In the charter scene, contracts between fleet operators and end customers have been a difficult topic for years. Everyone was cooking up their own little soup, some general terms and conditions were barely a DIN A4 page long, others were 8 pages long in tiny font sizes. Quite a few charter company contracts piled mountains of obligations on the skipper, but were noticeably thin on the ground when it came to personal liability.
YACHT therefore repeatedly warned against very critical clauses in the contracts, which sometimes entailed almost incalculable risks. And there were many of them: For example, when the deposit amount specified in the contract, generally the amount of the excess for the boat’s hull insurance, was described in the contract as follows: “The deposit does not have to correspond to the amount of the excess for the hull insurance.” However, the latter is not mentioned anywhere. So the skipper essentially signed a blank check for the fleet operator. That could be expensive.
Charter contracts often have pitfalls for the customer
Or if the contract contained clauses such as “Defective or missing equipment on board does not entitle the customer to a reduction in the charter price”. In plain English: bow thruster broken, autopilot not working, dinghy outboard motor missing – no chance of financial compensation. The yacht has even seen contracts in which the sails or dinghies were excluded from the hull liability.
It must be said that at least 90 percent of charter holidays go off without any major problems and customers don’t even need to read their contracts in detail, but they should, because they regulate a lot of very important things: How much do you have to pay if you have to cancel the trip at short notice? How long do you have to wait if a ship is not ready to go when the crew arrives?
The European industry associations wanted to define the standard
This problem should now be addressed at European level. The International Council of Marine Industry Associations (ICOMIA)and the European Boating Industry Association (EBI) took the Fair Charter contract of the German insurer YACHT-Pool as a basis and developed it into a standard work together with the national charter associations, in Germany the Association of German Yacht Charter Companies (VDC). After a long discussion, a document of around 5 pages was created that presents the rights and obligations of customers and fleet operators in a balanced way and, above all, takes newer EU law into account.
“It was indeed the case that charter contracts of individual fleet operators contained provisions that were not compatible with EU law,” says Dr. Friedrich Schöchl, from the insurance broker YACHT-Pool. Many years ago, his company addressed the problem and formulated the so-called “Fair Charter Contract,” which was intended to put an end to the dilemma. The proposal was well received in Croatia, but it remained the exception in the international charter market. “The EBI then approached me and asked whether we could work together on the basis of the contract to develop a standard work for the European market. That has now happened.”
A lot of ignorance among fleet operators
And so two old strands of contract law were cut off that are still in the minds of many skippers, agents, fleet operators and lawyers: “Two important points concern the place of action and the law according to which negotiations are conducted when there is a dispute over a charter. Many fleet operators still thought that the German customer had to sue them at the company’s headquarters, which was economically nonsensical for decades due to travel costs, translation costs, etc.”
Some fleet operators knew this and thought they were safe. “But the EU has long since clarified this through consumer protection laws: If the company through which the contract is concluded has a German website and German contracts, German law applies, regardless of where the company is based abroad. And secondly: the case is heard in the court where the customer lives!” says Dr. Schöchl.
So now there are these EU-coordinated “General Charter Conditions” which are recommended by the respective national associations of the charter scene to their member companies and fleet operators. However, this is not binding; each company decides for itself whether to follow the regulations or not. As a guideline, however, the recommendation is sure to be met with open ears, as it saves companies from having to seek their own expensive legal advice.
The Association of German Yacht Charter Companies (VDC) is also happy that the issue has finally started to move forward, according to its first chairman Christian Zaloudek: “We have been holding talks with our European fleet partners for many years about standardizing the contracts. This is simply much more customer-friendly, makes things much clearer for them and the agencies. That is why we have worked hard on the development of this common standard contract in many consultation rounds. And for the future, we can now warmly recommend it to our fleet partners, which has a completely different weight. I think that this will be heard.”
The advantages for skippers
But what does it actually say that is remarkable and better for the charter crews? First of all, there is the unequivocal rule that a delay in the handover of the charter yacht, for example because it still needs repairs, entitles you to a proportionate reduction in the charter price. Waited a day for the boat? Paid one day less!
Equipment deficiencies, i.e. defective or missing equipment, now also entitle you to financial compensation. The promised bow thruster is missing? There is no outboard motor for the dinghy?
There is also always trouble about the return of the deposit. Companies keep it for longer, even though there have been no complaints. Now it is regulated: the money must be released again 24 hours after the boat has been returned. Another problem sometimes is: the crew wants to return a boat, but no base employee comes to check out before their return journey. According to the new contract, if the boat is returned on time and the base manager is unable to take it over or refuses to provide a signed copy of the return report, the boat is then considered to have been returned in perfect condition.
The good thing about the new contract is that it regulates many of these small details that have occurred in practice. Dr. Friedrich Schöchl agrees: “Many things from decades of practical experience with our surety and skipper liability insurance have been incorporated into the contract.”
This also includes a point that charter companies have kept quiet about for a long time: GPS tracking of ships. Many fleets have been equipped with sensors for years. How this fits in with European data protection has always been a question that no one really wanted to address. In the new draft contract, GPS tracking of ships is now openly mentioned.
Of course, the 5-page document also contains various obligations for the skipper: reporting damage immediately, penalties for late return, liability for gross negligence beyond the insurance and the like. Therefore, reading the terms and conditions of a charter should simply be part of the process, even if hardly anyone feels like doing so while looking forward to their vacation.
More information about the contract on the ICOMIA/EBI website.
