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notecheck32.png The Court of Appeal considered off-hire claim under amended NYPE, Cl.49. Capture, Seizure, Arrest.

The "Global Santosh" was was mistakenly arrested together with her cargo by the cargo seller in West Africa’s port to secure a claim for demurrage against the buyer. Charterers withheld hire under clause 49.Capture, Seizure, Arrest of the charterparty in respect of the period for which the vessel was under arrest, i.e., 14.00 hours on the 18th December 2008 and 07.03 hours on the 15th January, 2009. The owners argued that an act by a delegate of charterers (the cargo receiver) causally linked to the capture, seizure, detention or arrest of the vessel.
NYK Bulkship (Atlantic) N.V. v Cargill International S.A. [2014] EWCA Civ 403.


notecheck32.png Can single bill of lading be subject to two different package limitation figures?

During sea passage part of claimants’ cargo was damaged. The Hague-Visby Rules were applicable as a matter of statute law but Paramount clause in Bills of Lading was referring to the Hague-Visby Rules.
The owners accepted and paid damages as limited by The Hague-Visby Rules, but the claimants contended that they are entitled to choose the higher figure within single bill of lading between two different package limitation figures.


Read this article in full: Yemgas Fzco & Ors v Superior Pescadores S.A. Panama [2014] EWHC 971 (Comm) (02 April 2014)


notecheck32.png Required inevitability of anticipatory breach.

In Geden Operations Ltd v Dry Bulk Handy Holdings Inc (The Bulk Uruguay) [2014] EWHC 885 (Comm) (28 March 2014) the High Court rejected the time charterers’ argument that there is a principle of law whereby a party who has made his performance dependent on a discretion to be exercised by a third party is ipso facto deemed to be evincing an intention not to perform. Anything short of inevitability would be insufficient for treating both renunciation and self induced impossibility as entitling the innocent party to treat the contract as at an end.

Read this article in full: Geden Operations Ltd v Dry Bulk Handy Holdings Inc (The Bulk Uruguay) [2014] EWHC 885 (Comm)


notecheck32.png Does In-Transit Loss (ITL) clause cover cargo stolen by pirates?

In Trafigura Beheer BV v Navigazione Montanari Spa [2014] EWHC 129 (Comm) (30 January 2014) the vessel while waiting for discharge orders off Cotonou was hijacked by pirates. Pirates arranged for an STS transfer of approximately 5,300.00 mts of cargo to unknown vessel. As a result of STS transfer this transferred or stolen cargo was never delivered to the consignees. Vessel was released by pirates next day. Charterers claimed value of cargo stolen by the pirates under In-transit loss clause.

Read this article in full: Trafigura Beheer BV v Navigazione Montanari Spa [2014] EWHC 129 (Comm)

notecheck32.png Is the seller to pay fees in full even if they exceed the price?

In Omv Supply And Trading AG v Kazmunaygaz Trading AG (Rev 1) [2014] EWCA Civ 75 (06 February 2014) the Court of Appeal rejected byer’s submission that clause 6 makes clear that the seller is to pay the fees whatever they may be even if they exceed the price. If the parties had intended that to be so they would need to have used clear language to that effect. Instead they provided for a deduction of fees from the price, no doubt contemplating that the fees would always be less.

Read this article in full: Trafigura Beheer BV v Navigazione Montanari Spa [2014] EWHC 129 (Comm)


notecheck32.png The contract price/market price differential is not a computation of lost profit.

In Glencore Energy UK Ltd v Cirrus Oil Services Ltd [2014] EWHC 87 (Comm) (24 January 2014) the judge held that "firm offer" email was intended to be capable of acceptance with a binding contract thereby concluded and moreover stated that the contract price/market price differential is not a computation of lost profit. Lost profit is the difference between the total net cost to the seller of acquiring the goods and bringing them to market on the one hand and the net sale price that would have been achieved on the other …

Read this article in full: Glencore Energy UK Ltd v Cirrus Oil Services Ltd [2014] EWHC 87 (Comm)


notecheck32.png The Court of Appeal clarifies application of cl.15 of NYPE form The Athena [2013] EWCA Civ 1723.

The key to a proper understanding of the off-hire clause is in my view that it is triggered by a cause preventing the full working of the vessel. It is axiomatic that the full working of the vessel refers to her ability to do that which she is immediately required to do.… The service immediately required of The Athena whilst drifting in international waters was to proceed to the roads at Benghazi. It is nothing to the point in computing the time lost by reason of the Master’s default that a similar length of time, … might have been lost had there been brought forward the moment at which the service immediately required of the vessel became not the sea passage but rather berthing and discharge.


notecheck32.png Is the $300M Tanker Vetting Industry Out of Control?

The vetting inspections of tankers by oil companies are proliferating in frequency, rising steadily in cost and, at an estimated $300m a year, are well on the way to running out of control. The Ship Inspection Report (SIRE) programme developed by the Oil Companies International Marine Forum (OCIMF) intended that tanker inspection reports should be shared by all OCIMF members. They are not. The cost of inspections should be shared by both parties. They are not. And to make matters worse, ship operators often have to pay the costs of luxury travel for inspectors.

Read this article in full here or here.

News Archive @ 2013

notecheck32.png The Court of Appeal dismissed charterers’ appeal in ED & F Man Sugar Ltd v Unicargo Transportgesellschaft GmbH [2013] EWCA Civ 1449.

Lord Justice Tomlinson giving the only reasoned judgment, underlined that the arbitrators’ findings, based on the evidence provided by the charterers, led them to right conclusion that there was no mechanical breakdown of the conveyor. The Court of Appeal also agreed with the judge that The Afrapearl (Portolana Compania Naviera Ltd v Vitol SA Inc [2004] EWCA Civ 864) and Olbena SA v Psara Maritime Inc, The Thanassis A unreported, 22 March 1982, cases should be distinguished as concerned simply with "breakdown of machinery or equipment",
ED & F Man Sugar Ltd v Unicargo Transportgesellschaft GmbH [2012] EWHC 2879 (Comm).


notecheck32.png Collision of mega-vessels in the Malacca Strait on 29 December 2013..

On Dec 29, 2013, Liberian-Flagged 349 metres long container vessel "Hanjin Italy" collided with 314 metres long LNG tanker "Al Gharrafa" early Monday in the Malacca Strait, off Singapore. "Al Gharaffa", which had sailed from Ras Laffan Port on Dec 19 to Tokyo Electric Power Co’s Futtsu LNG terminal in Japan, hit starboard side of container carrier. "Hanjin Italy" sustained relatively slight damage to her midship shell plating just beneath main deck. "Al Gharaffa" appears to have suffered more serious damage to her bow.
Read this article in full: Collision of mega-vessels in the Malacca Strait, 29 Dec 2013.


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31 March 2014. Added Meaning of Safe Port: Safety System of the Port

While usually predictable, adverse meteorological conditions nevertheless can deeply affect safety of any given port. Therefore in many ports a system of protection against bad weather conditions has been developed. A port which is only safe in fair weather is not safe, as Donaldson J said in Vardinoyannis v The Egyptian General Petroleum Corp. (The Evaggelos Th) [1971] 2 Lloyd’s Rep 200 at p.206.

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30 March 2014. Geden Operations Ltd v Dry Bulk Handy Holdings Inc (The Bulk Uruguay) [2014] EWHC 885 (Comm)

Shipping – Timecharter – NYPE – Amended BIMCO Piracy Clause – GOA OK vessel – Anticipatory breach – Whether there is some principle of law whereby a party who has made his performance dependent on a discretion to be exercised by a third party is ipso facto deemed to be evincing an intention not to perform – Required inevitability of breach.

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30 March 2014. Amended Dangerous Goods.

It was, however, disputed for many years whether absence of knowledge or means of knowledge on the part of the shippers is a good defence against the owners’ claim. This issue was specifically addressed by Lord Lloyd of Berwick in Effort Shipping Co Ltd v Linden Management SA (The Giannis NK) [1998] 1 All ER 495 when he hold at p.506 that:

…the liability of a shipper for shipping dangerous goods at common law, when it arises, does not depend on his knowledge or means of knowledge that the goods are dangerous.
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26 March 2014. Amended Meaning of Safe Port: Physically safe.

Physical safety of the port refers to the dangers which the vessel may encounter when she enters and leaving port, such as wrecks, and other hidden dangers, narrow channels, shifting mud banks, ice etc.

Beginning from the last quarter of the nineteenth century rapid development of propulsion systems stimulated, in its turn, significant growth in size of the ships. Obviously, a bigger vessel was able to carry more goods and also draw more water but apart from draft limitations, such a vessel required larger sea room for anchoring and safe manoeuvring within port limits, tug assistance in narrow channels, experienced pilot and master to handle it inside the harbour. It therefore became necessary to consider individual particulars of each vessel to ascertain safety of port in question.

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26 March 2014. Amended Meaning of Safe Port: Legal consequences of inaccessibility of port.

In cases when impediment made the port inaccessible for uncertain period of time the courts were involved in proceeding on an erroneous estimate of the facts and probabilities to apportion liabilities for resulting delays, or in other words, it was necessary to decide whether what had in fact been done was a commercially reasonable way to act to avoid an absurd result. This concept naturally involves consideration on the matter of degree, i.e. whether anticipated delay would have been inordinate.

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26 March 2014. Amended Meaning of Safe Port: Effect of threats of war, aggression or terrorism.

If not the ship itself but only the goods would be subjected to confiscation such nominated port will also be unsafe and the master’s duty to take care of the cargo will justify him, apart from any express provisions in the bill of lading or charterparty, in landing the goods at another safe place. The case of Nobel’s Explosives Co. v Jenkins [1896] 2 Q. B. 326 shows that only threat (albeit well founded) of seizure is sufficient for the port to be considered as unsafe, Mathew J formulated his opinion in the following words:

I am satisfied that if the master had continued the voyage with the goods on board he would have been acting recklessly. It was argued for the plaintiffs that the clause did not apply unless there was a direct and specific action upon the goods by sovereign authority. It was said that the fear of seizure, however well founded, was not a restraint, and that something in the nature of a seizure was necessary. But this argument is disposed of by the cases of Geipel v Smith (1872) L.R. 7 Q.B. 404, L. R. 7 Q. B. 404, and Rodoconachi v Elliott, (1874) L. R. 9 C. P. 518. The goods were as effectually stopped at Hong Kong as if there had been an express order from the Chinese government that contraband of war should be landed. The analogy of a restraint by a blockade or embargo seems to me sufficiently close.
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19 March 2014. Amended Safe Port. As near thereto as she can safely get.

Have a look at amended sub-chapters: Geographical limits; Politically unsafe; Dahl v Nelson.

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18 March 2014. Amended Safe Port warranty: Nugatory nomination.

For a long time safe port implication was considered to necessary follow from the charterers’ duty to order vessel to go to the port to which she could proceed. Nomination of impossible port is a nugatory nomination which could not possibly be acted upon. On the other hand it is said that no decision had yet gone so far in a voyage charterparty case and any suggested implied term has to be considered against the general business background to the transaction and the express terms of the charter.

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18 March 2014. Amended Safe Port Warranty: Implied safe port warranty.

The main difficulty with implication of safe warranty comes from the considerations that the omission of an express warranty may well have been deliberate or such an implied term is not necessary for the business efficacy of the charter or because such an implied term would at best lie uneasily beside the express terms of the charter.

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18 March 2014. Amended Safe Port Warranty: Named port or ports.

When the charterparty provides for a named port/berth or for two or more out of a number of named ports or berths nominated for the owners’ vessel to go, but silent as to safety, it is doubtful whether the charterer will be under any obligation as to the safety at all.

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17 March 2014. Amended Safe Port warranty. Unnamed port or ports.

Second part of celebrated statement of Dixon CJ in Australian Wheat Board v Reardon Smith Line Ltd [1954] HCA 27 is understood as possibly meaning that where the charterer cannot specify the place at the time of the charter a warranty would be implied that the nominated port or ports was or were safe. Due to lack of direct authority this question is yet to be finally decided.

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17 March 2014. Added Safe Port. Express warranty - Case law overview.

Analysis of English and American case law on express safe port warranty in charterparties: St Vincent Shipping Co Ltd v Bock, Godeffroy & Co (The Helen Miller) [1980] 2 Lloyd’s Rep 95; Atkins International HA v Islamic Republic of Iran Shipping Lines (The APJ Priti) [1987] 2 Lloyd’s Rep 37; Ullises Shipping Corporation v Fal Shipping Co Ltd (The Greek Fighter) [2006] EWHC 172 (Comm); AIC v Marine Pilot Ltd (The Archimidis) [2008] EWCA Civ 175; The Ahos I [2013] US11-2576.

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17 February 2014. Added Omv Supply And Trading AG v Kazmunaygaz Trading AG (Rev 1) [2014] EWCA Civ 75

Sale contracts – All fees … and penalties incurred by non EU origin, in force at the time of cargo customs clearance – Whether the seller is to pay the fees whatever they may be even if they exceed the price.

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17 February 2014. Revised: Ignorant and Illiterate

One of the main rights of the seamen was and is their right to be paid at the time when their contract comes to an end. As far as English law goes this right was guaranteed by the lien over the vessel on which seaman has served and goes back over 400 years in English Admiralty Court. The right for wages based on the contract of employment was not always easy to enforce due to the "extreme disparity" between seamen and the shipowners …

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16 February 2014. COLREGS Rule 19. The tragedy of Sun Cross

In recent collision case M.V. Sun Cross v M.V.Rickmers Genoa [2010] EWHC 1949 (Admlty) the Court was to consider the question of liability arising out of a collision which took place in the early hours of 8 March 2005 in the Yellow Sea between the vessels SUN CROSS and RICKMERS GENOA. Behind this formal words related to claim of the cargo owners we must not forget that this collision brought with it much more valuable damage which cannot be remedied at all: lives of all but two of the crew of Sun Cross. Enormous human loss and many similar contributing factors put this tragedy in one line with Mineral Dampier disaster. In aftermath of collision, 13 crewmembers of SUN CROSS went missing; water flooded one of the RICKMERS GENOA’s cargo holds contained 600 tons of a granulated, magnesium-based desulphurization reagent. About four hours later, the RICKMERS GENOA suffered an explosion and fire in that hold. The chief officer died in the explosion and the ship itself sustained serious damage.

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16 February 2014. COLREGS Rule 17.

… deck officers usually ignorant about distinction between sections (a)(ii) and (b), i.e. instances when stand-on vessel first ‘may’ and later ‘shall’ take avoidance action, and have little idea about objective assessment of distances between vessels at both stages. Distinction is important because it imposes different degree of duty on stand-on vessel and accordingly the law treats differently violation of ‘may’ and ‘shall’ obligations which is finally reflected in apportionment of collision claims.

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16 February 2014. Use of VHF in collision avoidance.

… establishing of VHF contact and reaching of passing agreement does not bring as such any benefits for the purpose of collision avoidance when COLREGS and rules of good seamanship are forgotten or not followed.

… the persistent and unsuccessful attempts to make contact whilst in the meantime making no alteration of course and speed is strongly suggestive of a reliance on VHF contact as the method of first resort in collision avoidance.

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06 February 2014. Added - In-Transit Loss (ITL) Clause.

… clause connotes loss that is incidental to the carriage of oil products, and does not extend to losses such as those that occurred because of the action of the pirates.…

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06 February 2014. Amended Freight; Cargo Retention Clause.

Complexity of ascertainment of short delivery after a normal voyage was acknowledged by Kerr LJ in The Olympic Brilliance [1982] 2 Lloyd’s Rep 205, at p.209 as notoriously difficult in the bulk carriage of oil …

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01 February 2014. Amended Time charters - Withdrawal as equivalent to cancellation.

Withdrawal is irrevocable and therefore operates only in one way: in way of cancellation of charterparty. There cannot be a partial withdrawal of the owners’ vessel and neither any temporarily suspension of the timecharter can take place unless such right is expressly granted to them by the contract …

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01 February 2014. Amended Time charters - Time is of essence of withdrawal provision.

For late payment of hire to be of repudiatory character it would be necessary to find that they evinced clearly by it an intention not to be bound by the terms of the contract. However in several later decisions of the House of Lords unequivocal statements of Lord Diplock suggest that timely payment of hire is of the essence and therefore a condition of the contract of affreightment …

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01 February 2014. Amended Time charters - Suspension of hire and suspension of service.

In Tradax Export SA v Dorada Compania Naviera SA of Panama (The Lutetian) [1982] 2 Lloyd’s Rep. 140, Bingham, J. held that the language of cl 15 of NYPE 46 form, which said that when time was lost from the listed causes "the payment of hire shall cease", accords with the charterers’ construction that the parties intended the owners to be secured by payment in advance in respect of hire which he would or might earn but not in respect of hire which he could never earn. Accordingly, no hire was payable on the due date if the ship was off-hire at that time. …

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29 January 2014. Amended Time charters - Withdrawal for underpayment.

The charterers have a right to deduct from the hire on the basis of equitable set off. But for such the deductions to be permissible it is essential that the estimates of the amounts of each of them were reasonable. To satisfy this test the deductions should be calculated on a reasonable basis in good faith and with detailed justifications. …

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29 January 2014. Amended Time charters. Withdrawal.

The the common law generally gives to the innocent party only remedies in damages for breach of contract, unless said breach is of repudiatory character. Accordingly, the common law does not treat the late payment of hire by the charterers as a breach of sufficient gravity to give the owners a right to rescind the contract, unless the conduct of the charterers show unwillingness or inability to pay or delay in payment amounts to repudiation of the charter. …

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27 January 2014. Glencore Energy UK Ltd v Cirrus Oil Services Ltd [2014] EWHC 87 (Comm) (24 January 2014)

Sale contracts – Binding contract – Identity of purchaser – Repudiation – Measure of damages– Sale of Goods Act 1979 sec 50 (2)(3)

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26 January 2014. ISM and Safety Culture.

So that is about ISM, at least in its modern status - of worship of words. I call it 'paper safety' (an non-existent reality), a bureaucratic set of rules, instructions and checklists which on the basis of foolproof presumption, covers every new accident with new checklist and circular, thus providing shipping managers with sufficient evidence against anticipated insurance claims.

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26 January 2014. Lifeboats Safety.

See shocking video on reckless way of conducting rescue boat drill underway!

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22 January 2014. Tanker Vetting F.A.Q.Are checklists for pre-arrival, pre-departure and pilot card effectively completed?

One will agree that observations which may occur here are quite obvious: some of checklists were found not properly completed, some items not ticked, UKC calculation not correct, signature missing, etc. But what if all requirements for checklists and master-pilot exchange fulfilled but inspector nevertheless made an observation?

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20 January 2014. Tanker Vetting F.A.Q. Conduct of inspection.

As it often happens, inspector during the course of inspection makes passing observations and remarks in his pocketbook without much discussion on site as VIQ requires and without clear identification of his future observation. Then during final part of his inspection inspector announces that he …

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20 January 2014. Master’s Blog. …Trust reposed in him

The authority of the master is so very great, and the trust reposed in him, including not merely the ship and goods of his employers, but he lives of the crew and passengers, so very extensive, that it is the bounden duty of the public to provide that it be not committed to ignorant or incapable hands.

COLREGS 72;
Letters of Protest;
Tanker Vetting. FAQ;
Safety at Sea and more …

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20 January 2014. Time Charters. Major approval clauses

Historically major’s approval was to the bigger extend based on the results of their physical inspection, which since the beginning of vetting process at the end of the last century, provided oil majors with first-hand information about tanker’s condition and her suitability for chartering purposes. Inspection report with the list of observations was a hard copy explanation of either rejection or duly communicated approval and a To-Do list for the owners and ship’s command.

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20 January 2014. Time Charters. Oil Major Approval - Effective cause of major’s rejection

Negative vetting decisions are normally communicated to the party proposing the business without reasons and without the vetting company separately informing the operator. Thus a vessel operator will usually not know why the vessel has not been accepted. Analysis: Dolphin Tanker Srl v Westport Petroleum Inc (The Savina Caylyn) [2010] EWHC 2617 (Comm)

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11 January 2014. Galaxy Energy International Ltd v Murco Petroleum Ltd [2013] EWHC 3720 (Comm)

Sale Contracts – Laytime – Delay in loading – Whether buyers agreed on extension of period of delivery – Market price.

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11 January 2014. ED & F Man Sugar Ltd v Unicargo Transportgesellschaft GmbH [2013] EWCA Civ 1449

Shipping – Voyage charter – Sugar Charter Party 1999 - The fire had destroyed the conveyor-belt system linking at the loading terminal – Vessel incurred substantial demurrage in loading port – Force-majeure clause (cl 28) – Whether the charterers have demonstrated that the delay in loading the vessel at Paranagua was caused by mechanical breakdown – Whether delay in loading caused by and/or in consequence of a fire which destroys mechanical loading equipment (and/or a port authority’s re-scheduling of loading following such destruction) counts as laytime under the Charterparty and whether the fact that loading thereunder at "1-2 safe berths" is lawfully relevant to the operation of Clause 28 of Charterparty.

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  • Bill of Lading

    Bills of lading have been known from at least the thirteenth century. At those times shippers (usually the owners of the goods) as a rule accompanied their cargoes on the voyage to destination and bill of lading served only as an invoice of the goods shipped.
    Later, in the sixteenth and the seventeenth centuries, when larger ships has begun to carry varied cargoes belonging to several shippers, this practice gradually came to naught and it became the custom to incorporate the terms of the contract of carriage into bill of lading. Finally to meet requirements of businessmen who wished to sell the goods before the vessel reached its destination bill of lading extended its status to a document of title.

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  • Laycan

    The term "laycan" is habitually used in the negotiation of charterparties, to refer to the earliest date at which the laydays can commence and the date after which the charter can be cancelled if the vessel has not by then arrived.

    As indicated in the name itself, ‘laycan’ is an agreed time range at the end of which comes the date when the charterers are entitled to exercise their option and cancel the charterparty for non-arrival of the owners’ vessel. The charterers can, but are not obliged to exercise cancellation option. It is not unusual for the parties to come to solution and extend laycan for a day or so, considering market condition and availability of substitute tonnage in the area.

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  • Off-hire

    When the owners let their vessel to the time charterers in consideration of the payment of hire the later entitled to the use of the vessel during contracted period of time. Express provision for punctual advanced payment of hire usually followed by relevant withdrawal wording in time charterparty. Thus, being under strict obligation to pay for services rendered by the owners, the charterers are obviously concerned over uninterrupted employment of the vessel. On the other hand, there are many factors peculiar to shipping business make delays inevitable. To deal with consequences of such delays parties insert certain provisions into the time charter contract, which are primarily collected in an ‘off-hire’ clause.

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IMAGINATION

… the vice of our modern legislations is that they do not speak to the imagination. Man can be governed only by imagination; without it, man is a brute. It is a mistake to govern men like things; it is by speaking to man’s soul that he can be thrilled …

Words of Napoleon from Mémoires sur le Consulat de 1799 à 1804 par un Ancien Conseiller d’Etat, Thibaudeau 419-424, translated by and cited in Alain Levasseur, "On the Structure of a Civil Code" (1969-1970), 44 Tul. L. Rev. 693 at p. 698.

LAW MERCHANT

It is true that Law Merchant is sometimes spoken of as a fixed body of law forming part of the law, and, as it were, coeval with it, but as a matter of legal history this view is altogether incorrect… The Law Merchant is of comparatively recent origin; it is neither more or less than the usages of merchants and traders in the different departments of trade ratified by the decisions of the Courts of Law, which, upon such usages being proved before them, have adopted them as settled law with a view to the interests of trade and public convenience…

Per Chief Justice Cockburn in Goodwin v Robarts (1875) LR 10 Exch 337

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