1、CHAPTER 4 THE TIME CHARTER PARTY,Section 1. Description of vessel and cargo Section 2.The period of charter and delivery and redelivery Section 3. The hire and payment of hire Section 4. Off-hire clause Section 5. Other clause, Definition,A time charter party is a contract under which the shipowner

2、provides a designated manned ship to the charterer, and the charterer employs the ship during the contractual period for the agreed service against payment of hire. The time charter party may be classified as an agreement for hire of a certain vessel. contents A time charter party mainly contains th

3、e name of the shipowners, the name of the charterers; the name, nationality, class, tonnage, capacity, speed and fuel consumption of the ship; the trading area; the agreed service, the contractual period, the time, place and conditions of delivery and redelivery of the ship; the hire and the way of

4、its payment and other relevant matters.,(3) Forms,By far the largest number of time charters are fixed on the basis of the New York Produce Exchange (NYPE) charter party form. For convenience we will examine the elements of a time charter party based on the NYPE form 46/93 (The New York Produce Exch

5、ange Time Charter - Revised 14 September 1993) to provide some ideas of the normal clauses required in a time charter party.,Section 1. Description of Vessel and Cargo,The time charter party differs from the voyage charter party which is rather an agreement for carriage of a certain cargo, with a ce

6、rtain vessel and certain ports. Instead of mentioning a certain cargo, the time charter party, mostly in general terms, states the type of cargo the time charterers are allowed to carry with the ship.,1. Description of the vessel,Generally, the description of the vessel is more important in the time

7、 charter party than in the voyage charter party and the description is also mostly more detailed and precise. All details about the ship such as name, flag, classification, port of registry, deadweight, capacity, construction, speed, fuel consumption, nationality, tonnage etc. must be known by the c

8、harterers during the negotiation with the shipowners. Charterers should form an opinion about the commercial value of the vessel and it is therefore important for them that they have correct and sufficient information about her.,1.1 Name of the ship,There seems to be no direct English authority on t

9、he question whether the name by which a vessel is described is a condition of a charter party. The famous book Scrutton on charter parties and bills of lading states “Substantial accuracy in the name of the vessel will be a condition of the contract”. The charter is for the named ship alone and the

10、charterers cannot be required to accept delivery under it of another, even of identical characteristics. It is open to the parties to agree that another ship may be substituted for the originally named ship or to agree to more than one substitution. The parties may also agree that the substitution b

11、e made at any time, whether before the start of the charter period, during it, or after the loss of the named or any substituted ship. But if it intended to give a right of substitution after loss, particularly clear words must be used; for otherwise the charter will be held to have been frustrated

12、by the loss and the right to substitute will terminate with the termination of the charter.,Case,The Badagry was chartered for a period of eight years, the charter providing by clause 33: “shipowners have the option to substitute the vessel with similar vessel type/size during the period of this cha

13、rter party.” The charter further provided that if the vessel should become a constructive total loss, hire shall cease at the time of the casualty resulting in such loss; The Badagry became a constructive total loss on or about 27 September. On 17 October the shipowners purported to substitute the B

14、onny for the Badagry. It was held by the Court of Appeal that it was not consistent with a continuation of the charter party after a constructive total loss, that the charter was frustrated before 17 October and that with the termination of the charter the right to substitute perished.,1.2 Sale of t

15、he ship and flag, Sale of the ship It seems that it is not of itself a breach of the charter for her owners to sell the ship during the period of the charter. The original owners will however continue to be responsible to the charterers for the performance of all the obligations assumed by them unde

16、r the charter., CMC regulation,According to Chinas Maritime Code, where the ownership of the ship under charter has been transferred by the shipowner, the rights and obligations agreed upon under the original charter shall not be affected. However, the shipowner shall inform the charterer thereof in

17、 time. After such transfer, the transferee and the charterer shall continue to perform the original charter., Ships flag,It is submitted that the statement as to the ships flag will usually be an intermediate term. But where the flag of the ship has a vital bearing on her safety or on her trading op

18、portunities-as in wartime, when the flag of the ship may determine her neutrality or otherwise-the statement may be treated as a condition, so that any breach will allow the charterers to treat the contract as discharged.,1.3 Cargo capacity,1.3.1 Description of cargo capacity The ships cargo capacit

19、y is described in the same way as in the voyage charter party, i.e., in most cases by deadweight and/or cubic capacity. In some cases it is necessary to have additional information about the vessels cargo capacity, for instance, how many containers she can take on deck and under deck respectively. A

20、 vessels cargo capacity is normally of great importance to the charterer. If a chartered vessel cannot load all the cargo the charterer wishes to ship, clearly he may miss his intended market or incur extra warehouse or transport expenses on shore as well as in arranging substitute tonnage.,1.3.2 NY

21、PE Form,The time charterers dispose all compartments which can be used for cargo. In the NYPE form this is expressed in the following way: “The whole reach of the vessels hold, decks, and other cargo spaces (not more than she can reasonably and safely stow and carry), also accommodations for superca

22、rgo, if carried, shall be at the charterers disposal, reserving only proper and sufficient space for the vessels officers, crew, tackle, apparel, furniture, provisions, stores and fuel.”,1.3.3 Importance of cargo capacity,As information about the vessels cargo capacity is very important for the time

23、 charterers, the shipowners must declare these details as correctly as possible. Statements of cargo capacity usually constitute intermediate terms. Incorrect information about the cargo carrying capacity may lead to deduction of the hire or, when the difference is big, the charterers may also be en

24、titled to cancel the contract and claim damage. In the New York Produce form 93 the deadweight capacity is defined as “cargo and bunkers, including fresh water and stores not exceeding -long/metric tons”.,1.4 Speed and bunker consumption,1.4.1 NYPE Form 93 As the charterers pay hire per time unit, t

25、he vessels speed capability and bunker consumption are essential for judging the operating potential of the vessel. The speed capability and bunker consumption statements in the time charter parties are usually connected to certain weather conditions and to a certain draught. Also, the type of fuel

26、is important. In the NYPE form 93 it is said that “Speed about -knots, fully laden, in good weather conditions up to and including maximum force-on the Beaufort wind scale, on a consumption of about -long/metric tons of-”.,1.4.2 Misdescription of statement,It seems that statements as to speed and fu

27、el consumption will usually constitute intermediate terms in accordance with English law. The consequences of misdescription will then depend upon the nature and consequences of the breach. Usually, a lack of speed or an excess of consumption can be compensated for damages alone. However, a serious

28、discrepancy in either respect may be so fundamental to the charter as to entitle the charterers to treat it as being discharged.,1.4.3 Time requirement for correct description,Whether the ship has to comply with the description as to speed at the time the charter is entered into or at the time of de

29、livery, or whether it is a continuing warranty. The whole purpose of the description of the vessel containing a speed warranty is that when she enters on her service, she will be capable of the speed in question, subject, of course, to any protection which her owners may obtain if there has been som

30、e casualty between the date of the charter party and the date of delivery affecting her speed which, under an exceptions clause, protects them from liability in relation to a failure to comply with the warranty. Commercial considerations require the description as to the vessels speed to be applicab

31、le as at the date of her delivery whether or not it is applicable at the date of the charter party.,1.4.4 Meaning of about,The word “about” when qualifying the warranty as to speed allows a margin either side of the stated speed; The extent of the margin is a matter of fact, not one of law. It was a

32、rgued that there were only two possible margins that could be allowed for the word “about”, half a knot or five per cent. The English court of appeal considered that it must be tailored to the ships configuration, size, draft and trim, etc.,1.4.5 Cases,A vessel which was chartered under a time chart

33、er party was described as capable of steaming at 14.5 knots. Due to her bottom being fouled by encrusted with molluscs, she was only capable of steaming at 10.61 knots. Held, that the owners were guilty of a breach of warranty, but were protected by an exceptions clause. The Apollonius 19781 Lloyds

34、Rep. 53. In the Lipa 2001 2 Lloyds Rep. 17, the Lipa was under time charter on Baltime form. The charter party provided consumption figures of about the number of tones best oil-fuel, and all details given in good faith but without guarantee. Charterer alleged vessel consumed excessive fuel. It was

35、held that charter did not contain warranty about the vessels rate of fuel consumption.,1.5 Safe port,1.5.1 Charterers obligation Under the time charter party, the primary obligation on the charterers is to order the vessel only to safe ports where the ship may safely lie always afloat. In general th

36、e criteria applicable in the case of voyage charters are applicable also to time charters. But the shipowners of a ship are more in need of protection from a safe port promise when operating under a time charter, in accordance with which they may be required to go to ports worldwide, than when opera

37、ting under a voyage charter with named or listed loading and discharging ports.,1.5.2 Definition of safe port,The classic definition of a “safe port” is that “a port will not be safe unless, in the relevant period of time, the particular ship can reach it, use it and return from it without, in the a

38、bsence of some abnormal occurrence, being exposed to danger which cannot be avoided by good navigation and seamanship”. If the charterer sends the vessel to an unsafe port, and she is damaged as a result, he will have to indemnify the shipowner. But if the master has acted unreasonably, knowing of t

39、he danger in the port has proceeded to enter it, and damage result, the charterer will not be liable.,1.5.3 Case,The Sussex Oak was time chartered under the Baltime form and was ordered to proceed to Hamburg. On her passage up the Elbe ice was encountered, but the pilot considered it safe to proceed

40、. When the ship was nearing the approaches to Hamburg she was stopped by a large ice flow. The ship was then in a part of the river in which she could neither turn, go astern nor anchor in safety and on the advice of the pilot forced her way through the ice, sustaining damage in consequence. It was

41、found as a fact that the master acted properly in proceeding without ice breaker assistance and held that the charterers were liable for the damage on the ground that Hamburg was then an unsafe port. The charterer does not guarantee that the most direct route or any particular route to the port is s

42、afe, but the voyage he orders must be one which an ordinarily prudent and skilful master can find a way of making in safety.,1.5.4 Time requirement,Where the charter party requires the vessel to use safe ports only, the port, at the time when the order is given, must be prospectively safe for her to

43、 get to, stay at, so far as necessary, and in due course leave. But if some unexpected and abnormal event thereafter suddenly occurs which creates conditions of unsafety where conditions of safety had previously existed and as a result the ship is delayed, damaged or destroyed, the charterer is not

44、liable. Where the time charterer has performed his primary obligation by ordering the ship to a port which at the time of the order was prospectively safe, and while she is still proceeding to that port new circumstances arise which render the port unsafe, he is under a secondary obligation to cance

45、l his original order and order her to go to another port which at the time when the fresh order is given is prospectively safe. Where the vessel has entered the port and new circumstances arise which render the port unsafe, the charterer is under no secondary obligation to nominate another port, if

46、it is impossible for the vessel to avoid the danger by leaving the port. But if it is possible for her to avoid the danger by leaving the port, the charterer must order her to leave forthwith, whether or not she has completed loading and discharge and order her to go another safe port.,1.5.5 Case,Th

47、e Evia under a time charter party which required that the charterers to use safe ports only was ordered by them in March 1980 to load cargo in Cuba for discharge at Basrah. She arrived and berthed on 20 August and completed discharge on 22 September, on which day war broke out between Iran and Iraq.

48、 The ship was unable to leave because of the danger to navigation. The shipowners claimed damages from the charterers for breach of their safe port obligation. Held by the House of Lords that there would be judgment for the charterers, for Basrah was prospectively safe at the time of nomination, and

49、 the unsafety was due to an unexpected and abnormal event after her arrival. They were not under a secondary obligation to make a fresh nomination because such an order would have been ineffective.,2. The cargo,2.1 Cargo Exclusions Besides the trading limits, the most important restriction as regard

50、s the time charterers freedom to use and direct the ship is the restriction on cargoes to be carried in the vessel. The general description of cargo accepted for the vessel sometimes by itself excludes some cargoes.,2.2.1 NYPE form,The printed charter party forms usually also contain a specification

51、 of cargo that is not allowed. In NYPE 1993 this clause has the following wording: The vessel shall be employed in carrying lawful merchandise excluding any goods of a dangerous, injurious, flammable or corrosive nature unless carried in accordance with the requirements or recommendations of the com

52、petent authorities of the country of the vessels registry and of ports of shipment and discharge and of any intermediate countries or ports through whose waters the vessel must pass. Without prejudice to the generality of the foregoing, in addition the following are specifically excluded: livestock

53、of any description, arms, ammunition, explosives, nuclear and radioactive materials.,2.2.3 Lawful merchandise,Lawful merchandise may include military stores and munitions. But goods will not be lawful merchandise if their loading amounts to a breach of the local law nor if they cannot lawfully be di

54、scharged at the nominated discharged ports. Presumably they must also be lawful under the law of the ships flag and the proper law of the charter.,2.2.4 CMC,It is a breach of the contract for the charterers to ship goods excluded by the charter and the master may properly refuse an order to load suc

55、h cargo. According to the provision of article 135 of Chinas Maritime Code, the charterer shall guarantee that the ship shall be employed to carry the lawful merchandise agreed. Where the ship is employed by the charterer to carry live animals or dangerous goods, a prior consent of the shipowners is

56、 required. The charterer shall be liable for any loss of the shipowner resulting from the charterers violation of this article.,2.2.5 Other rules,The time charter parties often incorporates the United States Carriage of Goods by Sea Act or the Hague Rules.According to these rules relating to danger

57、cargo carried: First, it allows the shipowners to land, destroy or render innocuous inflammable, explosive or dangerous goods to the shipment of which they have not consented with knowledge of their nature. Secondly, the shippers (charterers) liable for all damages and expenses arising out of such s

58、hipment. Thirdly, it concerns shipment of such cargoes to which the shipowners have consented with knowledge of their nature but which become a danger to their ship or its cargo, and gives the shipowners the rights listed in the first.,2.2 Cargo liability,In time chartering, the charterers and shipo

59、wners can allocate the liability for cargo as they wish but as liability under a bill of lading is also often involved, the situation is sometimes complex from a legal standpoint. Cargo owners usually claim under the bill of lading and the first question is whether the shipowners, time charterers, or both, are liable to the cargo owners. The second question is how the liability should ultimately be allocated between the charterers and shipowners.,2.2.1 Transfer of responsibility to the charterers,In the absence of express provision, the obligatio