Voyage Charters. Charterer’s obligation to load and discharge Last updated 28-Dec-2016

The charterer admits that he was under an obligation to nominate a berth and also to provide cargo, the latter being a separate and distinct obligation from the obligation to load.
Per Devlin J in Universal Cargo Carriers Corpn v Citati [1957] 2 All ER 70 at p.79

Obligation Obligation to provide the goods for loading

In absence of express stipulations the charterer is under an absolute obligation to provide cargo according to the charterparty, which duty forms the basis of the shipowner’s right to earn freight.

"Is not the freighter,"says Lord Ellenborough in Barker v Hodgson (1814) 3 M. & S. 267, "the adventurer who chalks out the voyage, and is to furnish, at all events, the subject-matter out of which the freight is to accrue." And on this principle it was held in that case, and has been held in several others, that there is an absolute contract on his part to furnish a cargo, and that he is bound to pay damages if it becomes impracticable to do so; though it would be otherwise if it became illegal to do so.
Postlethwaite v Freeland (1880) 5 App Cas 599 at 619 per Lord Blackburn.

Thus, charterers will be liable for any failure to provide cargo, whether total or partial, even if caused by extraordinary circumstances unless either the whole transaction is vitiated by illegality or the charterers protected themselves by express stipulations in the charterparty relieving them from the consequences of unforeseen impediments to the due performance of their contract.

Provision of the cargo and nomination of the berth must be made in sufficient time to enable the vessel to be completely loaded within the lay days. But failure to do so from the part of the charterer does not give a right to the owner to rescind the charter unless the delay becomes so prolonged that the breach assumes a character so grave as to go to the root of the contract.

If the charterer expressly or by conduct refuses to load the vessel, the shipowner does not have to wait till the end of the laydays before he can sue for a breach of the contract to load, but may accept such refusal and treat it as final.

In SK Shipping (S) PTE Ltd v Petroexport Ltd [2009] EWHC 2974 (Comm), the charterers failed to obtain cargo in time and to avoid substantial liability for demurrage were trying to escape liability by embarrassing the owners into agreeing a mutual termination of the charterparty. Flaux J agreed, at paras 101, 110, with the owners, that charterers’ failure to confirm their intention to perform their obligations under charterparty amounted to a renunciation of the charterparty:

Whilst not in themselves renunciatory, the combined effect of those matters was enough, both subjectively in terms of [the owner’s] state of mind and objectively in terms of what a reasonable person in the position of [the owner] would have thought, to give rise to a concern as to whether [the charterer] would be able to perform the charterparty, notwithstanding that the laydays had not yet expired.

[Charterers were] not saying "we will perform our obligations under this charter", but, at best, "we will only perform something different". A statement that a party will only perform something different from the contract is as capable of amounting to a renunciation as an express statement that a party will not perform the contract.

If contract has no express provisions covering the case the charterer will not be relieved from obligation to obtain cargo by such causes like strikes bankruptcy of merchants supplying the cargo, or non-existence of such cargo as well as causes preventing loading due to ice, bad weather, railway delays or Government orders. It seems to be equally difficult to invoke the doctrine of frustration in instances where the supplier refused to make goods available as case CTI Group Inc v Transclear SA [2008] EWCA Civ 856 shows. The Court of Appeal held that refusal is a matter of choice and is not of itself sufficient to frustrate a contract.

Moreover, the cargo must reasonably comply with the terms of the charter, the charterer must bring the cargo to the loading place and the charterer must perform his part of the operation of putting the cargo on board the vessel. Since the shipowner is not concerned with the methods by which the charterer intends to acquire the cargo, the arrangements for procuring that cargo are outside the scope of the contract. In Grant у Coverdale (1884) 9 App Cas 470 Earl of Selborne LC described these arrangements in the following words:

… those things with which [shipowner] has nothing whatever to do, which precede altogether the whole operation of loading, which are no part whatever of it but which belong to that which is exclusively the charterer’s business. He has to contract for the cargo, he has to buy the cargo, he has to convey the cargo to the place of loading and have it ready there to be put on board; and it is only when he has done those things that the duty and the obligation of the shipowner in respect of the loading arises.

If the ship cannot arrive so as to enable laytime to commence but for the cargo is available for her, defaulted charterer will be liable in damages to the shipowner for delay caused by the non-availability of such cargo. In the Atlantic Sunbeam it was held that:

… the term to be implied in this case is to the effect that the charterers were bound to act with reasonable dispatch and in accordance with the ordinary practice of the port of Calcutta in doing those acts which had to be done by them as consignees to enable the ship to become an arrived ship. In that connection the burden of proof, as in all cases of allegations of breach of contract, rests on the plaintiff, in this case the owners.

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