Despatch Money

While laytime is at the free disposal of the charterer, he is entitled to no reward at common law if he completes the loading or discharging operation in a shorter time. As it is usually of considerable advantage to a shipowner to have his vessel free as quickly as possible, an incentive is often provided by the insertion in the charterparty of a dispatch money clause. This clause entitles the charterer to payment at an agreed rate – usually fixed at half the demurrage rate – for time that is saved. Problems of construction frequently arise, however, in the calculation of such time. Is dispatch money payable only for laytime saved, or is it payable for Sundays, holidays and other periods normally excluded from the calculation of laytime? There is a strong argument for treating ‘time saved’ in this context as ‘time saved to the ship in the same way as time lost on demurrage is time lost for the ship’. There are, however, conflicting decisions in the cases on this point, and much depends on the construction of the particular clause at issue. Thus at one extreme is the clause providing that dispatch money is payable for ‘all time saved’, while at the other is the provision for payment only for ‘laytime saved’. Normally the periods for which demurrage or dispatch money are payable are calculated separately at the ports of loading and discharge. Consequently, it is of little benefit to the charterer to be paid dispatch money at one port if he is liable for demurrage at the other, since the latter is normally fixed at double the rate of the former. He would prefer to set off time saved at one port against time lost at the other. This result can be achieved in one of two ways, either by providing that laytime shall be ‘reversible’ or that time for loading and discharge shall be ‘averaged’. Where laytime is ‘reversible’, the charterer is entitled to add together the time used at each port and deduct these periods from the overall laytime until the latter is exhausted. Due allowance will, of course, be made for Sundays, holidays and other periods excepted from the calculation of laytime. Under the averaging system, the amount of laytime used at each port is calculated separately, after which time saved at one port is set off against excess time used at the other. The only practical difference between the two systems is that in the latter the charterer might obtain credit for time saved, e.g. Sundays, which would not have counted as laytime. It would appear that the charterer has an option whether or not to invoke such provisions and will be presumed to have opted against doing so if he claims dispatch money at the port of loading.