GENCON Charterparty

GENCON 1994 is the latest revision of a long series of GENCON Charterparties dating back to the 1920s. In common with many recently revised charter parties, GENCON Charterparty appears in what is known as box form. On GENCON Charterparty, required information to be inserted in each fixture is conveniently allocated boxes on the front page, so that completing the charter party is relatively straightforward and the salient details can be seen at a glance. Printed clauses, which are referred to in the top right hand corner of each box, all appear in Part II, and are numbered 1 to 19. All charter parties emerge from negotiations between Shipowners and Charterers, usually through one or more shipbrokers, and the resulting agreement may well require amendments to some of the printed clauses. In addition, as the GENCON is designed for non-specialised trades, both parties to the contract may well insist on certain additional clauses (rider clauses) particular to their requirements to be attached to the standard form. As a general rule, all the details which will eventually be inserted in the boxes of Part I of the charter-party are negotiable, and most will feature at some stage in the offers and counter-offers which are traded back and forth during the negotiations. Although the most fiercely contested area may be that of the freight level, the dates and the time allowed for cargo operations may also be crucial to the fixture, as we will see below. Examining the boxes in Part I of the GENCON ’94 the first thing we find after the broker’s name and address is the date and place of when the ‘fixture’ (as a chartering agreement is called) was made. Next, there are boxes in which to enter the names of the parties and of course, the name of the ship details of its registered tonnages, dead weight, and any other characteristics important to the fixture, for example cubic capacity or perhaps the size of the hatches. Boxes 8 and 9 should not be overlooked; they describe the position of the ship relative to this particular charter. We all know that “ships don’t run like trains” and there are many factors, which may affect the vessel’s expected readiness to load. Nevertheless, this information should not be taken lightly. Because of the imponderables in time for merchant ships there is usually a span of some days between which the vessel may be presented for loading. If, however, an owner gives an expected readiness for box 9 and then subsequently takes on some intervening business which makes the ship much later than originally intended, he is guilty of misrepresentation. In extreme cases, such misrepresentation could be grounds for the charterer to cancel the contract, and the date when this could take effect is shown in box 21. Boxes 10, 11 and 12 take us to the loading and discharging ports and the type and quantity of cargo to be loaded. Note that the printed clause 1 to which these details relate qualifies the places of loading and discharging by the phrase ” or so near thereto as she may safely get and lie always afloat”. Some loading or discharging berths, especially those in tidal rivers where small coasters regularly load; do not have enough water alongside at low tide to allow ships to remain afloat. These are often referred to as “NAABSA” berths (Not Always Afloat But Safe Aground). If the ship is fixed for loading or discharging at such a place, this must be specifically agreed in the charter party, otherwise the Owners have every right to refuse to put their vessel there. As far as the cargo is concerned, the charterers are expected to give full details, and if they have fixed the ship for “a full and complete cargo” they can expect the Master and Owners to demand sufficient to bring the ship down to its load-line or to fill the cargo space. If they fail to satisfy this request they will be liable to pay “dead freight” on the shortfall as if it HAD been loaded. Boxes 13 and 14 give details of the freight payable, whether it be so much per tonne or a “lump-sum” or on some other basis, and how, when and where it should be paid. The options in the printed clause 4 need to be carefully considered in conjunction with these details. Then comes the all-important clause setting out the rate of freight including how, when and where it is to be paid. A crucial point in connection with the freight is the question of which party should be responsible for the costs (and risks) of loading and discharging the cargo. GENCON 1994 charterparty only envisages a situation where the shippers pay for the loading and the consignees for the discharging. These are known as FIO terms (free in and out) implying that both loading and discharging operations are free of expense to the shipowners. There are still trades where it is customary for the ship to pay for (or contribute to) the cost of loading and/or discharging and if the GENCON 1994 form was used for such a cargo then a typed clause would have to replace part of clause 5. Provision is made (in the case of a ship having its own cranes or derricks cargo handling gear often simply referred to as “gear”); for charterers (or their shippers/receivers) to make use of it in loading or discharging – provided that this is expressly agreed in advance by a note in box 15. Note also from the printed clause that the Owners expect the charterers to be responsible for putting right any stevedore damage noted by the Master during cargo handling operations. The next clause (clause 6, boxes 16, 17 and 18) introduces a word, which is exclusive to the world of chartering – ‘laytime’. A word of which the precise definition is almost lost in history but for our purposes refers to the time allowed for loading, respectively discharging. This clause may seem surprisingly long to the uninitiated dealing as it does with when the ship is ready to load/discharge and how long the operations may take. The fact remains that large sections of maritime law books are devoted to ‘time counting’ disputes and legal arguments about the ‘arrived ship’ have enriched many maritime lawyers and will no doubt continue to do so till the end of time. In addition there are many ways in which laytime can be expressed. In terms of hours or days, as so many tonnes per day, as separate periods for loading and discharging or a total time span for both operations, whether or not time stops counting for bad weather and so on. The ‘GENCON’ clause has been refined over the years in the light of successive legal and commercial disputes to avoid all the usual pitfalls but in reality there will always be scope for further argument. Linked to when time commences to count and the amount of time allowed for loading and discharging is the penalty for exceeding the agreed limits. A ship is only earning income when she is on the move, not when she is lying idle in a port. A shipowner is, therefore, anxious to keep the time spent in loading and discharging to a minimum. If the charterers take too long over it, then the owner wants compensation which is covered by including a rate of ‘demurrage’ for every day or part of a day by which the agreed time is exceeded. The sum negotiated for this is inserted in box 20 and governed by clause 7. In some dry cargo trades the converse may also apply, in that the charterers can earn a bonus if they load/discharge the ship in less time than agreed. This is termed ‘despatch money’ and if such an agreement is made it must be inserted as a typed clause in the GENCON 1994 form. So clauses 5, 6 and 7 cover this dispute-prone area of time in port.