Law Case Study

Law Case Study

The ironic aspect of the regulation of Carriage of Goods by Sea is the striking similarity between the complexity and unpredictability of the physical shipping world and the identically complex metaphysical legal framework that regulates it. Issues surrounding charter parties reach to the core of the framework not only because it is the document that regulates the contractual relationship between charterer and ship-owner but the variety in form in which it appears can constitute a fundamental difference in the physical relationship between ship-owner and charterer however the metaphysical legal framework surrounding charter parties is far from clear. Most scholars of the area will be familiar with the division between what is varyingly called demise or bareboat charter parties whereby 'The charterer takes full control of the vessel along with the legal and financial responsibility for it. The demise shifts the control and possession of the vessel' , such a charter party is fundamental to the legal relationship between a charterer and ship-owner and for nearly all purposes the charterer is deemed to be responsible as the ship-owner, the intra-contractual relationship is merely one of hire of the boat and thus an obligation of seaworthiness However there are other forms of charter parties which constitute different such relationships, in most of the literature these two are lumped together but this essay will investigate the distinct nature of two generic types; Voyage and Time Charter parties.

Definitions

In this section we will briefly mention the real-life differences between voyage and time charter parties but what must be remembered is that it is the metaphysical legal differences that are the main thrust of this work.

The main distinction between the two would appear to be superficial; a voyage charter party is a contract between charterer and ship-owner to hire a boat for a specified voyage whereas a time charter party is for a specific length of time. However there is a more fundamental difference than this because commercial reality imposes on the legal framework:

'Under a voyage charter the owner … is using the vessel to trade for his own account. He decides and controls how he will exploit the earning capacity of the vessel, what trades he will compete in, what cargoes he will carry. He bears the full commercial risk and expense and enjoys the full benefit of the earnings of the vessel. A time charter is different. The owner still has to bear the expense of maintaining the ship and the crew. He still carries the risk of marine accidents and has to insure his interest in the vessel appropriately. But, in return for the payment of hire, he transfers the right to exploit the earning capacity of the vessel to the time charterer. The time charterer also agrees to provide and pay for the fuel consumed and to bear the disbursements which arise from the trading of the vessel'

The distinction is a subtle one but in judging the state of the law as regards the two it is as ...