Time Charter Breach of the Speed Warranty

Terms of a Time Charter differ radically from those of a Voyage Charter because of the difference of function. In the time charter the shipowner is placing the vessel for an agreed period at the disposal of the charterer who is free to employ it for his own purposes within the  permitted contractual limits.

As the time charterer controls the commercial function of the vessel, the time charterer is normally responsible for the resultant expenses of such activities and also under- takes to indemnify the shipowner against liabilities arising from the master obeying his instructions.

While there is a variety of standard forms of Time Charter, the following clauses are usually found to constitute the core of the contract.

Efficiency of the chartered vessel is of vital importance to the time charterer since the entire success of the commercial enterprise may depend on it.

The preamble to the charter therefore sets out in detail the specifications of the vessel, the most important of which are normally those relating to speed, loading capacity and fuel consumption. There are differing views as to the legal significance of such statements and the remedies available in the event of them proving inaccurate.

While New York arbitrators generally regard specifications as to speed and fuel consumption as constituting continuing warranties that the vessel will maintain such capabilities throughout the charter, English courts treat them merely as warranties as to the state of the vessel at the time of delivery under the charter.

In the event of breach of any of these warranties, it would appear that the appropriate measure of damages would be the difference in the market rate of hire between a vessel with the indicated specifications and the chartered vessel.

In the case of a breach of the speed warranty, it has been suggested that an alternative remedy might be to treat the vessel as off-hire for the appropriate period.