voyage charter agreements

VOYAGE CHARTERF05

S.A HosseiniS.A HosseiniIRISL Maritime Training InstituteIRISL Maritime Training Institute

Voyage Charter

Ø Is a contract for the carriage by a named vesselof a specified quantity of cargo betweennamed ports or places.

Ø May be thought of as equivalent to the hire of ataxi for a single journey, or for a series ofseveral consecutive journeys in the case of aconsecutive voyage charter.

Voyage Charter

Ø The shipowner present the named vessel for loading atthe agreed place within an agreed period of time and,following loading will carry the cargo to the agreedplace, where he will deliver the cargo.

Ø The charterer, agrees to provide for loading, within theagreed period of time, the agreed quantity of the agreedcommodity, to pay the agreed amount of freight, and totake delivery of the cargo at the destination place.

Voyage Charter

ØThe shipowner must provide themaster and crew, act as carrier andpay all running and voyage costs,unless the charter party specificallyprovides otherwise.

SHIPS’ COST CLASSIFICATIONØ Capital costs - are fixed costs associated with the ship’s purchase.

include pre-delivery costs, loan repayments, interest, leasing charges, initialregistration fees, taxes (sometimes), and any bareboat charterhire payable.are the owner’s responsibility.

Ø Voyage costs - Are variable costs associated with the commercialemployment of the ship. Include costs of bunkers, port and canal dues,pilotage, tug hire, agency fees and loading/discharge costs. Are theresponsibility of the ship’s commercial operator. If the ship is let on a timecharter, the charterer is liable for the voyage costs.

Ø Operating or running costs - Aare semi-variable costs which fall betweencapital and voyage costs. Include costs of crewing, storing, shipmaintenance, insurance and administration. Are the responsibility of theship owner or manager.

Voyage charter party clauses

1- Preamble:

Identity of parties, identity of vessel, warranty of

seaworthiness, present position of vessel, expecteddate of readiness to load, obligation to proceed toloading port or place, identity of and safety of loadingport or place, amount and nature of cargo to be loaded,obligation to proceed to and identity of discharge port orplace, obligation to deliver cargo.

Voyage charter party clauses2-Warranty of seaworthiness:

Ø Unless a contract of carriage by sea has an express provisionconcerning seaworthiness, the absolute (common law) obligation,known as the warranty of seaworthiness, is implied in the contract.

Ø In a charter party the absolute warranty of seaworthiness is usuallymoderated, to an undertaking that the shipowner or carrier will onlyexercise due diligence to make the vessel seaworthy before sailing.

Ø For a shipowner or carrier to exercise due diligence he must:1.Make a reasonable and careful inspection and perform

maintenance of the vessel in accordance with the custom of thetrade; and

2.Do this before the commencement of the voyage.

Voyage charter party clauses2-Warranty of seaworthiness: Continued

Ø Example of Exercising due diligence :

Ø Class surveys and statutory safety construction, equipment and loadline surveysare carried out and passed in accordance with current requirements(technically seaworthy);

Ø The cargo spaces are fit for the reception and carriage of the cargo and thatthe cargo is properly loaded and stowed taking into account the expected perilsof the voyage (cargoworthy);

Ø The vessel is properly equipped and supplied for the expected duration of thevoyage in terms of sufficient competent crew, navigational equipment andsupplies, stores, provisions and spares, bunker fuel, fresh water, etc.(“fittedness for the voyage”).


Safe ports and berths:Ø Charterers usually give an absolute warranty that ports to which they

will send the vessel will be “good and safe”, If charterers breachtheir warranty, the master has a right to refuse to enter, or refuse tostay at, the port in question.

Ø Safe Port: A port will not be safe unless, in the relevant period oftime the particular ship can reach it, use it and return from it without,in the absence of some abnormal occurrence, being exposed todanger which cannot be avoided by good navigation andseamanship.” ( unsafe river approach, buoys out of position,excessive ranging of vessels on berths, unanticipated ice. )


RequirementsRequirements forfor aa portport toto bebe consideredconsideredaa “safe“safe port”port” areare asas followsfollows::

•• ThereThere mustmust bebe safesafe accessaccess toto thethe portport..

•• TheThe vesselvessel cancan lielie safelysafely afloatafloat atat allall statesstates ofof thethe tidetide..

•• ThereThere mustmust bebe adequateadequate facilitiesfacilities forfor tradetrade..

•• ItIt mustmust bebe aa politicallypolitically safesafe portport..

•• TheThe vesselvessel mustmust bebe ableable toto leaveleave safelysafely..

Voyage charter party clauses3- Owners’ Responsibility Clause:Ø is a BIMCO clause that states the conditions under which the

owners will be responsible for loss, damage or delay of the goods,to the exclusion of all other causes.

Ø Replaces the traditional form of Exceptions Clause .

Ø Owners will usually accept liability only where the loss, damage ordelay has been caused by the improper or negligent stowage of thegoods or by personal want of due diligence on the part of the ownersor their manager to make the vessel in all respects seaworthy and tosecure that she is properly manned, equipped and supplied, or bythe personal act or default of the owners or their manager.


4. Deviation Clause:

Ø is a standard protecting clause giving the vessel the liberty to callat any port or ports in any order, for any purpose, to sail with orwithout pilots, to tow and/or assist vessels in all situations, andalso to deviate for the purpose of saving life and/or property.

Ø A P&I Bunker Deviation Clause is a form of deviation clauserecommended by the P&I clubs which allows the vessel to deviateoff the contract route in order to load bunker fuel without breachingthe contract. Bunkers are often cheapest at ports near oil producingcentres).


5- Freight Clause:Ø specifies the freight rate, how freight will be calculated, when it

must be paid, and the arrangements for payment. Details of bankaccounts may be in a separate document annexed to the charterparty.

Ø Freight: is the remuneration payable by the charterers to the owners for the performance of the contract. It may be called charter party freight in the contract.

Ø Freight is not payable unless the entire cargo reaches the agreeddestination, even if not the carrier’s fault, e.g. if the voyage isabandoned after a General Average act.

Types of FreightTypes of Freight

Ø Ordinary or charter party freight

Ø Lumpsum freight

Ø Bill of lading freight

Ø Advance or pre-paid freight

Ø Pro-rata freight

Ø Ad valorem freight.

Ø Back freight

Ø Dead freight


Bill of lading freight:Ø is freight calculated on shipped or intaken weights, as stated in a bill

of lading.

Ø is used in trades where intaken and outturn weights are likely to differ,

e.g. where:

• oil evaporates during the voyage;

• there is “clingage”;

• there is sedimentation;

• logs loaded from the water dry out on the voyage;

• ice melts on timber after loading;

• grabs cannot discharge all of a cargo.


Lumpsum freight:

Ø is a fixed sum payable irrespective of the amount of cargocarried, the owners usually guaranteeing a specified cargocapacity for the charterer’s use.

Ø is useful in “mixed cargo” charters where cargoes are of varyingdensities.

Ø is more common in the tanker trades than in dry cargo trades.


Advance or pre-paid freight:Ø is often demanded by carriers of dry cargoes, and is the usual

type of freight in the liner trades.

Ø may be the total freight or an agreed proportion of it, payable inadvance at the loading port, the balance being payable ondelivery of the cargo.

Ø is deemed to be earned as the cargo is loaded.

Ø is commonly required where cargo is shipped under a negotiablebill of lading, as buyers of goods covered by a bill of lading oftenrequire a “freight paid” bill of lading.


Pro-rata freight:

Ø is payable in common law where only part of the voyage hasbeen completed, e.g. when the voyage is abandoned followingan outbreak of war or an accident, and the cargo is discharged atan intermediate port, or if the vessel had to leave port because ofthe onset of ice.

Ø is not “freight” in the normal sense, but the shipowner’scompensation for carrying the goods at least part-way to theirdestination.

Types of FreightTypes of FreightAd valorem freight:

Ø is freight charged at a rate stated as a percentage of the value of ashipment, usually of high-value goods, e.g. bullion.

Ø is not normally used in voyage charter parties, generally being confined toliner shipments.

Ø An ad valorem bill of lading is one on which the value of the cargo isrecorded and under which the carrier waives his right to limit his liability tothe goods owner under the package limitation provisions in the contract,usually in return for the higher ad valorem freight.

Ø P&I clubs do not normally cover owners for liabilities in connection withhigh-value cargoes, and owners must usually make other insurancearrangements.

Types of FreightTypes of FreightBack freight:Ø is freight paid by a shipper for the return carriage of goods not

delivered to or not accepted by their receiver or consignee.Ø If the non-delivery or non-acceptance was the vessel’s fault (e.g.

due to over-carrying), no back-freight will be payable.

Deadfreight:Ø is not genuine freight, but owners’ compensation for lost freight,

payable by the charterers on a quantity of cargo short-shipped, i.e. aquantity which he agreed, but failed, to load. E.g., if the charter partyagreement was that the charterers would load 60,000 tonnes ofwheat, but he loaded only 50,000 tonnes, the shipowner will claimdeadfreight on 10,000 tonnes at the agreed rate of freight.


6- Loading and Discharging Costs Clause:

Ø allocates responsibility for the costs of bringing cargo alongside andloading, stowage, any required trimming, and discharging.

Ø In the dry bulk trades it is normal for the charterers to make arrangementsfor bringing cargo forward and for payment of all loading and dischargingcosts, in which case the terms are known as “free in an out” (FIO).

Ø Where the owners are responsible for the cargo handling costs, terms are“liner terms”, sometimes called “gross terms”.

Ø An agreement may provide for a combination of the above, such as “Freein/Liner out”.


7- Laytime Clause:Ø states the period of time allowed for loading and for discharging. The

clause may provide for separate laytime for loading anddischarging or for total laytime.

Ø states the conditions under which Notice of Readiness may betendered.

8- Demurrage Clause:Ø states the maximum period of time allowed on demurrage and

the rate at which demurrage will be calculated.

Ø The clause is often combined with a provision covering payment ofdespatch money .


9- Lien Clause:Ø gives owners a lien on the cargo for specified debts, which generally

include freight but may also include demurrage, deadfreight anddamages for detention (or any of these).

10- Bills of Lading Clause:Ø requires the master or owner’s agent to sign bills of lading,

sometimes “at such rate of freight as presented, without prejudice tothis charter party”.

Ø may require the owners to give agents written authority to sign billsof lading.

Voyage charter party clauses11- Cancelling Clause:Ø gives the charterers an option to cancel the charter party if the vessel is not

ready to load on the cancelling date indicated in the charter party.

Ø may contain an obligation on owners to inform the charterers of any delay to theship’s arrival, and an obligation on the charterers to declare whether he willexercise this option or not.

12- General Average Clause:Ø identifies the Rules under which any General Average will be settled, e.g. “York-

Antwerp Rules 1994 and any subsequent modification thereof”.

Ø states the obligation of cargo owners to pay cargo’s share of General Averageexpenses, even where these are necessitated through neglect or default of theowners’ servants.

Ø may be combined with the New Jason Clause, which will apply if GeneralAverage is to be adjusted in accordance with US law.


13- Agency Clause:Ø Port agents are normally selected, appointed and have their fees paid by

the shipowner.

Ø Where the charter party terms are free in and out (f.i.o.), the charterers areresponsible for loading and discharge costs, and he will often reserve theright to nominate port agents .

Ø The shipowner may appoint a protecting agent / husbandry agent toprotect his own interests, although this will mean paying two agency fees.

14- Brokerage Clause:Ø specifies the amount of any brokerage commission due, and the party to

whom it is payable.

Voyage charter party clauses15- Strikes ClauseØ allocates responsibility for the consequences of workers’ stoppages that

prevent fulfilment of the parties’ obligations under the charter party.

Ø Different strikes clauses feature in different charter party forms, Some clausesrefer only to strikes, some to strikes and lock-outs, and others including allforms of industrial action.

16- War Risks ClauseØ sets out the rights of the owners and the vessel’s master should the vessel find

herself in a war zone.

17- Ice ClauseØ should be included in the charter party terms where there is any possibility of

the vessel being sent to a port which is ice-bound on her arrival, or where theonset of ice may cause the master to decide to leave the port before cargooperations are complete.

Voyage charter party clauses18- Clause ParamountØ A Clause Paramount “General Paramount Clause” incorporates into the

contract of carriage one of three international conventions setting outminimum terms and conditions out of which the carrier cannot contract, i.e.the Hague Rules, the Hague-Visby Rules or the Hamburg Rules.

Ø It is inserted in any charter party under which a bill of lading is required tobe issued, and is also found in various forms in liner and charter party billsof lading.

Ø Where the sea carriage is from a country which compulsorily applies noneof the three conventions, the parties to the contract may still agree to bebound voluntarily by the rules of one of them so as to simplify the resolutionof disputes; in this case the contract should have a Clause Paramount toidentify the applicable rules.

Voyage charter party clauses19- New Jason Clause (or Amended Jason Clause)

Ø is required to protect owners against the possibility of US lawsuits.

Ø Under US common law, a shipowner cannot claim General Averagecontributions from cargo where there has been faulty navigation ormanagement of the ship. The owners will therefore seek to exoneratehimself from liability for loss from these causes.

Ø the Harter Act 1893 made it illegal to insert any clause in a bill of ladingexonerating the ship from liability for loss caused through negligence,improper stowage, etc.

Ø Even so, a clause was commonly inserted in bills of lading giving ownersthe right to claim General Average contributions from cargo.

Voyage charter party clauses20- Both to Blame Collision ClauseØ Under the Hague and Hague-Visby Rules collision, as a “peril of the sea”, is an excepted

peril, allowing the carrier to avoid cargo loss or damage claims arising out of a collision withanother ship. Normally an owner of collision damaged cargo must therefore claim on hiscargo insurance policy.

Ø Under the law of the USA and certain other countries which have not ratified the CollisionConvention 1910, a merchant whose cargo has been damaged in a collision may claim thefull amount against the owners of the noncarrying ship and thereby circumvent the Hagueor Hague-Visby Rules.

Ø The non-carrying ship’s owners may then recover from the owners of the carrying ship aproportion of the claim equivalent to their percentage of the blame for the collision.

Ø The Both to Blame Collision Clause is designed to enable a carrier to preserve thecollision defence and get round the US law. Under the clause, the cargo owner agrees toindemnify the carrying ship against any liability to the noncarrying ship in the event ofcollision.

Both to Blame Collision Clause

Example:Ø Ships A and B collide in American waters. Ship A is the cargo-

carrying ship, ship B the non-carrying ship. Ship A is held by aUS court to be 60% to blame for the collision, and ship B 40% toblame.

Ø Shipper A loses $1000 worth of cargo damaged on ship A, butcannot claim against the owners, who are protected by their billof lading terms (incorporating the Hague-Visby Rules).

Ø Shipper S is allowed to claim the entire $1000 from the owners ofthe non-carrying ship B. But Ship B is only 40% to blame, so herowners can claim $600 back from the owners of ship A. The neteffect is that the owners of ship A, while in no way contractuallyliable to shipper S, must pay 60% of S’s loss.

Voyage charter partyLaydays and the cancelling dateØ Laydays refers to a period of specified days (e.g. “Jan 8/15”) during which

owners must present the vessel for loading.

Ø should not be confused with laytime, which is the period allowed to thecharterers for loading and/or discharging without payment additional to thefreight.

Ø The cancelling date is the final layday and the date beyond which, if thechartered vessel has not been presented for loading, the charterers mayreject her and cancel the charter,it will usually be found in a CancellingClause, which provides that the charterers will not be entitled to cancel thecharter before the stated cancelling date, even when it is obvious that thevessel cannot arrive at the loading port by this date.

Ø Together, laydays/cancelling or the “laycan” is the period within which thevessel must be presented at the agreed port or place.

Voyage charter partyPreliminary voyage to the loading port

Ø Where the charter party requires the vessel to “....proceed with allconvenient speed....” to the loading port or place, she must proceed with allreasonable speed.

Ø Provided the owners despatches the vessel on this “preliminary voyage” atthe appropriate time, they will be protected by the Exceptions Clause orOwners’ Responsibility Clause in the charter party in the event that thevessel is unable, due to an excepted peril, to reach the loading port by thecancelling date.

Ø If, however, the vessel does not depart at the appropriate time, the ownerswill be liable for the late arrival even though the delay was due to anexcepted peril, i.e. one named in the Exceptions Clause.

Voyage charter partyLaytimeØ is defined as “the period of time agreed between the parties during which the

owners will make and keep the vessel available for loading or dischargingwithout payment additional to the freight”.

Ø is time allowed to the charterers for cargo operations without additionalpayment. should, in the interests of the owners, commence as soon aspracticable.

Ø may be separate for load and discharge ports, or reversible (or “allpurposes”)

Ø may be of three types with respect to the method of determining the duration:

• definite laytime;

• calculable laytime; or

• indefinite laytime.

Voyage charter partyLaytimeØ if definite will be stated in the charter party as a specified period of time, e.g. “6

(six) days....” or “.....48 running hours”.

Ø if calculable must be determined by making a computation from information inthe charter party, e.g. where a cargo weighing 20,000 tons is to be loaded at arate of 10,000 tons per day, the laytime will be 2.00 days.

Ø if indefinite the charter party may state that the cargo is to be loaded with“customary despatch” or “customary quick despatch” or “as fast as thevessel can receive”.

Ø Masters should obtain from their owners or managers a copy of VoyageCharter party Laytime Interpretation Rules 1993, which explain all the usualterms associated with the calculation of laytime, demurrage and despatch.

Voyage charter party

ØLaytime can only start to count against thecharterers after three conditions have beenfulfilled:

1. The vessel has become an “arrived ship” within the terms of the charter party;

2. The vessel is in all respects ready to load / discharge; and

3. Notice of readiness has been served on the charterers or their agent.

Voyage charter partyArrived ship

Ø To determine whether the vessel has become an “arrived ship”within the charter party terms the master will need to know whetherthe charter party is a “port charter party” or a “berth charterparty”.

Ø The agreed voyage is defined by the places named in the charterparty for loading and discharging. These will either be ports (e.g.“…..shall proceed to Rotterdam, and there load….”) or berths (e.g.“…..shall proceed to one safe berth Rotterdam (Vaalhaven), andthere load…..”).


Arrived ship- port charter party

Ø If a port is defined as the place for loading (e.g. “Rotterdam”), withoutstipulating a particular berth, the charter party is a port charter party.

Ø The characteristics of a port charter party are:

• the contractual destination is a named port .

• in order to qualify as having arrived at the named port and therefore beentitled to give notice of readiness to load (or discharge) the following twoconditions must be satisfied:

1. if the vessel cannot immediately proceed to a berth, she has reached aposition within the port where waiting ships usually lie; and

2. she is at the immediate and effective disposal of the charterer.


Arrived ship- Berth charter party

Ø If a particular berth is defined as the loading place, the charterparty is a “berth charter party”.

Ø The characteristics of a berth charter party are:

• the contractual destination is a berth designated by the chartererswithin a named port;

• in order to qualify as an arrived ship, and therefore be entitled togive notice of readiness to load (or discharge) the vessel must havereached the berth and be ready to begin to load (or discharge).


Arrived ship- Port / Berth charter partyØ To protect themselves, and convert a berth charter party into a port charter

party, the owners will often:

Ø insert a “Waiting for Berth” clause or

Ø insert a protecting phrase in the Laytime Clause to make it clear thattime can count as laytime once the vessel is at the customary waitingplace. These phrases include:

Abbreviation MeaningAbbreviation Meaning

whether in port or notw.i.p.o.n. or WIPON

whether in berth or notw.i.b.o.n. or WIBON

whether customs cleared or notw.c.c.o.n. or WCCON

whether in free pratique or notw.i.f.p.o.n. or WIFPON

Voyage charter partyIn all respects ready to load

Ø means the vessel is seaworthy and in every way fit to carry the particularcargo on the voyage contemplated by the charterer. The vessel must befully at the charterer’s disposal, i.e. with derricks or cranes ready foroperation, holds or tanks cleaned, prepared and surveyed, free pratique andcustoms clearance granted, etc. - unless the charter party allows otherwise,which it may do by the inclusion of a protecting phrase .

Ø most modern charter party forms have reduced the absolute obligation ( incommon law ) to a duty of “exercising due diligence”, i.e. doing everythingwhich a prudent shipowner can reasonably do to make the vesselseaworthy without actually guaranteeing her seaworthiness.

Voyage charter partyNotice of readinessØ is a notice to the charterer, shipper, receiver or other person as required by

the charter party that the vessel has arrived at the port or berth, as thecase may be, and is ready to load or discharge.

Ø may be (and is often) given by the ship’s agent on the master’s behalf. (Inmany cases the Notice of Readiness is sent by the ship’s agent to an agentof the charterer.)

Ø must be given before laytime can commence.

Ø must be given within the “laycan” period.

Ø must be given in accordance with the procedure in the Notice Clause orLaytime Clause in the charter party.

Ø is often required to be given during office hours from Monday to Saturday.

Voyage charter partyNotice of readinessØ Notice of Readiness may be tendered by delivery of a printed form or letter,

or by telex, fax or cable, unless the charter party provides otherwise.

Ø must be addressed to the charterers or their agent .

Ø should be sent in duplicate with a request that the second copy, with thetime and date of acceptance completed, should be returned for the master’sretention.

Ø If receipt of Notice of Readiness is not acknowledged on the first day noticeis tendered, daily attempts to have it accepted should be made.

Ø It is important to the shipowner or time charterer that Notice of Readiness istendered as soon as the possible. A few minutes’ delay in tendering on aSaturday morning could mean that laytime will not commence until Tuesdaymorning, even though cargo work starts earlier.


Examle of NOTICE OF READINESSm.v. “Hudson Bay”

At Rotterdam

15th September 2003

Dear Sirs

Please be advised that the above-named vessel, under my command, arrived withinRotterdam port limits at 0625 hours Local Time on 15th September 2003 and is nowin every respect ready to commence discharge in accordance with all terms,conditions and exceptions as per the charter party dated Hamburg, 17th July 2003.

Cargo: 149,252 longtons iron ore.

Kindly sign and return the enclosed copy, acknowledging receipt of this notice ofreadiness.

Yours faithfully

(Signed), John McNab Master

Notice tendered at 0900 hours Local Time on 15th September 2003.

Notice received at .... hours Local Time on ..................... ..........................

Voyage charter partyDemurrageØ If cargo operations are completed after expiry of the laytime, there is a

breach of contract for which the charterers would be technically liable fordamages.

Ø Demurrage is defined as “an agreed amount payable to the owners inrespect of delay to the vessel beyond the laytime, for which the owners arenot responsible. Demurrage shall not be subject to laytime exceptions.”

Ø Demurrage will only be payable if provided for in a clause in the charterparty, e.g. a Demurrage Clause or Demurrage/Despatch Money Clause.The demurrage rate, which is normally quoted in US Dollars, will normallybe a daily rate that will at least cover the owners’ costs of keeping the shipin the port.

Ø Demurrage is normally paid per running day, i.e. without exclusion of anySundays, holidays, or bad weather, strikes, etc., occurring during thedetention period “once on demurrage, always on demurrage”.

Voyage charter partyDespatchØ If cargo operations are completed before expiry of the laytime, a monetary

reward, termed despatch or despatch money, is normally payable by theowners to the charterer.

Ø Despatch money or despatch is defined as an agreed amount payable bythe owners if the vessel completes loading or discharging before the laytimehas expired.

Ø Despatch will only be payable if provided for in a charter party clause (e.g.a Demurrage/Despatch Money Clause). Some charterparties stipulate“free dispatch”, meaning that the owners will not pay any dispatch money iftime is saved.

Ø The daily despatch rate, which is normally quoted in US Dollars, istraditionally half the agreed demurrage rate.

Charter-related and other problems at the loading port

If charterers repeatedly reject the vessel on grounds ofunclean holds or tanks:

Ø Unless the charter party provides otherwise, the master has final responsibility for decidingwhen cargo compartments are sufficiently clean for loading. If personally satisfied thatcompartments are clean enough for the intended cargo, the master should:

• act reasonably;

• bear in mind that he is acting in the interests of both the owners and the charterer;

• politely and firmly point out to the surveyor ( charterer ) that the responsibility outlinedabove is the master’s;

• point out that the cost of any further cleaning will be for the charterer’s account; and

• note protest.

Ø If ordered to leave the loading berth before acceptance, the master should not agree to doso unless so instructed by the owners/disponent owners, or unless there is a clause in thecharter party giving the charterers the right to order the vessel off the berth, in which casethe order should come from the charterers to the master via the owners.


If charterers cannot provide a cargo on arrival

Ø The master should tender notice of readiness in accordance with the

charter party, and inform the shipowner.

Ø The charterers are not in breach of contract until the agreed laytime has

expired.

Ø The vessel should “sit out” the laytime, the period of which should be

computed from the charter party. If no cargo has been provided by the time

of expiry of laytime, the master should note protest, stating that the

owners’ obligations under the charter party have been met, and awaitinstructions.


If charterers cannot provide the agreed cargo quantity

Ø It is customary in the bulk trades for the charter party to allow for the actual

weight intaken to be more or less ( MOL) than the proposed weight by a margin

of perhaps 10%, in either the charterer’s option (MOLCO) or the owners’ option

(MOLOO).

Ø If the weight loaded is less than the agreed margin, the charterers will be in

breach of contract and liable for deadfreight. The owners will be entitled to take

reasonable steps to find other cargo to fill the unused space.

Ø In such a case the master should send a letter of protest to the charterer,contact the owners, and note protest. A deadfreight claim form may have to

completed by the master, for submission to the charterer.

Voyage Charter Party- Discharge PortOutturn problemsØ Problems may arise over the outturn of cargo, i.e. discrepancies between the

loaded (or “bill of lading”) quantity and the discharged quantity. The carrier isobliged to deliver the cargo in the same quantity and condition as when loadedand has a prima facie case to answer if any loss or damage occurs during thevoyage. The carrier must then be able to show that he is exempt from liabilityunder one or more of the exceptions in the contract of carriage. If he cannotprove that the loss/damage was covered by one of the exceptions in thecontract, he will be liable for the loss/damage.

Ø If the carrier can prove exemption from liability, however, the cost of theloss/damage will lie with the party bearing the risk in the cargo (e.g. theconsignee), subject to possible recovery from the seller or the cargo insurer.

Ø In order to provide the necessary proof, the carrier will require full documentaryevidence from the ship.

Voyage Charter Party- Discharge Port

Carrier’s lien on cargoØ In common law, a carrier may exercise a possessory lien on any part of the

cargo in respect of which freight is owing at the destination, and also for moneywhich has been spent in protecting the cargo (e.g. where reefer goods havebeen warehoused by the shipowner while a damaged reefer vessel has beendrydocked).

Ø A common law lien is not allowed on unpaid deadfreight or demurrage.However, carriers often insist on the insertion in the contract of carriage of aLien Clause giving themselves a contractual lien on the cargo for deadfreightand demurrage, and sometimes also for damages for detention. A contractuallien for anything other than freight must be clearly expressed in the contractterms.

Ø The carrier’s lien is exercised by the shipowner’s port agent or by the master asagent of the shipowner; it is not the master’s lien.


Carrier’s lien on cargo- cont…

Ø Once delivery of the goods is made, the lien is lost. (For this reason most dry cargocharter party forms require freight to be paid on or at some time before delivery.)

Ø To preserve his lien, the carrier must retain actual or constructive possession ofthe goods on which freight is due.

Ø The cargo on which the lien is exercised should therefore be discharged into awarehouse under the exclusive control of the carrier’s agent who should be giveninstructions to release the goods only after surrender of an original bill of lading andpayment of freight.

Ø If freight is still not paid after a certain period of time, local law may allow the goods tothen be sold to pay freight, storage charges, customs duty, etc.

Ø Many bills of lading have a clause (such as a “London Clause”) giving the master theright to discharge cargo immediately on arrival and without notice to receivers.


Cesser and Lien ClauseØ Where the charterers are not the owners of the goods but is acting only as an agent or broker for

the loading of another party’s goods, he will probably be anxious to ensure that his liability for thecargo ceases once it is loaded.

Ø This is usually expressed in a Cesser Clause stating that “...charterers’ liability will cease onshipment of cargo and payment of freight, deadfreight and demurrage”, i.e. sums incurred at theloading port.

Ø The shipowner, will not want to find himself without a remedy for any breach of contract ordamage done to his vessel after the charterer’s liability has ceased, and will want legal recourseagainst another party, who will usually be the receiver of the goods. Therefore, if a Cesser Clauseis incorporated in the charter party, a Lien Clause will also be included giving the owners the rightto retain possession of the goods at the discharge port until outstanding debts are paid.

Ø The two clauses are often combined in a Cesser and Lien Clause. The relief given to thecharterers from their obligations only operates to the extent that outstanding sums can berecovered at the discharge port. The owners must proceed against the receiver first, but thecharterers will remain liable for sums which cannot be recovered from the receiver.


If the consignee fails to take delivery of cargo

Ø When market conditions are poor, a consignee faced with having totake delivery of goods damaged during a voyage may prefer toreject the goods on the grounds that the damage is so extensivethat it amounts to a total loss.

Ø However, whether his goods are damaged or not, it is theconsignee’s duty to:

• take delivery of his goods;

• mitigate his loss; and

• make his claim against the carrier

voyage charter partylaytime alculations

Ø The purpose of laytime calculations is to determine whether oncompletion of loading or discharge operations despatch is payable tothe charterers or demurrage is due to the owners.

Ø There are seven stages in a laytime calculation:

1. Read relevant clauses in the charter party.

2. Obtain Statement of Facts from agent.

3. Determine duration of laytime allowed.

4. Establish time of commencement of laytime.

5. Allow for interruptions to laytime as per the charter party.

6. Establish time of expiry of laytime.

7. Calculate despatch or demurrage payable.

voyage charter partylaytime alculations

Ø words and phrases used in a charter party

“Working days” (WD) shall mean days not expressly excluded fromlaytime.“Running days” or “Consecutive days” shall mean days which followone immediately after the other.

“Weather working day” (WWD) or “Weather working day of 24 hours”or “Weather working day of 24 consecutive hours” shall mean aworking day of 24 consecutive hours except for any time when weatherprevents the loading or discharging of the vessel, or would haveprevented it, had work been in progress.

“Weather permitting” (WP) shall mean that any time when weatherprevents the loading or discharging of the vessel shall not count aslaytime.

THE ENDTHE END

voyage charter agreements

Documents

voyage costs

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voyage charterf05s

voyage charterthe shipowner

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