Charterparties

A shipowner will wish to ensure that it makes as much profit from its ship as it possibly can. One means of achieving this aim is to charter the ship either on a time charter or on a voyage charter. A demise charterparty is a time charterparty usually for a long term such as ten years and the ship is in the possession of the demise charterer who crews,

They are in a small minority of charters and this chapter will focus on the more usual time and voyage charterparties. In both these cases the ship remains in the possession of the owner who crews, maintains and insures the ship. However, there are very significant differences between time and voyage charterparties, most notably the manner in which the owner is paid. Under a time charterparty the ship is placed at the disposal of the time charterer for a period of time and the time charterer pays hire for every minute that it is so placed, unless the ship is off hire. Under a voyage charterparty the contract is for a voyage and the charterer pays freight and, if the time allowed at either the load or discharge port for the process of loading and discharging the cargo is exceeded, usually demurrage. This chapter will consider the role of shipbrokers. It will focus on charterparties between commercial parties. Such parties enjoy freedom of contract and can contract on such terms as they have the commercial muscle to obtain. The Hague,2 HagueVisby3 or Hamburg4 Rules, which impose minimum obligations that cannot be contracted out of, on carriers under bills of lading, do not apply mandatorily to charterparties. However, the parties may voluntarily provide for such conventions to apply to their charterparty. Whether they have done so will be considered so that the terms of the charterparty can be identified before the parties’ obligations are discussed. Standard form charterparties, both time and voyage, almost invariably contain express terms imposing obligations on the owner to make the ship seaworthy, to perform its contractual obligation with reasonable despatch and not to deviate from the contractual voyage. If there were to be no such express terms each of these obligations would be implied. These obligations will be considered together with the impact of any Rules which apply to the charterparty. The remedies that are available to the charterer for breach will be explored. The charterer’s obligations in relation to safe ports will be discussed, before considering the circumstances in which a charterparty can be frustrated. Issues specific to time charterparties will then be explored before turning to such issues in relation to voyage charterparties. Time charterparties are considered first as if there are both time and voyage charters in relation to the same ship, the time charter will usually have come into existence first. Finally the issue of liens both over cargo and sub-freights to enforce payment under the charterparty will be considered.