IMPLIED TERMS

Whatever the type of charter, the law will automatically imply further terms. These include conditions that the yacht is seaworthy and that she corresponds with the description given by or on behalf of her owner. Seaworthiness is taken to mean that the yacht, her equipment and crew (if any) must be able to cope with any foreseeable dangers. More specifically, in order to be seaworthy, the yacht must be as fit as an ordinary, careful owner would require at the start of any passage, taking into account all the likely circumstances of that passage.

The age of the yacht is relevant, but age does not excuse having out-of-date safety and navigational equipment. All legal documents required must be held on board. The charter agreement may oblige the owner to maintain the yacht in a seaworthy condition for the whole duration of the charter rather than just the start.

BREACH OF CHARTER

Generally, a breach of any terms may allow the charterer 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 charterer must have suffered some sort of loss as a result of the breach. Just because the yacht is unseaworthy, for example, does not mean that the charterer can claim damages. The particular seaworthiness must have caused loss on the part of the charterer. This would certainly be the case, for example, if the yacht was detained because she did not have the correct papers on board. Moreover, the courts will, as a matter of law, overlook breaches that are so trivial as to be negligible. What is trivial, however, depends entirely on the facts.

CHARTERERS’ INSTRUCTIONS

Subject to the charter agreement (known by lawyers as a ‘charter party’) the yacht is the charterer’s to do with as he or she pleases. Accordingly, the charterer is entitled to give, and the captain is obliged to comply with, legitimate instructions as to where the charterer wishes the yacht to go. This also means that should the yacht be saved from misfortune, the charterer could be liable to pay the rescuers for their services.

Unless a route proposed by the charterer will be inherently dangerous, the captain is bound to comply with the charterer’s request and must then use his navigational skills to avoid danger should it be encountered. Yet the charterer is not entitled to direct the captain on any matters of seamanship. In fact, the captain is not only entitled but also obliged to retain responsibility for all matters relating to the seaworthiness, navigation and the general safety of the vessel, and must refuse requests that might compromise these. A captain is also obliged to refuse to comply with instructions that are illegal under the laws governing the charter agreement.

LITTLE EXTRAS

While there is much else for the charterer to pay for aside from the hire, such other expenses are usually lumped in with the hire payment to produce the charter rate or fee. The charterer needs to pay close attention to the charter terms to avoid any unexpected bills, however. Quoted charter rates are normally inclusive of the brokers’ fees, but the charterer would be well advised to confirm this.

MYBA AGREEMENT

The most common terms are those published by MYBA (formerly the Mediterranean Yacht Brokers Association), which have also been adopted by the American Yacht Charter Association. On these terms, the operating costs of the yacht are in addition to the hire. The charterer must pay a self-explanatory Advance Provisioning Allowance, which must be topped up as required, although the captain is required to keep an eye on this expenditure. The charterer should be familiar with other key parts of the MYBA contract.

DELAYS

For various reasons beyond the owner’s reasonable control, the yacht may be delivered late to the charterer. The owner has 48 hours, or one tenth of the charter period – whichever is the shorter – in which to deliver the yacht for charter, with a proportionate refund being given, or the charterer may cancel the charter, but will only be entitled to a full refund. If the owner fails to deliver the yacht to the charterer, and the reason for this failure was within the owner’s reasonable control, then the charterer will be entitled to a full refund, plus an extra 50 per cent. The charterer may not, however, claim more, no matter how much inconvenience was caused. Should the owner choose to cancel before the start of the charter, the charterer will still only be entitled to a full refund plus 50 per cent.

A chartering area is agreed, and the charterer is allowed to cruise for up to six hours per day within that area. Should the yacht break down or become disabled for any other reason, for any length of time over 48 consecutive hours or 10 per cent of the charter period – whichever is the shorter – the charterer has the option to terminate the agreement.

INSURANCE

Insurance is required against liabilities to third parties that may be caused by the charterer. In as much as the cover required is no less than that set out in the Institute Yacht Clauses in use in the London insurance market, owners may well wish to use these terms rather than any foreign alternatives to save future argument over what is or is not cover of such a standard. The charterer will still be liable, however, should the yacht or any crewmember be detained as a result of any illegal activity on the part of the charterer or any of his or her guests.

The insurance policies for larger risks can be written in long-winded terms. In the event of a dispute arising between owner and insurer, unfamiliar terms can lead to doubt. While an owner who keeps the yacht for his or her own use may be given the benefit of any doubt as a consumer, where a yacht is chartered, this protection evaporates. The additional clause inserted by the insurer to allow the yacht to be chartered will usually take the form of a ‘warranty’ added to the policy, requiring the yacht to be skippered by a professional yacht captain. Being a warranty, if this is not abided by, the policy will be ineffective in its entirety. In the case of bareboat charters, the qualifications needed to be held by skipper-charterers will be set out in detail and, again, must be complied with to the letter.

REDELIVERY

Under the MYBA terms, the charterer should make sure that the yacht is redelivered back to the owner promptly, otherwise the charterer will be liable to pay the charter rate plus an extra 50 per cent, plus the owner’s resulting losses. There is also no agreed limit as to the amount that can be reclaimed should the charterer choose to cancel the contract.

AUTHORITY

A captain will often be given the authority to make contracts as the owner’s agent, as long as he or she is acting within his or her given authority. Where the yacht has been chartered and the charter agreement states that certain supplies, for example, are to be paid by the charterer, the owner will be liable to pay if the charterer doesn’t, even if the creditor knows of the existence of the charter agreement.

POINTS TO CONSIDER

Before a yacht is even placed on the charter market, there are a number of points owners should consider. Depending on the waters in which the yacht will be chartered, such activities will be affected by national laws and increasingly by capricious regional laws, especially in the Mediterranean. This may affect the number of guests allowed, safety requirements and the flag the yacht must sail under. Many flag states, in particular within the Red Ensign group, also have technical Codes of Practice applicable to chartered yachts, which can be expensive to comply with.