BIMCO has recently published BARECON 2017 updating its predecessor BARECON 2001. The key changes to look out for are:
- Delivery condition
The shipowner now owes an absolute obligation to deliver the vessel in a seaworthy condition, as opposed to being obliged to exercise due diligence to make the vessel seaworthy on delivery. If the charterer has inspected the vessel before delivery, the owner must deliver the vessel to the charterer in the same condition, fair wear and tear excepted.
- Charter period
The 2017 form includes an option for the charterer to extend the charter period at a pre-agreed charter rate.
- Latent defects
Owners are still liable for the cost of repairs arising out of latent defects. However, the definition of latent defect has now been included, removing previous uncertainty.
Late redelivery by charterers now results in the payment of an enhanced hire rate.
- Maintenance & Operation
Mandatory modifications can now be dealt with in one of two ways: (i) charterers bear all costs; or (ii) an apportionment is carried out which looks at the cost of the necessary change, the anticipated lifespan of the vessel, and the expected life of the modification. If neither option is specified the first should apply.
- Payment of hire
This clause now reads that “the Charterer shall pay hire due to the Owners punctually in accordance with the terms of this Charter Party”. The phrase “in respect of which time shall be of the essence” which had followed the above wording in the 2001 version has now been deleted.
This provision has been amended to take into account the decision in The Ocean Victory, so as to make it clear that co-insurance ensures payment of insurance proceeds to cover the owners’ loss but does not prevent the owners or their insurers from claiming against the charterer, nor the owner or the charterer, or their insurers, from claiming against third parties.
- Anti-corruption / sanctions
The form now contains an anti-corruption and sanctions clause based on the existing BIMCO clauses which provide a right of termination.
The owners’ right to withdraw the vessel is now described as a right to termination and repossession.
If you use BARECON when contracting it would be advisable to consider how the amendments to the new form affect your obligations and whether you require any amendments. If you require any assistance with this, please contact us.