Introduction
Maritime navigation arrangements require a comprehensive and adaptive commercial solution designed to the needs and nature of the goods transported. Beef transportation demands that the exporter consider many aspects in selecting a reliable and efficient chartering vessel. Chartering is a contractual activity that involves a vessel owner and a hiring partner within the shipping industry, whereby the former hires out their vessel to the latter. This essay focuses on examining differences between the time and bareboat charters, their legal and commercial duties, and a recommendation on the best option.
Differences between Time Charters and Bareboat Charters
The two common types of charters are time and bareboat charters. According to Menon (2021, para. 8, 10), the main difference between the two charters lies in the responsibilities of the two parties engaging in the contract regarding the ship charter. The charterer should know that a bareboat charter excludes the administration and technical maintenance from the agreement and he or she bears all the legal and financial obligations (Todd, 2015, p. 147). It is upon the charterer to ensure all operating expenses, including the port expenses, crew, fuel, and others, are paid to supply meat to the British supermarket chain successfully. Bareboat chartering gives the charter an option of extending the contract for many years and acquiring full ownership of the ship. This kind of charter is recommended for bulk cargo and common for tankers.
Time charterers are required to hire a vessel for a specified period with the responsibilities of vessel management remaining with the owner. However, the charter has the mandate of selecting the ports and directing the vessel to its destination. In a time charter contract, it is the charterer who pays for any port charges, fuel, commissions, and the daily hire fee to the vessel owner (Maulinasari, 2022, p. 9). In such a contract, the charterer is required to make proper arrangements to ensure that cargo is transported before the fixed period in the contract lapses.
The Legal and Commercial Obligations of the Time and Bareboat Charterers
Transport by sea face inherent risks that result in legal disputes between the charter parties. As a result, charterers have both legal and commercial obligations to avoid possible disputes when entering into a contract with vessel owners (Talley, 2012, p. 37). A time charterer is obliged to redeliver the vessel in the same good condition as it was delivered to him. This obligation helps the vessel owner to continue using the vessel for commercial trading immediately after the charter ends. Failure to meet the obligations, the charterer is required to meet all the damage costs involved.
Another key obligation for a time charterer is trading the vessel among safe ports and within the agreed trading limits. In case of any new circumstances that render a port unsafe, the charterer has a secondary obligation to cancel the original order and go to another port that is safe (Wilson, 2010, p. 80). However, any unexpected and abnormal events creating unsafe conditions and resulting in delays and damages do not give the charterer the liability.
The time charterer has a legal obligation to use the vessel for lawful cargo and be in lawful trades. The charterer should be aware of the Argentinian and UK trade and cargo laws because both countries have strict laws to enhance port state control. For instance, the Argentine Maritime Authority is crucial in checking foreign vessels to ensure they comply with the set provisions (Espiñeira, 2022, para. 6). The charterers have an absolute obligation to pay hire to the ship owner on the due date or in advance. Any delay in payment according to the contractual terms is a breach of the contract by the charterer and the latter is required to pay damages to the vessel owner.
Bareboat charters have the commercial obligation to cover vessel operation costs, cargo handling costs, and voyage expenses. The charterer is obliged to pay hire and adhere to the trading limits. Manning of the vessel and maintenance are all obligations of the charterer. According to English laws, the bareboat charterer is obliged to enhance seaworthiness by avoiding collision, pollution, and salvage (Chamberlain and Colaco, 2022, para. 14). Bareboat charterers enter into a party agreement that makes them quasi-owners of the vessel, and all the operational and trading responsibilities lie with them. Unlike in the time charter, where the vessel owner has the insurance obligation, the charterer is obliged to meet the insurance costs in a bareboat charter.
There are serious legal implications in case any party in a charter breaches the underlying laws in the contract. Maritime and Shipping Law (2019) provides a sample of maritime lawsuits on breach of contracts. For example, in Case 6663/2011/CA1, Epson Argentina filed a case against Monte Tamaro for the damages that the latter caused due to the late delivery of the cargo (Maritime and Shipping Law, 2019, p. 4). Charterers should carefully analyze the legal and commercial implications involved in any charter before signing the contract.
Recommendation
The choice of the charter depends on the expectations of the charterer and the ship owner. The charterer needs a vessel that will transport a sufficient volume of cargo and a charter party that will help him deliver the 10-year supply contract. Based on the analysis of the two charters, I would recommend the bareboat charter for the company. The bareboat charter agreement guarantees the hirer the flexibility of selecting the vessel of choice. This implies choosing a bareboat over the time charter; the charterer can choose a vessel suitable to transport the large volume of meat to the supermarket chain.
The bareboat charter has the advantage of allowing the charterer to export their cargo at their own pace. Working with a meat exporter who regularly ships beef to the UK requires a charter that will guarantee the availability of a vessel anytime there is a need to ship beef. A bareboat charter is long-term and this would help the charterer to complete the 10-year contract of exporting meat from Argentina to the UK successfully.
Conclusion
The disparity between the bareboat and time charters is a critical factor to consider when recommending the best shipping option. A charterer should understand the differences in the main commercial and legal obligations underlying the two charter options before making the final decision. The needs and nature of the contract are factors that should be considered in choosing a charter. Therefore, a bareboat charter is the most viable option for the case scenario in this task, which involves a 10-year beef supply contract with a sufficient volume of cargo.
Reference List
Chamberlain, A. and Colaco, H. (2022) ‘The shopping law review: United Kingdom-England & Wales’. Law Reviews. Web.
Espiñeira, B. M. (2022) Law and practice. Web.
Maritime and Shipping Law (2019) Newsletter Maritime, [Online]. Web.
Maulinasari, L. (2022) ‘General Review of Legal Relations and Responsibility of Carriers in Sea Transportation’, International Law Discourse in Southeast Asia, 1(1). Web.
Menon, H. (2021) Ship chartering process-the ultimate guide. Web.
Talley, W. (2012) The Blackwell Companion to Maritime Economics, Chichester: Blackwell Publishing
Todd, P. (2015) Principles of the Carriage of Goods by Sea, London: Routledge
Wilson, J. (2010) Carriage of Goods by Sea, (7th edn) Harlow: Pearson