Voyage Charters. Notice Of Readiness. Last updated 21-Sep-2014

The adventure contemplated by a voyage charter involves four successive stages. They are:
1. In all four of these stages acts of performance by the ship owner are called for; in the two voyage stages acts of performance by him alone.
2. The loading operation, viz. the delivery of the cargo to the vessel at the place of loading and its stowage on board.
3. The carrying voyage, viz. the voyage of the vessel to the place specified in the charter party as the place of delivery.
4. The discharging operation, viz. the delivery of the cargo from the vessel at the place specified in the charter party as the place of discharge and its receipt there by the charterer or other consignee.
In EL Oldendorff & Co GMBH v Tradax Export SA (The Johanna Oldendorf) [1974] AC 479 by Lord Diplock at p556-557.

General information and requirements

Division of a voyage into four distinct stages brings us to allocation of liabilities between the owners and the charterers and further to the question when such liabilities start to operate. Since owners are liable for preliminary and carrying voyage stages, the Charterers’ liability to provide cargo does not arise until the ship has been placed at their disposal.

NOTICE OF READINESS

By serving a Notice Of Readiness the master of the vessel on behalf of the shipowner informs the charterers that vessel has reached her destination as indicated in the charterparty and is ready to commence cargo operations, which involves both shore facilities and ship’s crew and equipment. From that moment the loading stage begins and the risk of delay passes from the owner to the charterer. On this stage the charterer’s liability to compensate the owner for delay is not in any way qualified by the fact that such delay was partly due to late arrival of the owner’s vessel or vessels, when contract provides, as it often does, that the owner excused for such late arrival caused by perils of the sea or salvage operation.

A ship in order to be ready and thus entitled to give valid notice of readiness must be ready to obey the charterer's orders whenever they are given, i.e. to be in a position to give the charterer unrestricted access to all her cargo spaces, subject only to such usual further preliminaries or routine matters as for example the opening of hatches or the rigging of cargo gear, which would not give any reason to suppose that they will cause any delay.

Under the common law NOR is only required at the port of loading and if there are several ports of loading then notice need only be given at the first port. However, modern practice is to expressly provide in charterparty for NOR be given at each loading and discharging port. In Nippon Yusen Kaisha v Societe Anonyme Marocaine de l’Industrie du Raffinage, (The "Tsukuba Maru") [1979] 1 Lloyd’s Rep. 459 Mocatta J held that, unless expressly provided otherwise, NOR is not required at discharge port if vessel was already on demurrage on departure from load port.

Besides, there is no legal requirement that a notice of readiness has to be in any prescribed form. It has merely to be a statement that a vessel is ready to load or discharge as the case may be and it must be accurate in stating that the vessel is so ready. Unless the contract says otherwise, nothing else is required.

A notice of readiness tendered with knowledge that it was untrue, i.e. that the vessel was not then ready would be ineffective to start time running. There must by implication be a requirement of good faith, see Cobelfret NV v Cyclades Shipping Co Ltd (The Linardos) [1994] 1 Lloyd’s Rep. 28, per Colman J. at p. 32.

Thus, the purpose of NOR is twofold: to inform the charterer that the vessel has completed the preliminary or carrying voyage and is at his disposal for the cargo operation; and to start the running of laytime. However to tender NOR is not sufficient for the vessel to be considered by the charterers to be at their disposal. There are three criteria, stated by Kennedy LJ in Leonis Steamship Company Ltd v Rank Ltd., which must precede the commencement of the laydays:

1. The ship must become an ‘arrived ship’

2. Then the ship is entitled and is bound to give a valid notice of readiness

3. The ship must in fact be ready for cargo operations

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