Ship Hire Money Due
The term Hire is also used to refer to the payment due from Charterers to Shipowners for the use of their ship.
See for example the following standard Time Charter Ship Hire terms:
- NYPE 1946 form refers to ‘payment of said hire’ (clause 5)
- NYPE 1993 form refers to ‘rate of hire’, ‘hire payment’ and ‘payment of hire’ (Clauses 10-11)
- Baltime 1939 form provides that ‘The Charterers shall pay as hire the rate stated in Box 19’ (clause 6)
Usually, Ship Hire Money Dues are given as Daily Rates and paid in advance 15 days.
Time Charter Ship Hire
Time charter ship hire, also known as time chartering, is a form of ship hire agreement where a vessel is leased for a specific period of time. In this arrangement, the charterer gains more control over the ship’s operations while the shipowner provides the vessel and its crew.
Here are some key points about time charter ship hire:
- Duration: The time charter agreement specifies the duration of the charter period, which can range from a few weeks to several months or even years. During this time, the charterer has the right to use the vessel for their transportation needs.
- Charterer’s Control: Under a time charter, the charterer has a higher level of control over the vessel compared to other types of ship hire agreements. They determine the ports, routes, and cargo to be carried, subject to any restrictions or limitations outlined in the contract.
- Operating Expenses: The charterer is responsible for covering the operating expenses during the charter period. These expenses typically include crew wages, fuel costs, maintenance, and other operational costs. The shipowner may provide technical support and assistance, but the charterer assumes the financial responsibility.
- Freight Rates: The charterer may generate revenue by sub-chartering the vessel to third parties, who pay freight rates for the cargo transported. The charterer negotiates these rates and profits from the difference between the freight collected and the expenses incurred.
- Obligations of Shipowner: The shipowner is responsible for providing a seaworthy vessel that is fit for the intended purpose. They also ensure that the vessel is properly manned, equipped, and maintained throughout the charter period.
- Laytime and Demurrage: The time charter agreement may specify provisions regarding laytime, which is the allowed time for loading and unloading cargo. If the charterer exceeds the agreed-upon laytime, they may incur additional charges called demurrage.
- Insurance: The responsibility for insuring the vessel typically falls on the shipowner. However, the charterer may be required to provide insurance coverage for the cargo and any liabilities arising from their operations.
Time charter ship hire offers flexibility to charterers who have a consistent need for maritime transportation but prefer not to own or manage their own fleet of vessels. It allows them to tailor their shipping operations to meet specific requirements without the long-term commitment associated with ship ownership.
It is essential for both parties to carefully negotiate and draft the time charter agreement, considering factors such as rates, duration, responsibilities, and dispute resolution mechanisms. Seeking legal advice and adhering to industry practices and regulations is advisable to ensure a smooth and mutually beneficial ship hire arrangement.
When is Ship Hire Money Due?
In most cases, ship hire payments are made periodically throughout the charter period. Common payment frequencies include:
- Monthly: The charterer pays the ship hire money on a monthly basis, typically in advance for the upcoming month.
- Bi-monthly: Payments are made every two months, with the charterer settling the ship hire money for a two-month period.
- Quarterly: Ship hire payments are made every three months, covering the ship hire money for a three-month period.
The specific due dates for ship hire payments are usually outlined in the charter agreement and are subject to negotiation between the charterer and the shipowner. It is essential for both parties to adhere to the agreed-upon payment schedule to maintain a smooth and mutually beneficial relationship.
Ship Hire Money Due in NYPE
In the maritime industry, the New York Produce Exchange form, commonly known as NYPE, is a widely used standard contract for time charter ship hire agreements. The NYPE form provides a framework for negotiating the terms and conditions of the charter, including the payment of ship hire money.
Regarding the payment schedule and due dates for ship hire money under the NYPE form, they are typically outlined in Clause 11 of the contract. Here are the key provisions related to ship hire payments in NYPE:
- Payment Period: The ship hire money is usually payable in regular installments, referred to as “half-monthly payments” in the NYPE form. This means that the ship hire amount is divided into two equal parts and paid in two installments each month.
- Due Dates: Under the NYPE form, the ship hire money is commonly payable in advance on the first and fifteenth day of each month. For example, the charterer would make the first payment in advance on the first day of the month, and the second payment on the fifteenth day of the month.
- Time of Payment: The NYPE form specifies that ship hire payments should be made “at or before” the due dates mentioned above. This means that the payments should be received by the shipowner on or before the specified due dates.
- Currency: The NYPE form typically states the currency in which the ship hire money should be paid, such as US dollars (USD) or another agreed-upon currency. The charterer is responsible for ensuring that the payments are made in the specified currency.
It’s important to note that while the NYPE form provides a commonly used framework, specific details regarding ship hire payment terms can be negotiated and customized between the charterer and the shipowner. Therefore, it is essential to refer to the specific terms outlined in the NYPE contract being used for the ship hire agreement in question.
As with any ship hire agreement, both parties should adhere to the payment terms and ensure timely and accurate payments to maintain a smooth relationship throughout the charter period.
Adhering to the payment terms outlined in the NYPE form is crucial for both the charterer and the shipowner to maintain a harmonious working relationship. Timely payment of ship hire money ensures the shipowner receives the agreed-upon compensation for providing the vessel and related services.
Late or non-payment of ship hire money can have serious consequences. It can lead to disputes, breach of contract claims, and even potential termination of the charter agreement. Therefore, it is essential for the charterer to fulfill their financial obligations and make ship hire payments on or before the specified due dates.
To facilitate the payment process, it is common for ship hire agreements under the NYPE form to include provisions regarding payment methods, such as wire transfers, electronic funds transfers, or other mutually agreed-upon means. These details should be specified in the contract to ensure a smooth and efficient payment process.
In addition to the payment schedule, the NYPE form may also address matters such as the currency conversion rate, any applicable interest on late payments, and the consequences of non-payment. It is advisable for both parties to thoroughly review and understand the payment-related clauses in the NYPE contract to avoid any misunderstandings or disputes.
Furthermore, it is essential for the charterer to maintain accurate records of ship hire payments made throughout the charter period. These records can serve as evidence of compliance with payment obligations and provide a clear financial trail for both parties.
Overall, in a time charter ship hire agreement governed by the NYPE form, the ship hire money is typically due in equal installments on the first and fifteenth day of each month, unless otherwise negotiated and specified in the contract. Adhering to these payment terms is crucial for maintaining a positive and mutually beneficial relationship between the charterer and the shipowner.
Late or Non-Payment of Ship Hire Money
Late or non-payment of ship hire money in a ship hire agreement can have significant consequences and may result in various legal and practical implications. Here are some key points to consider:
- Breach of Contract: Late or non-payment of ship hire money constitutes a breach of the charter agreement. The agreement typically specifies the payment terms and due dates, and failing to adhere to these terms can be considered a violation of the contract.
- Penalties and Interest: The charter agreement may include provisions regarding penalties or interest charges for late payments. These provisions may specify a fixed penalty or an interest rate that accrues on outstanding payments. The purpose is to incentivize timely payments and compensate the shipowner for the delay in receiving the funds.
- Legal Remedies: If the charterer fails to make timely payments or completely defaults on ship hire money, the shipowner may pursue legal remedies. This can include initiating legal proceedings to recover the outstanding payments, potentially leading to financial penalties or damages against the defaulting party.
- Termination of the Charter: Non-payment or persistent late payments may give the shipowner the right to terminate the charter agreement. The agreement may include provisions specifying the conditions under which the shipowner can terminate the contract due to non-payment. Termination can result in the immediate cessation of ship services and the potential for additional claims for losses suffered by the shipowner.
- Damage to Reputation: Late or non-payment can harm the charterer’s reputation within the maritime industry. Word spreads quickly, and repeated instances of non-payment may make it difficult for the charterer to secure future ship hire agreements or establish relationships with reliable shipowners.
To avoid the consequences of late or non-payment, it is crucial for the charterer to fulfill their payment obligations in a timely manner. Open communication between the charterer and the shipowner can help address any potential payment issues, allowing for negotiations or alternative arrangements if needed.
In case the charterer anticipates difficulties in making payments, it is advisable to inform the shipowner promptly and discuss potential solutions, such as restructuring the payment schedule or seeking financial assistance. Proactive communication and cooperation can help mitigate the negative impact of payment challenges.
Ultimately, it is in the best interest of both parties to adhere to the payment terms agreed upon in the charter agreement and promptly resolve any issues related to ship hire money to maintain a healthy and productive working relationship.