Ship Speed and Consumption Warranty in Time Charter Party: Good Weather, About Margin, and Claims

Charter Party Terms

In charter party law, the wording used in the contract is not merely descriptive. It determines what the parties have promised, how serious a breach may be, and which remedies may be available when performance does not match the agreed bargain. Charter party provisions are commonly examined under three broad categories: conditions, warranties, and innominate terms.

These categories are especially important in time charter disputes because the charterer pays hire for the use of the ship over a period of time, while the shipowner remains responsible for navigation, manning, technical management, and maintenance. A dispute over speed, consumption, seaworthiness, routing, bunkers, or delay may therefore depend not only on what happened, but also on how the relevant clause is legally classified.

Charter Party Terms:

Conditions
Warranties
Innominate Terms

Conditions are terms of central importance. A condition goes to the foundation of the contract. If a condition is breached, the innocent party may usually claim damages and may also be entitled to treat the contract as at an end. In a charter party context, a cancelling date, a fundamental description of the ship, or an obligation that directly affects the commercial identity of the contract may in appropriate circumstances be treated as a condition.

Warranties are contractual promises that are less fundamental than conditions. A breach of warranty normally gives the innocent party a right to damages, but not a right to terminate the charter party. A warranty may still be commercially important, particularly where the breach produces measurable financial loss, but the breach does not by itself deprive the innocent party of the whole benefit of the agreement.

Innominate Terms, also called intermediate terms, occupy the middle ground. The consequence of breaching an innominate term depends on the seriousness of the breach and the effect it has on the contract. If the breach is relatively minor, damages may be the only remedy. If the breach is so serious that it deprives the innocent party of substantially the whole benefit of the contract, termination may be available.

The classification of a charter party term is not always obvious. Courts and tribunals examine the language of the contract, the commercial purpose of the clause, the importance of the promise to the parties, and the consequences of breach. The more important a term is to the commercial bargain, the more likely it is to be treated as a condition.

What is an Innominate Term in a Charter Party?

An innominate term is a contractual term whose legal consequences are not fixed in advance. Instead of asking only whether the clause is labelled as a condition or warranty, the court or tribunal asks what practical effect the breach has had on the charter party.

This approach is particularly useful in shipping contracts because a single obligation may be breached in many different ways. For example, a promise relating to seaworthiness, maintenance, efficiency, or performance may be breached slightly or severely. A minor defect that causes a short delay may not justify termination, while a major defect that makes the ship commercially unusable for the charter service may have much more serious consequences.

The leading authority is Hong Kong Fir Shipping v Kawasaki Kisen Kaisha Ltd (1962). In that case, the ship was chartered for 24 months but suffered from machinery problems and an incompetent engine room staff. The ship was unavailable for about 20 weeks. Kawasaki Kisen Kaisha Ltd argued that Hong Kong Fir Shipping Co Ltd had failed to provide a seaworthy ship and sought to terminate the charter.

The court rejected a rigid classification of the seaworthiness obligation as either a condition or a warranty. Instead, the court treated the obligation as an innominate term and examined whether the breach deprived Kawasaki Kisen Kaisha Ltd of substantially the whole benefit of the charter. Since the ship was not unavailable for such a large part of the 24-month charter as to destroy the commercial purpose of the contract, Kawasaki Kisen Kaisha Ltd was not entitled to terminate, although damages could be claimed.

The decision in Hong Kong Fir Shipping v Kawasaki Kisen Kaisha Ltd (1962) remains central to charter party analysis. It shows that the legal remedy for breach may depend on the gravity of the consequences rather than on a simple label. This matters in speed and consumption disputes because a ship may underperform slightly, intermittently, or substantially. The contractual response will depend on the wording and the commercial effect of the failure.

Ship Speed and Consumption Warranty in Time Charter Party

A speed and consumption warranty is one of the most commercially sensitive provisions in a time charter party. Under a time charter, the charterer hires the commercial use of the ship for an agreed period, pays hire, pays for bunkers, gives employment orders, and makes voyage calculations based on the performance described in the charter party. The shipowner, meanwhile, continues to manage the ship technically and remains responsible for the master, crew, navigation, maintenance, and safe operation of the ship.

The speed and consumption warranty usually appears in the ship description clause. It states the speed the ship is expected to achieve and the fuel she is expected to consume under defined conditions. These figures influence voyage estimates, bunker planning, hire calculations, sub-charter decisions, freight negotiations, and the profitability of the charter employment.

If the ship fails to achieve the warranted speed or consumes more bunkers than warranted, the charterer may bring a claim for damages. The usual claim is not that the charter party should be terminated, but that the charterer has lost time, paid additional hire, or incurred extra bunker costs because the ship did not perform as described.

Determining whether a particular term is a condition or a warranty depends on the intention, interpretation, and construction of each individual contract.

In many time charter disputes, speed and consumption provisions are treated as warranties or performance undertakings, with damages being the normal remedy. However, the precise result depends on the wording of the clause, whether the promise is continuing, whether it is restricted to good weather, whether the word “about” is used, and whether any special performance assessment clause has been incorporated.

Typical Speed and Consumption Warranty in a Time Charter Party

A standard ship description may provide that the owners guarantee the ship’s performance during the charter, usually subject to good weather and sea conditions. A typical provision may read as follows:

Example of a Typical Speed and Consumption Warranty in a Time Charterparty Generally mentioned under the Ship Description Clause:

“The owners guarantee that the ship will maintain the following speed and consumption throughout the duration of this charter party, under good weather conditions:

Speed loaded: about 13 knots
Speed ballast: about 13 knots
Type of bunkers: VLSFO for the main engine
Consumption: a. At sea: about 25 mt VLSFO plus about 2 mt LSMGO b. In port idle: about 2 mt LSMGO c. Gear working per 24 hours: about 4 mt LSMGO

The wording may vary significantly. Some clauses distinguish between laden and ballast performance. Some set different eco speed, service speed, and maximum speed figures. Some identify weather limits by reference to the Beaufort Wind Scale and Douglas Sea State. Some clauses also refer to no adverse current, no negative influence of swell, no shallow water effect, no ice, no congestion, or no charterers’ slow steaming instructions.

The narrower and clearer the clause, the easier it is to apply. The more general the clause, the greater the scope for disagreement over what weather data should be used, which sea passages should be included, whether current should be deducted, and whether the ship’s logbook or a weather routing company’s report should prevail.

Good Weather Conditions in Time Charter Parties

Speed and consumption warranties are frequently expressed to apply only in good weather conditions. This qualification is important because a ship’s speed and fuel consumption are materially affected by wind, sea state, swell, current, draft, trim, fouling, engine condition, and routing decisions.

Good weather is commonly defined by reference to the Beaufort Wind Scale and Douglas Sea State. A common benchmark in charter party practice is Beaufort force 4 or below, but the precise test depends on the wording agreed by the parties. If the charter party expressly defines good weather, that definition should be applied. If the charter party is silent or vague, disputes may arise over whether a period qualifies for performance assessment.

Good weather evidence is normally taken from the ship’s deck log, engine log, noon reports, weather routing reports, satellite data, and sometimes independent meteorological records. The master and officers must therefore record weather, swell, sea state, wind direction, wind force, current, RPM, distance made good, slip, engine performance, bunker consumption, and any operational instructions with care.

Performance analysis usually begins by identifying good weather periods. If the ship underperforms during those periods, a tribunal may use that underperformance as a basis for extrapolating loss across the whole sea passage, depending on the contractual wording and the accepted method of assessment.

Weather routing services can be useful, but they do not remove the master’s navigational authority. The master remains responsible for the safety of the ship, crew, and cargo. A master may decide to avoid heavy weather, alter course, reduce speed for safety, or disregard a recommended route if following that route would endanger the ship. BIMCO’s Weather Routeing Clause for Time Charter Parties 2006 reflects this balance: the master may be required to comply with reporting procedures, but is not obliged to follow weather routing advice where safety requires otherwise.

Weather Routing Companies and Performance Evidence

Weather routing companies often play a major role in speed and consumption disputes. Charterers may appoint a weather routing service to monitor the voyage, provide recommended routes, collect weather data, and prepare a post-voyage performance report. Owners may rely on the ship’s records or appoint their own expert to challenge the charterers’ analysis.

A frequent dispute concerns whether the weather routing report should override the ship’s logbook. Some charter parties contain an evidence clause stating which source will prevail if there is a conflict. BIMCO’s Evidence of Performance Clause 2006, for example, provides a contractual mechanism for using the ship’s logbook unless substantially contradicted by the final report of an independent weather routing service supported by recognized weather authority data.

In the absence of such wording, there is no automatic rule that a routing company’s report is superior to the ship’s records. Equally, there is no automatic rule that the ship’s logbook is conclusive. The tribunal will examine the reliability of all evidence. Logbooks may be challenged if observations are inconsistent, incomplete, or unrealistic. Routing reports may be challenged if they rely on grid data, nearby observations, hindcast models, or assumptions that do not accurately reflect the conditions encountered by the ship.

Owners and charterers should therefore avoid vague performance clauses. A well-drafted clause should identify the weather criteria, the method of calculation, whether currents are considered, the minimum duration of good weather periods, the evidence to be used, and the consequences of conflicting data.

ABOUT Term in Ship Speed and Consumption Warranties in Time Charterparties

The word “about” is one of the most disputed words in speed and consumption clauses. It gives a margin of tolerance because ship performance at sea cannot be measured with laboratory precision. Weather, currents, loading condition, trim, sea passage length, and navigation all influence the result.

In London arbitration practice, “about” in relation to speed is often treated as allowing a margin of 0.5 knot. For example, if the ship is warranted to perform at about 13.5 knots, performance at 13.0 knots may fall within the accepted margin. However, this is not an inflexible rule of law. The appropriate margin may depend on the ship’s type, configuration, size, draft, trim, and the wording of the charter party.

For bunker consumption, English law does not impose a fixed statutory allowance. In commercial and arbitral practice, “about” is often treated as allowing an approximate 5% margin for fuel consumption, although some awards have applied different figures depending on the clause and facts.

The use of “about” for both speed and consumption may produce difficult arguments. Owners may contend that the ship is allowed both a speed tolerance and a fuel tolerance. Charterers may argue that allowing both margins gives owners a double benefit. The answer depends on the wording. A clause stating “about V knots on about Q mt per day” will not necessarily be interpreted in the same way as a detailed performance table with multiple speed and consumption levels.

However, the warranted fuel consumption would not be automatically reduced if the obtained speed was only 0.5 knots lower than the Charter Party Speed. In many cases, the natural reading is that the ship must be capable of achieving the warranted speed, less any accepted “about” margin, on the stated fuel consumption, plus any accepted “about” margin for bunkers. A proportional reduction of consumption may apply only where the wording or the structure of the performance table supports that interpretation.

How Ship Underperformance is Assessed

Ship speed and consumption claims are usually assessed by comparing the ship’s actual performance against the contractual warranty under the agreed conditions. The analysis must be methodical because small differences in speed, distance, current, or bunker figures can produce substantial financial claims.

The usual assessment involves three questions:

What was the warranted speed and consumption under the charter party?
Did the ship perform below the warranted standard during good weather periods?
If underperformance is established, what loss of time and/or additional bunker consumption should be applied to the relevant sea passages?

The well-known approach associated with speed and consumption disputes first examines performance in good weather and then applies the established variation, where appropriate, across the voyage. This does not mean that every bad weather period is directly tested against the warranty. Rather, good weather performance is used as evidence of the ship’s capability and may then be used for calculating the overall loss.

Modern disputes often include disagreements over the treatment of currents. If the clause says “no adverse current,” charterers may seek to deduct adverse current from the ship’s speed analysis. If the clause is silent about favourable current, owners may argue that charterers cannot use favourable current to reduce the ship’s apparent performance. Recent arbitration discussions show that current wording must be drafted carefully because the treatment of favourable and adverse currents can materially affect the result.

Calculating a Ship Speed Claim

Calculating a Ship Speed Claim can be exemplified as follows:

Vessel Name: MV HANDY HANDAN Charter Party Speed: about 14.0 knots Charter Party Fuel Consumption: about 24 mt VLSFO per day

Assume the ship performs a sea passage from Port X to Port Y of 8,000 nautical miles. The ship completes the passage in 655.7 hours at an average speed of 12.2 knots. During the fair weather periods, the evidence indicates that the ship did not meet the warranted performance. The charterer’s weather routing company confirms underperformance, even when the ship’s own records are considered.

How to Calculate Ship's Performance Speed

For this simplified example, assume the following factors:

Weather factor: -0.6 knots
Current factor: +0.4 knots
Effective speed after applying the “about” allowance: 13.5 knots

Performance speed is calculated as follows:

Performance speed = Effective Speed + Weather Factor + Current Factor

Performance speed = 13.5 - 0.6 + 0.4 = 13.3 knots

Chartered time based on performance speed:

8,000 nautical miles / 13.3 knots = 601.5 hours

Actual time taken:

655.7 hours

Computed time lost:

655.7 hours - 601.5 hours = 54.2 hours

54.2 hours = 2.2583 days

If the daily hire rate is $10,000, the speed claim is:

$10,000 x 2.2583 = $22,583

This simplified example demonstrates the basic method. In a real case, the calculation may also include bunker overconsumption, bunker savings, excluded periods, slow steaming instructions, off-hire events, sea passage limits, pilot station to pilot station measurement, sea buoy to sea buoy measurement, and expert adjustments for weather and current.

What is the Speed and Consumption Clause in a Time Charter?

The speed and consumption clause in a time charter is the provision that describes how fast the ship is expected to sail and how much fuel the ship is expected to burn under agreed operating conditions. It is essential because charterers bear the commercial consequences of time and bunkers during the charter period.

If the ship is slower than warranted, the charterer may lose time and pay more hire than would have been paid had the ship performed properly. If the ship consumes more fuel than warranted, the charterer may also suffer additional bunker expense. For this reason, charterers frequently monitor performance closely and compare the ship’s reported performance with the charter party description.

From the shipowner’s perspective, the clause should not expose the owner to unrealistic claims based on bad weather, unsafe routing, poor quality bunkers supplied by charterers, slow steaming orders, fouling caused by prolonged waiting under charterers’ employment, or operational circumstances outside the owner’s control. Proper drafting is therefore vital for both sides.

Ship Speed and Consumption Disputes Under English Law

Under English law, speed and consumption disputes often focus on the wording of the New York Produce Exchange time charter form and its rider clauses. A common formulation is:

“speed about…knots, fully laden, in good weather conditions up to and including maximum force…on the Beaufort windscale, on a consumption of about…long/metric tonnes of…”

Other forms use different wording. For example, Baltime wording may refer to:

“speed capability in knots (about) on a consumption in tonnes (about)”

When the ship does not meet the described performance, the charterer usually claims damages for breach of the speed and consumption warranty. In some cases, the charterer may also rely on other provisions, such as the owner’s obligation to keep the ship in an efficient state, the master’s obligation to prosecute voyages with due or utmost dispatch, or an off-hire clause dealing with loss of speed caused by defect or breakdown.

Typical alternative clauses may include:

Line 5: “with hull, machinery and equipment in a thoroughly efficient state”
Lines 21/22: “ship on her delivery to be tight, staunch, strong and in every way fitted for the service”
Clause 1: an obligation that owners shall keep the ship in an efficient state in hull, machinery and equipment during the service
Clause 8: an obligation that the captain shall prosecute voyages with dispatch
Clause 15: an off-hire provision where speed is reduced by defect or breakdown of hull, machinery, or equipment

If the charterer cannot prove a breach of the speed warranty itself, the charterer may argue that the ship’s poor performance resulted from a pre-existing defect, a machinery problem, hull fouling, lack of maintenance, or failure by owners to act reasonably after a problem emerged. The success of such an argument depends on evidence.

The master should not be criticized for taking a safe route, reducing speed in fog, avoiding heavy weather, protecting cargo, or taking measures necessary for the safety of the ship and crew. Navigation remains within the master’s responsibility. A performance claim should not be used to punish prudent seamanship.

Terms Used to Describe the Ship

Care must be taken when applying the ship description. If the warranty applies only when the ship is fully laden, evidence of strong ballast performance may not prove compliance with the laden warranty. A ship capable of achieving a certain speed in ballast may not achieve the same speed when deeply laden.

The word “capability” may also matter. Owners may argue that the ship was technically capable of achieving the warranted performance, even if a particular voyage did not produce that result. In practice, arbitrators and courts often scrutinize actual performance evidence closely because the commercial question is whether the ship performed as described under the agreed conditions.

The ship’s condition at delivery, hull cleanliness, propeller condition, main engine performance, auxiliary consumption, fuel quality, draft, trim, and loading condition may all become relevant. In dry bulk trades, prolonged anchorage, warm waters, and trading patterns may also raise hull fouling arguments if the charter party allocates responsibility for cleaning or performance deterioration.

Shipowners in Defending Ship Performance Claims

Shipowners may have several legitimate defences to speed and consumption claims. The strength of each defence depends on evidence and the charter party wording.

1- Charterers supplied unsuitable or poor-quality bunkers. If the ship’s performance was affected by bunkers supplied by or for charterers, owners may argue that the underperformance was not caused by the ship. This defence requires strong evidence, including bunker delivery notes, fuel analysis reports, manifold drip samples, engine records, and any operational problems after bunkering.

2- Weather conditions were outside the agreed good weather limits. If the ship encountered bad weather, heavy swell, adverse currents, tropical storms, ice, fog, or other conditions outside the warranty, owners may argue that those periods should not be used to prove breach. The ship’s logs, noon reports, routing reports, and contemporaneous communications are critical.

3- The word “about” must be applied. Owners may rely on the agreed or customary margin for speed and consumption. Charterers must calculate claims after allowing the contractual tolerance.

4- Bunker savings must be credited. If the ship lost time but consumed less fuel as a result of lower speed, the calculation may need to account for savings. Damages should compensate loss, not create a windfall.

5- The master made a reasonable navigational decision. If the master altered course, reduced speed, or deviated to avoid danger, save life, protect cargo, or preserve the ship, that conduct may be justified. The master’s safe navigation obligations remain paramount.

6- Charterers’ orders caused the performance result. Slow steaming instructions, ordered arrival times, port congestion, waiting periods, or employment orders may affect performance analysis. Periods of charterers’ slow steaming should normally be excluded from a standard speed warranty assessment unless the clause provides otherwise.

How to Avoid Ship Underperformance Claims

Speed and consumption disputes are often won or lost on records. A ship may have a good defence, but if the logs are incomplete, inconsistent, or unsupported, the defence becomes difficult to prove. Owners, managers, masters, and charterers should treat performance evidence as a daily operational discipline.

To reduce the risk of underperformance claims, owners and masters should:

Avoid accepting clauses that automatically prefer a performance monitoring company’s report over the ship’s records without safeguards.
Record weather, sea state, swell, current, RPM, speed, distance, draft, trim, fuel consumption, and operational interruptions accurately.
Ensure deck log, engine log, noon reports, and weather routing messages are consistent.
Record adverse currents, head swell, cross swell, shallow water effects, tropical weather, fog, and safety-related speed reductions.
Promptly report any mechanical issue, suspected hull fouling, bunker problem, or abnormal consumption.
Preserve bunker samples, fuel analysis reports, engine performance data, and maintenance records.
Give clear explanations when the master deviates from a recommended route for safety reasons.
Monitor fair weather performance carefully because fair weather periods often form the foundation of claims.
Investigate early signs of underperformance before the issue develops into a major claim.
Maintain close communication between the ship, technical managers, operators, and chartering department.

Charterers should also protect themselves by drafting clear performance clauses, appointing reputable weather routing services, preserving voyage data, and raising performance concerns promptly rather than waiting until the end of the charter.

BIMCO Weather Routing Clause for Time Charter Parties 2006

Weather routing clauses help define how routing advice is used during a time charter. They may identify who appoints the weather routing service, who pays for it, what reporting obligations apply, and whether the master must follow or merely consider the routing advice.

The master’s authority over safe navigation should remain clear. A weather routing company can advise, but the master must decide whether the recommended route is safe for the ship, crew, and cargo. This is particularly important in heavy weather, cyclone areas, piracy-risk zones, ice regions, and situations where cargo safety may require a more conservative route.

We kindly suggest that you visit the web page of BIMCO (Baltic and International Maritime Council) to learn more about BIMCO Weather Routing Clause and to obtain the original Charter Party forms and documents. www.bimco.org

Advantages of Weather Routing for Optimal Voyages

Weather routing is not simply a way to shorten a voyage. In modern shipping, it is a voyage optimization tool used to improve safety, reduce fuel consumption, manage arrival times, lower emissions, and protect cargo. The best route is not always the shortest route. The best route is the route that balances time, safety, fuel economy, engine performance, cargo care, weather exposure, and contractual obligations.

Decrease Operating Costs: Fuel remains one of the largest voyage expenses. Better routing can reduce unnecessary steaming, avoid heavy weather resistance, limit excessive consumption, and help the ship arrive within the intended laycan or terminal window. Weather routing may also reduce overtime, avoid damage, and limit expensive delays.
Enhance Safety: Heavy weather remains a major risk for ships at sea. Routing support helps masters identify developing storms, avoid dangerous sea states where possible, and plan safer passages for ship, cargo, and crew. The master’s judgment remains essential, but reliable weather information improves decision-making.
Support Decarbonization Targets: Voyage optimization can contribute to lower fuel consumption and reduced emissions. As shipping faces CII, EEXI, EU ETS exposure, FuelEU Maritime, and broader decarbonization pressure, performance management and routing have become more commercially important.
Save Bunkers: Avoiding adverse weather, unnecessary speed changes, and inefficient routes can produce meaningful bunker savings. Even modest percentage savings matter where bunker prices are high and charterers bear fuel cost under a time charter.
Minimize Delays: Weather-related disruption can affect port arrival, berth planning, supply chains, and charter party obligations. Early routing decisions allow ship operators and charterers to manage arrival expectations and reduce avoidable waiting.

Weather routing is therefore both an operational tool and an evidential tool. Operationally, it helps the master and operators plan safer and more efficient voyages. Evidentially, it may become central to later disputes about whether the ship met the speed and consumption warranty.

Modern Performance Clauses and Environmental Considerations

Speed and consumption clauses are changing as commercial shipping adapts to environmental regulation and digital monitoring. Traditional clauses focused mainly on knots, daily bunker consumption, and good weather. Modern clauses may also address emissions performance, CII rating, slow steaming, virtual arrival, alternative fuels, shaft power limitations, and data sharing.

This development can create tension in time charters. Charterers may want the ship to proceed quickly to maximize commercial employment. Owners may need to protect the ship’s technical condition and environmental compliance. Both parties may need to cooperate on voyage planning, speed orders, bunker choice, reporting, and emissions data.

For this reason, speed and consumption warranties should not be drafted in isolation. They should be consistent with slow steaming clauses, weather routing clauses, CII clauses, hull fouling clauses, bunker quality clauses, off-hire provisions, maintenance obligations, and evidence clauses. A clause that is commercially attractive but legally unclear may create disputes after every voyage.

Practical Drafting Points for Speed and Consumption Clauses

A clear speed and consumption clause should address the following points:

The exact warranted speed or speed range.
The exact fuel type and daily consumption figure.
Whether the warranty applies laden, ballast, or both.
Whether the warranty is given only on delivery or throughout the charter period.
The definition of good weather.
The accepted Beaufort wind force, Douglas sea state, swell limits, and current treatment.
Whether favourable current may be considered.
Whether adverse current is excluded.
The minimum period required for a valid good weather sample.
Whether periods of slow steaming, waiting, deviation, off-hire, pilotage, canal transit, or manoeuvring are excluded.
The evidence to be used in case of dispute.
The role and authority of any weather routing company.
The method of calculating time loss and bunker overconsumption.
Whether bunker savings are credited.
How hull fouling, prolonged idle time, and low-load engine operation are treated.

Precise drafting reduces the risk of disputes. It also allows both owners and charterers to price the fixture more accurately, monitor performance more fairly, and resolve claims more efficiently.

Conclusion

Ship speed and consumption warranties are central to time charter economics. Charterers rely on the stated performance to estimate voyage duration, bunker cost, sub-charter profitability, and cargo commitments. Shipowners rely on fair wording to ensure that the ship is assessed only under the agreed conditions and not judged by unrealistic standards.

The most common disputes involve good weather definitions, the meaning of “about,” the reliability of logbook evidence, the use of weather routing data, current adjustments, bunker overconsumption, and the calculation of time lost. English law and arbitration practice provide useful guidance, but the result in each case depends heavily on the charter party wording and the quality of evidence.

For practical purposes, the best protection is careful drafting, accurate daily records, prompt communication, reliable weather evidence, and disciplined voyage monitoring. When owners, charterers, masters, managers, and routing companies understand their respective roles, speed and consumption clauses can function as commercial tools rather than recurring sources of dispute.