Charterers Must Provide Cargo

Charterparty will normally specify the type and amount of cargo to be provided by the charterer at the port of loading, the arrangements for procuring that cargo are outside the scope of the contract. The shipowner is in no way concerned with the methods by which the
charterer intends to acquire the cargo, and his sole interest is whether it will be available at the loading port at the required time. The charterer, on the other hand, is under an absolute duty to provide the cargo and it will be no excuse that he is prevented from doing so by
reasons which are entirely beyond his control. Thus it will be no defence to an action for breach of contract that cargo was not available because of crop failure, government controls on exporting or transport delays on the way to the loading port caused by strikes or bad
weather. While it is true that many charters include exceptions covering delay in loading, there is a strong presumption that such clauses apply only to the actual process of loading  the cargo when ready, and not to delay in providing the cargo. Thus in Grant v Coverdale
where a vessel had been chartered to proceed to Cardiff and load a cargo of iron, there was an exception covering ‘hands striking work, or frost or floods, or any other unavoidable accidents preventing the loading’. The charterer sought to rely on this exception when he was
prevented from lightering part of the cargo from the wharf, where it had been stored, to the loading dock because an intervening canal had been blocked by ice and it was impracticable to transport it by any other means. The court held that the exception had reference only to the loading operation and did not cover delays in transporting the goods to the loading point. Where, however, the only available storage facilities in a particular port are at some distance from the loading berths, the carriage of the cargo between these two points will be regarded as part of the loading process and covered by the exceptions. Such a situation might arise in the case of container stores which are often located outside the dock area, and it has even been held that movement of grain from storehouses sited some 110 miles from the loading port was part of the loading operation. Where difficulties are foreseen in procuring a particular cargo, then the charterer may gain relief from his absolute obligation if he ensures inclusion in the contract of an appropriate and clearly worded exception.
The cargo to be provided by the charterer will normally be expressly agreed in the charterparty. It may take the form of a specific cargo, e.g. 10,000 tonnes of wheat, or it may consist of a series of alternative cargoes, e.g. wheat and/or barley and/or rye, from which the charterer may select one or more. Occasionally it may appear in the more general form of ‘any lawful cargo’. The charterer is under an obligation to provide a cargo of the type or types specified and any attempt on his part to load a different cargo amounts to a serious breach of contract entitling the shipowner to repudiate the charterparty. Should the shipowner waive this breach by accepting the substituted cargo, then an obligation will be implied that the charterer will pay the current rate of freight for cargo of that description. Where the charterparty specifies a range of alternative cargoes, the charterer will normally have a free choice between them, even though the respective freight rates may vary. On the other hand, he is under an obligation to load a full cargo from the range open to his selection and, if some of the cargoes later prove not to be available, he must load an alternative from such a range. The fact that he intends to load one particular cargo does not amount to a decisive election and he cannot plead frustration because the intended cargo is not available. Even though failure to load that particular cargo is covered by an exception, he is not relieved from his obligation to load an alternative cargo. In the words of Viscount Radcliffe, ‘If a shipper has undertaken to ship a full and complete cargo made up of alternative commodities as in the terms “wheat and/or maize and/or rye”, his obligation is to have ready at the port of shipment a complete cargo within the range of those alternatives. Consequently the fact that he is prevented from loading one of the possible types of cargo by a cause within the exceptions clause, even though that is the type that he has himself selected and provided for, is not an answer to a claim for demurrage.’ This right of selection of the charterer, with its correlative duty, continues ‘until the final ton is put on the ship’. On the
other hand, where the charterer is prevented from loading his original choice of cargo, he is entitled to a reasonable time in which to make alternative arrangements. Occasionally a charterer is given a true election between a range of cargoes, but it would appear to be a rare occurrence. So in Reardon Smith Line v Ministry of Agriculture the vessel was chartered to receive ‘a full and complete cargo . . . of wheat in bulk’, the charterer having an option to substitute barley for wheat, in respect of one-third of the cargo, on payment
of additional freight. When a strike of elevator men prevented the loading of any wheat, the House of Lords held that the charterer could rely on the strike clause in the charter and was not obliged to load an alternative cargo of barley. On the wording of the charterparty, the
charterer had a ‘true option’ between the two cargoes and, in the event of one cargo not being available, he was not obliged to load the other.