Demurrage as Liquidated Damages

It should be remembered that since demurrage represents the amounts which the parties have agreed are payable by the charterer to the owner to recompense it for any losses which it has suffered as a result of the detention of the vessel beyond laytime, it follows that the owner may not be able to recover other losses which it has suffered as a result. These ‘liquidated damages’ (ie demurrage) represent all the damages which can be recovered by the owner where the laytime is exceeded. Therefore, for example, it may not be able to recover extra bunkers or port costs incurred by it as a result of the delay or even the loss of a valuable ‘next’ fixture which is cancelled as a result of the delay. To recover these other losses, the owner must show that the charterer is also in breach of another provision of the charterparty. For example, in a case called Reider v Arcos [1926] 25 Lloyd’s Rep 513, the owner proved that, as a result of the charterer’s delay, the vessel could not leave port with a full cargo because the depth of water over the bar had dropped. The charterer therefore loaded less cargo than it would have loaded if there had been no delay and the owner recovered deadfreight for the charterer’s breach on top of demurrage.