Charter Yacht Management Contract


Our experience as charter boat owners in charter fleets has shown some issues that are common to all of us, regardless of the charter company we are using. We sort and discuss those questions by order of importance.


JeanneauTypical management contracts state that your boat will be maintained to the "highest industry standard" or some similar wording. Unfortunately, this does not mean much. Here is our most important single piece of advice: Get involved!

Believe it or not, a good maintenance on your boat depends also on yourself. You will get better or best results if you do the following........

Some owners assume that Charter Companies take ongoing care of all the maintenance problems. Guess what? They don't always. And charterers do not always mention malfunctioning items at the end of the charter. You see, Charter Companies are constantly walking a fine line between:

As you can easily understand, a boat that has to be put aside for unscheduled maintenance does not generate income, and incidentally throws a wrench in the bookings schedule. See the ongoing conflict right there? In all fairness, this is not an easily resolved equation, but that's what Charter Companies have to deal with day in and day out. AND, if the charter company pays for the maintenance of your boat, they also have to watch its cost all the time.

In conclusion, you can have some level of understanding, but, overall, your boat should be maintained properly. And as we said, you are playing a big part in this.


When they sell a boat, Charter Companies act as brokers or dealers. Therefore the warranty on the yacht is not carried by them, but by the boat builder, who in turn, carries the warranty for the suppliers he used (power plant, windlass, sails, etc.). However, during the course of the Management Contract, your Charter Company will—or should—act as your representative to enforce the warranty in case of a defect on the boat or one of its major components, especially if you acquired the boat from them, and if they acted as a dealer.

Defects: In case of a significant structural defect —like hull osmosis for example— you want the Charter Company to deal with the builder on your behalf. Usually, the builder recommends some specific procedures for structural repairs. In case of a very major defect, some builders may approve the repair work of only some designated yards, in case their own yard is too far from where your boat is based. If those rules are not complied with, the warranty may become void.

For that reason, even if the Charter Company represents you properly, you definitely want to be involved in, and approve all the steps that are taken to fix a major defect. Get copied on all correspondence. You want to make sure proper action is taken, and agree to it.

If you are not happy with what is proposed to you, step in. Order an independent survey if necessary. You certainly don't want to have the bad surprise of finding out your hull warranty has become void because the Charter Company has decided on its own that a quick, cheap fix was good enough to put your boat back to work.

Accidents: In case of an accident, follow the same procedures as above. However, in case of grounding, you or the Charter Company might find out only long after the fact (at the annual haul-out) that your boat went aground. A word of caution: Don't be too quick to cast the stone to the Charter Company. Sometimes, charterers will go aground and will not report it, to avoid embarrassment and potential liabilities. Unless the base is organized to send a diver inspect each boat returning from charter, which is not always possible, the Charter Company will probably not know about it until the next haul-out. Nothing you can do about it.

Lastly, your boat might be chartered for racing purposes. You will not necessarily be asked or told about it. But racing accidents do happen. Charter Companies have special insurance coverage for this, but if your boat is T-boned, well, she's T-boned. And even if fixed properly, damage has to be disclosed when you resell the boat. If you feel uncomfortable with this, try asking the Charter Company to restrict your boat from being raced.


Charter Companies have large blanket liability coverage. Your Management Contract certainly states how your company covers your boat. Some companies cover 100%, but some only up to 80% of the boat's total hull value, and it is your decision to pay the difference to 100% or not. Our personal experience makes us strongly suggest paying the small extra at least for the first 2 years of your contract. After that, your boat will be worth less than 80% of the original value anyway.

 Another thing to check: You want to be named as an additional insured on the policy. The reasoning: Any negligence of the Charter Company cannot be imputed to the owner (you) and used against you as an escape clause by the insurance Co. Therefore, the insurance Co. would be required to pay you for damages to your boat regardless of the level of negligence of the Charter Company.

You may want to read the very interesting 2015 study that was made by Capt. Kevin Curran of about various insurance companies and coverage. Click HERE to read the study.

Hurricane Season / Boats Furlough

If your boat is stationed in a hurricane-prone region, like the Caribbean, Bahamas or Florida, you want to know what the base procedures are for what is called the boat's "hurricanization". We hope this is spelled out on your contract! If not, insist on knowing the following:

• Will your boat stay at the marina, or be moved to a hurricane shelter?
• Either way, what will the standard preparation procedure? The extent of damages varies dramatically from one company to another.
• How quickly will your boat be back in service?

Some companies will simply furlough part of their fleet during the height of hurricane season (August and September), meaning that your boat will not be available to you, nor can it generate any income, which is a problem if you have a variable income. But this is probably better than risking your boat being destroyed.

Sale of Unused Owner's Time

Most probably, your Charter Company lets you resell directly your unused contractual time, at a price you will determine. Obviously, it has to be somewhat lower than the Charter Company list price or rack rate; that way, everybody is happy.

Some owners are aggressively marketing their boat on the Internet or at their Yacht Club when they know they will not be using their time fully. If you do this, the income might impact your cash flow positively, and help you "accelerate" the pay back of your mortgage principal. So you should not neglect this potential income.

Many owners also use their unused weeks as a bartering tool, either against sailing time in another area of the world, or against the use of another asset or service. A few examples: I give you a week of my boat and you give me a week in your ski resort condo. Or you give me a year's worth of accounting. Your imagination is the limit. (See The Discount Charters section of this web site)

A Big Issue: Yacht Phase-Out

This covers what happens to your prized possession when the Management Contract ends and she is handed back to you. Needless to say, this is of crucial importance. Reputable charter companies know this and will provide all the necessary cooperation for a successful phase-out.

The technical aspects of phasing-out your boat are covered in depth in the special Phasing Out section of this site. The contractual elements hopefully include a very detailed description of the phase-out procedure.

When does the boat officially enter the phase-out procedure? That should be before your contract ends. The reasoning is: Let's suppose you discover osmosis on your hull. Chances are, the builder's osmosis warranty will still be in effect. If your contract is already expired, you will have to deal with the boat builder. Conversely, if you are still within the contract, the Charter Company deals with this major headache, not you. Trust us, you don't want to deal with this issue on your own.

The contract probably allows you to use the services of an independent surveyor of your choice, and his conclusions have to be accepted by the Charter Company. Do not accept the Company in-house survey. It could be fair, but it could also be very biased for obvious reasons.

Your contract perhaps describes all the major items that the Charter Company will fix if problems are discovered, as well as the actions taken to take care of those (replacement, overhaul, rebuilding, etc.). Reputable companies will supply a comprehensive "Phase-out Manual" describing all this in great details.

The concept of "fair wear and tear" comes into play here. These ambiguous words mean that you cannot reasonably expect to receive a boat that is rebuilt to new condition. That would be unfair: The fact is that your boat has chartered for 4 or 5 years, and although everything should be in properly inspected working condition, you will not receive new upholstery, new sails, a new engine, unless it's all destroyed. And that's only fair.
Now, torn sails, non-working electronics, thick black smoke out of the exhaust, cracks in the rigging, blisters in the hull, etc., are not fair wear and tear. Get it?

Make sure you retrieve the long inventory list you receive at your boat delivery. You know, all the boat equipment: lines and sheets, tools and spares, binoculars, first aid kit, charts & navigation tools, flags, manuals, life jackets, linen and galley equipment, etc. You get the idea. Things disappear in charter bases. Not necessarily because of theft, but because of "cannibalization" from one boat to another by the base personnel. Anyway, all items that were on the boat when she was commissioned should be still there, and in working order. If not, they should be replaced. Simple.

Lastly, it would be nice if at phase-out the Charter Company would offer you the opportunity to upgrade or add equipment for your life after phase-out at a preferred cost.

Again, the technical aspects of phasing-out your boat are covered in great detail in the Phasing Out section of this site.

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