What is a Charter Party? What is Included in a Charter Party Bill of Lading?

A Charter Party is a type of contract used particularly by companies engaged in maritime transportation. Individuals using this method must also issue a Charter Party bill of lading in connection with it.

So, what is a Charter Party, and what are its types? Continue reading to learn everything about the subject in detail.

What is a Charter Party?

A Charter Party is the term given to the process of hiring a vessel in maritime transport. The master of the ship or the ship's captain is responsible for the goods on board, including the signing of bills of lading for the goods.

What Are the Types of Charter Party?

A Charter Party has different types. Generally, there are three different types. These are:

• Trip Charter: The hiring of a vessel for use on a specific voyage. These contracts are signed for the carriage of a specific cargo by the vessel and its crew on a specific voyage and without time constraints. It is important to make payments related to freight and other services.

• Time Charter: The hiring of a vessel for use within a specific period of time. These contracts are signed for the hire of the vessel and its crew by the charterer within a specified time and subject to other limits. Regular payment of hire is required.

• Hybrid Charter: Combined contracts consisting of a mix of some features of Time and Trip Charters.

 The transport documents issued in these shipments are called Charter Party bills of lading (Charter Party Bill of Lading). The Charter Party contract itself is not included on the bill of lading, but it is stated to be based on the contract (Subject To The Charter Party).

These bills of lading are not subject to a specific form. In case of any dispute, as this contract takes precedence over general principles, it can pose a risk for third parties regarding the goods. Therefore, banks do not prefer to accept such bills of lading in letter of credit transactions. 

What is a Charter Party Bill of Lading?

A Charter Party bill of lading is a document issued by the charterer of a ship or vessel outlining specific information such as the types, quantities of goods, and the conditions under which the goods will be transported. 

The document is issued under conditions different from a liner bill of lading. A Charter Party bill of lading is generally evidence that cargo has been loaded onto a vessel, the quantity of the cargo, the cost of the cargo, and the conditions under which the cargo will be transported.

What Information Must Be Included in a Charter Party Bill of Lading?

When a Charter Party bill of lading is issued, it must contain the following information:

• Signature of the issuer

• Name, surname, or trade name of the carrier

• Information on the type, dimensions, brand, and characteristics of the transported goods

• Date and place of issue

• Number of original copies issued

• Name of the captain

• Shipper's name

• Consignee's name

• Nationality and name of the vessel

• Ports of loading and discharge

• Freight details

How Should a Charter Party Bill of Lading Be Signed?

A Charter Party bill of lading must be signed by the captain or a named agent acting on behalf of the captain, by the shipowner or a named agent acting on behalf of the shipowner, or by the charterer or a named agent acting on behalf of the charterer.

How is the Loading Date Written on a Charter Party Bill of Lading? 

The loading date must be indicated by a printed clause or by a loading notation (on board notation) indicating the date on which the goods were loaded on board the vessel. 

What as the Differences Between a Charter Party Bill of Lading and a Standard Bill of Lading?

There are several differences between a Charter Party bill of lading and a standard bill of lading. We can list these differences as follows:

• While Charter Party bills of lading can be signed by the shipowner, the company chartering the vessel, the master, or agents; standard bills of lading are signed by the carrier, the carrier's agent, or the master.

• Charter Party bills of lading are generally printed on standard forms prepared by BIMCO. Standard bills of lading, on the other hand, are printed on standard forms containing the carriers' own rules and terms.

• Another feature of Charter Party bills of lading is that shipowners can claim that the chartering company has not paid them the charter hire and can request the transportation cost directly for themselves. Therefore, in letter of credit payments, banks keep their distance from these bills of lading.