Charter Contract Types: Bareboat, Time, Voyage
Charter contracts are not one template — there are three distinct structures. Each one has different risk allocation, responsibility split, and revenue profile. Their financing values are also different. This guide covers the three types and how they affect financing.
What this guide covers
- The three charter contract types
- Responsibility and risk allocation per type
- Typical use (yacht, commercial)
- Financing-side view (which is the strongest revenue)
- Typical contract clauses
Note: This page is educational. It is not a substitute for legal advice — work with your legal counsel and broker for project-specific contracts.
The three types — summary
| Type | Crew | Fuel | Maintenance | Insurance | Duration | |---|---|---|---|---|---| | Bareboat | Charterer | Charterer | Charterer | Charterer | Months / years | | Time charter | Owner | Charterer | Owner | Owner | Months / years | | Voyage charter | Owner | Owner | Owner | Owner | Single voyage |
Bareboat charter
Definition: Vessel rented without crew, maintenance or insurance. The charterer takes full operational and financial responsibility for the vessel — as if it were their own.
Use:
- Commercial shipowner → long-tenor rent to operating company
- Superyacht segment → private owner / fund → yacht management company
- When the tonnage owner wants to step out of operations and recoup capital
Risk profile:
- Owner: low operational risk, fixed revenue
- Charterer: high operational risk, flexibility
Time charter
Definition: Vessel rented with crew + maintenance + insurance. The charterer pays only fuel + port charges + cargo management. Duration is fixed (months / years).
Use:
- Yacht side crewed charter model
- Commercial side: long-tenor rent to operator
- Avoid spot-market uncertainty
Risk profile:
- Owner: medium operational risk (crew + maintenance responsibility)
- Charterer: medium operational risk (fuel + logistics)
Voyage charter
Definition: Rental for a single voyage. Everything is on the owner — crew, fuel, maintenance, insurance. Charterer just delivers their cargo (commercial) or takes a voyage (yacht).
Use:
- Commercial spot market — dry bulk, tanker
- Yacht side: day / week short charters
- One-off voyage
Risk profile:
- Owner: all operational risk
- Charterer: only cargo / voyage risk
The financing-side view
Financiers evaluate a charter contract for revenue stream quality.
Bareboat → strongest
- Long-tenor + fixed rent
- Predictable revenue for owner
- Repayment plan easily aligned with rent
- High financing value for banks
Time charter → medium-strong
- Fixed duration + fixed revenue
- Crew / maintenance operational load on owner
- Repayment uses annual average
- Good financing value
Voyage charter → weakest
- One-off, continually renewed
- Exposed to spot market volatility
- Weak repayment backing
- Financing relies entirely on operator track record
This is why commercial shipowners secure income under time or bareboat before seeking financing. Spot-only shipowners struggle for financing.
Typical contract clauses
Watch-points in a charter contract (any type):
1. Duration + options
- Rental period
- Extension option (charterer's right)
- Early termination terms
2. Hire rate + payment
- Daily / monthly hire rate
- Payment date (typically monthly in advance)
- Late payment penalties
3. Responsibility allocation
- Insurance responsibility
- Maintenance responsibility
- Fuel responsibility
4. Off-hire clause
- Is hire paid when the vessel is out of service?
- Off-hire notice
- Resumption after repair
5. Insurance + indemnity
- Which party holds which insurance
- P&I responsibility
- Indemnity clauses
6. Termination
- When the contract ends
- Repossession on breach
- Return-to-owner procedure
7. Arbitration
- Dispute resolution seat (typically London)
- Governing law
Standard templates
BIMCO templates dominate on the charter side:
- NYPE 93 — time charter (dry bulk, container)
- GENTIME — modern time charter
- BIMCO Barecon — bareboat charter
- GENCON 22 — voyage charter
Less standardised on the yacht side — brokers use custom drafting, but the foundations come from BIMCO.
FAQ
What's the most common charter type on the yacht side?
Time / crewed charter — the yacht is rented with crew; the customer pays only fuel + port + provisions. Bareboat is less common on yachts; voyage charters are weekly private trips.
Is a bareboat contract risky for the owner?
Operational risk is low (sits with the charterer). The real risk: the charterer not returning the vessel in good condition. Insurance + indemnity + return-inspection clauses are critical.
Can voyage charter income support financing?
Alone, weak. With 3–5 year operator track record + spot market performance, a bank may evaluate. Without time / bareboat, the equity requirement increases.
How is charter income taxed?
Driven by flag + owner country. Turkish flag + Turkish owner → Turkish tax regime; international structures have different rules. Tax counsel assessment required.
What's the broker's role in signing a charter?
The broker introduces both sides, manages negotiation, and provides the template. Commission is typically taken from the charter fee (paid by owner, passed through in the rate).
Related
- Charter Operator Financing — pillar
- Charter revenue model
- Charter operating cost
- Bareboat charter (glossary)
Talk to us about your project: let us plan the right charter structure + financing coordination together. Reach out via the contact form.
