Time Charters, delivery of the vessel

1. The charterers liability specialists
Claims Service Letter 8 – April 2013 www.charterama.com
Time Charters,
delivery of the vessel
In previous service-letters it has been discussed when, where and how
a valid NOR should be tendered under a Voyage Charter. Delivery of
a vessel under a T/C displays similarities but as in essence a T/C is
different from a Voyage Charter, the commencement of a T/C will be
reviewed separately here below.
As applies to a valid NOR, a vessel can port or berth, the same principles apply as Other C/P forms will invariably contain a
be delivered validly when the following are determining for tendering a valid NOR wording of the same tenor:
requirements have been met: (see previous service-letters 2, 3 and 5). The Baltime form states (clause 1) : “...
• The vessel must be delivered in time. The vessel being in every way fitted for the
• The vessel must have arrived at the right Any options given to the charterer as to the ordinary cargo service.”
place as specified in the C/P. place of delivery should be exercised timely The NYPE 1993 form states (clause2):
• The vessel must be in a state and (to enable the owners to deliver their vessel “The vessel on her delivery shall be ready
condition as required under the C/P. in accordance with the C/P). Otherwise to receive cargo with clean swept holds...
• There might be other specific this may be taken as a waiver of charterers’ and in very way fitted for ordinary cargo
requirements in the C/P which have right. The vessel will then be delivered service...”
to be met. validly at each optional place under the C/P.
Owners will have to meet these requirements
The vessel must be delivered in time Specific requirements at the time of delivery. If these requirements
Usually the C/P incorporates a cancelling Under a NYPE 1946 CP the owners have have not been met, delivery can be rejected.
date before which the vessel has to be to tender a NOR before the charterers have Charterers will have an option to cancel the
delivered into the C/P. If owners fail to to accept delivery of the vessel. Clause 5 C/P in accordance with the cancelling clause
do so, this will provide charterers with an of the C/P provides for a “notice-period” if these requirements have not been met
option to cancel the C/P. after which time starts to count which time before the cancelling-date.
Cancelling clauses will be discussed in the coincides with the time of delivery, unless If delivery has been accepted but it appears
following service-letter. charterers exercise their express option to that the vessel is not in the required
There will also be another date entered in make use of the vessel earlier in which case condition, usually owners may be liable for
the C/P before which charterers do not this moment is considered as the time of damages as a consequence of their breach.
have to accept that the C/P period will delivery. If the deficiencies are serious enough
commence. Together with the cancelling The NYPE 1993 and Baltime forms state to frustrate the performance of the C/P,
date this “time-window” is known as that hire is payable from the time of delivery charterers may become in a position the
vessel’s “laycan”. without making reference to a NOR and a cancel the C/P and claim damages because
Often the C/P requires from the owners “notice period”. of a repudiatory breach.
to give advance notices. Such notices There could be more specific requirements “In every way fitted for the service” means
should be given honestly and on reasonable varying from C/P to C/P and are for that the vessel has to be suitable for services
grounds failing which charterers may be example dependent on the type of vessel or required from her under the C/P. This
entitled to claim damages. trade, but it would go too far to discuss this has to be judged reasonably which in the
here at length. The Baltime C/P and the NYPE 1993
The vessel must have arrived at C/P finds expression by adding “ordinary
the right place The vessel must be in a state and cargo” to “service”.
Charterers do not have to accept delivery of condition as required under the C/P “Fitted” includes an absolute obligation
the vessel if she has not arrived at the place The NYPE 1946 C/P states (line 21-22): that the vessel must be seaworthy.
agreed in the C/P. “Vessel on her delivery to be ready to receive So the test of seaworthiness applies to the
The place of delivery could be a specified cargo with clean-swept holds and tight, contractual voyage (s).
berth, port or pilot station or a specified staunch, strong and in every way fitted for
place at sea (f.e. on passing Gibraltar). the service....”
Where the vessel has to arrive at a specified
page 1, October 2012

2. In case the Hague Rules are incorporated, Proving that due diligence has been However charterers should weigh carefully
for example by virtue of a “Clause exercised may sound relatively easy, whether they wish to perform a full
Paramount” this absolute obligation will but it is a heavy burden which has to be condition survey of the vessel jointly with
be qualified by article 3 (1) stating that discharged. In this respect this duty cannot the owners.
“the carrier shall be bound before and at be delegated. Owners will also have to It could be that delivery has already been
the beginning of the voyage to exercise due show that their servants (f.e. a repair-shop) accepted and that charterers are not
diligence to make the vessel seaworthy.....” exercised due diligence as well. interested to investigate the full condition
In a Time Charter it is thought that “before The effect of a Clause Paramount will no of the vessel for the purpose of acceptance
and at the beginning of the voyage” should doubt be discussed more detailed in a or not . This may be dependent on the
mean “on delivery”. following service-letter. type of vessel or charter, for example if it
However together with other provisions concerns a trip T/C or a long-term T/C. It
in the C/P (for example a continuing Other requirements concerning the state could also be sufficient for charterers to
obligation to maintain the vessel), the duty and condition of the vessel on delivery: have a good impression of vessel’s fitness
to exercise due diligence to make the vessel and engage a surveyor for this purpose.
seaworthy before and at the beginning of “Ready to receive cargo” is a requirement
the voyage may apply to each voyage under similar to the one which has to met before a So whether charterers should perform a
a C/P. This is still not entirely clear. valid NOR can be tendered. This has been condition survey will much depend on the
discussed in our previous service-letter. circumstances but often charterers may
In practice the incorporation of the Hague Other specific requirements which decide not to spend money and time on it.
Rules means that owners may now be are commonly used, such as “properly
excused from latent defects which could equipped” and “properly manned”, can Although somewhat beyond the scope of
not have been discovered by the exercise of be brought under the general provision: this subject, a noteworthy disadvantage of
due diligence, of which the burden of proof “fitted for the ordinary cargo service”. a full condition survey, whereby owners
will be on owners. So fulfilling these requirements are and charterers will jointly survey and record
(It is the rule that the burden of proof is precedent to charterers duty to accept each and every irregularity, is the following:
on charterers to show that the vessel was delivery. At the end of the charter on redelivery
unseaworthy before and at the beginning of another full condition survey will be
the voyage. If this has been established the In contrast with this are requirements performed. Both surveys will be compared
burden of proof is on owners to show that which are not clearly linked with the to each other and charterers will be kept
due diligence has been exercised to make requirements discussed here above. responsible for all discrepancies, including
the vessel seaworthy.) To illustrate this, a Time C/P will specify small deficiencies which could easily have
with how much bunkers on board the vessel been overlooked during the full condition
will be delivered. If she has less or more survey on delivery.
bunkers on board, charterers will not be
entitled to refuse delivery unless this makes Secondly, in combination with f.e. clause
the vessel unfit for the service required from 4 of the NYPE 1946 form, stating that
her or unless the C/P clearly states that a the vessel shall be redelivered “in like good
failure in this respect entitles the charterers order and condition, ordinary wear and
to reject delivery of the vessel. tear excepted”, charterers could be made
Otherwise charterers may be left with a responsible for damages to the vessel which
claim for damages. would, but for this clause, not have been
their responsibility at all. (Other C/P forms
On-hire surveys contain similar provisions)
Charterers may wish to perform a ­ Although it is thought that this clause must
delivery-survey or on-hire survey, jointly mean that charterers have to make good
with a representative of the owners, to damages which are caused in consequence
ascertain the condition of the vessel and of owners’ compliance with charterers’
the quantity of bunkers on board. orders, together with a full condition survey
The NYPE 1993 contains a specific clause on delivery and redelivery charterers may
(clause 3) dealing with this issue. face claims which would otherwise not have
arisen.
Usually a joint bunker-survey is helpful
to charterers and owners in order to avoid So it could be preferable to survey damages
disputes about the quantity of bunkers only when they have been sustained
which charterers take over from the owners. and which are within charterers’ control
or for which charterers have been kept
responsible.
This letter has been drafted with the utmost care on basis
of information which is believed to be correct but which
cannot be guaranteed by Charterama.
page 2, October 2012