Shipping and Charter Party Contracts

Charles has chartered a vessel to David for a voyage or ocean trip under the conditions of charter party contracts. And under this contract the ship owner has the control over vessel and it is his duty to make sure the ship is seaworthiness and can complete the journey efficiently. In this assignment we will analyze the rights and liabilities of ship owner and charter party and this will cover various issues relating to loading, unloading, laytime, demurrage and deviation.

In initial stage I will discuss terms of charter party and various problems that have aroused from the contract between Charles and David such as when no birth is available who is responsible for this and why only 500 tons were loaded despite the fact the vessel had the capacity of 1000 tons. Who is responsible for the delay during voyage due to various reasons and at last the discharge of vessel took eight days and during unloading it was found the reeds were rotted who is accountable for this and some reeds dropped on dock and damaged by sea who will be responsible for this negligence and who will claim damage from whom.

CHARTER PARTY CONTRACT TERMS

The charter party is that contract in which the conditions of the pact are decided in those markets which are free and the only law that is applicable to it is that law of demand and supply. The terms of the contract will depend on the shipowner, charterer and the market. The parties of charter party can also form there own terms of contract which would remain free from any other legal interference. in reality the parties of the contract follows those standards of contracts which are generally applicable. These acceptable standards are the result of monopoly of various individual firms in a specific field such as gas etc or some are the results of trade in coal,grain,ore etc.

Generally there are two important types of charter, time charter parties and voyage charter parties. Before explaining what type of charter contract David and Charles have entered in to we must discuss or define two important types of charter as said above.

VOYAGE CHARTERPARTIES

There are number of various charter contracts that fulfilled various needs of the party , in this type of charter parties the parties of the contract can form there own terms and conditions of the contract or can make some relevant changes in the existing standards to full fill there specific needs which are acceptable to both the parties. In this contract of charter parties the details of contracting parties, name of ship and the agreed route of journey is given in the initial paragraphs. The capacity of the cargo must also be told to the charterer and such explanation of the capacity of the cargo must not be taken as a guarantee as it also depends on the stowage capacity. [1] In this type of contracts the charter also tells us the port of loading and unloading or the charterer is give the right to point out such ports from a specific list or from a already told area having number of ports.

TIME CHARTERPARTIES

The time charter parties are different from the voyage charter parties and the difference lies in there functions. As the name suggest the vessel is chartered for a specific period or time and the charterer can use it for any purpose within the limits prescribed by the contract. In this kind the charterer controls the commercial activities of the vessel and in the terms of contract the charter must also explain fuel consumption, the capacity of loading and the speed of vessel. As the success of the commercial charterer depends on all the above mentioned qualities of the ship and the charter also explains the time period in very clear words and there should be in ambiguity in it and must be given in days, month or years

THE NATURE OF CONTRACT BETWEEN DAVID AND CHARLES

The nature of contract between David and Charles is a voyage charter parties as we can easily infer from the terms of charter between them that it has those terms of charter which are found in voyage charter parties. As in the terms not only name of the ship is given but also the contracting parties and the route is also explained in it and both the parties have also agreed upon some other point of agreements that are relevant to existing standards of the charter

IMPLIED OBLIGATIONS UNDER THE CONTRACT

In this assignment we have to know what are the rights and liabilities of the ship owner and the charterer and both the parties have some expressed obligations which are very clear in the terms of contract which explained when the vessel to be loaded and discharge, when the master should give the notice to the agent of charterer, how much demurrage should be paid, who is responsible for the negligence of the crew and stevedores and when the bills of lading to be issued. All these rights and liabilities are very clear despite all these points there are also implied conditions of the contract which will help us to explain various problems that have been given in the assignment. Briefly there are six implied obligations. Frustration, not to ship dangerous goods, seaworthiness of ship. Not to deviate from agreed routes, nominate a safe port and obligation of reasonable dispatch

1. Seaworthiness of Vessel

In every contract there is understood obligation that the ship must be fit for sailing and must be able to withhold all the dangers of sea of which she will witness during the sea journey [2] . According to this obligation various other points are also part of terms such as efficiency of crew, the fuel sufficiency and other things which are necessary for the carriage of goods. According to this obligation the owner should make sure ship is not only fit but must make sure it is really fit [3] . Another point that is brought forward is that the ship must be fit only for the purpose for which it is chartered; the ship must be fit and strong in every prospect for the service delivery. Other important point to discuss here is that if the unseaworthy of ship has not been found and the ship has gone for sail it does not mean that charterer will not have any right of damage [4] .

2 Obligation of reasonable dispatch

The second most important undertaking that is present in every contract is that the carrier or shipowner must perform his duties of dispatch. When no time has been given in the terms of contract than in these circumstances the dispatch must be done in a reasonable time. The reasonable time clause will be judged from the actual scenarios in which what is normally expected by the shipowner. If the carrier has violated this obligation than the charterer can claim damages if it can be recovered where as the effect is so grievous than in this case the injured party can cancel the contract and the delay has frustrated the object [5] .Another point to note here is that when the delay is not that much than the party can only claim damages [6] and if the reason of delay is due to natural causes such as rain, storm or any conditions beyond human control than no damage can be claimed by the party [7] . At common law the deviation which is unjustified has been regarded as a fundamental breach of the contract. “the true perspective is that any deviation from the contract is consider as a violation of contract by the shipowner and it doesn’t matter if the deviation is very minimum and the contracting party can say after that he is no more bound by terms of contract” [8]

3 No deviation from agreed route

Under the contract of the carriage the ship owner undertakes not to deviate from the route as mentioned in contract. Deviation can be explained as will full and not reasonable change in the route of journey as decided in terms of contract [9] .one can only find out the deviation by looking into the route given in the pact. There are forms of charter that mention the route that has to be followed [10] in absence of any specific mention of routes proper route is the direct route between the port of loading and discharge. Few deviations are accepted these points are considered as exceptions to the normal route of journey. The carrier will not be accountable for any deviation which is to save human life and can communicate with other vessel when lives are at risk. The second exception for deviation is that in case of any danger to the ship or cargo the carrier can deviate from the agreed route this danger to cargo or ship can be result of natural acts or to keep the cargo safe from the attacks of pirates. The Hague and Visby rules also allow deviation to save property and only defense that is available under common law is Act of god and Act of Queen enemies but only in one case when the carrier shows that damage would have occurred irrespective of the change of route. The rights that are available before deviation can also be enforced after deviation and if the freight arrives safely than the carrier can claim or recover freight charges

4 Nomination of safe port

In any kind of charter whether it is time charter or voyage charter when the charterer has been given the right to nominate a port than the charterer must nominate that port which is safe. “The port will not be consider safe when a ship can reach that port in a specific time and uses it and than return without any occurrence which are consider dangerous and these dangers cannot be avoided by excellent navigation and good seamanship” [11] it is the duty of charterer to nominate a safe port and the port must be safe for all the time mentioned in the contract. The period will include the time of entry in port to the departure and in certain cases it will also cover the perils faced in open sea such as risk of submarine movement during wartime [12] . This nomination also includes that when loading and discharging is complete the vessel must be able to leave the port safely. Whether a port is safe or not it is a matter of fact of other individual cases [13] a due consideration must be given to the type of vessel because a port may be safe for one vessel but not for the other. The dangers of port may be related to the use of port depending on the depth of port or lack of safety equipment and last but no least political unrest. The remedy that is available to ship owner if the charterer nominates a port which is not safe he can refuse to accept the port nomination if the port is not safe and can nominate an alternative port and is any damage has been done he can claim for physical damage to ship and costs of avoiding the damage to the ship e.g. tugs or off-loading cargo

5 Not to ship dangerous goods

The shipper must not take to ship those good which are dangerous without notifying the peculiarities of those goods to the carrier. The dangerous goods not only include those commodities which are dangerous from start and those good which may become dangerous due to any leak or fumes. When ever goods are shipped without giving notice to the shipper that these good are harmful than the shipper will be accountable for any damage which will be caused to the ship or cargo [14] . If the shipowner is aware of the goods that they are harmful then there is no obligation on the shipper to apprise him of the fact. If goods are dangerous than the shipowner has the right to refuse to carry these goods

6 Frustration

When the contract cannot be completed or materialized without the fault of any party it is called frustration. There are various kinds of frustration and the first one is impossibility of the performance and this type of frustration happens when the ship that is chartered is lost or becomes constructive total loss [15] . The second kind of frustration is that when any change has been brought in the law and as a result of this law the performance of the contract becomes unlawful and delay also causes frustration as a delay may result in not achieving the objectives of the contract. The burden of proving frustration will be on that party who will be alleging it he must satisfy the court that the event has made the contract useless or the performance of the contract has become illegal.

THE LIABILITIES OF CHARLES THE SHIP OWNER AND DAVID CHARTERER

We have discussed various implied obligations in detail and this will help us to sort out what will be the liabilities of Charles according to the terms of contract. Both the parties of charter have agreed on some terms of charter and despite these terms few issues have been given in assignment which will be explained not only according to the implied obligations but also what is generally applicable.

The first issue of discussion is that the vessel arrived at port of Lagos at 1800 on 1st January and the master immediately gave notice to the chatterer’s agent who at first instance refused to accept it as according to the terms of contract the master was bound to give notice 6 hours before the arrival of ship and it was a public holiday however later on he accepted it. And the loading started on 4th January and three days were wasted as no berth was available. It has been clearly mentioned in the terms of contract that whether berth will be available or not after acceptance of notice. The laytime will start laytime means the period of time that is agreed between the parties during which the owner will keep the vessel available for loading and discharging without any extra payment to the freight. The loading took 7 days but in terms of contract it has been mentioned that 5 working days will be available for loading here the point of fact is that who will pay demurrage, the terms have made it clear that charterer will pay demurrage at £3000 per day and the ship owner is free from any liability in this respect.

The second issue in the assignment is that MV Twist has the capacity to load 1000 tons of cargo but it only loaded 500 tons and which was 50% short of her actual capacity. And this was the result of the method of stowage had different mode been adopted the ship had loaded 1000 tons. To get the ship full up to its capacity is the responsibility of the charterer as in terms of contract it has been clearly mentioned that shipowner will not be responsible for the negligence of the stevedores. And there are no other implied obligations to it.

The issue which is very important and relates to implied obligation of the contract and no details have been given in the terms of contract by the parties. Under the terms Lagos is the port of loading and East coast of England is the port of discharge and no other details have been given regarding which route the master will follow. In this scenario when no route has been given in the terms of charter than the proper route is the direct route between the ports of loading and discharge. But few exceptions are also involved in it such as to save human life and to avoid danger to crew or cargo. But here the master has deviated from the direct route for its own personal purpose to pick up wine and perfume to give it as a gift to his wife and this act is consider as a breach of implied obligation. Although this is consider as a breach but the cargo owner can ignore it and contract remains intact as it depends on the goods owner to waive it [16] . The shipowner cannot claim any right as this voyage is not a time voyage and the parties of charter are not bound by the time. Two more days were wasted as David nominated London as lightening port and another day was lost to bag the top cargo but all these will not violate any terms of contract as in this charter time is not the essence.

The last point of discussion relates to the issue of discharge as the discharge took total 8 days as 2 days were lost due to strike and 1 day was lost because the shipowner Charles removed the vessel for safety check. According to the terms of contract the charterer has 4 days to discharge his cargo and if any time that will be lost due to strike than in this case demurrage will be paid by the shipowner and the day on which he checks the vessel the demiurge will also be paid by him. This makes the whole issue very clear as out of total 8 days the charterer has 4 day of discharging and 3 days demurrage will be paid by the shipowner and the charterer will only pay demurrage for one day. The last point that needs explanation is that as told in assignment some reed were rotted as they were packed around ventilation pipe and some were damaged during unloading this point of issue is very clearly explained in the terms of charter that the shipowner will not be responsible for any loss caused by negligence of crew or stevedores so this point makes it clear it was duty of charterer to carefully placed his cargo and carefully unload it in this issue shipowner is free form any liability

BIBILIOGRAPHY

Dockray, Martin cases & materials on the carriage of goods by sea 3rd ed. London; Portland, or. : Cavendish Pub., 2004.

John Wilson Carriage of Goods By sea

Shipbroking and chartering practice / by Lars Gorton 6th Ed London: LLP, 2004.

Hughes, A. D. Casebook on carriage of goods by sea. 2nd ed London: Blackstone Press, 1999.

Ivamy, E. R. Hardy (Edward Richard Hardy) Payne and Ivamy’s Carriage of goods by sea. 13th ed. London : Butterworths, 1989