Time Charter Clauses

Time Charter comprises hiring a ship for a specific period of time to charterers. Time Charterparty is a contract which is is governed by the law of contract. Time Charterparty is a binding contract after the acceptance of an offer and the agreement to all the substantial terms.

Under time charter, shipowner is contractually bound to offer the agreed services to the charterer through the use of the ship and ship’s crew. Ship itself is not leased to the charterer, but the charterer has the freedom, within certain expressed or implied limitations, to send the ship on specific voyages. Shipowner and the charterer undertake a number of specific responsibilities. For example,

Shipowner must:

  • maintain the performance of the ship
  • provide an accurate description of the ship
  • ensure that the ship is seaworthy
  • ensure that the ship is cargo worthy
  • deliver the ships during the agreed and allowed time frame
  • not unreasonably delay the ship
  • exercise reasonable dispatch
  • incur all the operating expenses of the ship

Charterer must:

  • pay hire on time, always in advance
  • carry out safe loading and discharging operations
  • respect the period of charter and redeliver the ship within the agreed time frame
  • nominate safe ports for the commercial use of the ship
  • carry lawful and not dangerous cargoes
  • stay within the trading limits that are stipulated such as Institute Warranty Limits (IWL) or International Navigable Waters (INW)

Time Charter Clauses
Time Charterparty contains the following standard clauses:

  • Place, Date, Name and Domiciles of Parties (Preamble)
  • Ship Description
  • Duration of period and description of trips
  • Delivery and Redelivery. Places of Delivery and Redelivery. Laydays and Canceling Days.
  • Cargo Intentions and Exclusions
  • Trading Intentions and Trading Limits
  • Ship Condition. Undertaking by shipowner that the ship is in good condition
  • Shipowner’s responsibilities. List of what shipowner is to provide
  • Charterer’s responsibilities. List of what a charterer is to provide
  • Bunkers. On/off-hire surveys. Charterers take over and pay the owners for the bunkers ROB (Remaining On Board)upon delivery. Shipowners take over and pay the charterers for the bunkers ROB (Remaining On Board) upon redelivery
  • Hire. Ship Hire amount, when, where, and to whom hire is payable
  • Off-hire Clause. Provisions leading to off-hire situations such poor performance, strike by crew
  • Ship Performance. Poor speed and consumption performance
  • Ship Maintenance. Dry-docking Clause
  • Cargo Claims. How cargo claims will be handled and usually stipulating Inter-Club Agreement
  • Master (Captain) and Officers. Duties of the Master (Captain). Charterers’ rights in case Master (Captain) and Officers are not fulfilling their responsibilities toward the charterers.
  • Logbooks. Charterers may appoint a specialized weather routing company to check the ship’s performance. In case of discrepancy between logbooks and the independent reports, the independent reports prevail
  • Bills of Lading (B/L). Stipulates the procedures in which Bills of Lading (B/L) are to be
    drawn up and signed. How Bills of Lading (B/L) protect the shipowner in case of paper inconsistencies
  • Stevedore Damages. Notification of stevedore damages and repairs
  • Commissions. Address Commissions (ADDCOM) and Brokerage Commissions
  • War Risks. Stipulating standard war risks clauses for time charters
  • Protecting Clauses. New Jason Clause and P&I (Protection and Indemnity) Bunkering Clause. Clause Paramount and Both to Blame Collision Clause
  • Supercargo and Victualling. Charterers have the right to appoint a supercargo to inspect and/or sail with the ship at their cost and responsibility
  • Lien. Shipowner’s and Charterer’s right of lien must be considered and stipulated
  • Assignment. Charterer’s right to sublet the ship to another charterer is stipulated
  • Arbitration. In case of a dispute between shipowners and charterers
  • Exceptions. Rights of contracting parties to cancel the charter
    party in case of events that make its performance virtually impossible
  • Requisitions. Arrangements in the event a ship be requisitioned by the flag state
  • Pollution. P&I (Protection and Indemnity) Clubs provide insurance cover against oil spillages, resulting fines, and clean-up expenses
  • Salvage. In case of salvage, expenses and rewards  should be shared
  • Laying-up. Shipowners and charterers stipulate provisions in case a ship is laid-up due to lack of employment
  • Signatures. Time Charterparty is not completed unless signed by both parties.