eye to fixing costs, for the contract between a [charterer](https://icsonline.academy/mod/glossary/showentry.php?eid=216&displayformat=dictionary) and shipowner to make a series of consecutive voyages.This procedure is helpful in trades where it is usual for the ship to make the passage to the loading port in ballast. When the frequency of loading does not coincide with the consecutive voyages of a single ship, or in trades where returning in ballast is not normal, an alternative to consecutive voyages may be required. In such a situation, it is appropriate for the [charterer](https://icsonline.academy/mod/glossary/showentry.php?eid=216&displayformat=dictionary) and shipowner to agree parameters covering the frequency of loading, the range and size of ships available and the total quantity of the commodity to be moved within a given period. Under such arrangements, shipowners will have a degree of flexibility to maintain full employment of their ships and, if necessary, charter in other ships should they not have one of their own in the right position.The contract that is established is known as a contract of affreightment. 6\. The time charter party Where the commodity is drawn from a number of different places and sold to several buyers in different locations, neither a voyage charter, consecutive voyage nor a [contract of affreightment](https://icsonline.academy/mod/glossary/showentry.php?eid=157&displayformat=dictionary) will give the [charterer](https://icsonline.academy/mod/glossary/showentry.php?eid=216&displayformat=dictionary) the flexibility required.This is especially the case if there are marked differences in the speed of loading or discharge at the different terminals involved. A solution for the [charterer](https://icsonline.academy/mod/glossary/showentry.php?eid=216&displayformat=dictionary) is to hire the ship on a contract based on time, known as a [time charter](https://icsonline.academy/mod/glossary/showentry.php?eid=218&displayformat=dictionary). Before the days of containerisation, the most prolific [time charter](https://icsonline.academy/mod/glossary/showentry.php?eid=218&displayformat=dictionary)ers were the [liner](https://icsonline.academy/mod/glossary/showentry.php?eid=343&displayformat=dictionary) companies, which [time charter](https://icsonline.academy/mod/glossary/showentry.php?eid=218&displayformat=dictionary)ed ships to supplement their fleets when demand in the general cargo market exceeded their own resources. Oil companies produce their own [time charter](https://icsonline.academy/mod/glossary/showentry.php?eid=218&displayformat=dictionary)s called BPtime, Shelltime and Texacotime. [Bimco](https://icsonline.academy/mod/glossary/showentry.php?eid=192&displayformat=dictionary) adopted the Baltime [charter party](https://icsonline.academy/mod/glossary/showentry.php?eid=15&displayformat=dictionary), which proved to be popular, but there are other forms including the New York Produce Exchange Form, which has been updated by a joint working group from Bimco, the US Association of [Shipbroker](https://icsonline.academy/mod/glossary/showentry.php?eid=219&displayformat=dictionary)s and Agents (ASBA) and the Singapore Maritime Foundation (SMF) as NYPE 2015. Key features of NYPE 2015 include: - A choice of trip or period charter - Optional Not Always Afloat But Safely Aground (NAABSA) provision - Choice of cargo readiness at delivery port or first load port - Obligation on owners and [charterer](https://icsonline.academy/mod/glossary/showentry.php?eid=216&displayformat=dictionary)s to restrict further employment immediately prior to delivery or redelivery that might delay the ship - Owners to provide and maintain Certificates of Financial Responsibility for oil pollution as required at the start of the charter period - Detailed [bunker](https://icsonline.academy/mod/glossary/showentry.php?eid=74&displayformat=dictionary) provisions for period and trip charter options covering quantities and prices; [bunkering](https://icsonline.academy/mod/glossary/showentry.php?eid=75&displayformat=dictionary) operations and sampling; quality and liability; fuel testing; and low-sulphur fuels - Description of the vessel's speed and fuel consumption is a continuing warranty of performance, so the vessel must perform as described throughout the charter rather than only at the time of delivery - A detailed and clarified speed and performance clause, with disputes settled by 'an independent expert or alternative weather service selected by mutual agreement' - A broad choice of law and arbitration options -- New York, London, Singapore (Singapore or English law) or a free choice agreed by the parties  \ The 2015 revision also includes new clauses dealing with a range of current issues: - Hold cleaning and residue disposal in accordance with Marpol - International Maritime Solid Bulk Cargoes (IMSBC) Code - Hull fouling - Electronic bills of lading - Slow steaming - [Piracy](https://icsonline.academy/mod/glossary/showentry.php?eid=289&displayformat=dictionary) - ISM/ISPS Codes - [Ballast water](https://icsonline.academy/mod/glossary/showentry.php?eid=106&displayformat=dictionary) exchange regulations - Owners' right to reject orders that could place the vessel in breach of international sanctions   [Stowaways](https://icsonline.academy/mod/glossary/showentry.php?eid=208&displayformat=dictionary) constitute a breach of the [charter party](https://icsonline.academy/mod/glossary/showentry.php?eid=15&displayformat=dictionary) and are the responsibility of the [charterer](https://icsonline.academy/mod/glossary/showentry.php?eid=216&displayformat=dictionary)   The objective of a [time charter](https://icsonline.academy/mod/glossary/showentry.php?eid=218&displayformat=dictionary) is to transfer the commercial direction of the ship to the [charterer](https://icsonline.academy/mod/glossary/showentry.php?eid=216&displayformat=dictionary) while leaving the technical control, including employment of the ship's crew, with its\ owners.The [charterer](https://icsonline.academy/mod/glossary/showentry.php?eid=216&displayformat=dictionary) decides where the ship will load and discharge and the time and expense of doing so. All the incidental expenses directly resulting from the commercial trading of the ship will be for the [time charter](https://icsonline.academy/mod/glossary/showentry.php?eid=218&displayformat=dictionary)er's account, including port expenses, canal dues and cleaning.The biggest item of expenditure, after the hire payment, will be the cost of [bunker](https://icsonline.academy/mod/glossary/showentry.php?eid=74&displayformat=dictionary) fuel.\  \ One advantage of a [time charter](https://icsonline.academy/mod/glossary/showentry.php?eid=218&displayformat=dictionary), unless excluded by a clause contained in the [charter party](https://icsonline.academy/mod/glossary/showentry.php?eid=15&displayformat=dictionary), is that, if the [charterer](https://icsonline.academy/mod/glossary/showentry.php?eid=216&displayformat=dictionary) does not require the ship for any part of the period of hire, the ship can be sub-chartered to a third party. A [charterer](https://icsonline.academy/mod/glossary/showentry.php?eid=216&displayformat=dictionary) needing a ship for just one voyage but requiring the flexibility of a [time charter](https://icsonline.academy/mod/glossary/showentry.php?eid=218&displayformat=dictionary) will arrange a charter known as a trip [time charter](https://icsonline.academy/mod/glossary/showentry.php?eid=218&displayformat=dictionary).\  \ The duration of the [time charter](https://icsonline.academy/mod/glossary/showentry.php?eid=218&displayformat=dictionary) party is of importance and can be set out in terms of months or years.The [time charter](https://icsonline.academy/mod/glossary/showentry.php?eid=218&displayformat=dictionary) party will establish trading limits between safe ports.\  \ The responsibilities of the shipowner and the [charterer](https://icsonline.academy/mod/glossary/showentry.php?eid=216&displayformat=dictionary) will be clearly stated in the clauses Owners to Provide and [Charterer](https://icsonline.academy/mod/glossary/showentry.php?eid=216&displayformat=dictionary)s to Provide. Essentially, the shipowners provide and pay for the capital and operating costs, including crew and maintenance.The [charterer](https://icsonline.academy/mod/glossary/showentry.php?eid=216&displayformat=dictionary)s provide and pay for voyage items including fuel, [pilotage](https://icsonline.academy/mod/glossary/showentry.php?eid=298&displayformat=dictionary), and port charges.\  \ Fuel, normally referred to as [bunkers](https://icsonline.academy/mod/glossary/showentry.php?eid=74&displayformat=dictionary), is a major item of expenditure. [Charterer](https://icsonline.academy/mod/glossary/showentry.php?eid=216&displayformat=dictionary)s pay for fuel on delivery of the ship and the shipowners will do so on redelivery under the clause [Bunkers](https://icsonline.academy/mod/glossary/showentry.php?eid=74&displayformat=dictionary) on Delivery and [Bunkers](https://icsonline.academy/mod/glossary/showentry.php?eid=74&displayformat=dictionary) on Redelivery. It is usual for the cost of fuel to be settled on the basis of current prices. In addition, the quality of fuel to be used by the [charterer](https://icsonline.academy/mod/glossary/showentry.php?eid=216&displayformat=dictionary) is agreed, as off- specification fuel can cause serious damage to the main and auxiliary engines.\  \ In summary, a time [charter party](https://icsonline.academy/mod/glossary/showentry.php?eid=15&displayformat=dictionary) form covers:  - Date - Names of the parties - Ship's name and particular - Speed and fuel consumption - Duration - Places of delivery and redelivery - Trading areas and limitations - Rate of hire - Laydays and cancelling - Brokerage commissions ### **7. The demise charter party (bareboat charter party)** A [charterer](https://icsonline.academy/mod/glossary/showentry.php?eid=216&displayformat=dictionary) may want a ship to be at its disposal for a long period of time, perhaps several years.The type of [charter party](https://icsonline.academy/mod/glossary/showentry.php?eid=15&displayformat=dictionary) that is arranged is called a [demise charter](https://icsonline.academy/mod/glossary/showentry.php?eid=303&displayformat=dictionary) party or [bareboat charter](https://icsonline.academy/mod/glossary/showentry.php?eid=217&displayformat=dictionary) party, and the [charterer](https://icsonline.academy/mod/glossary/showentry.php?eid=216&displayformat=dictionary) is referred to as the disponent owner.The expression '[demise charter](https://icsonline.academy/mod/glossary/showentry.php?eid=303&displayformat=dictionary) party' is normally used because the word '[demise](https://icsonline.academy/mod/glossary/showentry.php?eid=303&displayformat=dictionary)' means transfer. A [demise charter](https://icsonline.academy/mod/glossary/showentry.php?eid=303&displayformat=dictionary) party transfers the complete operational role of the ship to the [charterer](https://icsonline.academy/mod/glossary/showentry.php?eid=216&displayformat=dictionary). During the period of hire the [demise charter](https://icsonline.academy/mod/glossary/showentry.php?eid=303&displayformat=dictionary)er acts as if the ship is owned by them. It is quite usual for the [demise charter](https://icsonline.academy/mod/glossary/showentry.php?eid=303&displayformat=dictionary)er to change the ship's port of [registry](https://icsonline.academy/mod/glossary/showentry.php?eid=114&displayformat=dictionary) and flag for the period of the charter. A [demise charter](https://icsonline.academy/mod/glossary/showentry.php?eid=303&displayformat=dictionary) party can be compared to a long-term lease of a house or office block.To all intents and purposes, the [demise charter](https://icsonline.academy/mod/glossary/showentry.php?eid=303&displayformat=dictionary)er acts as the owner and is seen as such by the outside world. In many cases, a [demise charter](https://icsonline.academy/mod/glossary/showentry.php?eid=303&displayformat=dictionary) party can be used as an alternative way of financing a ship.The [charterer](https://icsonline.academy/mod/glossary/showentry.php?eid=216&displayformat=dictionary) may find it more convenient or beneficial to pay a monthly hire out of revenue than raise the capital to buy a ship. 8\. Tanker charter parties The [tanker](https://icsonline.academy/mod/glossary/showentry.php?eid=6&displayformat=dictionary) market uses single-voyage and consecutive-voyage charter parties as well as [time charter](https://icsonline.academy/mod/glossary/showentry.php?eid=218&displayformat=dictionary)s and contracts of affreightment. The basic construction of a [tanker](https://icsonline.academy/mod/glossary/showentry.php?eid=6&displayformat=dictionary) [charter party](https://icsonline.academy/mod/glossary/showentry.php?eid=15&displayformat=dictionary) is similar to dry cargo.  While the broad areas of interest correspond with the [charter party](https://icsonline.academy/mod/glossary/showentry.php?eid=15&displayformat=dictionary) forms previously described, the details contained within a liquid cargo [charter party](https://icsonline.academy/mod/glossary/showentry.php?eid=15&displayformat=dictionary) differ. In some respects, the clauses are simpler, partly because oil installations are almost invariably set well apart from port complexes so that readiness to load and time-counting clauses are far less complicated. Many charter parties have been compiled by the major oil companies, such as Shell, BP,Texaco and ExxonMobil, for their own use. Independent bodies such as Intertanko and the ASBA have developed standard [charter party](https://icsonline.academy/mod/glossary/showentry.php?eid=15&displayformat=dictionary) forms for others to use.    [Tanker](https://icsonline.academy/mod/glossary/showentry.php?eid=6&displayformat=dictionary) voyage [charter party](https://icsonline.academy/mod/glossary/showentry.php?eid=15&displayformat=dictionary) [Shellvoy](https://icsonline.academy/mod/glossary/showentry.php?eid=439&displayformat=dictionary) 6 is the latest edition of Shell's [tanker](https://icsonline.academy/mod/glossary/showentry.php?eid=6&displayformat=dictionary) voyage [charter party](https://icsonline.academy/mod/glossary/showentry.php?eid=15&displayformat=dictionary) and was adopted in 2005. The document, which is produced in open form, has three Parts:  - Part 1 concerns 15 lettered clauses (A-O) including description of the ship, position and readiness, load and discharge ports, cargo description and freight rate, described by Worldscale. - Part II provides 56 numbered clauses covering the responsibilities and obligations of the shipowners and [charterer](https://icsonline.academy/mod/glossary/showentry.php?eid=216&displayformat=dictionary)s including condition of the ship, cleanliness of the tanks, [laytime](https://icsonline.academy/mod/glossary/showentry.php?eid=236&displayformat=dictionary), [demurrage](https://icsonline.academy/mod/glossary/showentry.php?eid=204&displayformat=dictionary), heating of the cargo, bills of lading, war risks, drug and alcohol policy and arbitration. - Part III covers geographic concerns; for example, the restriction of the ship not to transit the Great Barrier Reef Inner Passage, 'whether in ballast, en route to a load port or laden' or, when in the USA, the ship 'will comply with all applicable United States Coast Guard (USCG) Regulations in effect'. [Worldscale](https://icsonline.academy/mod/glossary/showentry.php?eid=235&displayformat=dictionary) index: A major difference between voyage charters for dry cargo and voyage charters for tankers is the way that freight is expressed. In dry cargo charter parties, freight is usually expressed in \$/tonne of cargo carried.The oil industry uses a system known as Worldscale, which is described as 'an international freight index for tankers that provides a method of calculating the freight applicable for transporting oil by reference to a Standard Vessel engaged on a round-trip voyage from one or several load ports to one or several discharge ports'.  The Worldscale organisation has calculated a nominal freight rate in \$/tonne for a standard [tanker](https://icsonline.academy/mod/glossary/showentry.php?eid=6&displayformat=dictionary) covering almost every conceivable voyage on which crude oil is carried. If a rate for a specific voyage has not been calculated, Worldscale will produce one.The nominal freight rates are reviewed at regular intervals and subscribers to the service can access the relevant rate at any time. Market levels of freight are expressed in terms of a percentage of the nominal freight rate. Worldscale 100 is the nominal freight rate for the specific voyage as calculated and issued by the Worldscale Association. Worldscale 150 means the freight on the voyage is 150% of the nominal freight rate, whereas Worldscale 50 means the freight achieved will be 50% of the nominal freight rate. By studying reported crude oil fixtures, it is straightforward to see how the crude oil freight market fluctuates and reacts to market forces. Oil installations work 24 hours a day, 365 days a year.The total time allowed for loading or discharging is always 72 hours because tankers are equipped with pumps commensurate with their size. A loading and discharging clause in Shellvoy 6 states that the cargo is loaded at the [charterer](https://icsonline.academy/mod/glossary/showentry.php?eid=216&displayformat=dictionary)'s expense and risk to the ship's permanent hose connections, and is discharged to the ship's permanent hose connections at the shipowner's expense and risk. [Demurrage](https://icsonline.academy/mod/glossary/showentry.php?eid=204&displayformat=dictionary) works in the same way in [tanker](https://icsonline.academy/mod/glossary/showentry.php?eid=6&displayformat=dictionary) charters as for dry cargo but no dispatch is payable.\   [Tanker](https://icsonline.academy/mod/glossary/showentry.php?eid=6&displayformat=dictionary) [time charter](https://icsonline.academy/mod/glossary/showentry.php?eid=218&displayformat=dictionary) party [Shelltime](https://icsonline.academy/mod/glossary/showentry.php?eid=440&displayformat=dictionary) 4 is the latest edition of Shell's [tanker](https://icsonline.academy/mod/glossary/showentry.php?eid=6&displayformat=dictionary) voyage charter party. Initially issued in 1984, it was amended at the end of 2003.The [charter party](https://icsonline.academy/mod/glossary/showentry.php?eid=15&displayformat=dictionary) is produced in open format and comprises 42 comprehensive and detailed clauses. In addition, Shelltime 4 contains two [appendices](https://icsonline.academy/mod/folder/view.php?id=7175).\ Appendix A is the [OCIMF](https://icsonline.academy/mod/glossary/showentry.php?eid=174&displayformat=dictionary) Vessel Particulars Questionnaire. Appendix B is the Shell Safety and Environmental Monthly Reporting [Template](https://icsonline.academy/mod/glossary/showentry.php?eid=497&displayformat=dictionary). The [OCIMF](https://icsonline.academy/mod/glossary/showentry.php?eid=174&displayformat=dictionary) Vessel Particulars Questionnaire is a comprehensive, 16-chapter listing of details concerning the [tanker](https://icsonline.academy/mod/glossary/showentry.php?eid=6&displayformat=dictionary). It covers all aspects including operational history, certificates and documents carried on board, crew management, navigation equipment, safety equipment including inert gas systems, structural condition, pollution prevention arrangements, the cargo and ballast system including tank capacities, mooring and towing arrangements, the main propulsion system and structural condition. The Monthly Reporting [Template](https://icsonline.academy/mod/glossary/showentry.php?eid=497&displayformat=dictionary) requires the ship to report any oil spill incident and any incident having potential to cause injury, damage or loss. It also requires a report on the ship's monthly consumption of fuel and diesel oil, and information on distance steamed.  The quality standards required by Shell are emphasised in clause 1, entitled Safety Management. The clause covers safety and environmental management systems and safe working procedures. The related clause 2 concerns Shipboard Personnel and their Duties and covers the number and quality of ship staff. 9\. Bills of lading A [bill of lading](https://icsonline.academy/mod/glossary/showentry.php?eid=168&displayformat=dictionary) is a document made out between the carrier and the merchant and has three functions: - Receipt for the goods: The [bill of lading](https://icsonline.academy/mod/glossary/showentry.php?eid=168&displayformat=dictionary) provides evidence that the goods have been received by the carrier for shipment or received on board the ship. It gives certain details as to their condition on being received. If the goods are damaged on receipt, the [bill of lading](https://icsonline.academy/mod/glossary/showentry.php?eid=168&displayformat=dictionary) will be claused accordingly. If claused, the [bill of lading](https://icsonline.academy/mod/glossary/showentry.php?eid=168&displayformat=dictionary) will be regarded as a dirty [bill of lading](https://icsonline.academy/mod/glossary/showentry.php?eid=168&displayformat=dictionary). Goods received undamaged will receive a clean [bill of lading](https://icsonline.academy/mod/glossary/showentry.php?eid=168&displayformat=dictionary). - Evidence of a contract between the shipper and carrier:  The [bill of lading](https://icsonline.academy/mod/glossary/showentry.php?eid=168&displayformat=dictionary) is not a contract itself, but evidence that there is a verbal or written contract between the carrier and the merchant (exporter or importer). - Document of title: The carrier undertakes to deliver the goods against the surrender by a merchant of the original document. As a document of title, the [bill of lading](https://icsonline.academy/mod/glossary/showentry.php?eid=168&displayformat=dictionary) can be traded, and transfer of ownership of the goods described in the [bill of lading](https://icsonline.academy/mod/glossary/showentry.php?eid=168&displayformat=dictionary) can take place between the merchant named in the [bill of lading](https://icsonline.academy/mod/glossary/showentry.php?eid=168&displayformat=dictionary) to another.Trading of the cargo can occur while the ship is on passage. It is not unusual in certain trades for several transactions to take place between the loading port and discharging port. These functions are often abbreviated to RED: Receipt, Evidence, Document. The bill of lading is used in both the [tramp](https://icsonline.academy/mod/glossary/showentry.php?eid=342&displayformat=dictionary) and [liner](https://icsonline.academy/mod/glossary/showentry.php?eid=343&displayformat=dictionary) trades. It is of importance in international trade documentary procedures and is related to letters of credit.There are different forms of bills of lading available. A long form [bill of lading](https://icsonline.academy/mod/glossary/showentry.php?eid=168&displayformat=dictionary) is typically used in the [liner](https://icsonline.academy/mod/glossary/showentry.php?eid=343&displayformat=dictionary) trades and incorporates an international convention that lays out the minimum terms and conditions concerning the carriage of goods. It also makes clear the carrier's obligations, exceptions from liability and the extent of the carrier's liability to the merchant.The merchant's responsibilities to the carrier are also set out, as are the amounts recoverable from the carrier in cases of loss or damage. One of the following international conventions will be incorporated into the [bill of lading](https://icsonline.academy/mod/glossary/showentry.php?eid=168&displayformat=dictionary): the [Hague Rules](https://icsonline.academy/mod/glossary/showentry.php?eid=149&displayformat=dictionary), the [Hague-Visby](https://icsonline.academy/mod/glossary/showentry.php?eid=150&displayformat=dictionary) or [Hamburg Rules](https://icsonline.academy/mod/glossary/showentry.php?eid=151&displayformat=dictionary). A new convention, the Rotterdam Rules established in 2009, is awaiting ratification by sufficient numbers of governments. A short form [bill of lading](https://icsonline.academy/mod/glossary/showentry.php?eid=168&displayformat=dictionary) is used in conjunction with a [charter party](https://icsonline.academy/mod/glossary/showentry.php?eid=15&displayformat=dictionary). It incorporates the 'terms and conditions, liberties and exceptions' of the [charter party](https://icsonline.academy/mod/glossary/showentry.php?eid=15&displayformat=dictionary) including the law and arbitration clause. An example of a short form [bill of lading](https://icsonline.academy/mod/glossary/showentry.php?eid=168&displayformat=dictionary) is Congenbill 2007, published by Bimco. It is two pages in length. Page 1 is in [box](https://icsonline.academy/mod/glossary/showentry.php?eid=19&displayformat=dictionary)ed form. It contains details under the following headings: a reference number, name and address of the shipper and consignee, the name of the ship, port of loading and port of discharge. Included is the shipper's description and statement of the gross weight of the goods and recognition that if goods are carried on deck they are carried at shipper's risk. Freight, payable as per [charter party](https://icsonline.academy/mod/glossary/showentry.php?eid=15&displayformat=dictionary), and the amount of freight paid in advance are noted. Prior to the signatures of the [master](https://icsonline.academy/mod/glossary/showentry.php?eid=374&displayformat=dictionary) and agents, a paragraph is provided that states: "\[the cargo\] Shipped at the Port of Loading in apparent good order and condition on the Vessel for carriage to the Port of Discharge or so near thereto as the Vessel may safely get the goods specified above. Weight, measure, quality, quantity, condition, contents and value unknown". Page 2 lists the conditions of carriage and refers to the [charter party](https://icsonline.academy/mod/glossary/showentry.php?eid=15&displayformat=dictionary). Clause 1 states that 'all terms and conditions, liberties and exceptions of the [Charter Party](https://icsonline.academy/mod/glossary/showentry.php?eid=15&displayformat=dictionary) including the Law and Arbitration Clause/Dispute Resolution Clause are herewith incorporated'. Clause 2 is the General Paramount clause that applies the Hague or [Hague-Visby Rules](https://icsonline.academy/mod/glossary/showentry.php?eid=150&displayformat=dictionary). Clause 3 is the [General Average](https://icsonline.academy/mod/glossary/showentry.php?eid=321&displayformat=dictionary) Clause, which concerns where a [general average](https://icsonline.academy/mod/glossary/showentry.php?eid=321&displayformat=dictionary) is to be adjusted and settled. Clause 4 concerns the New Jason Clause, used to protect owners against the possibility of US la[ws](https://icsonline.academy/mod/glossary/showentry.php?eid=235&displayformat=dictionary)uits, and Clause 5, the Both-to-Blame Collision Clause, is designed to enable a carrier to preserve its defence in claims caused by collision between two ships. In situations where a [letter of credit](https://icsonline.academy/mod/glossary/showentry.php?eid=317&displayformat=dictionary) is being used for the commercial transaction, the [bill of lading](https://icsonline.academy/mod/glossary/showentry.php?eid=168&displayformat=dictionary), along with the commercial invoice, packing list and insurance certificate, will be provided to the seller's bank by the shipper and will be forwarded to the buyer against payment. Only clean bills of lading are normally accepted by the bank.