Maritime Law. A contract in nature of a mortgage of a ship on which the owner borrows money to enable him to fit out the ship, or to purchase a cargo for a voyage proposed: and he pledges the keel or bottom of the ship, pars pro toto, as a security for the repayment; and it is stipulated that if the ship should be lost in the course of the voyage by any of the perils enumerated in the contract, the lender also shall lose his money but if the ship should arrive in safety, then he shall receive back his principal and also the interest agreed upon, which is generally called marine interest. However this may exceed the legal rate of interest. Not only the ship and tackle, if they arrive safe, but also the person of the borrower, is liable for the money lent and the marine interest.
The contract of bottomry should specify the principal lent and the rate of marine interest agreed upon; the subject on which the loan is effected the names of the vessel and of the master those of the lender and borrower whether the loan be for an entire voyage; for what voyage and for what space of time; and the period of re-payment.
Bottomry differs materially from a simple loan. In a loan the money is at the risk of the borrower and must be paid at all events. But in bottomry, the money is at the risk of the lender during the voyage. Upon a loan, only legal interest can be received; but upon bottomry any interest may be legally reserved which the parties agree upon.
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