- A contract in the nature of a mortgage, by which the
owner of a ship, or the master as his agent, hypothecates and binds the
ship (and sometimes the accruing freight) as security for the repayment
of money advanced or lent for the use of the ship, if she terminates
her voyage successfully. If the ship is lost by perils of the sea, the
lender loses the money; but if the ship arrives safe, he is to receive
the money lent, with the interest or premium stipulated, although it
may, and usually does, exceed the legal rate of interest. See
Hypothecation.
Definition
[ n.]