GENCON Freight Clauses

Charterparty normally records the agreed rate of freight, the unit of measurement of cargo to which it applies, and the time and place of payment. The calculation of freight is usually a straightforward operation, although it is important to indicate in the charter whether the
assessment has to be made on the quantity of cargo shipped or on the quantity discharged. The reason is that where cargo is weighed both on loading and on discharge, discrepancies between the recorded figures frequently arise which are caused either by defects in the weighing machinery or by natural factors. Thus certain cargoes are liable to spillage or evaporation which will reduce their weight on discharge, while other cargoes may increase in weight during the voyage as a result of absorbing moisture. Many of these problems will be avoided if the freight is quoted as a lump sum for the  voyage, regardless of the quantity of cargo shipped. This procedure will normally be adopted in cases where adequate facilities are not available at the relevant ports for weighing the cargo, or where the parties are uncertain as to the amount of cargo that will be available. There would seem to be little advantage in not invoking the lump sum procedure when cargo is shipped in bulk and the charterer is responsible for providing a ‘full and complete cargo’, since in such an event any shortfall has to be paid for in the form of dead freight. Provision is also made in the standard form for indicating whether the freight is payable
in advance on signing bills of lading, or only on delivery of the goods at their destination.  In the latter event it is usual to protect the interests of the shipowner by including a clause granting him a lien on the cargo until the freight is paid. It is also, of course, possible to require part of the freight to be paid in advance and the balance on delivery of the cargo. Additional clauses will normally make provision for the currency in which the freight is to be paid. In a period of fluctuating exchange rates this is a matter of particular importance to the shipowner, especially where the expenses of the voyage are likely to be incurred in a different currency. One final matter requiring clarification is whether the quoted freight rate includes the cost of loading and discharging the cargo, or whether these costs are an additional expense to be borne by the charterer. Where bulk cargoes are loaded at private wharves, or where it is otherwise difficult to estimate port handling charges in advance, freight is more conveniently quoted on ‘net’ terms and the handling costs are left to be paid directly by the charterer or consignee. Even where ‘gross’ terms are quoted, and the port handling charges are for the
shipowner’s account he will often protect himself with a clause stipulating that he is only liable for such charges providing that they do not exceed a specified rate per tonne of cargo.