Duhaime's Law Dictionary


Bottomry Definition:

An obsolete bond contract by which a ship owner or master borrowed money in a far-off port of call, for the repair of a ship in exchange for which, he would repay the loan on safe arrival at the ship's destination, for which the ship stood as collateral but where the lender assumed the risk of the loss of the ship en route.

Tetley describes bottomry as having ancient Greek and Roman origin; it may even of been part of the Lex Rhodia.

Volume 1(1) of Halsbury's Laws of England describes bottomry as:

".. . contracts in the nature of a mortgage of a ship or cargeo on which the owner, or master acting for the owner, borrows money in circumstances of unforeseen  necessity or in case of distress to anable him to repair the ship or to pay for repairs and dispatch of the vessel for the completion of her voyage, and pledges the ship or cargo ... for repayment.

"If the ship is lost in the course of voyage, the lender on the bottomry bond loses his money unless the terms of the bond otherwise provide; but if the ship arrives safe, then he may recover the loan, with interest...."

In essence, bottomry bonds pledged the entire shop as the bottom and keep are hardly severable from the rest of the ship

A bond which similarly pledged only the cargo, was known as a respondentia bond.

Chorley and Giles' Shipping Law describe the circumstances which gave rise to bottomry and respondentia bonds:

"Before submarine cables, radios and satellites established a close network of communications throughout the world, ships' masters in foreign ports  had to be given authority to act on behalf of their owners and of cargo-owners when in an emergency they could not communicate with them. They might have to order repairs quickly to bring a prishable cargo home and had no money or credit in those distant parts.

"... bottomry and respondentia are now almost obsolete."

REFERENCES:

  • Gaskell, N. and others, Chorley and Giles' Shipping Law (Northampton: Belmont Press, 1987), page 68.
  • Tetley, William, Maritime Liens and Claims, 2nd Edition  (Montreal: Editions Blais, 1998), page 9.

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