A bottomry, or bottomage, is an arrangement in which the master of a

ship A ship is a large watercraft that travels the world's oceans and other sufficiently deep waterways, carrying cargo or passengers, or in support of specialized missions, such as defense, research, and fishing. Ships are generally distinguishe ...

borrows money upon the ''bottom'' or

keel The keel is the bottom-most longitudinal structural element on a vessel. On some sailboats, it may have a hydrodynamic and counterbalancing purpose, as well. As the laying down of the keel is the initial step in the construction of a ship, in Br ...

of it, so as to forfeit the ship itself to the creditor, if the money with interest is not paid at the time appointed at the ship's safe return. This occurs, for example, where the ship needs urgent repairs during the course of its voyage or some other emergency arises and it is not possible for the master to contact the owner to arrange funds, allowing the master to borrow money on the security of the ship or the cargo by executing a bond. Where the ship is

hypothecated Hypothec (; german: Hypothek, french: hypothèque, pl, hipoteka, from Lat. ''hypotheca'', from Gk. : hypothēkē), sometimes tacit hypothec, is a term used in civil law systems (e.g. law of entire Continental Europe except Gibraltar) or mixed ...

, the bond is called a bottomry bond. Where both the ship and its cargo are hypothecated, the relationship is called respondentia. Due to the bottomry bond's relatively low priority as against other liens in the event of a

libel Defamation is the act of communicating to a third party false statements about a person, place or thing that results in damage to its reputation. It can be spoken (slander) or written (libel). It constitutes a tort or a crime. The legal defini ...

against the ship, the use of bottomry bonds declined greatly in the 19th century and the subject is today of interest only to legal historians. The

Code of Hammurabi The Code of Hammurabi is a Babylonian legal text composed 1755–1750 BC. It is the longest, best-organised, and best-preserved legal text from the ancient Near East. It is written in the Old Babylonian dialect of Akkadian, purportedly by Hamm ...

describes a form of bottomry which is a risk transferring technique. A bottomry would be taken, but the repayment would be contingent on the ship successfully completing the voyage. This is more like a catastrophe bond than traditional insurance. In traditional insurance, you pay premiums and receive a benefit on the risk event. With bottomry and catastrophe bonds, you receive a loan up front and only pay it back with a premium if the risk event doesn't occur. In his ''Life of

Cato the Elder Marcus Porcius Cato (; 234–149 BC), also known as Cato the Censor ( la, Censorius), the Elder and the Wise, was a Roman soldier, senator, and historian known for his conservatism and opposition to Hellenization. He was the first to write hist ...

'',

Plutarch Plutarch (; grc-gre, Πλούταρχος, ''Ploútarchos''; ; – after AD 119) was a Greek Middle Platonist philosopher, historian, biographer, essayist, and priest at the Temple of Apollo in Delphi. He is known primarily for h ...

describes how he would use the process to make money, but calls it "the most disreputable form of money-lending". Kaplan and Kaplan describe it as follows:

Respondentia

Respondentia is a loan where a ship's cargo is the security, on similar terms to bottomry.

Respondentia

See also

References

Further reading