Chartering (renting a yacht) allows the charterer limited control of the yacht, for a certain period of time in exchange for the payment of hire, subject to the specific details agreed in the charter agreement, known by lawyers as a charter party.
There are two basic types of charter: those where the crew is provided by the owner and those where it is up to the charterer to provide the crew (known as bareboat charters).
Because of the complex crew certification requirements, larger yachts are rarely bareboat charters, although they may be the subject of such a charter as part of a complex finance and/or tax avoidance scheme.
Whether or not crew is provided makes a real difference to the legal positions of the parties.
Generally, with bareboat charters, the charterer remains responsible as if he or she was the owner. Since the crew are employees of the charterer and not of the owner, the acts and omissions of the crew are the responsibility of the charterer should the yacht, for example, be involved in a collision.
Bareboat charterers can take comfort in the fact that the Limitation Conventions of 1957 and 1976 allow charterers to limit their liability for loss of life or personal injury to any person carried on board; loss of or damage to property; liabilities for dealing with a wrecked or abandoned yacht; and the infringement of any other non-contractual rights.
Implied terms and seaworthiness
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The age of the yacht is relevant, but it does not excuse having out-of-date safety and navigational equipment.
All legal documents required must be held on board.
The charter agreement may also oblige the owner to maintain the yacht in a seaworthy condition for the whole duration of the charter rather than just the start.
Generally, a breach of any terms by the owner may allow the charterer to treat the charter as having come to an end immediately and claim damages, or 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.