Difficult
Guests
3 October 2017
Last revised
minutes
3
Reading time
Just because charterer guests have paid a great deal of money for the exclusive use of a superyacht, this does not mean that he (or she) has the right to do with the boat and crew as he pleases. A Member recently sought advice with regard to redress following a charter during which guests behaved in a way which was at best depraved – and at worst illegal.
minutes
3
Reading time
3 October 2017
Last revised
Just because charterer guests have paid a great deal of money for the exclusive use of a superyacht, this does not mean that he (or she) has the right to do with the boat and crew as he pleases. A Member recently sought advice with regard to redress following a charter during which guests behaved in a way which was at best depraved – and at worst illegal.
In the absence of an agreement stating otherwise, the broker marketing the yacht is considered the owner's agent and must act in the owner's best interests.
Once the broker books the charter, the owner is bound by the charter agreement and must provide the yacht to the charterer.
The terms of the charter agreement are often based on the MYBA Charter Agreement, which allows the owner to back out only in exceptional circumstances and with financial consequences.
The captain is required by law to refuse illegal instructions from the charterer, but there are other unsavory or immoral actions that may not be illegal.
The MYBA form explicitly prohibits certain behaviors, such as causing nuisance or disrepute, commercial photo shoots, and harassment of crewmembers.
Any breach of the charter agreement may entitle the owner to terminate the contract immediately and claim damages.
The captain must raise issues with the charterer before the owner can terminate the contract, according to the MYBA Charter Agreement.
Despite the challenges, chartering can help offset the costs of owning large yachts with the right guidance and support.
The MYBA form explicitly prohibits certain behaviors, such as causing nuisance or disrepute, commercial photo shoots, and harassment of crewmembers.
Any breach of the charter agreement may entitle the owner to terminate the contract immediately and claim damages.
The captain must raise issues with the charterer before the owner can terminate the contract, according to the MYBA Charter Agreement.
Despite the challenges, chartering can help offset the costs of owning large yachts with the right guidance and support.
In the absence of an agreement stating otherwise, the broker marketing the yacht is considered the owner's agent and must act in the owner's best interests.
Once the broker books the charter, the owner is bound by the charter agreement and must provide the yacht to the charterer.
The terms of the charter agreement are often based on the MYBA Charter Agreement, which allows the owner to back out only in exceptional circumstances and with financial consequences.
The captain is required by law to refuse illegal instructions from the charterer, but there are other unsavory or immoral actions that may not be illegal.
Had the owner known who the charterer was, he would have never have agreed. The charter broker was aware of the charterer’s reputation but remained silent until just before the start of the charter.
In the absence of agreement to the contrary, the broker marketing the yacht on behalf of the owner will often be, in law, the owner’s agent. As such, the broker must perform with the appropriate care and skill, and not allow any conflict between personal interests and those of the principal. By booking a charter with someone known to be unsuitable, it could be said that the broker wasn’t careful and just wanted the commission.
THE AGREEMENT
Once the broker has booked the charter, however, the owner will have been bound by the charter agreement, and is bound to provide his yacht to the charterer. The terms will have been set out in the charter agreement. The most common terms are those published by the Mediterranean Yacht Brokers Association (‘MYBA’), which have also been adopted by the American Yacht Charter Association. The MYBA Charter Agreement only allows the owner to back out as a result of circumstances beyond his control, on pain of reimbursing the owner plus an extra 50%.
EDGY BEHAVIOUR
While, subject to the charter agreement, the yacht is the charterer’s to do with as he pleases, the captain is obliged by law to refuse to comply with illegal instructions. However, there are many things a charterer may do which, while unsavoury or immoral, are not illegal. The MYBA form therefore expressly bans, for example, behaviour causing nuisance or disrepute, commercial photo shoots, and harassment of crewmembers.
Member’s Experience:
“I have been chartering my yachts for more than 15 years and have maintained an excellent relationship with brokers and charterers. In fact, my yachts are considered some of the most successful yachts on the charter market. What has occurred is certainly an aberration and not to be confused with the excellent work the broker community has done these many years.”
Generally, any breach may allow the owner to treat the charter as having come to an end immediately and claim damages, or just claim damages afterwards, depending on how serious the breach is. But the owner must have suffered some sort of actual loss as a result of the breach: an upset crew may not be enough.
RAISING ISSUES
The MYBA Charter Agreement specifically requires the captain to raise issues with the charterer first, before the owner has a chance to terminate the contract. A failure to do this could arguably be seen as a waiver of the owner’s rights, and owners may wish to amend such standard form contracts.
The Member was at pains to point out that these circumstances are unusual, commenting, “I have been chartering my yachts for more than 15 years and have maintained an excellent relationship with brokers and charterers. In fact, my yachts are considered some of the most successful yachts on the charter market. What has occurred is certainly an aberration and not to be confused with the excellent work the broker community has done these many years.”
DON’T BE PUT OFF
For all the pitfalls and hurdles, chartering can substantially offset the costs associated with the ownership of large yachts – with the right guidance and support.
Thank you to all our Members who contributed to this article. Unless otherwise stated, this article broadly describes, by way of illustration, the situation in the United Kingdom waters in respect of United Kingdom-registered vessels. This piece does not provide or replace legal advice.
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