Charterparty Terms

It may happen, however, that the Charterparty contains one or more terms which substantially affect the previously ‘agreed’ main elements of the negotiation. The seriousness of these ‘details’ may not be realised until negotiation on charterparty terms is underway but it is incumbent upon Charterer’s Brokers to ensure, if possible, that the original negotiations leading to agreement on ‘main terms’ contain all main terms. That would help to avoid disagreement over terms which substantially affect items already agreed – e.g. the freight rate. If agreement cannot be reached on major but simple issues such as cargo size, vessel’s/cargo’s available dates, freight rate, etc., there is little point in dealing with perhaps tedious and relatively minor charterparty clauses. Under English Law, however, there is no binding contract at the ‘main terms’ stage of negotiations, nor will there be any such agreement until each and every detail of the contract has been agreed and all subjects lifted. Legally, therefore, there is nothing to stop one or other of the parties renegotiating a feature of the ‘agreement’ reached – e.g. the freight rate – although, professionally, and unless justified by the discovery of a previously hidden ‘major’ item, this would be considered highly unethical. As mentioned earlier, under present American Law, however, there may be a contract once ‘main terms’ have been negotiated and agreed, unless both sides decide to withdraw from the negotiations; unilateral withdrawal is not sufficient. Agreement reached on what may be interpreted as the ‘essential’ parts of a contract may well result in a legally binding fixture, even though a mass of relatively minor details have not even been discussed, let alone resolved, and even though numerous subjects remain to be lifted.