Ship Laycan

Charterparties contain a clause giving the charterer the right to cancel the charterparty if the ship does not arrive at the loading port in a ready to load condition by a stated time and date. This option arises whether or not the late arrival is due to breach by the owner. Therefore, if the vessel arrives late through no fault of the owner, that is, she has suffered a breakdown whilst on the approach voyage which is excepted by the terms of the charter then the charterer will still be entitled to terminate the charterparty for late arrival of the vessel but will not be entitled to claim damages for the vessel’s late arrival. On the other hand, if the vessel arrives late for some reason for which the owners are not protected by one of the charterparty exception clauses then the charterer will be entitled to cancel the charterparty and also claim damages. Unless the charterparty makes some special provision to deal with  the situation, the charterer does not have to exercise his option to cancel until the ship has actually arrived. This is the case even if the cancelling date has long passed. The shipowner cannot, where the cancelling date has passed, call upon the charterer to declare whether or not he will load the vessel. If the charterer cancels the charter before the cancelling date, that is, he recognises that the vessel is unlikely to arrive before the cancelling date or suspects this to be the case, and therefore cancels prematurely, then the owner may terminate the contract, treating the charterer as in breach, and claim damages. However, it should be noted that if it can be shown that the vessel is unlikely or would not have reached the loading port by the cancelling date then, whilst technically in breach by cancelling prematurely, the charterer’s damages are likely to be nominal. It therefore follows that, if the charterer gives notice of cancellation before the cancelling date, the owner has a choice; he may terminate the contract and, provided that he can show that the vessel would have reached the load port before the cancelling date, claim damages or he can continue on the voyage and tender the vessel for loading, in effect gambling that she will arrive before the cancelling date. If the owner adopts the second of these choices it will then be open to the charterer to remedy his breach by exercising his contractual right by loading cargo or, if the vessel arrives after the cancelling date, to cancel the contract.