Type of yacht charter contracts

Once you’ve identified a suitable yacht for a holiday through a broker, there’s a yacht charter contract that you’ll need to sign to book the vessel.

Such a contract puts forth the rights and obligations as well as cancellation policies relating to the use of the vessel. Some of the aspects captured in the agreement include date and location of the charter, a structure of the payment details and the insurance terms.

It is important to understand though, that the terms of contract usually vary depending on the region in which you’re chartering the vessel. But all contract terms are crafted with the aim of protecting both the charterer and the yacht owner.

Below is a comprehensive guide of the types of yacht charter contracts and the terms embedded in each:

WMT (Western Mediterranean Terms-MYBA)

The Western Mediterranean Terms (WMT) refers to specific conditions stated in the MYBA (Mediterranean Yacht Brokers Association) charter agreement, which is often dubbed a plus all expenses’ contract.

The charter rates as paid by the charterer under this contract covers the following:

  • Hire of the yacht (fully equipped)
  • Crew wages and food
  • Marine insurance for the yacht (includes third party liability)
  • Ship’s laundry

All other operational expenses like fuel (for the yacht, tender fuel, jet skis etc), food & drinks for the guests, harbor dues, communication costs, and personal laundry are to be footed by the charterer.


SEMT (Standard Eastern Mediterranean Terms)

Just as its name suggests, the Standard Eastern Mediterranean Terms (SEMT) is used in the Eastern Mediterranean region and is mostly applicable in Greece and Turkey. The contract offers much the same conditions as CTI, aside from the food, where only two meals are provided, with the assumption that guests are likely to dine ashore in most evenings.

The SEMT base charter fees will include the following:

  • Hire of the yacht (fully equipped and in good working order)
  • Crew costs (including wages and food)
  • Marine insurance for the yacht plus third part liability
  • 2 meals daily, covering breakfast and lunch
  • Fuel for 4 to 5 hours per day
  • Harbor and berthing fees

The charter rates in this contract do not cover any additional fuel costs (for the main engine, generators, toys etc), food for dinner, drinks for the party, communication costs, personal laundry, local taxes and berthing fees for journeys touching outside the usual cruising area.


Standard Caribbean Terms (SCT)

The Standard Caribbean Terms (SCT), also known as Caribbean Terms Inclusive (CTI), are contractual terms applicable in the Caribbean region and mostly used in the charter industry with small vessels. SCT or CTI terms are typically described as mostly inclusive’.

Under the SCT terms, the charter base fees include the following:

  • Hire of the yacht (fully equipped and in good working order)
  • Crew costs (both wages and food)
  • Fuel for a number of hours (varies from one charter to another)
  • Food for the guests (3 meals daily)
  • Ship’s laundry
  • A selection of table wines or beverages (sometimes)

All other expenses including drinks, telecommunication, mooring fees at special marinas, fuel for jet skis and outboard engines as well as local taxes will have to be paid by the charterer.


Advanced Provisioning Allowance (APA)

In a bid to make the payment structure a bit more coherent for the guests, there’s an Advanced Provisioning Allowance (APA), a mechanism where you, as a charterer, pays approximately 25 to 30 percent or even more of the base charter rates to cover all the additional expenses.

You can always feel free to request an estimated APA amount from your yacht charter broker, based on your onboard expectations. The APA is usually paid about one month or so prior to setting off and the amount is often submitted directly to the Captain of the vessel.

Upon receiving the amount, the captain will keep the money in some sort of account, from which he will be paying for expenditures while keeping a precise record of the spending.


VAT in Italy and in the Mediterranean Sea

Since the amending of the law touching on the yachting industry in Italy in 2002, yacht charterers have been enjoying reduced VAT on chartering.

The law states that whoever charters a yacht and cruises the EU and/or Extra EU waters can be allowed to pay the usual VAT percentage and on the part of the base charter fee only. The VAT percentages charged on each charter, in this case, is inversely proportional to the specific yacht’s dimensions.

Here is a breakdown of the VAT percentages and how they apply:

  • Power yachts or motor yachts over 24 meters long: 6.6 percent
  • Sailing yachts measuring between 20.01 to 24m & motor yachts of between 16.01 and 24m: 8.80 percent
  • Sailing yachts measuring between 10.01 and 20m & power yachts of between 12.01 and 16m: 11 percent

Also, all Italian yachts that are regularly licensed for charter are eligible for duty-free fuel, which is way cheaper than the normal price.

Mediterranean countries

As for other Mediterranean countries, VAT percentages applicable vary from one country to another. Here is a quick rundown of the VAT percentages as they apply in different countries:

  • Charters starting in French ports: 10 to 20 percent (depending on the charterer’s itinerary)
  • Charters taking off from Spanish ports: 21 percent VAT
  • Charters starting in Greek ports: 12 percent VAT
  • Charters commencing from Turkish ports: 18 percent VAT
  • Charters beginning in Croatian ports: 21 percent VAT
  • Charters starting in Montenegro-based ports: VAT exempt

As a charterer, you need to check VAT applicability and confirm the percentages, before sailing as exemptions can be given in most of these countries at certain times.


GT Greek Terms 

Greek Terms (GT) applies to yacht charters taking place within the Greece territory. And under the GT terms, the base charter fee includes the following:

  • Vessel hire and insurance
  • Cost of the crew, including food and wages
  • Ship’s laundry
  • Porting fees (within Greek waters)

All other additional expenses touching on fuel, extra food & drinks, communications, berthing fees outside Greek waters and local taxes are to be taken care of by the charterer. It is best to set off into the sea having a clear mind on what to expect for the entire charter period.


Tips

Pay Attention to the Contact

Before appending your signature on the charter contract, be sure to read through the fine print and fully understand all the terms, whether express or implied. The contract is a legally binding agreement, so you wouldn’t want to have regrets later.

Ask Your Broker Questions You Do Not Understand

Should you find a problem with understanding the terms of the contract or the payment structure and/or method, feel free to seek clarification from the broker.

Conclusion

These are by far the main types of charter contracts that you can take advantage of when planning a sailing vacation. Understanding the terms provided in each of the contracts can help you choose a destination that offers the best yacht charter deals and assures you of great holiday fun with friends and/or family.

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Do you have some experiences with yacht charter contracts? If so, you are welcome to share thoughts in the comments below.

16 COMMENTS

  1. This really came at the right time of my life because I have been planning to go for something I’ve never done , so I have been thinking of going on a sailing vacation. This post has really educate me on things I really need to know about the new thing I’m about to try .

    • Hi Lok,

      That’s a wonderful idea! If you’ve never sailed before, then there is no doubt that you will love it! I am glad you’ve learned useful information from this article.

      Thank you for the comment and wish you a great day!

  2. Hi there:

    Wow! I thought it’s same contract for all regions – thanks for this info. We (my family & few family friends) are actually planning a sailing trip for this coming spring and this info would be helpful in our planning.

    Tony

    • Hi Tony,

      As you can see they are all different:) I am glad you found this article useful and I hope it will help you plan your sailing trip!
      Thank you for the comment and I hope you have a wonderful trip with your family!

  3. Very informatie blog post on chatering a yacht. Not that I will be doing that anytime soon. Found the site easy to navigate, and really liked the extra tips about charteing yachts in the side column. I think this information will be very useful for anyone who might be thinking of using a yacht in the near future. For what ever that may be for.

  4. Hi Daniella; Your article is very informative on a subject that I admired. Cruising in the Mediterranean is the cruise I wish to take some dayThere are some attractions in Italy that I will give me the personal experience. 

    I learn from your post that I can charter a yacht via a broker. It will take me some time to understand the different charges, but it will be worth it I believe. 

    Should I compare the Attractions and Yacht service in the Caribbean to those in the Mediterranean? Or they will need to be analysed and contrast?

    DorcasW

    • Hi DorcasW,

      I agree with you, Italy is terrific!

      It’s very easy to understand, the service of a yacht charter broker is free of charge. The broker does operate on a commission that is not paid by the charter. As simple as that:)

      Both areas are well know as top yacht charter destinations. In the Carribean like in the Mediterranean, you’ll have the possibility to swim in the clear blue water, enjoy a variety of fun water sports, relax, and discover new cultures. It all boils down to your personal preferences. May to October are the best months to sail in the Mediterranean. November to February is the best season to navigate in the Caribbean. As for the yacht service, choosing a good yacht charter broker plays a vital role in having a successful charter holiday:)

      I hope it helped! Please, don’t hesitate to contact me with any questions, I’ll be more than happy to assist.

      Thank you for the comment and I hope you enjoy the rest of your day.

  5. Hi Daniella! Thank you very much for this post about the types of charter contracts. This is very useful information, and I haven’t read such a good explanation, as this one you have laid for all of us here. I’m glad I found your post.

    I appreciate your experience and I’ll always follow your tips. We usually don’t pay very much attention to contracts, and that’s a mistake. And there are no bad questions. It’s better to always play safe.

    I have personally benefited from what you have mentioned concerning fuel prices for VAT in Italy and in the Mediterranean Sea. Thank you very much!

    • Hi Henry,

      I am glad you found the article useful! The problem with contracts is that they not always easy to understand. So it’s advisable to ask your yacht charter specialist. It’s crucial.

      Thank you for passing by and the comment! I wish you have a nice day!

  6. The article is all about, chartering various types of yachts,in various areas, of the Mediterranean, and Caribbean oceans.

    The terms and conditions of charter vary according to what the owners consider a fair price

    There are 3 areas the Eastern, and Western Mediterranean,and the Caribbean oceans.

    They include 1/Hire of the yacht fully equipped.2/Crew wages and food,3/Marine insurance for the yacht,4/Fuel for the yacht,5/ Meals for the guests.

     Other expenses vary, depending on the areas, such as harbour and berthing fees,tender fuel,jet skis,communication costs,Local taxes ,such as VAT( which varies a lot from country to country),toys, generator,vary according to the area, and are to be paid by the Charterer.

    One needs to be very wary, and read all the small print,of the contract,as this is a legal and binding,document,for both parties.

    Once taken care of you should have a wonderful and exciting holiday

    • Hi Robert,

      Yes, the owner of the yacht is the boss:).He is the one that sets the price, according to the market, of course. He is also the one that decides to who to rent his boat.

      I see you know well about the yacht charter contracts. Thank you very much for having shared your experience, I am sure many readers will find this useful!

      Thank you for the kind comment and wish you a great day.

  7. Hey thanks for the awesome post,

    So my girl friend and I are thinking of taking a much needed trip over to the Caribbean! I was thinking we would just meet her dad there and he would have his sail boat, but that doesn’t seem to be the case anymore. I think chartering a yacht would be quite the experience. No matter what, we have to get on a boat out there and do some fishing. So i see the SCT and it mentions “the crew”. Just to clarify, but the crew includes a captain correct? We are not expected to have a boating license of some sort? Also, I know we will be signing things for insurance and liability information, but do most of these contracts include any type of insurance for the well-being of the passengers (us) ? 

    Last question: Do a lot of these yachts offer any type of fishing equipment? 

    Thanks a lot!

    Michael 

    • Hi Michael,

      That’s correct; the crew includes a captain. If you charter a crewed yacht, you don’t need any sailing license, the captain takes care of the navigation, but if you opt for a bareboat charter, then, yes, you will need a certificate and skill to maneuver the boat. As for the insurance, it is not included in the yacht charter. Usually, all charterers should be covered by personal medical and accident insurance. Also, many yacht char company will require a deposit for the boat that you get in return at the end of your trip if any damage weren’t done. Not all yachts provide fishing equipment on board. This is something you will have to check when choosing the boat:)

      I hope it helped! Don’t hesitate to contact me with any question. I’ll be more than happy to assist!

      Thank you for the comment and wish you a nice day!

  8. I am really looking forward to taking a vacation like this. I just didn’t realize there were so many different types of yacht charter contracts. Now, I have the information and I just need to decide on which cruise we want and then see what kind of contract is used. Right? Am I thinking correctly? I guess I am a little confused. Are the contracts by area as well?

    • Hi Matts,

      Indeed, there several types of yacht charter contracts. Most of the contracts you see in the article are used for crewed yachts. For bareboat charter, it’s an entirely different contract.
      I hope it helped!
      Feel free to contact me with any question, I’ll be glad to assist.

      Thank you for the comment and wish you a lovely day.

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