Bottomry

Bottomry. The contract of Bottomry is a pledge or mortgage of a ship to secure the repayment of money lent to its owner to enable him to carry on a voyage. It is usually in the form of a bond called a bottomry bond, the condition being that if the vessel be lost on the voyage, the lender loses the whole of his advance, but if the ship and tackle reach the destined port, they become immediately liable together with the person of the borrower for the money lent, and also for the premium or interest agreed to be paid upon the loan. Money is generally raised in this way by the master of a ship when he is abroad and requires money to repair the vessel, or to procure other things necessary to enable him to complete his voyage. This is allowed to be a valid contract by all trading countries for the benefit of commerce, and by reason of the extraordinary hazard run by the lender. The practice of lending money on ships or their cargo and sometimes on the freight is very ancient. It was common in Athens and other Greek commercial towns. The speech of Demosthenes against Lacritus contains a complete Bottomry contract, which clearly indicates the nature of these transactions at Athens.