Legal Definitions - maritime loan

Definition: A maritime loan is a type of loan that provides that a lender will not be repaid if the cargo is damaged or lost due to a navigational peril, but the lender will be repaid plus interest if the cargo arrives safely or is damaged due to the carrier's negligence.

Example: A shipping company takes out a maritime loan to finance the transportation of a valuable cargo. If the cargo is lost due to a navigational peril, the lender will not be repaid. However, if the cargo arrives safely or is damaged due to the carrier's negligence, the lender will be repaid the loan amount plus interest.

Explanation: The example illustrates how a maritime loan works. The lender takes on the risk of the cargo being lost due to a navigational peril, but if the cargo arrives safely or is damaged due to the carrier's negligence, the lender will be repaid. This type of loan is commonly used in the shipping industry to finance the transportation of goods.