Time Charters. Delivery and Duration Vessel to be placed at the disposal of the charterers …

An owner delivers a ship to a time charterer … by placing her at the Charterers’ disposal and by placing the services of her master, officers and crew at the Charterers’ disposal, so that the charterers may thenceforth give orders (within the terms of the charter-party) as to the employment of the vessel to the master, officers and crew, which orders the owners contract that their servants shall obey.
The Madeleine [1967] 2 Lloyd’s Rep. 224, per Roskill, J. at p.238.

Delivery under timecharter usually takes place at designed location or range and within certain time interval, which by analogy with voyage charter also called laycan.

As to geographical position of the vessel at the date of delivery it must meet requirement that the vessel is at the immediate and effective disposition of the charterers. The concept of laycan has a lot of similarity with one developed in voyage charters, although, terms related to place of delivery in time charter are less stringent as compared with a berth or a port voyage charters. Usually time charter provides for locations such as ‘dropping last outward pilot’ or OPL Singapore, where exact vessel’s location at the moment of delivery is of no importance. But whatever general description of delivery place might be, failure of the owners to deliver their vessel at such place gives the charterers a right to refuse delivery. Mechanism of invocation of cancelling clause is similar to that in voyage charter contracts. (Read more on Laycan and Cancelling Clause).

Baltime form, Box 16 and Clause 1 (below) expressly stipulate date and time of delivery but some forms can instead contain only cancelling clause as NYPE 46 cl 14, while NYPE 93 cl 16 (below) addresses both delivery and cancellation issues. An effect of cancelling clause is to give the charterers an option to cancel if the vessel is not ready by stipulated date. Mechanism of invocation of cancelling clause is similar to that in voyage charter contracts.

Baltime 1939, clause 1

BaltimeClause1

NYPE 46, clause 14

14. That if required by Charterers, time not to commence before … and should vessel not have given written notice of readiness on or before … but not later than 4 p.m. Charterers or their agents to have the option of cancelling this charter at any time not later than the day of vessel’s readiness.

NYPE 93, clause 16. Delivery/Cancelling

16. If required by the Charterers, time shall not commence before … and should the Vessel not be ready for delivery on or before … but not later than … hours, the Charterers shall have the option of cancelling this Charter Party.
Extension of Cancelling
If the Owners warrant that, despite the exercise of due diligence by them, the Vessel will not be ready for delivery by the cancelling date, and provided the Owners are able to state with reasonable certainty the date on which the Vessel will be ready, they may, at the earliest seven days before the Vessel is expected to sail for the port or place of delivery, require the Charterers to declare whether or not they will cancel the Charter Party. Should the Charterers elect not to cancel, or should they fail to reply within two days or by the cancelling date, whichever shall first occur, then the seventh day after the expected date of readiness for delivery as notified by the Owners shall replace the original cancelling date. Should the Vessel be further delayed, the Owners shall be entitled to require further declarations of the Charterers in accordance with this Clause.

Duration of time charter may be expressed in fixed terms such as "six months" or "two years" or variable terms as for example "six months plus-minus 14 days". Although in the former case charterers undertake to redeliver the vessel on particular date it was held that, unless the charterers were not entitled to send the vessel on her last voyage and not was responsible for the delay, there is a presumption that a definite date for the termination of a time charter should be regarded as an approximate date only. Any such delay will not constitute breach of charterparty and the charterers must pay full charter rate until the end of a legitimate last voyage . Where delay is not reasonable, then the charterers, in addition, liable to pay damages in respect of their failure to redeliver within a reasonable time.

In Alma Shipping Corp of Monrovia v Mantovani (The Dione) [1975] 1 Lloyd’s Rep.115 Lord Denning MR suggested at p.117, that where contract provides for no margin or allowance express or implied then if market goes up the charterers must pay market rate.

But it is open to the parties to provide in the charter-party - by express words or by implication - that there is to be no margin or allowance. In such a case the charterer must ensure that the vessel is redelivered within the stated period. If he does not do so - and the market rate has gone up - he will be bound to pay the extra. That is to say, he will be bound to pay the charter rate up to the end of the stated period, and the market rate thereafter…

This situation may arise when the court will not be able to imply a presumption above and notwithstanding that such last voyage will be a legitimate one the charterers will be in breach and must be bound to compensate the owners for the market hike.

In cases when charterparty provides for margin the charterer must ensure that the vessel is redelivered within the permitted margin or allowance.

If he does not do so - and the market rate has gone up - he will be bound to pay the extra. That is to say, he will be bound to pay the charter rate up to the end of the expressly permitted margin or allowance, and the market rate for any overlap thereafter…
Alma Shipping Corp of Monrovia v Mantovani (The Dione) [1975] 1 Lloyd’s Rep.115, per Lord Denning MR at p.117

As it was touched briefly on Trip Time Charter page, duration of the charterparty sometimes is not so easy to determine and careful wording is necessary to avoid open-end contracts. And especially so bearing in mind power of the time charterers "upon paying the hire to call upon the vessel to visit any port or ports which [they wish] within trading limits subject to any express agreement to the contrary".

In SBT Star Bulk & Tankers (Germany) GmbH & Co KG v Cosmotrade SA [2016] EWHC 583 (Comm) the vessel was let under an amended NYPE 1946 form for:

Time Charter trip via via good and safe ports and/or berths via East Mediterranean/Black Sea to Red Sea/Persian Gulf/India/Far East always via Gulf of Aden, with steels and/or other lawful/harmless general cargo, suitable for carriage in a cellular container vessel as described. No bulk cargo is allowed. Duration about 40-45 days without guarantee minimum 40 days without guarantee within below mentioned trading limits

Hire was to be paid as per clause 4:

That the Charterers shall pay for the use and hire of the said Vessel … until the time of the day of her re-delivery as per Clause 55 in like good order and condition, ordinary wear and tear excepted, to the Owners (unless lost) on dropping last outward sea pilot one (1) safe port in Charterers’ option Mumbai/Colombo range or in Charterers’ option one (1) safe port East Coast India range, not north but including Chennai Colombo/Busan range including China not north Qingdao …

Combination of both provisions made a) end of charter was set at an "open date" upon passage of min 40 days and b) trading range extremely wide from East Mediterranean/Black Sea to Red Sea/Persian Gulf/India/Far East.

Vessel loaded her cargo at 4 ports in the Black Sea and then sailed to the East where she discharged all cargo at one port in the Red Sea (Jeddah), one port in the Gulf of Oman (Sohar), and three ports in the Persian Gulf (Hamriyah, Jebel Ali and Dammam). Just before completion of discharging operation in the last PG port Dammam charterers ordered the vessel to proceed to Sohar (Oman) after sailing from Dammam when the vessel was empty of cargo to load a project cargo for delivery at New Mangalore or Cochin (West Coast of India). The owners considered this orders as illegitimate.

Both the Arbitrators and the High Court decided that the charterers were entitled to give such orders. The court held that contract in hand allowed the charterers to call at such ports as they wished provided that the calls were within the trading limits and the route was not inconsistent with the contractual route, which was a voyage from Algeciras to the Colombo/Busan range via the East Mediterranean and/or the Black Sea and/or the Red Sea and/or the Persian Gulf and/or India and/or the Far East (always via the Gulf of Aden and always ending in the Colombo/Busan range).

The owners contended that the word "via" in the phrase "via eastmed/blacksea…" was restricting the range at which the vessel might load cargo; and the word "to" in the phrase "to redsea/pg/india/fareast…" was restricting the range at which the vessel might discharge cargo. Secondly, the owners said that if the charter was not circumscribed by its nature as a "trip" in conjunction with its geographical ranges it would be entirely open-ended; that if the tribunal were correct then the charterers here could have employed the vessel for as many voyages with load and discharge ports in the Red Sea, Persian Gulf, India and Far East as they liked.

The judge, however, was not persuaded by those arguments, he rejected owners’ construction of the contract and concluded:

18. As it seems to me, the word "via" simply means "by way of"; and the word "to" simply denotes the contractual route. Even in the context of this being a charter for "one" charter trip, I do not read those words as restricting the charterers' general entitlement to give orders and directions with regard to loading and discharging provided, of course, that, as already stated, the calls were within the trading limits and the route was not inconsistent with the contractual route. To adapt the language of Donaldson J in The Aragon, the charterer was – upon paying hire - here entitled to call upon the vessel to load and discharge at any port or ports within trading limits and on the contractual route subject to any express agreement to the contrary …

21. … it is not correct to say that the charter here was "open-ended". At the risk of repetition, the charterers could not give orders for the vessel to proceed outside the stipulated trading limits or which were otherwise inconsistent with the contractual route. In my view, those two features imposed important constraints. As to the example of a possible time charter trip from East Coast USA to West Coast Australia, I confess that I have never come across such a charter. In any event, the proper construction of such charter would obviously depend upon its own specific terms.

In conditions of depressed freight rates the owners are desperate to find a better employment for their fleet, which has a side effect of expanding limiting borders as related to vessels’ employment conditions.

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