Bottomry

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A bottomry, or bottomage, is an arrangement in which the master of a ship borrows money
upon the bottom or keel 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.
his occurs, for e!ample, 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 e!ecuting
a bond. Where both cargo and ship are hypothecated, the bond is called a bottomry bond.
Where both the ship and its cargo are hypothecated, the relationship is called respondentia. "ue
to the bottomry bond's relatively low priority as against other liens in the event of a libel against
the ship, the use of bottomry bonds declined greatly in the #$th century and the sub%ect is today
of interest only to legal historians.
he &ode of 'ammurabi describes a form of bottomry that was a type of insurance. A bottomry
would be taken, but the repayment would be contingent on the ship successfully completing the
voyage.
(n his Life of Cato the Elder, )lutarch describes how he would use the process to make money,
but calls it *the most disreputable form of money+lending.*
,#-
*.hip insurance springs naturally from the necessity of trade, the e!istence of sophisticated
entrepots, and the rapacity of barbarians ++ all long+familiar facts of life on the /editerranean. (ts
ancient 0reek form, as described by "emosthenes, was what is now called by the splendid name
of *bottomry.* (t was not a direct transfer of risk, but rather a conditional loan: he insurer staked
the merchant to a sum of money in advance of the voyage, which was to be repaid with
1considerable2 interest if the voyage succeeded ++ but forgiven if the vessel was lost. (t is an
arrangement that is easy to describe but difficult to characteri3e: not a pure loan, because the
lender accepts part of the risk4 not a partnership, because the money to be repaid is specified4 not
pure insurance, because it does not specifically secure the risk to the merchant's goods. (t is
perhaps best considered as a futures contract: the insurer has bought an option on the venture's
final value.
,5-
Respondentia
Respondentia is a loan where a ship's cargo is the security, on similar terms to bottomry.
,6-