A Charter Agreement is a legal document that is created between two parties, when either of them wants to charter a mode of transport or service for a specified amount of time. The first party in the Charter Agreement is known as the Client and the second party is known as the Charter Company and is a logistics fulfillment company by nature. This contract is a legal document between both the organizations and it outlines the specifics of the cargo or products that needs to be chartered from one point to another. It outlines the exact dimensions, weight and contains of the cargo and also mentions the amount of funds that will be issued in exchange for the charter to be processed. The charter company needs to fulfill all the individual specifications of the client and make sure that the shipment is transported safely and on time.
When Do You Need a Charter Agreement?
The most common use of this agreement can be found when a company or an organization needs a specific product or cargo to be shipped and or transported from one destination to the other in a stipulated amount of time. This contract allows the Charter Company to safely and secure transport the cargo as specified by the Client, while making sure that all the terms and conditions outlined and mutually agreed are fulfilled at all times.
With this agreement in place, a company can usually charter a ship, vessel or even a small boat of sorts.
Inclusions in Charter Agreement
Parties Involved: In a Charter Agreement, there are usually two parties involved; the first being the company who wants the product or cargo to be transported and the second is the logistics company who will fulfill the logistical requirements. They are simultaneously known as the Client and the Charter Company.
Effective Dates: This section of the agreement specifies the dates of significance in the context of the contract, such as when the cargo will be transported, by what dates it needs to be delivered and the total tenure of the transport agreement.
Where does it Apply: This agreement is legally binding within the borders of the state, city or county in which it was originally drafted at and it also follows International Maritime Laws.
How to Draft a Charter Agreement?
Follow the mentioned below steps in order to draw Charter Agreement.
- Organize a meeting between both the parties involved and discuss upon the terms and conditions of the Charter Agreement.
- Discuss upon the dates from when the contract will come into effect as well as details about the amount of funds that will be disbursed for the Charter process to take place.
- Once both the parties have agreed to the terms and conditions, reach out to a legal team and ask them to draft a Charter Agreement on your organization’s behalf.
- Cross verify and check the details with both the parties and file the contract in the local court of law as advised by your legal team.
Benefits of a Charter Agreement
The benefits of having a Charter Agreement are outlined as below.
Pros of Charter Agreement
This legal document clearly outlines the individual responsibilities of both the parties before and after the contract has come into effect and thus makes sure that both parties are well aware of their duties and responsibilities at all points in time.
This contract is a legal document and thus can be presented in court if there ever a need in the future for the same.
Cons of not having a Charter Agreement
In the absence of a Charter Agreement, both parties don’t have a legal proof of a transaction ever taking place between both the entities and therefore stand to lose if the matter is ever taken to court.
Key Terms & Clauses in Charter Agreement
Notices: Both the stakeholders in the contract need to issue certain notices to each other and this section of the contract, outlines the details of the same.
Disclaimers: The parties involved in the creation of the contract need to provide certain disclaimers to each other and this section contains details of the same.
Remedies: In the case of a lapse in agreed terms and conditions or a default in payment, certain remedies immediately come into effect, the details of which are enclosed in this section of the contract.
Obligations: Both the parties have certain obligations to each other, during, and after the creation of the contract, the details of which are mentioned here.
Sample Draft of Charter Agreement
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Sample Charter agreement
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This agreement is made between Charter Company and Client on the effective date of 13th November, 2011.
Charter Company represented by
Mr. Shane Williams
Rising Sun Charter
Address: 4735 Pecan Street, New Orleans LA 70126
Contact number: (504) 284-7900
Client represented by:
Mr. Boris Kapoff
Address: 22 North Blue Ridge Court, New Orleans LA 70128
Contact number: (504) 831-9911
Terms and Conditions:
- The Owner of the “Charter Company”, Mr. Shane Williams, hereby charters their vessel M.S Katerina on 15 November, 2011 for a period of 1 month and this term will end on 16 December 2011. The destination of the charter will be to Madagascar and will be taking an expedition crew of the “Client”. The itinerary of the expedition and charter is attached in Exhibit A.
- The chartered vessel will be outfitted, fully furnished, and ready for service for the above mentioned purpose, and the “Charter Company” warrants their acceptance of the “Clients” itinerary and states that it is within the capabilities of the Chartered Vessel.
- The “Charter Company” will provide a qualified crew including a captain to ensure safe journey of the “Client” and their expedition team along with Coast Guard certification of registration as well as trading limits, and other certification as applicable.
- If there is an event where the Chartered Vessel is damaged or disabled due to natural causes, machinery breakdown, grounding, fire, collision or any other probable cause, then according to this Charter Agreement, the “Charter Company” will not charge the “Client” the said amount of $50,000. The “Charter Company” will only charge the daily charter rate from the commencement of the journey to the date of the occurrence of event on a prorate basis.
IN WITNESS WHEREOF, the parties “Charter Company” and “Client” have executed this Capital Accumulation Plan as on the date set forth which is 11/13/2011 (MM/DD/YY).
SIGNED FOR AND ON BEHALF OF CHARTER COMPANY BY:
SIGNED FOR AND ON BEHALF OF CLIENT BY: