Bareboat charter

Bareboat charter or demise charter

The owners lease (“demise”) a ship out for an agreed period to a “demise Charterer”. The charterers obtain complete control, possession and management of the ship and operate it, for example appointing the master and the crew, as if they are the owner (“disponent owner”).
The actual, registered ownership still remains with the owner.

In times when building costs are very high shipowners may prefer to defer ordering new tonnage and in that case may resort to chartering suitable tonnage on a bareboat basis, in order to meet their immediate requirements. Casualties to their own ships may also necessitate the chartering of suitable ships on a bareboat basis.
Shipowners may not readily agree to let their ships on a bareboat basis, because they then relinquish the management and control to charterers, unless the owners are well satisfied with the general experience and management of the charterers, thereby reducing the possibility of financial liability.

Because bareboat chartering was not common before the 1970s, there were no standard forms of contracts. If bareboat charters were made, companies used forms based on self-modified time charters. These led to problems because of the legal consequences that were not considered when drawing up a form. The Americans used a private form: “Form 149” and, during the Second World War, they used “Warship demise” to requisition ships from owners. Some oil companies have used their own forms, such as the Shell Oil Company’s “Shell-demise”. It was not until 1974 that BIMBO published two standard forms, “Barecon `A”‘ and “Barecon `B”‘ which became very popular. Changes in the shipping business have required changes in the Barecon standard bareboat charters and a new standard bareboat charter has emerged from BIMCO, an amalgamation of the Barecon A and Barecon B. The new form is called BARECON 89.