danger, those responsible for the ship allow her to be damaged, when they could have saved her, it would be contrary to reason if damages could be recovered . . . they would not be the result of the breach of contract, but of the deliberate and unnecessary act of those in control of the ship [at p 104].30

Not to ship dangerous goods

The obligation on the part of the charterer not to ship dangerous goods without disclosure is also implied by common law in bills of lading. The meaning of dangerous goods and the scope of the undertaking are examined in detail in Chapter 7.

Common law immunities

Common law implies a number of immunities that operate in favour of the shipowner in charterparties. The shipowner is not liable for loss or damage to cargo that is caused by:

(a)an act of God;

(b)an act of the Queen’s enemies; or

(c)inherent vice.

These immunities are also implied in bills of lading governed by common law. The scope of these immunities is examined in Chapter 7.

Usual express terms

A voyage charterparty usually contains a number of express terms. It is not possible to examine all the terms, since the wording of these terms varies from charterparty to charterparty. What is provided here is a list of terms likely to be found in most standard form charterparties.

The charterparty will contain a number of clauses, including introductory clauses identifying the vessel’s identity, its cargo capacity, the time from when performance of the charter is to start and cancellation clause.31 Where the vessel is in the port of loading, it would be easy to fix the start date precisely. Since, the vessel, in most cases, is unlikely to be at the port of loading, it is common practice to indicate where the vessel is on the date of the charter or when it can be expected to be ready to load. Express terms relating to the position of a ship on the date of the charter has important consequences. In Behn v Burness,32 the charter stated that the vessel was described as ‘now in the port of Amsterdam’. At the time of the charter, the vessel was 62 miles away and arrived at Amsterdam four days later. The charterer refused to load the cargo onto the ship. The clause was held to be a condition since charterers use the position of the ship on the date of the charter to calculate the time of the ship’s arrival at the port of loading and inaccurate statements in respect of position would undermine the foundation of the contract. Similarly, ‘expected ready to load’33 clauses, it

30See also The Kanchenjunga [1990] 1 Lloyd’s Rep 391.

31See, for instance, The Democritos [1976] 2 Lloyd’s Rep 149.

32(1863) 3 B&S 1; (1863) Ex Ch 751.

33These clauses should not be confused with notice of readiness (NOR). NOR (to load) by custom is given by the shipowner to the charterer, thus triggering the running of laytime (time agreed for loading/discharging of cargo). See The Mexico 1 [1990] 1 Lloyd’s Rep 507 on the effect of failure to give NOR on laytime. See also The Happy Day [2002] 2 Lloyd’s Rep 487 on notice of readiness to discharge.

seems, will be construed as conditions. For instance, in Maredelanto Compañia Naviera SA v Bergbau-Handel Gmbh (The Mihalis Angelos),34 the ship was chartered for a voyage from Haiphong to Hamburg or other European ports. The charter described the vessel as ‘now trading and expected ready to load under this charter about 1 July 1965’. On 17 July, the charterers repudiated their contract. There was evidence on the date of the charter (25 May 1965) that the owners could not have reasonably estimated the vessel to be at Haiphong on 1 July. The court held that the ‘expected ready to load’ was a condition and the repudiation effective. According to Megaw LJ:

[The owner] is undertaking that he honestly and on reasonable grounds believes at the time of the contract that the date named is the date when the vessel will be ready to load. Therefore, in order to establish a breach of that obligation, the charterer has the burden of showing that the owner’s contractually expressed expectation was not his honest expectation, or at least that the owner did not have reasonable grounds for it.

In my judgment, such a term in a charterparty ought to be regarded as being a condition of the contract . . . that is, that when it has been broken, the other party can, if he wishes, by intimation to the party in breach, elect to be released from performance of his further obligations under the contract; and he can validly do so without having to establish that on the facts of the particular case the breach has produced serious consequences which can be treated as ‘going to the root of the contract’ . . . [at p 204].

Clauses on specific cargo or cargoes and the quantity to be carried, agreed rate of freight and time allowed for loading and unloading of the cargo (called laydays) are also found in the charter. Where the charterer does not load the cargo specified, he is in breach of the charterparty. In these circumstnaces, the shipowner can repudiate the contract. As to whether the shipowner exercises this right, or agrees to load cargo of another type, is dependent on the circumstances. Where the market conditions do not favour shipping interests – that is, in lean times – the shipowner may decide to waive the breach and agree to carry other cargo provided by the charterer. As stated earlier, freight charges are calculated on the kind of cargo carried. Change in cargo will mean change in freight rates, and the charterer will be required to pay the market rate of freight for that cargo.35 Where the charterer does not provide the amount of cargo agreed, he will be required to pay damages for the amount of freight lost (also known as dead freight).

The charterparty, as stated earlier, usually specifies the laydays/laytime36 – that is, a period of time agreed for the purposes of loading or discharging of cargo from the ship. In the absence of a term on laydays in the charterparty, it will be implied that the operations of loading and discharge are carried out within a reasonable time, taking into account the circumstances of the case, such as facilities available at the port, the custom of the port, and so on.37 Where the charterer is unable to load/discharge cargo within the days agreed in the charterparty, the charterer is in breach of the contract and will be liable to the shipowner in damages for detaining the vessel to complete loading/discharging. It is, therefore, common practice to insert a demurrage clause in the charter, a clause that fixes the amount of damages payable for exceeding the laydays.38 The courts will normally respect the sum stipulated in the demurrage clause, unless it is so high as to be unconscionable in keeping with the general approach in English law to liquidated damages and penalties.39

34[1971] 1 QB 164.

35Steven v Bromley [1919] 2 KB 722.

36See cl 6 of GENCON 1994, 1976.

37Van Liewen v Hollis [1920] AC 239.

38See cl 7 of GENCON 1994, 1976.

39Dunlop Pneumatic Tyre Co Ltd v New Garage and Motor Co Ltd [1915] AC 79, at p 86ff.

Demurrage runs continuously. It will accrue, despite strikes, bad weather, and so on, unless the demurrage clause is worded to take account of these events.40 There may be exceptions in the charter in relation to laytime provisions, but these will not be effective in respect of demurrage, unless they are suitably worded.

It is possible that a charterer completes the loading/discharging operation before the expiry of the laydays. Where this is the case, the charterer cannot detain the ship on the basis that the laydays have not been exhausted – the reason being that laydays are for the sole purpose of loading/ discharging operations. So, after completion of loading and within the laytime, where the charterer detains the vessel for the purposes of documentation, he will be liable for detention.41

Other than the previously stated terms, the charterparty may contain terms about seaworthiness of the ship and deviation, which may displace the common law implied obligations where clearly worded.42 For instance, cl 3 of GENCON 1994 provides, in respect of deviation, that ‘the vessel has liberty to call at any port or ports in any order, for the purpose to sail without, to tow and/ or assist vessels in all situations, and also to deviate for the purpose of saving life and/or property’. In respect of seaworthiness, for example, cl 1(a) of TANKERVOY 87 states that ‘the owners shall before and at the beginning of the loaded voyage exercise due diligence to make the vessel seaworthy and in every way fit for the voyage, with her tanks, valves, pumps and pipelines tight, staunch, strong and in good order and condition with a full and efficient complement of master, officers and crew for a vessel of her type, tonnage and flag’.

Clauses exempting the carrier from liability for loss or damage to goods due to events, such as the negligence of the master of crew, storms, strikes, wars and ice, are also commonly found in charterparties.43 Some of the express exemption clauses frequently found in charterparties are also found in bills of lading and are, therefore, examined in Chapter 7.

Jurisdiction, arbitration and applicable law clauses44 are also not uncommon. Where the standard form does not provide for these, it may well be in the parties’ interests to come to an agreement on choice of law and choice of jurisdiction to avoid nasty surprises in the course of resolving disputes. Interestingly, many charterparties choose England as the venue, and English law as the applicable law – perhaps because of England’s historical past in shipping and commerce.

As stated earlier, in a voyage charter, the master may be asked to issue bills of lading by the charterer. Bills of lading issued under charterparties frequently incorporate terms contained in the charterparty. The extent to which these terms bind the bill of lading holder (who is not the charterer as in the case of a buyer in a CIF contract) are examined in Chapter 6.

Conclusion

As stated in the introduction to this chapter, even where goods are transported under a voyage charter, it is commonplace for the charterer to obtain bills of lading from the master, regardless whether or not the sale is on CIF terms. The bill of lading’s pivotal role in international commerce is due to characteristics peculiar to it. Chapters 6, 7, 8 and 9, therefore, concentrate on the characteristics of a bill of lading, common law as it affects bills of lading and the international conventions that determine the responsibilities and liabilities arising under a bill of lading.

40The John Michalos [1987] 2 Lloyd’s Rep 18; The Nordic Navigator [1984] 2 Lloyd’s Rep 182.

41Nolisement (Owners) v Bunge y Born [1971] 1 KB 160.

42See Chapter 7, pp 198–202.

43See, for example, cll 2, 16, 17 and 18 of GENCON 1994; cl 26 of TANKERVOY 87.

44See Chapters 16 and 17 on jurisdiction and applicable law issues and Chapter 19 for arbitration.

Further reading

Baker, ‘The safe port obligation and employment and indemnity clauses’ [1988] LMCLQ 43. Baker and David, ‘The politically unsafe port’ [1986] LMCLQ 112.

Baughen, Shipping Law, 5th edn, 2012, Routledge.Cavendish Publishing.

Boyd, Burrows, and Foxton (eds), Scrutton on Charterparties and Bills of Lading, 20th edn, 1996, Sweet & Maxwell.

Colinvaux et al, Carver’s Carriage by Sea, 2 vols, 13th edn, 1982, Stevens. Cooke et al, Voyage Charters, 3rd edn, 2007, LLP.

Davenport, ‘Unsafe ports, again’ [1993] LMCLQ 150. Girvin, Carriage of Goods by Sea, 2011, OUP.

Herman, and Goldman, ‘The master’s negligence and charterer’s warranty of safe port/berth’ [1983] LMCLQ 615.

Hibbits, ‘The impact of the Iran-Iraq cases on the law of frustration of charterparties’ [1985] JMLC 441.

Powles, ‘Sea ports and voyage charterparties’ [1987] JBL 491. Reynolds, ‘The concept of safe ports’ [1974] LMCLQ 179. Tetley, Marine Cargo Claims, 4th edn, 2008, Blais.

United Nations Conference on Trade and Development, Charterparties: A Comparative Analysis (Report by UNCTAD Secretariat), TD/B/C4/ISL/55, 27 June 1990.

Wilson, Carriage of Goods by Sea, 7th edn, 2010, Pearson Education.Longman.