Bareboat Charter vs. Time Charter: Key Legal Differences

Understanding Vessel Charter Agreements

Commercial ships, offshore vessels, yachts, and other watercraft are not always operated directly by the companies that own them. Instead, a vessel owner may allow another person or business, known as the charterer, to use the vessel under a charter agreement.

Not all charters work the same way. Some transfer nearly complete control of the vessel to the charterer. Others allow the charterer to use the vessel while the owner continues to manage its crew, maintenance, and navigation.

Two common arrangements are bareboat charters and time charters. Although the terms may sound similar, their legal differences can significantly affect responsibility after a collision, onboard injury, equipment failure, or other maritime accident.

What Is a Bareboat Charter?

A bareboat charter, also called a demise charter, gives the charterer control of the vessel for a set period. The charterer is generally responsible for hiring the crew, operating the vessel, and handling its day-to-day management, while the original owner retains legal ownership.

The charterer may be responsible for:

• Hiring and paying the captain and crew
• Navigating and operating the vessel
• Purchasing fuel and supplies
• Arranging maintenance and repairs
• Paying port and operating expenses
• Obtaining required insurance
• Following applicable safety regulations

A bareboat charter is similar to leasing a vehicle without a driver. The charterer takes responsibility for operating and managing the vessel and may be liable for accidents caused by unsafe navigation, crew negligence, poor maintenance, or other operational failures.

However, the original owner may still be responsible for its own negligence, hazards that existed before the vessel was transferred, or duties it retained under the charter agreement.

What Is a Time Charter?

A time charter gives the charterer the commercial use of a vessel for a set period. Unlike a bareboat charter, the vessel owner generally continues to control the ship’s management and navigation. The owner typically provides the captain and crew and remains responsible for matters such as:

• Navigating the vessel
• Managing and supervising the crew
• Maintaining the vessel
• Addressing mechanical and safety issues
• Insuring the vessel
• Following vessel-management requirements

The time charterer generally decides where the vessel will go, what it will carry, and how it will be used. However, the vessel owner and crew remain responsible for operating it safely.

A time charter is similar to hiring a car service. The customer chooses the destination, but the company provides the vehicle and driver and remains responsible for the trip.

Why Does the Type of Charter Matter After an Accident?

The type of charter can help determine which party may be responsible for an accident. In many cases, liability depends on who controlled the vessel, crew, maintenance, route, cargo operations, or other activity that contributed to the injury.

The vessel owner, charterer, operator, or another company may be responsible depending on the terms of the agreement and what happened. More than one party may also share liability.

How Is the Responsible Party Identified?

The name printed at the top of the charter agreement does not always resolve the issue. An investigation may examine both the contract and how the parties actually operated the vessel. Relevant evidence may include:

• The charter agreement and any amendments
• Crew employment and payroll records
• Maintenance and inspection records
• Safety policies and operating procedures
• Communications between the owner and charterer
• Voyage instructions
• Navigation and vessel-tracking data
• Cargo and loading records
• Insurance policies
• Testimony from the captain and crew

Several parties may ultimately share responsibility, including the vessel owner, bareboat or time charterer, vessel operator, employer, maintenance contractor, cargo company, or equipment manufacturer.

Morgan & Morgan Is Here to Help

Determining liability after a maritime accident can be difficult when multiple businesses are involved in owning, chartering, staffing, and operating the vessel. The company appearing on the vessel or a worker’s paperwork may not be the only party responsible.

Morgan & Morgan’s maritime accident attorneys can review the charter agreement, investigate who controlled the vessel, preserve important evidence, and pursue compensation from the parties whose negligence contributed to the accident.

Contact Morgan & Morgan for a free, no-obligation case evaluation. With the Fee Is Free™, you pay nothing unless we win your case.