Head charter. Most charters allow the charterer to sub-charter (or “sub-let” or “relet”) the ship to other charterers.
The original charter is called the “head charter” and the original charterer is named the “head charterer”. There could be more than one sub-charterer in a chain of charters. Under a sub-let or relet clause the head charterer remains responsible to the owners for the complete and correct fulfilment of the terms of the head charter.
A problem can arise when a bill of lading is issued for goods carried on board a chartered ship and the bill of lading contains a clause stating that “ . . . the terms of the charterparty are incorporated herein . . .” or words to that effect. If there is a “chain of charters, which charterparty terms are part of the contract evidenced by the bill of lading? Who are the parties to this contract, the shipowner and the bill of lading holder or the head charterer and the bill of lading holder or the sub-charterer and the bill of lading holder? It is significant to realise that the “carrier” can be any one of the owner, charterer or sub-charterer.
In a chain of charters an incorporation clause in a bill of lading will usually incorporate the head charter terms in a voyage charter situation because the bill of lading is issued on behalf of the shipowner who is one party to the head charter and not necessarily to a sub-charter (The Sevonia Team, 1983) However, if the head charterer issues the bill of lading independently or even on behalf of the master of the ship (Lignell v. Samuelson, 1921), the sub-charter could be incorporated if the intention of the parties are clearly evidenced as to which charter was being incorporated.