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bond, ship and security

BOTTOMRY and RESPONDENTIA.—Bottomry, in maritime law, is the pledge of a ship as security for the repayment of money advanced to an owner for the purpose of enabling him to carry on the voyage. The contract is usually in the form of a bond, called a Bottomry bond. The term bottomry is derived from a Low German word, signifying the keel or bottom of a ship, and by a not unusual development in sense has come to mean the ship itself ; thus, trade is often spoken of as being carried on in foreign bottoms. The conditions of a bottomry bond are that, if the ship is lost on the voyage, the lender loses the whole of his money ; but if it reaches porte both the ship itself and the borrower personally become liable for the money lent and the agreed interest. As the nature of the bond is tc make the lender a co-adventurer with the owner on the success of an undertaking advantageous to the public, and as the lender usually comes to the financial rescue of the ship at a critical and doubtful time, the contract of bottomry has never been subject to the laws directed against usury ; consequently the interest on such a bond has been, and is still generally, at a higher rate than that obtaining in less speculative adventures.

It is by a bottomry bond that the master of a ship borrows money when he is abroad, and has a real and pressing necessity to repair the vessel or to procure things essential to the prosecution of his voyage ; the pressing necessity is the only recognised authority for his so doing. Should there be no such necessity, the owner would not be liable on the bond, and accordingly the master should be careful that the necessity really exists. Where several of these bonds are given for the same ship at different times, the last bond in point of time has priority of satisfaction, for the reason that it is given in order to preserve the security available for the earlier bonds. When the security for the loan includes the cargo as well as the ship, the transaction is called respondentia, but it is subject to the same rules of law as a bottomry bond. A bottomry bond may also be given on the security of the freight ; but the cargo must not be the only subject of the pledge. Nor may the master give a bond unless it is impossible to obtain the necessary advance on the personal security of the owner alone.