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2.1 Demise charter
In a demise charter, the charterer possesses and controls the vessel completely. So the “redelivery clause” in the contract is very important for the shipowner to ensure that the charterer fulfils the obligation to redeliver the vessel in same condition at the termination of the charter. The clause is considered as a warranty of the contract to entitle the shipowner to have a claim under the charterparty upon a breach of warranty.9 Especially, the owner of the ship has not vicarious liability to the cargo owners for any loss or damage of the cargo, even that no responsibility for the maintenance of a seaworthy vessel.
2.2 Voyage charterparty
In voyage charterpary, the charterer get the right to use the vessel, while the vessel’s control and possession is left in the hands of the owner. The charterer can carry his own goods or someone else’s goods in the charterer’s name to maximise the utilisation of the chartered vessel to earn a profit. The master of the vessel, who works as an agent of the shipowner, will be responsible for the issue of the bill of lading to the cargo owners, thus making not the charterer but the shipowner legally responsible for each cargo owner. The charterer will collect the freight under each bill of lading to pay the agreed hire of the vessel to the vessel’s owner.
Under the common law, the shipowner has an implied obligation to provide an absolutely seaworthy ship to be chartered. The seriousness of the unseaworthiness is the key to determine the breach of a condition or of a warranty in the contract of affreightment. In Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd,10 two principles have been set up to decide what constitutes the seaworthiness. Firstly, the nature of the defect, which will probably constitute unseaworthiness, has frustrated the commercial nature of the venture for which the vessel was chartered. Secondly, the unseaworthiness of the vessel must be the actual cause of the loss or damage from which the cargo owner suffers. In addition, seaworthiness must be considered within specific time frames from receiving the cargo and properly discharging the cargo after the long sailing. The shipowner must exercise the due diligence to put the ship into the seaworthy condition to overcome ‘ordinary perils of the sea’.11 Under Hague-Visby Rules (Article III rule 1) and Hague Rules (Article III rule 1 and IV rule 1), the statutory obligation similarly require the shipowner’s exercise of the due diligence before and at the beginning of any voyage to make the ship seaworthiness. Additionally, other shipowner’s obligations such as cargoworthiness as an aspect of seaworthiness, ship sailing with reasonable dispatch, ship no deviation from the agreed sailing and so on, have been implied under the common law. On the other hand, the charterer in a voyage charter has obligation not to ship dangerous goods and has obligation to nominate safe ports for loading and discharging under the common law.
2.3 Time charterparty
In a time charterparty, the charterer acquires the use of the vessel for a specified period of time and pays “hire” for this. The failure by the charterer to pay promptly will normally entitle the shipowner to withdraw the vessel from the charterer’s use. The shipowner and the charterer take the same implied obligations as in voyage charterparty.
3. The Bills of Lading
The bill of lading is normally issued after the goods have been loaded on to the vessel. It is important in three aspects: bill of lading as a document of title; bill of lading as a contract of carriage; bill of lading as a receipt of the goods.
3.1 Bill of lading as a document of title
Bill of lading as a document of title means that it represents the goods afloat on board of a vessel. The bill of lading may be transferred as negotiable instrument from holder to holder and by each transfer the property of the goods are also transferred. The buyer in a cif contract is obligated to pay the seller and has the right to resell or pledge the goods upon the bill of lading without the shipped goods actually arrival. In addition, the bill of lading constitutes an acknowledgment of the goods that have been received for shipment. And the bill of lading state the terms under which the contract of affreightment was made between the goods/cargo owner and the shipowner. The bill of lading, along with the document of insurance and the invoice, serves as a cornerstone for the implementation of payment arranged by way of letters of credit.
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