We use cookies to improve security, personalize the user experience,
enhance our marketing activities (including cooperating with our marketing partners) and for other
business use.
Click "here" to read our Cookie Policy.
By clicking "Accept" you agree to the use of cookies. Read less
Bottomry: A Comprehensive Guide to Its Legal Definition and Usage
Definition & Meaning
Bottomry is a type of contract used in maritime law where a ship owner secures a loan by mortgaging the ship's bottom or keel. This loan is typically used to finance a voyage. If the ship is lost during the journey, the lender cannot recover the loan amount. Conversely, if the ship successfully completes the voyage, the loan can be enforced, and the owner must repay it. Bottomry contracts are also known as bottomry bonds or bottomage bonds.
Table of content
Legal Use & context
Bottomry is primarily used in maritime law, which governs navigation and shipping activities. This term is relevant in situations where ship owners need immediate financing for voyages, especially in foreign ports. Users may encounter bottomry in legal documents related to maritime financing, and they can manage such documents using legal templates available through services like US Legal Forms.
Key legal elements
Real-world examples
Here are a couple of examples of abatement:
1. A ship owner needs funds to repair their vessel before a critical voyage. They enter into a bottomry contract to secure a loan against the ship. If the ship successfully completes the voyage, they repay the loan with interest.
2. A hypothetical example: A ship encounters a storm and sinks during its journey. The lender loses the money they provided under the bottomry bond since the ship did not survive.
State-by-state differences
Examples of state differences (not exhaustive):
State
Bottomry Regulations
California
Follows general maritime law principles.
Florida
Specific statutes governing maritime liens may apply.
Texas
Recognizes bottomry but may have unique local requirements.
This is not a complete list. State laws vary, and users should consult local rules for specific guidance.
Comparison with related terms
Term
Definition
Key Differences
Bottomry
A loan secured by a ship's bottom or keel.
Risk of loss is borne by the lender if the ship sinks.
Hypothecation
A pledge of collateral without transferring ownership.
Ownership remains with the borrower; risk is different.
Maritime Lien
A claim against a ship for unpaid debts.
Can be enforced regardless of the ship's fate.
Common misunderstandings
What to do if this term applies to you
If you are a ship owner considering a bottomry contract, it's essential to understand the risks involved. Consult with a legal professional to ensure you are making an informed decision. Additionally, you can explore US Legal Forms for templates that can help you draft a bottomry bond or related documents.
Find the legal form that fits your case
Browse our library of 85,000+ state-specific legal templates.