Shipowner

The charterer cannot deduct from the freight the damage to the goods but will have a separate cause of action for it unless it was caused solely by excepted perils whether excepted by express stipulation or by the operation of the Common Law. Unless the shipowner fails to carry the goods to the destination agreed he entitled to be paid the freight. Although it was in connection with a time charter, the issue of deductions from freight payment was considered carefully in The Nanfri (1978) (House of Lords) by Lord Denning MR in respect of the question of whether a time charterer could set off damages against hire. His Lordship recognised that at one time it had been common to describe sums payable under a time charter as ‘freight’ but that in modern times a change had come about. Payments under time charters were now described as ‘hire’. His Lordship believed that this change corresponded to a recognition that the two charters were quite different. On this basis, the ‘special rule’ of English law whereby freight must be paid in full without deductions for short delivery or cargo damage could not be applied automatically to time charterers. (His Lordship then went on to develop the argument that equity would allow a time charterer to set off such claims against hire). In the case of lump sum freight with the bills of lading providing that freight shall be payable as per charter party, each holder of a bill of lading will be liable for such proportion of the lumpsum freight as his parcels bear to the whole cargo shipped. Where a ship arrives at her destination the shipper must pay full lumpsum freight even if some of the goods were lost through causes other than excepted perils. Sometimes the contract provides that lumpsum freight is payable in advance and will not be returnable even if the vessel and or her cargo is lost.