Charterers Absolute Right to Cancel Ship

Ship charterers right to cancel on the specified date is an absolute right and can be exercised irrespective of whether the late arrival was due to the fault of the shipowner, or whether the cause of the delay was covered by an exception. While the exception may protect the shipowner from any claim for damages, it will not protect him from the exercise of the cancelling option by the charterer. Neither will the charterer be barred from exercising the option to cancel because of failure to nominate a port of loading. In the recent case
of Mansell Oil Ltd v Troon Storage Tankers the charter conferred on the charterer a right to nominate a port in the Ghana/Nigeria range together with an option to cancel the charter if the vessel had not been delivered by a specified date. Prior to the commencement of
the charter the owners were required to undertake substantial structural modifications to the vessel which had not been completed by the time the cancellation date arrived. The owners challenged the charterer’s attempt to cancel on the grounds that they had never nominated a port for delivery of the vessel and such nomination was a condition precedent to the exercise of the option to cancel. The Court of Appeal rejected this argument on two grounds. First, there was no express term in the charter providing that nomination of a port was a condition precedent to exercise of the option to cancel and no basis on which to imply such a term. Secondly, any such implication would be pointless in view of the fact that, at the time of cancellation, the vessel was physically incapable of complying with any nomination.