A recent article by Captain Fred Edwards in the American Professional Captains Association Newsletter IN COMMAND brought back memories of attempts by boat owners to charter out their boats on a bareboat charter while still retaining control themselves.
The purpose of the bareboat charter is to avoid the carriage of passengers for hire. A vessel carrying any passengers for hire must have a licensed operator and if it carries over 6 people, it must be inspected and certificated by the Coast Guard if operated in "navigable waters of the United States" or on the high seas. Certification usually means the boat is safer and more expensive to operate.
A learned attorney can prepare a perfect bareboat charter. The owner and his charter party can sign the document to provide for the charter of a boat to a group of people.
So far, all is fine. Now examine whether or not the parties to the agreement actually followed it, for in order for there to be a bareboat charter, the fact situation must meet the requirements. Captain Edwards points out that many owners do not. That is a fact of life. He further points out that a number of them get caught by the Coast Guard. Frankly, that is the least of their worries. When a boat is operated in violation of the law, it is not seaworthy, and any person who is injured or dies while aboard will have an easy time in the courtroom recovering substantial damages.
While I don't mean to belittle the services of an astute defense attorney, the maritime limitation of liability will not be successful and the operator may loose all that he has. In fact, his insurance may be void.
An owner who is aboard his own boat while under bareboat charter is suspect. If he exerts any control over the boat, its operating expenses, or its personnel, he has likely nullified the charter agreement.
Another ruse is to say that all of the people aboard were nonpaying friends. Numerous times the Coast Guard has questioned passengers on boats - asked them if they paid. Many had been coached by the owner/operator to say they hadn't. But often one will tell the truth and a violation will result.
If an injury is involved, the person injured will undoubtedly say he paid. Then the results may be bankruptcy for the owner. An attorney who has a client that wants a bareboat contract drawn up should be advised of the consequences of violating the contract.
A number of years ago, a well to do individual in Seattle, Washington was investigated by the Coast Guard for carrying Scouting groups and other youth groups aboard his uninspected large sailing vessel. He had set up two corporations, one to operate the boat and the other to teach sailing on the sailing dinghies which were carried aboard. The groups paid for the trip, the payment being made to the corporation that operated the dinghies. None of the money went to the corporation that operated the large sailing vessel. The owner/operator said he carried them as a philanthropic venture and paid for the operation of the boat himself. What the Coast Guard discovered was that the second corporation transferred money to the first corporation, and thus the monies paid indirectly went to the owner/operator. A clever scheme? Yes, but not clever enough.
Again, an attorney dealing with such a client should advise him of ALL of the consequences of his actions.
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