Freight in a Voyage Charterparty

Freight in a Voyage Charterparty

Freight is the commercial reward earned by a shipowner for carrying cargo under a voyage charterparty. It is different from time-charter hire because it is connected to the agreed cargo voyage rather than the use of the ship over a period of time. In a voyage charter, the freight bargain normally reflects the cargo, the loading and discharging ports, the expected duration, bunker exposure, port costs, market conditions, and the allocation of operational risk between shipowner and charterer.

Under the traditional rule, freight is earned only when the cargo has been carried to the contractual destination and the shipowner is ready to deliver it to the party entitled to receive it. The voyage may be almost complete, but unless the cargo is delivered, freight is not normally earned. If part of the cargo is delivered and part is lost, freight is payable only on the part delivered, unless the charterparty clearly changes that result.

Modern voyage charterparties often depart from this basic rule. The parties may agree that freight is payable on the quantity shipped, that it is earned on loading, that it is payable after the signing or release of bills of lading, or that it is non-returnable whether the ship or cargo is lost or not lost. For that reason, freight disputes are rarely solved by one general principle alone. The answer depends on the exact freight wording, the surrounding clauses, the role of the bill of lading, and the stage at which the relevant event occurs.

The Commercial Meaning of Freight

Freight is the agreed payment for carriage of cargo from the loading place to the discharge place. It may be calculated by weight, volume, number of units, a published scale, or a fixed lumpsum. In dry bulk fixtures, freight is commonly stated as a rate per metric ton, while in some project, timber, scrap, or awkward cargo movements the parties may prefer a lumpsum because the usable cubic capacity of the ship is commercially more important than the final cargo weight.

The word freight can also be used loosely to mean cargo itself, but in voyage-charter law it normally means the remuneration payable to the shipowner. This distinction matters because freight, unlike demurrage or damages, has historically received special legal protection. Once freight has been earned and has become payable, charterers are generally not permitted to reduce it by setting off cargo claims or other counterclaims unless the charterparty clearly allows the deduction.

When Freight Is Earned Under the Ordinary Rule

In the absence of contrary wording, freight is earned by substantial performance of the carriage obligation: the cargo must arrive at the contractual destination and be ready for delivery. A damaged cargo may still earn freight if the goods remain commercially identifiable as the cargo shipped. By contrast, if the cargo has been destroyed or changed so fundamentally that it is no longer the article of commerce that was shipped, freight dependent on delivery may not be earned.

This rule can produce strict results. A ship may carry the cargo nearly all the way to the discharge port, but if the voyage is not completed and the charter contains no contrary provision, the shipowner may have no claim for freight as such. The shipowner may still have a claim for damages if the failure to complete the voyage was caused by the charterer’s breach, but that is different from a direct freight claim.

The Gencon approach reflects the traditional connection between freight and delivery unless the boxes and rider clauses alter it. Clause 4 of the traditional Gencon wording provides for payment in cash on delivery of cargo, with the receivers bound to pay freight on account during delivery if required by the master or shipowners. This means that payment and delivery are normally concurrent acts.

Freight on Intaken Quantity and Freight on Delivered Quantity

A major freight question is whether the amount payable is calculated on the intaken quantity or on the delivered quantity. The difference is important because cargo may lose weight, gain weight, evaporate, absorb moisture, suffer ordinary wastage, be partly lost, or be measured differently at loading and discharge.

Where freight is agreed on intaken quantity, the parties usually intend the loading-port measurement to fix the cargo quantity for freight purposes. In bulk trades, this wording may also mean that freight remains payable on the quantity loaded even if some of the cargo is later lost, provided the charterparty makes that intention sufficiently clear and some commercially meaningful cargo is eventually delivered.

Where freight is agreed on delivered quantity, the discharge measurement normally becomes decisive. If the cargo naturally dries, shrinks, evaporates, or suffers measurable loss before delivery, the freight will be calculated on the delivered quantity if the charter points clearly to that result. However, every case remains a matter of construction. The words used may refer only to the time or place of measurement, or they may also decide whether freight is payable on cargo not delivered.

Parties should therefore avoid shorthand that leaves the commercial intention uncertain. If freight is to be payable on the bill of lading quantity regardless of discharge figures, the clause should say so. If ordinary transit loss, evaporation, clingage, moisture variation, or draft-survey discrepancy is to be handled in a particular way, the mechanism should be expressed rather than left to implication.

Bill of Lading Quantity and Conclusive Evidence Clauses

A bill of lading commonly records the apparent quantity, weight, or measure of the cargo shipped. Without special wording, that statement may be prima facie evidence, but it is not always conclusive between the original parties. A master may also protect the shipowner by signing with qualifications such as “weight unknown” or “quantity unknown,” particularly where the ship cannot verify the cargo figures.

The position changes when the charterparty states that the bill of lading is to be conclusive evidence of quantity or measurement for freight purposes. In that situation, the figures in the bill of lading may govern the freight calculation even if later evidence suggests that the actual shipped quantity was different. This is commercially understandable because the parties have chosen a document-based method for fixing the freight account.

Care is needed where the bill of lading states both the number of units and the total measurement. A conclusive evidence clause may make both matters binding for freight calculation. Equally, a provision referring to an invoice quantity, customs declaration, official scale certificate, draft survey, or terminal certificate may make that document decisive if the wording clearly gives it that effect.

Freight Rates, Scales, and Overage

Freight is often expressed as a rate per ton, per cubic meter, per unit, or by reference to a published freight scale. Tanker trades may use scale systems such as Worldscale, and dry cargo fixtures may use an agreed rate linked to the cargo quantity and trading range. Where a published scale is incorporated, later amendments may apply if the charter wording and the scale itself point to that result.

If the charterparty fails to state a freight rate, the law may imply a reasonable freight, unless the circumstances show that the parties intended carriage without payment. In commercial shipping, such an intention will be unusual. A reasonable freight is normally assessed by reference to the market value of the carriage actually performed, taking account of the ship, cargo, route, timing, and prevailing rates.

Overage freight arises where the ship carries more than a stated minimum, guarantee, or expected cargo quantity. The parties may agree that additional cargo above the minimum pays full freight, half freight, a special rate, or no additional freight. If they do not specify the consequence, disputes may arise. Clear drafting is especially important where the fixture combines a minimum cargo figure with a lumpsum freight.

Lumpsum Freight

Lumpsum freight is a fixed amount payable for the voyage rather than a rate multiplied by the cargo quantity. It is often used where the parties prefer certainty or where cargo characteristics make precise intake difficult to predict. Scrap, packaged steel, timber, project cargo, and irregular parcels may create this type of commercial need.

A lumpsum freight clause does not necessarily oblige the charterer to use every cubic foot of the ship. Unless the charterparty separately imposes a clear obligation to load a full and complete cargo, the charterer may have the right to use the available space without being bound to maximize it. Conversely, the shipowner may be entitled to the agreed lumpsum even if the charterer loads less cargo than anticipated.

If no cargo is shipped and the charter contains no provision deeming freight earned in advance, lumpsum freight will not usually be payable. The shipowner’s remedy may instead be a claim for damages if the non-shipment resulted from the charterer’s breach. If some cargo is shipped but part is lost before delivery, a lumpsum clause may still entitle the shipowner to the full freight if the contract has been substantially performed or if the risk of cargo loss has been allocated to the charterer.

Lumpsum freight is not normally apportioned merely because part of the cargo is short-shipped or short-delivered. Where the freight bargain is a single fixed sum, the courts have generally been reluctant to divide it unless the charter clearly provides a method of apportionment. A charterer who wants freight to be reduced if the ship cannot load a stated quantity should say so expressly.

Freight and Transhipment in Voyage Charter

When the shipowner lawfully completes the carriage by transhipment, substituted ship, lighterage, or another reasonable method, freight may still be earned. The essential service is the carriage and delivery of the cargo, not necessarily delivery by the original ship in every circumstance. This principle is particularly important where casualty, port difficulty, or operational necessity prevents the named ship from completing the voyage in the ordinary way.

The result depends on the charterparty and the facts. If the shipowner is ready and willing to carry the cargo to the contractual destination, but the cargo owner requests delivery at an intermediate port, full freight may remain payable because the cargo owner has waived completion of the voyage. If, on the other hand, the shipowner cannot complete the voyage and the cargo owner merely receives the goods where the voyage has ended, the receipt of cargo alone does not usually create a liability for full or pro rata freight.

Pro Rata Freight

Pro rata freight is not payable merely because part of the voyage has been performed. The ordinary rule is that freight is earned at destination, not mile by mile. To recover pro rata freight after delivery short of destination, the shipowner must show an express or implied new agreement under which the cargo owner accepts delivery at the intermediate place in return for payment of a proportionate freight.

Such an agreement is not easily implied. If the voyage has been abandoned, or if delay has made completion commercially impossible, the cargo owner may be entitled to take the cargo without agreeing to pay freight for the incomplete carriage. However, where the shipowner remains able and willing to complete the voyage and the cargo owner chooses to take the goods earlier for commercial reasons, an agreement to pay freight, or even full freight, may be inferred.

Charterer Fault Preventing Freight from Being Earned

A charterer may prevent the shipowner from earning freight by failing to load cargo, failing to nominate a valid discharge port, failing to provide or present bills of lading when required, refusing to accept delivery, or otherwise frustrating the freight-earning event. In such cases the shipowner’s claim may be for damages rather than freight, unless the freight has already been earned under the charterparty.

The practical difference can be important. Freight is protected by the rule against set-off, while damages are subject to ordinary principles of causation, remoteness, mitigation, and proof. If the shipowner has no realistic opportunity to mitigate, damages may equal the full freight. If the shipowner can obtain substitute employment or other revenue, the damages may be reduced accordingly.

Who Must Pay Freight

The charterer is normally personally liable for freight unless the charterparty clearly provides otherwise or a cesser clause alters the position. In addition, freight liability may arise against a shipper, consignee, cargo owner, receiver, or lawful bill of lading holder if the contract of carriage or the applicable statute imposes such liability.

A person named as shipper in a bill of lading will often be treated as liable for bill of lading freight, but this is not automatic. The surrounding facts may show that the named shipper acted only as agent, or that the real freight contract was made with another party. A bill marked “freight prepaid” is relevant evidence, but it does not by itself prove that freight has actually been paid or that the original freight debtor is discharged.

Where a lawful holder of a bill of lading demands or takes delivery of cargo, that party may assume the liabilities under the bill, including freight liability, if the applicable statutory framework transfers such obligations. However, intermediate holders who merely hold and transfer documents without demanding delivery may not incur the same liability.

“Freight Payable as per Charterparty”

Bills of lading issued under a charter often state that freight is payable as per charterparty. This wording incorporates the charterparty freight provisions into the bill of lading so that the party entitled to freight can claim the freight specified in the incorporated charter. The incorporated terms may include the rate, currency, place of payment, timing, and permitted deductions.

Where a ship is time-chartered and then voyage-chartered, the head shipowner may have an interest in sub-freights. A lien on sub-freights can allow the head shipowner to intercept freight payable under a sub-charter if hire is unpaid. However, if sub-charter freight has already been paid in accordance with the incorporated payment machinery before notice of the lien, the payer may be discharged.

Freight payable to a third party requires careful analysis. A charter may direct payment into an account nominated by a charterer, broker, bank, or other person. In some situations that nominated recipient is treated as an agent for the party entitled to freight, meaning the payee’s authority may be revoked before payment is made. Security interests and assignments may complicate the position, but the central question remains: who has the legal right to demand the freight at the relevant time?

Deadfreight Is Not Freight

Deadfreight is compensation for cargo not loaded when the charterer was obliged to provide a full or minimum cargo. Although closely connected with the freight bargain, deadfreight is not freight itself. It is usually a claim in damages or liquidated damages for failure to load the contracted quantity.

This distinction matters when charterparty terms are incorporated into bills of lading. A phrase such as “freight payable as per charterparty” will not, without more, incorporate a personal liability for deadfreight. Wider incorporation wording may incorporate a lien for deadfreight, but a direct personal obligation to pay deadfreight requires clearer wording.

Currency and Exchange

Freight clauses commonly distinguish between the currency of account and the currency of payment. The currency of account expresses the commercial debt, while the currency of payment identifies the money in which payment must actually be made. A charter may state the freight rate in U.S. dollars, but require payment in another currency or into a particular bank account.

If the charter requires payment in a designated currency and bank account, the charterer must comply. If no currency of payment is specified, the answer may depend on the law of the place of payment and the wording of the charter. Where payment is made in a currency different from the currency of account, the amount must normally be converted at the relevant commercial exchange rate on the day of payment.

The reference in Gencon-style wording to the mean exchange rate on the day or days of payment is intended to prevent uncertainty and unfair exchange manipulation. Where official and commercial rates differ, the commercial rate at which the shipowner can realistically convert the money is usually the relevant measure.

Place and Time of Payment

The charterparty may name a bank, account, place, or payee. If it does not, freight is generally payable to the shipowner, disponent owner, or an authorized agent. A loading broker may have authority to receive freight due on shipment, and the master may have authority to receive freight due on delivery, unless that authority has been revoked or displaced by express instructions.

Freight may often be paid before the stated due date if the charter does not prohibit early payment and the payment is clearly made as freight for the relevant voyage. Once the freight has been properly paid to the contractually designated account, it may be too late for another party to intercept it by later asserting a lien or claim over sub-freights.

Where the charter says freight is payable within a stated number of days after signing or releasing bills of lading, disputes may arise over whether the shipowner must release bills marked “freight prepaid” before actual payment. The safest solution is clear drafting. If charterers want credit and immediate release of freight-prepaid bills, the charter should state this expressly. If shipowners require freight before releasing such bills, that should also be stated.

Payment in Cash

Payment “in cash” does not usually mean physical banknotes. Commercially equivalent methods such as bank transfers may satisfy the requirement if they give the shipowner an immediate and unconditional right to use the funds. A transfer that is subject to a later value date, condition, or possible reversal may not amount to cash payment until the funds are actually available without qualification.

Payment by cheque or bill of exchange is different. The shipowner is not normally obliged to accept such instruments as cash. If the shipowner does accept them, the payment is usually conditional until the instrument is honoured, unless the circumstances show that the shipowner accepted it in final satisfaction of the freight debt.

Freight Without Discount and the Rule Against Set-Off

The expression “without discount” reinforces the rule that freight is to be paid without unauthorized deductions. In voyage-charter practice, this is not a minor drafting phrase. It reflects a broader legal approach under which freight, once due, is treated as a protected debt. A charterer generally cannot deduct cargo claims, damages claims, dispatch claims, expenses, or other cross-claims from freight unless the charterparty expressly or impliedly permits the deduction.

This rule applies even where the charterer’s claim arises out of the same voyage. A claim for cargo damage, short delivery, delay, defective holds, pump problems, or breach of dispatch obligation may have to be pursued separately. It does not automatically reduce the freight invoice. The shipowner may obtain judgment or an interim arbitration award for freight while the charterer’s counterclaim is decided later.

The rule also applies to liquidated claims unless the charter provides otherwise. For example, dispatch money, overtime sharing, port expenses, or agreed credits are not deductible merely because they are quantifiable. They become deductible only if the freight clause, rider clause, or commercial arrangement clearly allows the deduction from freight.

Special Clauses Allowing Deductions in Voyage Charterparty

The parties may agree that certain amounts can be deducted from freight. Common examples include undisputed dispatch, brokerage, agreed address commission, loading-port advances, owner’s contribution to additional insurance, or cargo shortage amounts calculated under a specific formula. Such clauses must be read carefully because they may operate either as a final adjustment of freight or merely as interim security for a claim.

A shortage deduction clause may allow charterers to deduct the value of missing cargo regardless of whether the shipowner is legally liable for the shortage. Alternatively, the wording may permit deduction only where the shipowner is responsible for the loss. The difference is substantial. A clause that makes a surveyor’s or inspector’s finding final and binding should also identify the inspector, appointment procedure, measurement method, and scope of finality.

Freight Payable on Delivery

Where freight is payable on delivery, the shipowner must be ready to deliver the cargo at the contractual destination or other permitted delivery place. The receiver must be ready to pay freight as delivery takes place. These obligations are concurrent. The shipowner cannot usually insist on retaining all cargo on board until the full freight is paid if the receiver is ready and willing to pay on account during discharge.

If the receiver is not ready or willing to pay freight, the shipowner is not obliged to commence delivery and may retain the cargo. This is not merely a lien point. The duty to deliver and the right to be paid arise together. If payment is refused, the shipowner may maintain possession, suspend delivery, or take reasonable steps to protect the freight claim.

If the charterer refuses absolutely to pay freight or refuses to take delivery, the shipowner need not wait indefinitely. After the time required by the charterparty, or after a reasonable time where no period is stated, the shipowner may be entitled to freight and may take reasonable steps to preserve the cargo and enforce security.

Right and True Delivery

Freight clauses sometimes require payment on right and true delivery. This generally means delivery or tender of delivery to the right party, at the contractual place or an accepted alternative place, of cargo that has not lost its commercial identity. The phrase does not require the cargo to be perfectly sound unless the charter so provides.

Freight may therefore be payable even where the cargo is damaged, contaminated, wet, heated, rusty, or otherwise depreciated, provided the goods remain recognizably the cargo shipped. The charterer’s remedy for the damage is usually a separate cargo claim, not a deduction from freight. However, if the cargo has ceased to exist in a commercial sense, freight dependent on delivery may fail.

Damaged Cargo and Loss of Commercial Identity

The line between damaged cargo and cargo that has lost its commercial identity can be difficult. Coal that arrives as damaged coal may still be coal. Oil contaminated by residues may still be the particular oil shipped if the description can honestly be qualified rather than destroyed. But dates ruined by sewage, cement that no longer exists as cement, or cargo transformed into a different article of commerce may not constitute delivery of the cargo for freight purposes.

No single test is conclusive. The court or tribunal may consider commercial description, marketability, possibility of reconditioning, degree of contamination, remaining value, and whether honest merchants would still trade the goods under a description that sensibly includes the original cargo name. The issue is factual and commercial, not merely linguistic.

Advance Freight

Advance freight is freight paid before the ordinary delivery-based earning event. It may be payable on loading, on sailing, on signing bills of lading, within a stated number of banking days, or on request for loading-port disbursements. Unless the charter says otherwise, advance freight is normally non-returnable once it has become due and has been paid, even if the voyage is later frustrated.

The historical reason is commercial certainty and insurability. The party bearing the risk of freight can insure that risk. In modern practice, clauses often make the position explicit by stating that freight is discountless, non-returnable, and payable ship and/or cargo lost or not lost.

However, a payment called an advance is not always irrevocable freight. It may be a loan if the charter wording shows that the payment is to remain at the shipowner’s risk or is not truly made on account of freight. Modern clauses rarely intend that result, but the issue is still one of construction.

Cash Advances for Ordinary Disbursements

Gencon-style wording may require charterers, if asked, to advance cash for the ship’s ordinary disbursements at the loading port. Such advances are normally treated as advances against freight, not loans. They are made to fund the ship’s ordinary port expenses and are usually subject to a percentage deduction to cover insurance and related costs.

Ordinary disbursements may include port charges, agency expenses, and other routine costs necessary for the performance of the voyage. They do not normally include extraordinary repairs or unusual expenditure unless the wording is broad enough or the circumstances justify the inclusion. Bunkers and provisions may fall within the clause where they are ordinary and necessary for the voyage.

The obligation arises only if the shipowner or master requires the advance. A charterer cannot insist on making an advance merely to benefit from an exchange rate. Conversely, if the voyage has already been frustrated before any request is made, the shipowner cannot normally bring the advance clause into operation afterwards.

Advance Freight on Loading, Sailing, or Bills of Lading

If advance freight is payable on loading, it usually becomes due when the cargo quantity required for the calculation has been loaded. If the clause calls for payment as loading progresses, periodic payment may be required. If freight is payable on sailing, the ship must have departed from the loading place ready and intending to proceed on the cargo voyage; a mere movement within the port to await papers, crew, or supplies may not be enough.

Where freight is payable on signing bills of lading, the timing can be sensitive. If several bills of lading cover different parcels, freight attributable to each parcel may become payable when the relevant bill is signed. If the charterer wrongfully fails to present bills for signature and the shipowner is thereby prevented from earning advance freight before a casualty, the shipowner may have a damages claim equal to the lost advance freight.

Freight Deemed Earned on Shipment

A clause stating that freight is deemed earned on shipment, earned on cargo loaded, or due on signing bills of lading can turn freight into an accrued debt before delivery. Once that debt has crystallized, later frustration of the voyage, loss of cargo, loss of the ship, or accepted repudiation by the shipowner may not discharge the freight obligation if the clause is sufficiently clear.

The distinction between when freight is earned and when freight is payable is critical. Freight may be earned on loading but payable later, for example after discharge or after presentation of documents. If the earning wording is clear, later payment machinery does not necessarily postpone the accrual of the debt. If the clause is ambiguous, the traditional rule that freight is earned on delivery may still govern the unpaid balance.

“Ship or Cargo Lost or Not Lost”

The words “ship and/or cargo lost or not lost” allocate the risk of non-delivery to the charterer once the freight has been earned or has become payable under the clause. They are powerful words, but they are interpreted according to their precise function. They do not always accelerate the time when freight becomes due. If the freight has not yet been earned or become payable before the loss, the clause may not help unless the wording separately makes the debt accrue earlier.

A clause saying freight is non-returnable cargo and/or ship lost or not lost may protect freight already paid, but it may not create a right to freight not yet payable. A clause saying freight is deemed earned on loading, discountless and non-returnable, ship and/or cargo lost or not lost, is stronger because it fixes the earning point and the risk allocation together.

Freight Prepaid Bills of Lading

Bills of lading marked “freight prepaid” are commercially important because buyers, banks, and receivers may rely on them in sale and letter-of-credit transactions. The marking represents that freight has been paid, but under English law it is not necessarily a contractual term between the original parties. If freight has not in fact been paid, the shipowner may still have a claim against the charterer or shipper, depending on the contractual relationship.

However, the marking may create an estoppel against the shipowner in favour of an innocent consignee or lawful holder who relied on the representation when taking up the bill. For that reason, shipowners should be careful before authorizing freight-prepaid bills when freight has not actually been received, and charterers should be clear whether the charter gives them a credit period after release of such bills.

Freight, Liens, and Cargo Security

A shipowner may have a lien on cargo for freight, deadfreight, demurrage, or other sums if the charterparty and bill of lading provide it. Where freight is payable on delivery, the lien supports the shipowner’s right to retain cargo until payment is made or secured. Where freight is payable only after delivery, the lien may be unavailable unless the shipowner still retains control over the cargo after discharge.

Liens must be exercised carefully. A shipowner who releases cargo without collecting freight may lose practical security, although the personal freight claim may remain. In chains of charterparties, head shipowners often rely on liens over sub-freights rather than a physical lien over cargo. Timing and notice are decisive because sub-freight that has already been properly paid may no longer be available for interception.

U.S. Law on Freight in Voyage Charterparties

Under U.S. maritime law, the same basic distinction is recognized between freight under a voyage charterparty and hire under a time charterparty. Freight is compensation for the voyage carriage, while hire is compensation for the use of the ship over time. In the absence of contrary agreement, freight is generally earned on delivery of the cargo at the agreed destination.

U.S. voyage charters, particularly in dry cargo trades, usually modify that rule. Many clauses provide that freight is earned as cargo is loaded and that a major percentage is payable shortly after loading and bill of lading issuance, with the balance settled after discharge together with demurrage, dispatch, brokerage, and other final accounts. These clauses are valid if clearly drafted.

U.S. arbitrations also distinguish between lumpsum freight and per-unit freight. In a lumpsum fixture, the charterer may be entitled to use the available cubic capacity without paying more for additional cargo unless the charter says so. Likewise, the shipowner may not be entitled to deadfreight merely because the charterer did not fill every space, unless the charter clearly imposes a minimum-cargo obligation.

For per-ton freight, disputes commonly focus on measurement evidence: draft surveys, terminal scales, railway weights, official certificates, tally records, or independent survey reports. A master who suspects that bill of lading weights are wrong should protest promptly and, where appropriate, obtain independent verification. Uncorroborated ship figures may be insufficient to displace signed shipping documents.

U.S. Approach to “Without Discount”

In U.S. practice, “without discount” has been interpreted broadly to prevent set-off, recoupment, abatement, counterclaim, and similar deductions from freight unless the charterparty permits them. Cargo shortage, contamination, stevedore costs, crane problems, discharge expenses, port charges, and other asserted claims do not justify withholding freight simply because they arise from the same voyage.

Arbitrators may issue partial final awards for undisputed freight and award interest on withheld sums. This reflects the commercial view that freight should move according to the contract, while disputed cross-claims should be dealt with separately unless the parties have bargained for a specific deduction mechanism.

U.S. Law on Prepaid Freight and Owner Fault

U.S. courts generally enforce freight-earned and non-returnable freight clauses. If the failure to deliver cargo results from an excepted cause, restraint of government, peril of the sea, or other event not attributable to the shipowner’s actionable fault, the shipowner may retain prepaid freight according to the clause.

The position becomes more difficult where non-delivery results from the shipowner’s failure to exercise due diligence, unseaworthiness, negligent cargo care, or financial inability to perform. U.S. cases have sometimes denied the shipowner the right to retain prepaid freight where the voyage failed because of such fault. Other cases stress that the cargo owner’s remedy should avoid double recovery: the cargo owner should not receive both the value of performance and repayment of freight for the same loss.

The practical approach is to examine the cause of the failure, the freight wording, whether the voyage began, what damages were actually suffered, whether on-carriage was arranged, and whether returning freight would duplicate compensation already awarded through cargo-value or transhipment damages.

Reasoned Judgment in Abandoning or Altering the Voyage

Where unexpected danger, war, government restraint, casualty, port closure, or cargo condition affects the voyage, U.S. law places weight on whether the shipowner and master exercised reasoned judgment. The master is not required to be infallible, but must consider the ship, cargo, crew, contractual obligations, available alternatives, and the interests of all concerned.

If the decision to abandon, delay, discharge short of destination, or tranship is commercially and operationally reasonable, prepaid freight may remain protected. If the decision reflects disregard of cargo interests or is caused by an owner’s avoidable fault, the freight position may change and the shipowner may face a claim for repayment, on-carriage costs, or damages.

Practical Drafting Points

Freight clauses should state clearly whether freight is calculated on intaken quantity, delivered quantity, bill of lading quantity, draft survey, official scale weights, customs figures, or another measurement source. The clause should also say whether freight is payable on cargo lost during the voyage and how ordinary transit loss or measurement tolerance is treated.

If freight is intended to be earned before delivery, the clause should say exactly when it is earned and whether it is non-returnable. Wording such as “freight deemed earned on cargo loaded, discountless and non-returnable, ship and/or cargo lost or not lost” is stronger than a clause that merely states payment is to be made after bills of lading are signed.

If deductions are permitted, they should be listed precisely. Charterers should not assume that cargo claims, dispatch, brokerage, advances, expenses, or survey differences can be deducted from freight. Shipowners should not assume that “without discount” will override a carefully drafted special deduction clause.

Where bills of lading are to be marked freight prepaid, the charter should specify whether freight must actually be paid before release, whether the shipowner grants credit, what percentage is required, when the balance is payable, and whether the master may withhold bills until payment is received.

For chains of charterparties, the freight clause should be coordinated with lien clauses, payment-account instructions, assignment arrangements, third-party payees, cesser clauses, and bill of lading incorporation wording. Many freight disputes arise not because the rate is unclear, but because the contractual route of payment is not aligned with the commercial chain.

Conclusion

Freight in a voyage charterparty is more than a simple price for carriage. It is a carefully structured allocation of voyage risk, cargo risk, payment timing, measurement method, security, and documentary control. The traditional rule links freight to delivery, but modern charterparties frequently move the earning point to loading, sailing, or bill of lading issuance and may make freight non-returnable even if ship or cargo is later lost.

The safest commercial practice is precise drafting. Parties should identify the freight quantity, rate, earning point, payment date, currency, account, permitted deductions, lien position, bill of lading wording, and consequences of loss, damage, transhipment, or early termination. In freight disputes, small differences in wording can decide whether the shipowner has an immediate debt claim, a damages claim, a lien, or no recoverable freight at all.