Time Charter under International Trade
Under time charter arrangement, a ship is hired for a fixed time period with the condition that the ship is to be operated in specified territories. Though the primary essence of the agreement is for the fixed time, still the charterer can employ the ship only within the specified territories. The charterer cannot operate the ship beyond the territorial jurisdiction. The ship owner has to deliver the ship to the charterer, on the agreed date, in a seaworthy condition. Besides, it is the duty of the ship owner to ensure the ship, in the same seaworthy condition, during the period for which the ship has been given on contract to the charterer to enable him to use the ship for the purpose of carrying cargo during the contracted period. It is the responsibility of the ship owners to provide the crew and maintain stores and provisions for the crew during the period of voyage. All the operating expenses such as insurance, depreciation and other fixed expenses have to be borne by the ship owner. All the running expenses like fuel, port charges, canal dues and cargo expenses have to be met by the charterer. The charterer has to pay the agreed hire charges, generally in advance, whether the ship is used or not during the contractual period. After the period is over, charterer has to return the ship. in the same seaworthy condition, it has been given, back to the ship owner, except the normal wear and tear.
The ship owner is assured of the contracted hire charges. By a long-term contract of affreightment, the charterer is protected from the vagaries of fluctuations in freight rates during the long-term contractual period. The charterer can also sublet the ship if the agreement so provides. If the market rates improve and the ship is sublet later, then the charterer may earn more money than what he has to pay in the form of hire charges to the ship owner and stands to gain.
The charterers have greater responsibility under time charter compared to voyage Charter. However, under time character, the ship owners have to undertake the responsibility that the ship is maintained in a seaworthy condition during the contract period. The ship owners have to exercise all reasonable care and diligence to maintain the ship, in seaworthy condition. This implies that the ship owners are responsible in keeping the hull. machinery and equipment in a thoroughly efficient condition during the contract period so that the charterers are able to employ the ship for carrying the cargo without any problem, whatsoever.
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