What is a charter party?
A charter party is the contract under which a shipowner lets a vessel to a charterer, setting out the cargo or service to be provided, the money to be paid, and the division of cost and risk between the two parties for the duration of the hiring.
The name comes from the Latin carta partita, a deed that was once torn in two so each party held a matching half. The instrument is the master contract of the dry bulk trade. Whenever a cargo interest needs tonnage and an owner has a ship to offer, the deal they strike is recorded in a charter party. It is the document that turns a verbal agreement between a broker, an owner and a charterer into an enforceable carriage contract.
The charter party sits at the centre of every fixture. The freight rate, the laycan, the laytime regime, the demurrage rate and the cargo handling terms are all clauses inside it. When people on a chartering desk talk about the terms of a deal, they are talking about the charter party, even when the binding agreement is first captured in a fixture recap and the formal document is signed later.
What a charter party governs
A charter party governs the commercial relationship between owner and charterer from the moment of fixture to the moment the account is closed. It does four things at once. It identifies the vessel and the cargo or service. It fixes the money, whether that is freight per tonne or hire per day. It allocates the operational costs of running the ship. And it splits the time and cargo risk between the two sides.
The split of cost and risk is the part that matters most in negotiation. On one form the owner pays for bunkers, port costs and crew and carries the voyage risk. On another the charterer takes that burden in exchange for control of the ship. The charter party is where those choices are written down, and a single mislabelled clause can move hundreds of thousands of dollars of exposure from one party to the other.
Because the document is so central, the market has standardised it. Rather than drafting a fresh contract for every lift, owners and charterers start from a printed standard form, agree the variable terms, and attach rider clauses to record anything specific to their deal. The standard forms are the backbone of the trade, and the rest of this page sets out the main types and the leading forms behind each one.
The main types of charter party
There are three principal types of charter party, distinguished by how much of the ship the charterer takes on. The difference is one of control. The more the charterer controls, the more cost and risk it carries, and the more the pricing shifts from freight per tonne toward hire per day.
A voyage charter hires the ship for one named voyage. The owner keeps commercial and technical control, pays the bunkers and port costs, and is paid a freight rate per tonne of cargo carried. It is the workhorse of the dry bulk spot market, used when a cargo interest has a single parcel to move and no appetite for operational risk.
A time charter hires the ship for a period rather than a voyage. The charterer takes commercial control, decides where the ship trades within the agreed limits, and pays the bunker and port bill, in exchange for paying the owner hire per day. The owner still mans, maintains and insures the vessel. It is used when the lifts are repetitive enough that hiring for a period beats fixing voyage by voyage.
A bareboat charter, also called a demise charter, hires the ship without crew. The charterer takes the vessel as if it were the owner, providing the crew, the insurance, the maintenance and the management, and paying hire per day for the bare asset. It is a financing and asset-use instrument rather than a freight instrument, and it rarely competes for the same cargo as a voyage or time charter.
Standard charter party forms
Most fixtures start from a recognised standard form rather than a bespoke contract. The leading forms are published by industry bodies such as BIMCO and exchange associations, and each is anchored to a particular charter type and trade. Parties take the printed text as the base and negotiate amendments through rider clauses.
| Form | Issuer | Charter type | Typical use |
|---|---|---|---|
| GENCON | BIMCO | Voyage charter | General dry cargo and dry bulk; the default voyage form. Current edition is GENCON 2022. |
| NYPE | ASBA, BIMCO and SMF | Time charter | Dry cargo and dry bulk period hire; the most widely used time charter form. NYPE 2015 is the current edition. |
| BALTIME | BIMCO | Time charter | Dry cargo period hire; an alternative time charter form favoured in some owner-oriented trades. Current edition is BALTIME 1939 (as revised 2001). |
| SHELLVOY | Shell | Voyage charter (tanker) | Crude and product tanker voyage fixtures; the leading tanker voyage form alongside ASBATANKVOY. |
| BARECON | BIMCO | Bareboat charter | Demise hiring and ship-finance lease structures. |
| GENTIME | BIMCO | Time charter | General-purpose time charter form for trades not fitting NYPE or BALTIME. |
In dry bulk, the two forms that dominate are GENCON for voyage work and NYPE for time charters. BALTIME is the older BIMCO time charter and is still seen in some trades, while GENTIME is BIMCO’s more recent general-purpose period form. On the tanker side, SHELLVOY is the leading oil-major voyage form. The point of the standard form is shared understanding: when a broker writes that a fixture is on GENCON 2022 with rider clauses, both sides know the base position on freight, laytime and cargo responsibility before they read a single amendment.
How the umbrella document fits with detailed clauses
The charter party is best understood as an umbrella over a set of detailed clauses, each of which can carry significant money. This page names the document and the forms. The clauses themselves are explained on dedicated pages so that a negotiator can drill into any single pressure point.
The full clause-by-clause breakdown lives on charter party terms, which walks through the freight or hire clause, the laycan and cancelling clause, the cargo handling terms, the off-hire clause and the rider clauses. The two operational clauses that most often move money are covered separately: laytime explains how the loading and discharge clock is counted, and demurrage explains what the charterer pays when that clock overruns.
For the three charter types in full, see voyage charter, time charter and bareboat charter. For how the binding deal is first recorded before the formal document is signed, see fixture recap. If your desk needs help choosing the right form and structuring the rider clauses for a specific stem, the ship-brokering team works the charter party from recap to signature.
Frequently asked questions
What is a charter party in simple terms?
Is a charter party the same as a bill of lading?
What is the difference between GENCON and NYPE?
Do parties have to use a standard form?
Who drafts the charter party?
Where are the detailed clauses explained?
Scope and what this page does not cover
This page explains the charter party as the master contract of dry bulk chartering and names the leading standard forms. It does not provide clause-by-clause drafting, opine on jurisdiction-specific case law, or recommend a governing-law or arbitration seat for any particular deal. For those, work with chartering counsel and a desk-side broker against the current standard form text.