Voyage Charters. Freight. Lump freight – delivery of cargo at destination place play crucial role.

The gist of the contract is that the shipowner should convey and deliver to the charterer or his consignee goods included in the charter.

Lump Freight

Charterparty may provide for the payment of a lump sum as freight. In that case, contrary to the general rule, the owner is entitled to full freight even when he delivers only a portion of the goods in specie. This rule is based on the following principle: the ship owner undertakes that he will carry the goods to the place of destination and the charterer undertakes that if the goods be delivered at the place of their destination he will pay the stipulated freight. Since sum which was agreed to pay as freight is fixed, two other factors, i.e. delivery of cargo at destination place play crucial role – the owner either paid in full or paid nothing.

For the purpose of lump freight, quantity of cargo which owner undertakes to bring to the destination port is always subject to qualifications imposed by exception or limitation provisions, if any, in the contract.

[It] is the cargo which vessel has to deliver. It does not mean the cargo she has shipped, but which she is not bound to deliver, which the shipowner is excused from delivering; it means the right delivery of the cargo which is to be delivered, not the right delivery of the cargo which was originally shipped on board of her.
Per Coleridge CJ in Merchant Shipping Co v Armitage (1873) LR 9 QB 99 at p.110.

However, this rule above lacks clarity, as Coleridge CJ mention later in his judgment:

It may be said, it is a very odd thing that, if the ship brought in safety an hundred part of the cargo home, the entire 5000£ should be paid, whereas, if that hundredth part was lost, nothing should be paid. That, no doubt, may be a difficulty.

The next governing principle is delivery at place of destination. The carrier must deliver goods even if his vessel is unable to proceed to destination. As Lord Ellenborough said in Hunter v Prinsep (1808) 10 East 378 at p.394:

If the ship be disabled from completing her voyage, the ship-owner may still entitle himself to the whole freight, by forwarding the goods by some other means to the place of destination; but he has no right to any freight if they be not so forwarded; unless the forwarding them be dispensed with, or unless there be some new bargain upon this subject.

Thus, even when vessel itself did not reach the port of discharging but substantial part of cargo was delivered, by any means which owner can employ, charterers obliged to pay freight. In William Thomas & Sons v Harrowing SS Co [1915] AC 58, 12 Asp MLC 532, only part of the cargo was delivered (in fact it was partly washed ashore and there collected and partly saved from broken ship) after the ship was wrecked. The House of Lords held that:

…what took place was equivalent to that transhipment which Lord Ellenborough speaks. It does not matter that it was not done in lighters; it was done by getting the pit props brought out to the beach where they were delivered. It does not matter that wind and waves played a large part in the process; the point is that they arrived … Under those circumstances the learned judge has held that the facts are facts which amount to a transhipment of the goods, or at any rate have the same effect in law, a consequently, there was delivery of two-thirds of the cargo, and as to the rest of the cargo it came within the clause excepting perils of the sea.

Share this article on:

Readers’ comments:

Posted by:   

Be first to comment …
Leave your questions and comments here

Although author encourages visitors to leave their comments using this form, but if you unable or unwilling to use it for any reason you can forward your mail to to contact with him.