Charterparty Cancellation

Charterparty Cancellation

Cancellation provisions, particularly on a lengthy approach voyage, can be problematic for owners. Clearly, if the ship is unlikely to arrive at the load port within the cancelling period the Shipowners may not wish to undertake a long approach voyage, particularly if it is passing alternative loading areas, without the comfort of knowing whether or not the Charterers are likely to cancel the charterparty.

Therefore, it is common to see within charterparties an express additional provision stating that in the event that Shipowners consider the ship unlikely to meet the laycan provisions they can give notice to Charterers requiring charterers to confirm whether or not they will exercise their right to cancel the charterparty and that the cancellation date will be extended.

Wording as follows is commonly used: “If the vessel is not delivered by midnight local time on the cancelling date stated … the charterers shall be entitled to cancel this charterparty. However, if the owners will be unable to deliver the vessel by the cancelling date, they may give notice in writing to the charterers at any time prior to the delivery date as stated … and shall state in such notice the date by which they will be able to deliver the vessel. The charterers may within 24 hours of receipt of such notice give notice in writing to the owners cancelling this charterparty. If the charterers do not give such notice then the later date specified in the owners’ notice shall be substituted for the cancelling date for all the purposes of this charterparty.”

The approach voyage ends and the next stage of the Voyage Charterparty takes place when the Ship Master gives Notice of Readiness (NOR) at the load port.

Notice of Readiness (NOR) is the trigger to commence the running of laytime, the period allowed for the loading and discharging of cargo on board the ship.

For a valid Notice of Readiness (NOR) to be given, and the approach voyage to be concluded, the ship must be an Arrived Ship and comply with the specific provisions within the charterparty for the tender of Notice of Readiness (NOR).