Wednesday, 29 January 2014

Time charters. Withdrawal

The the common law generally gives to the innocent party only remedies in damages for breach of contract, unless said breach is of repudiatory character. Accordingly, the common law does not treat the late payment of hire by the charterers as a breach of sufficient gravity to give the owners a right to rescind the contract, unless the conduct of the charterers show unwillingness or inability to pay or delay in payment amounts to repudiation of the charter.
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Tuesday, 22 January 2013

Time Charters. Off-hire clause

It is trite law that hire is continuously payable under a time charter unless the charterer can bring himself within the words of the off-hire clause.
Court Line, Ltd. v Finelvet, A.G. (The Jevington Court) [1966] 1 Lloyd’s Rep.683, per Roskill J, at p.698

A time charter being a contract for services to be rendered to the charterer by the shipowner, it is evident that an ultimate interest of the charterer is an efficient and uninterrupted operation of the vessel during the whole length of the charter. For such efficient and uninterrupted services the owner is paid in advance by way of monthly or semi-monthly installments, also called hire (read more about paiment of hire here). Consequently, when the charterer is deprived of full working of the vessel, irrespectively whether due to the owner’s fault or not , he reserves a right, by way of off-hire clause, to cease payment of hire for the time thereby lost.
 
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Thursday, 27 December 2012

Time Charters. Condition of vessel on Redelivery

Duration of contractual service of the vessel under time charter confined between the terms of the place or time, or both, at which the vessel is redelivered, regardless of vessel’s condition. Mustill, J., in Santa Martha Baay Scheepvaart & Handelsmaatschappij N.V. v Scanbulk A/S (The Rijn)[1981] 2 Lloyd’s Rep. 267 held at p.270 that:
Once the stated time has expired, or the stated port or range has been reached, the period of hiring is accomplished, even if the charterer is in breach at the time. Equally, from a commercial point of view, it would be absurd if the charter were to run on indefinitely, with the charterer obliged to retain the ship in service, even though there was no longer any voyage upon which she could permissibly be sent.
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Time Charters. Date of Redelivery

Under a time-charter contract the vessel is to be delivered by the owners to the charterers for their commercial use within stipulated period of time. At the end of this time, subject to any express provision contained in the contract, the charterers obliged to redeliver the vessel to the owners. Therefore time charterparty necessarily contains terms as to its duration.

Where a charterparty is for a fixed period such as three or six months, the court may imply a reasonable margin or allowance because it is impossible for anyone to calculate exactly the day on which the last voyage may end, but it is open to the parties to provide that there is to be no margin or allowance.

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Time Charters. Place of Redelivery.

Place of redelivery together with the time of redelivery are the two terms which define the extent of contractual service. When both terms expressly stipulated in time charter, failure of charterers to comply with either of them, will constitute breach of the charter for which the charterers will be liable in damages.  

… shipowner has a contractual right to have the ship kept in employment at the charter rate of hire until the service is completed. This does not happen until the ship reaches the redelivery range,…
Per Mustill, J., in Santa Martha Baay Scheepvaart & Handelsmaatschappij N.V. v Scanbulk A/S (The Rijn)[1981] 2 Lloyd’s Rep. 267
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Time Charters. Payment of Hire.

Payment of hire is a primary obligation of the charterer under the terms of time charterparty. Payment of hire is an absolute obligation and is not excused by accident or inadvertence.
Hire is payable in advance in order to provide a fund from which the shipowner can meet those expenses of rendering the promised services to the charterer that he has undertaken to bear himself under the charterparty, in particular the wages and victualling of master and crew, the insurance of the vessel and her maintenance in such a state as will enable her to continue to comply with the warranty of performance.

Per Lord Diplock in Scandinavian Trading Tanker Co AB v Flota Petrolera Ecuatoriana (The Scaptrade) [1983] 2 All ER 763 at p.767

It is well settled law that an advance payment of hire under a charter-party is provisional in the sense that if the hire is not earned for the whole period covered by the payment the charterer will be entitled to recover pro tanto. It is also necessary to mention here that, although advance hire under a charterparty is provisional, the charterer had a right only against the shipowner under the terms of the charterparty contract for money had and received, i.e. for hire paid but not earned. An assignee of receivables due under time charter, e.g. hire, who received an advance payment of hire pursuant to the assignment is not liable to repay it to the charterer in the event of the hire not being earned.
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Sunday, 16 December 2012

Tank Cleaning - Legal Issues related to Time Charters

It is also pertinent to remember that tank cleaning is in the ordinary way an activity required by a time charterer. Time charterer is free to choose, within certain limits provided in technical description of the vessel, what cargoes are to be loaded, and consequently when and what cleaning is required. Due to sometimes wide variety of the goods, which may be available for transportation, it is evident, that there is wide variety of cleaning procedures and technologies as well. Because of this, in a particular case, cleaning may take longer than either charterers or owners expect but, provided that it is carried out with due diligence and proper equipment, the time occupied will not fall under off-hire provisions.
 
If the charterer orders the vessel to load coal on one voyage and sugar in bulk on the next, he can hardly expect the necessary cleaning to be done in the owner’s time.
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Minerva Navigation Inc v Oceana Shipping AG (The Athena) [2012] EWHC 3608 (Comm) (13 December 2012)

Shipping – Timecharter – NYPE Amended NYPE 1946 cl.15 – Whether the Vessel is off-hire for a particular period merely because the vessel is not efficient for the services then required during that period, or whether the charterers have to further show a net loss of time resulting thereby?
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