Time Charter Margin

Time Charter-party Clause in the Time Charter will normally specify the precise length of the charter period in days, months, or years. It is, however, recognized that in practice a ship’s movements under a time charter cannot be so accurately planned as to ensure that it arrives at the agreed port for re-delivery on the exact date fixed for termination of the charter.

Inevitably the ship might arrive earlier (underlap) or later (overlap), in which event litigation is likely to ensue during a period in which there have been fluctuations in freight rates.

The courts recognize the problem and are prepared to imply a margin of tolerance of some 5 per cent on the period stated in the charter unless the parties themselves have made express provision for overlap.

Should the charterer return the ship to its owner after the stated charter period has expired but within the permitted margin of overlap, d the charterer will be required to pay for the extra time at the normal charter rate. Only in the event of exceeding the overlap allowance will the charterer be guilty of breach of contract and liable to damages based on the current market rate of hire.