Laytime & Demurrage - CIF terms. Last updated 28-Jun-2015

I do not find it surprising that a buyer should contract to receive demurrage at a different rate, or on different conditions, than those governing his liability to pay a shipowner or a sub-buyer. Normally one might perhaps expect the terms to be the same, … but they may be different.
R. Pagnan & Fratelli v Finagrain Co. Com. Agricole et Financiere SA (The Adolf Leonhardt) [1986] 2 Ll.R. 395, per Staughton J.

Positions of the buyer as the charterer & the seller as the owner

CIF terms make the buyer responsible for laytime and demurrage as related to the port of discharge only and he will not be expected to bear any demurrage costs at the load port. As it was held in Congimex v Tradax [1981] 2 Lloyd’s Rep. 687, and approved in the Court of Appeal, see [1983] 1 Lloyd’s Rep. 250, the obligation of the c.i.f. seller is either to ship the goods himself to the contractual destination or to obtain a bill of lading from someone else who had shipped them and to tender it with other appropriate documents to the buyers and the buyers' obligation was to take up and pay for the documents. It follows that in absence of any express provision the contract did not impose any implied obligations as between the buyers and the sellers whereby the goods would be discharged as part of performance of the c.i.f. contract.


Thus, if a c.i.f. contract containing no such express terms, the seller/charterer cannot recover damages for charterparty demurrage incurred on the basis of delay by the buyer in discharging the goods. The buyer is under no implied duty to discharge; neither to discharge within a given time nor to indemnify the seller for any demurrage accrued under seller’s charterer party with the shipowner. It is also obvious from the (link) that the buyer’s liability to pay demurrage under a sale contract does not arise automatically from the charterer’s liability for demurrage under relevant charterparty, but must be expressly provided for in sale contract.

Evidently, such express stipulation in the sale contract is of vital importance to the c.i.f. seller in the matter of recovering damages for delays in discharge port from the buyer, to offset his demurrage liabilities under relevant charterparty with the ship owner. Often there is an express linkage between the laytime and demurrage provisions in the sale contract and in the charterparty, so-called ‘blanker reference’ to the charterparty, stating that laytime, demurrage and despatch to be governed by the similar provisions in the underlying charterparty.

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