Bottomry

 Bottomry is an ancient and largely archaic form of maritime lien.  It is a contract entered into by the owner (or other authorized party, such as the master) to obtain funds from a lender.  The funds plus interest are to be repaid, in typical contracts, upon successful completion of the voyage.  If the ship is lost, there is no obligation to repay the loan amount.  If the voyage is successful and the loan plus interest is not repaid in accordance with the terms of the bottomry contract, then the lender acquires title to the vessel.  The bottomry contract was thus a conditional loan.  In addition to its initial use for funding upcoming voyages, bottomry was later also used to pay for unexpected costs (such as costs of repair of damages) that occurred during a voyage.  The concept of bottomry dates back as least as far as the Code of Hammurabi in the Babylonian Empire (circa 1750 BC).  Records from the Roman Empire show that the interest rate on bottomry contracts averaged about 6%.  Bottomry contracts fell into disuse as modern marine insurance, commercial lending, and maritime liens developed, particularly at Edward Lloyd’s coffeehouse in London in the late seventeenth century.