Ship Misdescription

Charterers’ remedies for Misdescription of 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 ship 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 of Ship 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 of Ship 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 of Ship 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 Shipowners 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 of Ship is such that the Shipowners 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.

–

Misdescription of a Ship in Charterparty

Shipowners, to protect themselves  from claims for marginal Ship Misdescription, will often preface any description of the ship with the word about that introduces a margin of error in favour of the shipowners.

There is little guidance as to what margin is permitted by reference to the word about. The approach of the courts will seek guidance from what a reasonable commercial person engaged in shipping would understand to be an acceptable margin of error to be allowed for the word about.

Generally, in relation to a ship’s speed and performance about is taken to mean half a knot in relation to speed and +5% or -5% in relation to fuel consumption.

In ‘EI Yam’ v ‘Invotra’ 1958 the ship was described as being of about 478,000 cubic feet bale capacity but her actual bale capacity was 484,015 cubic feet. Delvin J held that even if this was a Ship Misdescription, and therefore a breach by shipowners, their breach was not repudiatory.

Furthermore, Delvin J indicated, in the context of ‘EI Yam’ v ‘Invotra’ 1958 case, that the meaning of about would have been satisfied by the margin of 1.2% which was in question in relation to the ship’s description.

In earlier cases in relation to deadweight capacity about has been held to encompass a much wider margin.

The ship’s capacity will often be described by reference to her deadweight, bale capacity or container intake capacity.

Ship Misdescription by over or under statement of any of these characteristics may give rise to the right on the part of the charterers to terminate the charterparty. However, the right to terminate will depend very much on the extent of the breach or Ship Misdescription.

If the Ship Misdescription is minor and therefore of limited consequences then the right to terminate the charterparty is unlikely to arise and charterers would be entitled to claim damages alone.

–

Ship Misdescription in Charterparty

If the vessel is not correctly described by owners at the time the charter is entered into, charterers may, depending upon what is misdescribed and its importance in the context of the contract negotiations, reject the vessel and thereby treat the charter as terminated.

When considering the legal position, which arises when the vessel is misdescribed, it is necessary to distinguish between two alternative remedies that may be available to charterers.

At common law charterers have the following rights: If the term of the charter, which has been breached, amounts to a condition, charterers can refuse delivery or they may terminate the contract, provided they act promptly upon discovering the misdescription.

Condition has a special legal meaning in the present context. Whenever any term of the charter is breached, the innocent party is entitled to claim damages. Only in certain circumstances may he also have the right to treat the breach as a repudiation of the charter and to elect to bring the charter to an end.

Whether or not this latter right will arise depends upon the importance of the term, which has been broken, and for this purpose contractual terms fall into three classes:

1. Conditions
2. Warranties
3. Intermediate terms

—

Misdescription of Ship in Charterparty

A misdescription of the ship in the charter party can create significant legal issues.

For example, if the charter party describes the ship as being capable of carrying a certain quantity of goods, and it turns out that the ship’s actual capacity is less than that, the charterer might be able to claim damages for the loss of profits that would have been made from the goods that could not be transported.

Furthermore, if the charter party misrepresents the condition of the ship, such as its seaworthiness, speed, fuel efficiency or other performance-related factors, it could lead to a breach of contract. If the charterer relied on these descriptions when entering into the contract and it turns out they were inaccurate, the shipowner could be held liable for damages.

However, minor or insignificant misdescriptions may not constitute a breach of the contract. The misdescription would typically need to be material, meaning that it would have to be of such a nature that the charterer would not have entered into the contract if they had known the true facts.

In some cases, the charter party might contain a clause that allows for some degree of variance in the description of the ship. These clauses can provide protection for the shipowner against claims for minor misdescriptions. However, such a clause would not typically protect against major misrepresentations or fraudulent descriptions.

In conclusion, a misdescription of a ship in a charter party can lead to significant legal consequences. Therefore, it is very important for both the shipowner and charterer to ensure that the description of the ship in the charter party is as accurate as possible.

In addition to the direct legal consequences such as claims for damages, there can also be indirect implications. Misdescription can lead to loss of trust and reputation, which are vital in the shipping business. Future business relationships may be affected, and the shipowner might find it more difficult to find charterers willing to enter into a contract with them.

Moreover, if the misdescription is about the ship’s compliance with safety and environmental regulations, it could also lead to sanctions or penalties from regulatory bodies. This is particularly relevant in the current context where the shipping industry faces increasing scrutiny regarding environmental standards.

From the charterer’s perspective, a misdescription could lead to operational issues. For example, if the ship is slower than described, the charterer might not be able to deliver goods on time, leading to potential contractual breaches with their own clients. Similarly, if the ship consumes more bunker (fuel) than indicated in the contract, the charterer would have to bear higher operational costs.

In order to mitigate these risks, both parties should undertake due diligence before entering into a charter party. The shipowner should ensure that the description of the ship is accurate and verifiable. On the other hand, the charterer should verify the information provided and possibly even inspect the ship before signing the contract.

In the event of a dispute arising from a misdescription, both parties should attempt to resolve the issue amicably, possibly through negotiation or mediation. If this is not possible, they may have to resort to legal proceedings. In such cases, the exact terms of the contract, the nature and extent of the misdescription, and the laws of the jurisdiction governing the contract will be key factors in determining the outcome.

A misdescription of a ship in a charter party can have serious legal, financial, and operational implications. Both shipowners and charterers should take steps to ensure the accuracy of the description of the ship in the charter party, and to handle any disputes that arise in a fair and constructive manner.

 

Misdescription of Ship is a Condition, an Innominate Term or a Warranty

In English law, the misdescription of a ship can be classified as either a condition, an innominate term, or a warranty, depending on the circumstances and the intention of the parties involved in the contract. Let’s explore each classification:

1. Condition: A condition is an essential term of the contract that goes to the root of the agreement. If the misdescription of the ship is considered a condition, it means that the incorrect description of the ship’s characteristics or features is considered a fundamental breach of the contract. In such cases, the innocent party would have the right to terminate the contract and potentially claim damages.
2. Innominate Term: An innominate term is a contractual term that does not fit into the categories of condition or warranty. Instead, the court determines the effect of the breach based on the consequences of the breach itself. If the misdescription of the ship is an innominate term, the court will examine the seriousness of the misdescription and its impact on the contract. Depending on the circumstances, the innocent party may be entitled to terminate the contract and seek damages.
3. Warranty: A warranty is a less essential term compared to a condition. If the misdescription of the ship is considered a warranty, it means that it is a minor or ancillary term of the contract. Breach of a warranty entitles the innocent party to claim damages but does not give them the right to terminate the contract. However, if the warranty is deemed to be a condition “by construction,” the innocent party may still have the right to terminate the contract.

It’s important to note that the classification of misdescription as a condition, an innominate term, or a warranty ultimately depends on the specific facts and circumstances of each case, as well as the intentions of the parties involved in the contract. Legal advice should be sought for a comprehensive understanding of how the law applies to a particular situation.

Charterers’ Remedies for Misdescription of Ship

When charterers encounter a misdescription of a ship, they may have various remedies available to them under English law. The specific remedies depend on the nature of the misdescription and the terms of the charter contract. Here are some common remedies that charterers may consider:

1. Termination: If the misdescription is substantial and goes to the root of the charter contract, charterers may have the right to terminate the agreement. Termination allows them to be relieved of their obligations under the contract and potentially claim damages for any losses suffered as a result of the misdescription.
2. Damages: Charterers may seek damages for any losses incurred due to the misdescription. This could include additional costs incurred as a result of the misdescribed ship, such as expenses related to repairs, delays, or the need for alternative arrangements.
3. Specific Performance: In some cases, charterers may seek specific performance, which means they ask the court to enforce the contract as originally intended. This remedy is more commonly sought when the misdescription is not substantial and the charterers still want to proceed with the contract, but with appropriate compensation for the misdescription.
4. Abatement of Hire: If the ship’s misdescription affects its performance or suitability for the charterers’ intended use, they may be entitled to a reduction or abatement of the hire payable under the charter contract. This reduction reflects the diminished value or utility of the ship due to the misdescription.
5. Rectification: In certain situations, charterers may seek rectification of the charter contract to correct the misdescription. This remedy aims to adjust the terms of the contract to accurately reflect the agreed-upon ship’s characteristics or features.

It’s important to note that the availability of these remedies and their specific application can vary depending on the facts, the terms of the charter contract, and the governing law. Seeking legal advice from a qualified professional is recommended to understand the precise remedies available in a particular situation.