Time Charter Ship Description

Time Charter Ship Description

Time Charterer is in control of the commercial operation of the vessel and is obliged to pay hire at a fixed rate throughout the charter period, the profit margin he derives from the enterprise will be largely dependent on the characteristics and performance of the chartered ship. Accordingly, standard time charter forms include in the preamble a detailed description of the vessel covering such matters as its name and flag, ownership, class, gross and net registered tonnage, cargo capacity, speed, and fuel consumption.

The success of the adventure may depend on the accuracy of these particulars, since the risk of efficient vessel performance will fall largely on the charterer. It is therefore in his interest to secure as detailed a description as possible and, in cases of doubt, to have the vessel inspected by qualified staff. In the majority of cases, however, the reputation of the shipowner may be a more reliable guide.

While any facet of a vessel’s description might be of importance on a particular occasion, as, for example, a vessel’s flag in time of war, the bulk of litigation tends to centre on the three characteristics of cargo capacity, speed, and fuel consumption. In order to minimise the possibility of disputes in the event of minor discrepancies in such particulars, it is usual to qualify any statement by the addition of ‘about’ or some similar phrase, which is normally interpreted as permitting a tolerance of approximately 5 per cent.

Similarly, when reference is made to a vessel’s speed, it is normal to add the proviso ‘in good weather conditions’, thus enabling arbitrators to ignore checks made on days when prevailing winds range above force 4 or 5 on the Beaufort Scale. There can be little doubt that specifications of this type incorporated in a charterparty are intended to have contractual effect and amount to undertakings by the shipowner as to the performance of his vessel. Opinions have, however, been divided as to their precise legal effect. Are they merely factual statements as to the vessel’s capabilities at the time of signing the charter, or are they contractual undertakings that the vessel will maintain that capability throughout the period of the charter, or at least until it has been delivered to the charterer?

While New York arbitrators generally regard statements as to a vessel’s speed and fuel consumption as continuing warranties throughout the charter, British courts have taken a more restrictive view. In the late nineteenth century the Court of Appeal held that a statement as to a vessel’s classification was not a continuing warranty, but was only applicable to the time at which the charter was signed.

This rather extreme view has been modified more recently in the case of Cosmos Bulk Transport Inc v China National Foreign Trade Transportation Co where Mocatta J held that a speed warranty referred to the capability of the vessel at the date of delivery under the charterparty. In that case the vessel concerned was capable of steaming at the speed warranted when the charterparty was signed but her capability was subsequently affected as the result of her hull becoming encrusted with molluscs while calling at a tropical port during the completion of a previous charter. In holding the shipowners liable for breach, Mocatta J expressed the view that ‘commercial considerations require this description as to the vessel’s speed to be applicable as at the date of her delivery, whether or not it is applicable at the date of the charter’.

In his opinion similar considerations applied to representations as to fuel consumption and cargo capacity, although he distinguished earlier cases involving classification warranties on the ground that, as changes in classification were outside the control of the parties, the shipowner should only be responsible for the accuracy of statements as to classification at the time they were made.

The shipowner is not, however, taken to have guaranteed the accuracy of these specifications throughout the period of the charter, although some oil charter forms contain express undertakings to that effect. In practice, with the notable exception of those relating to speed and fuel consumption, few of the specifications are likely to vary between the signing of the charter and the delivery of the vessel in the absence of some deliberate act on the part of the shipowner as, for example, a decision to sell the vessel which would result in a change of ownership and possibly of flag.

The burden of proving failure to comply with the specifications rests on the charterer and, in the circumstances of ocean transport, proof may be difficult to obtain. Breach of such an undertaking may, in the extreme case, give the charterer a right to cancel the charter, but in practice he will normally be restricted to claiming compensation for the vessel’s failure to meet the relevant specification. According to basic contractual principles, the appropriate measure of damages recoverable would be calculated on the difference between the respective market rates of hire for a vessel with the required contractual specifications and one with the specifications of the vessel delivered.

In practice such a test may be extremely difficult to operate and, in any event, may result in the award of a derisory amount of damages. It is, therefore, interesting to note that in the Cosmos Bulk Transport case the court adopted an alternative formula to cover breach of a speed warranty, allowing the charterer to treat the vessel as off-hire for the extra time taken on the relevant voyage. Occasionally alternative remedies for errors in description may be derived from other clauses in the charterparty. Thus the obligation in many charters to prosecute all voyages with the utmost dispatch might provide a remedy for a speed deficiency, while an off-hire clause may specifically cover a reduction in speed caused by defect in or breakdown of any part of her hull, machinery or equipment.

An alternative approach to the question of a reduction in speed caused by the fouling of a vessel’s bottom is provided by the New York Produce Exchange Form which allows the charterer to request the vessel to be taken off-hire into dry dock for cleaning at the owner’s expense.

Time Charter Ship Description

A time charter is a type of contract in the maritime industry in which a vessel is hired for a specific period of time. The shipowner provides the vessel, crew, and covers the operational expenses, while the charterer is responsible for the vessel’s commercial management, including choosing the cargo, routes, and ports.

When drafting a time charter agreement, a detailed description of the ship is essential to ensure that both parties are aware of the vessel’s characteristics, capabilities, and limitations. The ship description in a time charter contract typically includes the following information:

  1. Name of the vessel: The full registered name of the ship.
  2. Flag of registry: The country in which the vessel is registered.
  3. Year of build: The year the ship was constructed.
  4. Classification society: The organization responsible for the ship’s classification, ensuring that it complies with international standards for safety, design, and construction.
  5. Gross tonnage: The measure of the ship’s overall internal volume.
  6. Net tonnage: The measure of the ship’s cargo-carrying capacity.
  7. Deadweight tonnage (DWT): The maximum weight the ship can safely carry, including cargo, fuel, fresh water, crew, and provisions.
  8. Length overall (LOA): The total length of the vessel from the forward-most part to the aft-most part.
  9. Beam: The width of the vessel at its widest point.
  10. Draft: The depth of the vessel submerged in the water, measured from the waterline to the bottom of the hull.
  11. Cargo capacity: The total volume or weight of cargo the vessel can carry, expressed in cubic meters or metric tons.
  12. Cargo hold(s) description: The number, size, and configuration of the vessel’s cargo holds, including any specialized equipment or features such as refrigeration or ventilation systems.
  13. Hatch covers and dimensions: The type, size, and operation of the hatch covers used to access the cargo holds.
  14. Cargo gear: The onboard equipment used for loading and unloading cargo, such as cranes, derricks, or winches, including their lifting capacity and outreach.
  15. Main engine details: The type, manufacturer, and output of the vessel’s main propulsion engine.
  16. Speed and consumption: The vessel’s average speed and fuel consumption, typically expressed in knots and metric tons per day, respectively, under specified conditions.
  17. Bunker capacity: The maximum amount of fuel the vessel can carry.
  18. Crew complement: The number of crew members required to operate the vessel safely and efficiently.
  19. Trading limits: The geographical areas or specific ports where the vessel is authorized to trade.

A comprehensive and accurate ship description is crucial for a successful time charter arrangement, as it ensures that the charterer is fully aware of the vessel’s capabilities and limitations, and can plan their commercial activities accordingly.

 

Can Shipowner modify the ship during Time Charter?

During a time charter, the shipowner generally retains control over the vessel’s management and maintenance. However, any significant modifications or alterations to the ship should be carefully considered and addressed in the time charter agreement.

In most cases, the shipowner should seek the charterer’s prior consent before making any major modifications that could affect the vessel’s performance, cargo capacity, or other characteristics relevant to the charterer’s commercial interests. The time charter agreement may include provisions outlining the circumstances under which the shipowner may make such modifications, as well as the process for obtaining the charterer’s consent.

If the shipowner undertakes modifications without the charterer’s consent, and these modifications have a negative impact on the charterer’s ability to use the vessel for its intended purpose, the charterer may be entitled to claim damages or even terminate the charter agreement, depending on the severity of the impact and the terms of the contract.

Conversely, if the shipowner makes modifications that enhance the vessel’s performance or capabilities, the charterer may benefit from the improvements during the charter period. In such cases, the parties may need to renegotiate the charter rate or other terms of the agreement to reflect the enhanced value of the vessel.

Ultimately, any modifications or alterations to the ship during a time charter should be clearly addressed in the charter agreement, and both parties should communicate openly and cooperate to ensure that the modifications do not adversely affect the charterer’s interests or the overall success of the charter arrangement.

 

Burden of Proving Failure to comply with the Ship Specifications rests on the Charterer

In a charter party agreement, the shipowner is generally responsible for providing a vessel that meets the agreed-upon specifications, as detailed in the ship description clause. However, if a dispute arises between the shipowner and the charterer regarding the vessel’s compliance with the agreed-upon specifications, the burden of proof typically rests on the charterer to demonstrate that the ship has failed to meet those specifications.

To prove that the vessel does not comply with the agreed specifications, the charterer should gather relevant evidence, which may include:

  1. Inspection reports: Reports from independent surveyors, marine experts, or classification societies, detailing the discrepancies between the ship’s actual condition or performance and the agreed-upon specifications.
  2. Photographic or video evidence: Visual documentation of the discrepancies, if applicable.
  3. Records of correspondence: Any communication between the shipowner and the charterer discussing the discrepancies or expressing concerns about the ship’s condition or performance.
  4. Expert testimony: Statements from industry professionals who can attest to the vessel’s non-compliance with the agreed specifications.
  5. Performance data: Records of the ship’s performance during the charter period, such as speed, fuel consumption, or cargo capacity, which can be compared to the agreed-upon specifications.
  6. Incident reports: If the vessel’s failure to comply with the specifications resulted in incidents, accidents, or damage to the cargo, the charterer should gather relevant incident reports and documentation.

To ensure a successful outcome in a dispute, the charterer should maintain clear and detailed records throughout the charter period, documenting any concerns or discrepancies related to the vessel’s compliance with the agreed-upon specifications. The charterer should also engage in open communication with the shipowner and attempt to resolve any issues amicably before resorting to legal action. If the dispute cannot be resolved through negotiation or mediation, the charterer may need to present their evidence in arbitration or court, depending on the dispute resolution provisions outlined in the charter party agreement.

 

 

 

NYPE Ship Description

The New York Produce Exchange (NYPE) is a standard form of time charter party often used in the maritime industry. A comprehensive and accurate ship description is essential in a NYPE time charter agreement, as it provides the charterer with a clear understanding of the vessel’s capabilities and limitations.

When describing a ship in a NYPE time charter agreement, it is important to include the following details:

  1. Name of the vessel: The full registered name of the ship.
  2. Flag of registry: The country in which the vessel is registered.
  3. Year of build: The year the ship was constructed.
  4. Classification society: The organization responsible for the ship’s classification, ensuring that it complies with international standards for safety, design, and construction.
  5. Gross tonnage: The measure of the ship’s overall internal volume.
  6. Net tonnage: The measure of the ship’s cargo-carrying capacity.
  7. Deadweight tonnage (DWT): The maximum weight the ship can safely carry, including cargo, fuel, fresh water, crew, and provisions.
  8. Length overall (LOA): The total length of the vessel from the forward-most part to the aft-most part.
  9. Beam: The width of the vessel at its widest point.
  10. Draft: The depth of the vessel submerged in the water, measured from the waterline to the bottom of the hull.
  11. Cargo capacity: The total volume or weight of cargo the vessel can carry, expressed in cubic meters or metric tons.
  12. Cargo hold(s) description: The number, size, and configuration of the vessel’s cargo holds, including any specialized equipment or features such as refrigeration or ventilation systems.
  13. Hatch covers and dimensions: The type, size, and operation of the hatch covers used to access the cargo holds.
  14. Cargo gear: The onboard equipment used for loading and unloading cargo, such as cranes, derricks, or winches, including their lifting capacity and outreach.
  15. Main engine details: The type, manufacturer, and output of the vessel’s main propulsion engine.
  16. Speed and consumption: The vessel’s average speed and fuel consumption, typically expressed in knots and metric tons per day, respectively, under specified conditions.
  17. Bunker capacity: The maximum amount of fuel the vessel can carry.
  18. Crew complement: The number of crew members required to operate the vessel safely and efficiently.
  19. Trading limits: The geographical areas or specific ports where the vessel is authorized to trade.

By providing a detailed and accurate ship description in a NYPE time charter agreement, both the shipowner and the charterer can ensure a successful chartering experience, as the charterer can plan their commercial activities based on the vessel’s capabilities and limitations.

Time Charter Breach of the Speed Warranty

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