Time Charterparty
Payment of Hire
The importance of this advance payment to be made by the charterers is that it is the substance of the consideration given to the shipowner for the use and service of the ship and crew which the shipowner agrees to give. He is entitled to have the periodical payment as stipulated in advance of his performance so long as the charterparty continues.
By Lord Wright in A/S Tankexpress v Compagnie Financiere Belge Des Petroles SA (The Petrofina) [1948] 2 All ER 939 at p.946.
Payment of hire is a primary obligation of the charterer under the terms of time charterparty. Payment of hire is an absolute obligation and is not excused by accident or inadvertence.
Hire is payable in advance in order to provide a fund from which the shipowner can meet those expenses of rendering the promised services to the charterer that he has undertaken to bear himself under the charterparty, in particular the wages and victualling of master and crew, the insurance of the vessel and her maintenance in such a state as will enable her to continue to comply with the warranty of performance.
Per Lord Diplock in Scandinavian Trading Tanker Co AB v Flota Petrolera Ecuatoriana (The Scaptrade) [1983] 2 All ER 763 at p.767
Advanced payment of hire is provisional in the sense that if the hire is not earned for the whole period covered by the payment the charterer will be entitled to recover pro tanto.
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