Voyage Charters. Charterers’ Obligations Last updated 29-Jun-2015

If the charterer was continuing to assert, wildly and optimistically, that he could and would complete the loading, although everyone else knew it to be impossible, would that amount to renunciation? If not, would the owners be obliged to wait? I can see no good reason why a party’s right to claim an anticipatory breach should depend simply on whether his adversary is artful enough to conceal his state of mind or obstinate enough not to admit his inability.
Per Devlin J in Universal Cargo Carriers v Citati [1957] 2 Q.B. 401

Main duties which charterers ought to perform

There are several cargo-related duties, listed below, which charterers ought to perform under a voyage charter:

1. To nominate port of loading and discharging;

2. To provide the goods for loading;

3. To load and later to discharge the goods at the discharging port in co-operation with the shipowner;

4. To pay freight as stipulated in the contract.

Charterers are solely responsible for port nomination and provision of cargo. Loading and discharging operations are joint actions of both the charterers and the owners. In absence of express provisions, extent of duties related to loading and discharging allocated to each party is determined by the custom of the port at which the operation is performed. If there is no custom the "tackle to tackle" rule provides make charterers responsible to deliver the cargo to the ship’s rail, where the owners must receive the cargo and load it on board. At the port of discharge, the owners discharge their responsibilities for the goods when the cargo passes the ship's rail, at which point the charterers are obliged to receive them.

Breach of any of these obligations, unless it is of frustrating nature, does not give right to the shipowner to rescind the charter, so he can only sue for damages.If, however, by words or conduct the charterer professes inability to perform the charter, it will be sufficient to constitute an anticipatory breach, which if accepted by shipowner, will bring the contract to an end. When the shipowner choses to rescind charter it will be irrelevant whether or not the charterer was able to perform. The owner also has an option to affirm the contract but reserve his right for damages. In this case all rights and duties of parties under contract remain unchanged and parties obliged to fully perform contract. If the shipowner does not accept the refusal as final, the charterer can withdraw it at any time before expiration of the laydays and is entitled to begin loading.

Sometimes, inability to perform can be masked by attempts to engineer a "mutual termination" of charterparty on a "drop hands" basis. And although from commercial point of view there is nothing wrong with that approach, but words and conduct of the charterer in seeking to achieve such result were held in SK Shipping (S) PTE Ltd v Petroexport Ltd [2009] EWHC 2974 (Comm) to amount to a renunciation of the charterparty in. In that case at the time of the fixture between owners and charterers was being finalised, the charterers were still negotiating contracts for a sale of the cargo of naphtha with potential buyers. Eventually they failed to secure any contract at all by the time of arrival of owners’ vessel at loadport and tendering NOR. Moreover charterers had problems at the supply end and had not put up the letter of credit for the cargo to be loaded.

Meanwhile owners became aware of charterers difficulties and asked charterers to confirm whether they were going to perform.  In reply charterers did not say "we will perform our obligations under this charter", but offered to the owners some options which were outside of scope of current charter. The court considered it as "a  statement that a party will only perform something different from the contract", which is as capable of amounting to a renunciation as an express statement that a party will not perform the contract. Flaux J stated at para 117-8:

117. However there was in effect a refusal on the part of the defendant to provide that confirmation. [Charterers] submitted that silence would not suffice for renunciation, because it is equivocal. I do not accept that submission, as it seems to me it must depend on the context. Renunciation may be by words or conduct and where one party is seeking confirmation that the other will perform, a failure to give the confirmation may be renunciatory, especially if, as in the present case, it is preceded by other conduct which is renunciatory.

118. In any event, in truth this was not a case of silence, since in fact [charterers] sent email at 10.35 hours Singapore time in full knowledge of the confirmation the claimant was seeking … in purported response to the claimant’s email seeking confirmation.[I]t is perfectly clear what [charterers were] seeking to achieve by those emails. Rather than provide the confirmation sought, by referring to the claimant having put the vessel on subs and to tortious interference obviously a reference to Glencore, [charterers were] trying to embarrass the claimant into agreeing a mutual termination of the charterparty, with no liability on the defendant for damages. … However, in my judgment the tactic backfired, because the failure to provide the confirmation the claimant was seeking was further renunciatory conduct on the part of the defendant.

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