A contract of Insurance by which a ship or its cargo is pledged as collateral for a loan required to support a maritime venture. In the early days of marine insurance, a ship-owner would borrow money on a mortgage on the ship, and the mortgage would provide that if the ship were lost, the borrower would not have to reply the loan. This was Bottomry, which thus combined money lending with insurance. When cargo instead of hull was involved it was called “respondentia.”
***
UK: A loan raised by the ship’s master when other methods of raising money for a voyage have failed. The loan, secured on the vessel or vessel and cargo, is not repayable if the venture is lost. The term, now academic, illustrates an early form of risk transfer.
***
When the master of a ship borrows money on the bottom of the ship, with the agreement that the ship will be forfeited to the creditor if the interest is not paid upon the ship’s return.