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What is a Demise Clause?

A clause in a bill of lading which provides that:

 (1) if the (carrying) ship is not owned or chartered by demise (i. e. bareboat chartered) to the company issuing the bill, then the contract evidenced by the bill will be solely with the shipowners or demise (bareboat) charterers, and, in that case: (2) the party issuing the bill (who will usually be the charterers) is merely an agent with “no personal liability whatsoever” under the contract. Many ships employed by carriers who issue bills of lading are not owned or bareboat-chartered by them, but are chartered. A Demise Clause effectively transfers liability from the issuing charterers to the shipowners, even though the holder of the B/L will probably not have a copy of the charter party. English courts accept demise clauses, but some jurisdictions do not.

 

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