Misdescription of Ship

Charterers’ remedies for misdescription of a ship. If the charterers do not discover the misdescription until after they have accepted delivery (for example where the vessel does not comply with the speed and consumption warranty which the charterers will only discover during the voyages or at the end of the charterparty) the charterers can claim damages for breach of the charterparty and in certain cases can terminate the charterparty. An example of where they can terminate the charterparty is where the vessel’s lack of speed or excess of fuel consumption is so fundamental to the charterparty that it entitles the charterers to treat the charterparty as being discharged. The more difficult question is what happens where the charterers realise that the vessel does not comply with her description either before delivery takes place or on delivery. Whether the charterers are entitled to refuse delivery or whether they are merely entitled to claim damages depends on the element of the description which is inaccurate and the seriousness of the misdescription. Whether a particular misdescription is a condition, an innominate term or a warranty will depend on the particular words used and the facts of the specific case. The courts have held that the only parts of the description of a vessel which are ‘substantial ingredients’ of the vessel’s identity could be conditions thereby entitling the charterers to refuse to take delivery of the vessel. If the misdescription does not relate to a condition of the charterparty the charterers only have the right to refuse delivery and to treat the charterparty as terminated if:

(1) the total effect of the misdescription is so serious that it goes to the root of the charterparty and deprives the charterers of substantially the whole benefit of the charterparty; or

(2) the ship owners refuse or fail to take steps to make the ship comply with the description in such manner that their refusal or failure shows an intention no longer to be bound by the contract which amounts to a repudiation of the charterparty; or

(3) the misdescription is such that the ship owners are unable by the cancelling date to satisfy the requirements of fitness for the purposes of the cancelling clause, the charterers can then cancel the charterparty under the terms of the cancellation clause.