Voyage Charterparty
Laycan
‘Laycan’ is a period of time within which the vessel should arrive at loading port and tender ready for loading without risk of being rejected by the charterers. As indicated in the name itself, ‘laycan’ is an agreed time range at the end of which comes the date when the charterers are entitled to exercise their option and cancel the charterparty for non-arrival of the owners’ vessel. In recent case which reached the Court of Appeal, Tidebrook Maritime Corporation v Vitol SA of Geneva (The Front Commander) [2006] EWCA Civ 944, Rix LJ defined laycan at para 38 as:
(a) the earliest day upon which an owner can expect his charterer to load and
(b) the latest day upon which the vessel can arrive at its appointed loading place without being at risk of being cancelled.
Laycan is not, however, specific feature of voyage charters only. As Clarke J. noted in SHV Gas Supply and Trading SAS v Naftomar Shipping and Trading Co Ltd Inc [2005] EWHC 2528 (Comm) at para 9:
The term "laycan" is habitually used in the negotiation of charterparties, to refer to the earliest date at which the laydays can commence and the date after which the charter can be cancelled if the vessel has not by then arrived. By extension the term is to be found in FOB sales, so as to provide that the seller can cancel the contract if the vessel, which it is the buyer’s duty to procure, does not arrive at the port by the cancellation date. The expression does not fit so easily into the confines of a CIF contract where it is the seller’s obligation to make a contract of carriage, ship the goods on board and tender the customary documents.
The charterers can, but are not obliged to exercise cancellation option. It is not unusual for the parties to come to solution and extend laycan for a day or so, considering market condition and availability of substitute tonnage in the area. Some standard forms of voyage charters, such as SHELLVOY5 and SHELLVOY6 (read more on NOR and Laycan page), specifically define procedure for laycan extension.
It is manifest that the right of cancellation could not be validly exercised until the arrival of the cancellation date and any premature notice purporting to cancel the contract constitutes an anticipatory breach and repudiation of the charterparty.
Notice to narrow or move the laycan
When charterparty provides for a notice to nominate or to narrow laycan spread, then such notice is rather obligation than option, see LJ Clarke in Bulk Carriers Ltd v Andre Et Cie SA [2001] EWCA Civ 588 at para17. This notice, however, is not a condition precedent to the owner’s duty to nominate a vessel. Because the owners could obtain no conceivable benefit from a narrowing of the laydays, there is only theoretically disadvantage they may suffer compensated in damages.
Notice to narrow laycan spread in most cases would also identify both the loading port and the cargo. Therefore the effect of the notice giving the laycan period was to write those particulars into the charterparty: The Jasmine B [1992] 1 Lloyd’s Rep. 39. Likewise when in due course a vessel was duly nominated by the owners: Union Transport v Continental Wines [1992] 1 Lloyd’s Rep. 229. Thus, the laycan notice is irrevocable, see P v A & Anor [2008] EWHC 1361 (Comm) per Steel J. at paras.16-17.
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