www.charterama.

com Claims Service Letter 8 April 2013

The charterers liability specialists
As applies to a valid NOR, a vessel can
be delivered validly when the following
requirements have been met:
The vessel must be delivered in time.
The vessel must have arrived at the right
place as specifed in the C/P.
The vessel must be in a state and
condition as required under the C/P.
There might be other specifc
requirements in the C/P which have
to be met.
The vessel must be delivered in time
Usually the C/P incorporates a cancelling
date before which the vessel has to be
delivered into the C/P. If owners fail to
do so, this will provide charterers with an
option to cancel the C/P.
Cancelling clauses will be discussed in the
following service-letter.
There will also be another date entered in
the C/P before which charterers do not
have to accept that the C/P period will
commence. Together with the cancelling
date this time-window is known as
vessels laycan.
Often the C/P requires from the owners
to give advance notices. Such notices
should be given honestly and on reasonable
grounds failing which charterers may be
entitled to claim damages.
The vessel must have arrived at
the right place
Charterers do not have to accept delivery of
the vessel if she has not arrived at the place
agreed in the C/P.
The place of delivery could be a specifed
berth, port or pilot station or a specifed
place at sea (f.e. on passing Gibraltar).
Where the vessel has to arrive at a specifed
port or berth, the same principles apply as
are determining for tendering a valid NOR
(see previous service-letters 2, 3 and 5).
Any options given to the charterer as to the
place of delivery should be exercised timely
(to enable the owners to deliver their vessel
in accordance with the C/P). Otherwise
this may be taken as a waiver of charterers
right. The vessel will then be delivered
validly at each optional place under the C/P.
Specifc requirements
Under a NYPE 1946 CP the owners have
to tender a NOR before the charterers have
to accept delivery of the vessel. Clause 5
of the C/P provides for a notice-period
after which time starts to count which time
coincides with the time of delivery, unless
charterers exercise their express option to
make use of the vessel earlier in which case
this moment is considered as the time of
delivery.
The NYPE 1993 and Baltime forms state
that hire is payable from the time of delivery
without making reference to a NOR and a
notice period.
There could be more specifc requirements
varying from C/P to C/P and are for
example dependent on the type of vessel or
trade, but it would go too far to discuss this
here at length.
The vessel must be in a state and
condition as required under the C/P
The NYPE 1946 C/P states (line 21-22):
Vessel on her delivery to be ready to receive
cargo with clean-swept holds and tight,
staunch, strong and in every way ftted for
the service....
Other C/P forms will invariably contain a
wording of the same tenor:
The Baltime form states (clause 1) : ...
The vessel being in every way ftted for the
ordinary cargo service.
The NYPE 1993 form states (clause2):
The vessel on her delivery shall be ready
to receive cargo with clean swept holds...
and in very way ftted for ordinary cargo
service...
Owners will have to meet these requirements
at the time of delivery. If these requirements
have not been met, delivery can be rejected.
Charterers will have an option to cancel the
C/P in accordance with the cancelling clause
if these requirements have not been met
before the cancelling-date.
If delivery has been accepted but it appears
that the vessel is not in the required
condition, usually owners may be liable for
damages as a consequence of their breach.
If the defciencies are serious enough
to frustrate the performance of the C/P,
charterers may become in a position the
cancel the C/P and claim damages because
of a repudiatory breach.
In every way ftted for the service means
that the vessel has to be suitable for services
required from her under the C/P. This
has to be judged reasonably which in the
The Baltime C/P and the NYPE 1993
C/P fnds expression by adding ordinary
cargo to service.
Fitted includes an absolute obligation
that the vessel must be seaworthy.
So the test of seaworthiness applies to the
contractual voyage (s).
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.
Time Charters,
delivery of the vessel
page 1, October 2012
In case the Hague Rules are incorporated,
for example by virtue of a Clause
Paramount this absolute obligation will
be qualifed by article 3 (1) stating that
the carrier shall be bound before and at
the beginning of the voyage to exercise due
diligence to make the vessel seaworthy.....
In a Time Charter it is thought that before
and at the beginning of the voyage should
mean on delivery.
However together with other provisions
in the C/P (for example a continuing
obligation to maintain the vessel), the duty
to exercise due diligence to make the vessel
seaworthy before and at the beginning of
the voyage may apply to each voyage under
a C/P. This is still not entirely clear.
In practice the incorporation of the Hague
Rules means that owners may now be
excused from latent defects which could
not have been discovered by the exercise of
due diligence, of which the burden of proof
will be on owners.
(It is the rule that the burden of proof is
on charterers to show that the vessel was
unseaworthy before and at the beginning of
the voyage. If this has been established the
burden of proof is on owners to show that
due diligence has been exercised to make
the vessel seaworthy.)
Proving that due diligence has been
exercised may sound relatively easy,
but it is a heavy burden which has to be
discharged. In this respect this duty cannot
be delegated. Owners will also have to
show that their servants (f.e. a repair-shop)
exercised due diligence as well.
The effect of a Clause Paramount will no
doubt be discussed more detailed in a
following service-letter.
Other requirements concerning the state
and condition of the vessel on delivery:
Ready to receive cargo is a requirement
similar to the one which has to met before a
valid NOR can be tendered. This has been
discussed in our previous service-letter.
Other specifc requirements which
are commonly used, such as properly
equipped and properly manned, can
be brought under the general provision:
ftted for the ordinary cargo service.
So fulflling these requirements are
precedent to charterers duty to accept
delivery.
In contrast with this are requirements
which are not clearly linked with the
requirements discussed here above.
To illustrate this, a Time C/P will specify
with how much bunkers on board the vessel
will be delivered. If she has less or more
bunkers on board, charterers will not be
entitled to refuse delivery unless this makes
the vessel unft for the service required from
her or unless the C/P clearly states that a
failure in this respect entitles the charterers
to reject delivery of the vessel.
Otherwise charterers may be left with a
claim for damages.
On-hire surveys
Charterers may wish to perform a
delivery-survey or on-hire survey, jointly
with a representative of the owners, to
ascertain the condition of the vessel and
the quantity of bunkers on board.
The NYPE 1993 contains a specifc clause
(clause 3) dealing with this issue.
Usually a joint bunker-survey is helpful
to charterers and owners in order to avoid
disputes about the quantity of bunkers
which charterers take over from the owners.
However charterers should weigh carefully
whether they wish to perform a full
condition survey of the vessel jointly with
the owners.
It could be that delivery has already been
accepted and that charterers are not
interested to investigate the full condition
of the vessel for the purpose of acceptance
or not . This may be dependent on the
type of vessel or charter, for example if it
concerns a trip T/C or a long-term T/C. It
could also be suffcient for charterers to
have a good impression of vessels ftness
and engage a surveyor for this purpose.
So whether charterers should perform a
condition survey will much depend on the
circumstances but often charterers may
decide not to spend money and time on it.
Although somewhat beyond the scope of
this subject, a noteworthy disadvantage of
a full condition survey, whereby owners
and charterers will jointly survey and record
each and every irregularity, is the following:
At the end of the charter on redelivery
another full condition survey will be
performed. Both surveys will be compared
to each other and charterers will be kept
responsible for all discrepancies, including
small defciencies which could easily have
been overlooked during the full condition
survey on delivery.
Secondly, in combination with f.e. clause
4 of the NYPE 1946 form, stating that
the vessel shall be redelivered in like good
order and condition, ordinary wear and
tear excepted, charterers could be made
responsible for damages to the vessel which
would, but for this clause, not have been
their responsibility at all. (Other C/P forms
contain similar provisions)
Although it is thought that this clause must
mean that charterers have to make good
damages which are caused in consequence
of owners compliance with charterers
orders, together with a full condition survey
on delivery and redelivery charterers may
face claims which would otherwise not have
arisen.
So it could be preferable to survey damages
only when they have been sustained
and which are within charterers control
or for which charterers have been kept
responsible.


page 2, October 2012
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.