Time Charter

Time Charter

A Time Charter may be described as an agreement for the Hire of a particular ship for an agreed period. This makes it fundamentally different from a Voyage Charter, where the main purpose is the carriage of a specified cargo on a defined voyage between agreed ports. In a Time Charter, the commercial focus is not one cargo movement, but the use of the ship over time. The Charterer obtains the right to employ the ship commercially within the limits of the Charter Party, while the Shipowner continues to provide and maintain the ship as an operating unit.

The Time Charter is the most common form of Period Charter. Under this arrangement, the commercial use of the ship is placed at the disposal of the Charterer for a short, medium, or long period. The Shipowner remains responsible for the technical and operational side of the ship, including crewing, insurance, repairs, maintenance, stores, spare parts, lubricants, technical management, class requirements, and seaworthiness. The Time Charterer, by contrast, controls the ship’s commercial employment. This normally includes deciding where the ship will trade, nominating ports, selecting cargoes within the permitted range, giving voyage instructions, and paying the main voyage-related costs such as bunkers, port charges, canal dues, extra insurances, cargo-handling expenses, and Stevedore costs. Navigation and safety decisions, however, remain under the authority of the Shipowner and the Ship Master.

The Time Charterer pays an agreed daily “Hire” for the use of the ship. This is different from Voyage Chartering, where Freight is commonly calculated by reference to the quantity of cargo carried. Hire is usually expressed in USD per day and is normally payable every 15 days or monthly in advance, although other payment intervals may be agreed. Instead of identifying one single voyage and one specific cargo, the Time Charter Party defines the period of employment, the delivery and redelivery places, the trading limits, permitted and excluded cargoes, bunker arrangements, speed and consumption warranties, off-hire events, and other terms governing the commercial use of the ship.

In Time Chartering, the relationship between Shipowners and third parties is different from the relationship normally found in Voyage Chartering. Since the Time Charterer controls the ship’s commercial operations, the Time Charterer will usually deal more directly with Shippers, Receivers, terminal operators, cargo interests, sub-Charterers, and other commercial parties. The Shipowner remains responsible for the ship, crew, technical management, navigation, and compliance with the Charter Party, but the Charterer directs the ship’s employment within the agreed contractual limits. Time Charters are used in both the Bulk/Tramp trading sector and the Liner Shipping sector, particularly where an operator wants commercial control over tonnage without purchasing or technically managing the ship.

Time Charter Parties are usually governed by standard Time Charter forms, although there are fewer widely used Time Charter forms than Voyage Charter forms. Common forms include NYPE, BALTIME, SHELLTIME, and other sector-specific or company-specific contracts. These forms are regularly amended through rider clauses to reflect the ship, trade, period, cargoes, route, market conditions, bunker position, regulatory requirements, and risk allocation agreed between the parties. Because the ship may be employed in different trades and ports during the charter period, Time Charter wording must be drafted carefully and with more forward-looking detail than a single Voyage Charter.

It is also important to note that FONASBA (The Federation of National Associations of Ship Brokers and Agents) introduced the Time Charter Interpretation Code 2000. This code was designed to assist in the interpretation of Time Charter Party clauses and to provide guidance where wording is unclear, incomplete, or disputed. While it does not replace the Charter Party itself, it may help Shipowners, Charterers, Shipbrokers, and legal advisers understand common Time Charter expressions and reduce uncertainty in commercial practice.

Ship

Description of Ship

In a Time Charter Party, the description of the ship is usually more comprehensive, detailed, and precise than in a Voyage Charter Party. This is because the Time Charterer is not fixing the ship merely for one known cargo and one known route. The Time Charterer is hiring the commercial use of the ship for a period and must therefore understand the ship's full earning potential, technical limitations, operating profile, and suitability for a range of possible employments. The description of the ship is central to the commercial value of the Time Charter.

During negotiations, Time Charterers normally require complete information about the ship. This may include the ship’s cargo-carrying capacity, deadweight, cubic capacity, cargo-handling gear, cranes, derricks, grabs, hold dimensions, hatch arrangements, tank or hold condition, construction, speed, fuel consumption, fuel grades, flag, class, year built, IMO number, call sign, gross tonnage, net tonnage, draught, length overall, beam, depth, number of holds and hatches, and any special equipment or certificates. These details allow the Time Charterer to evaluate how the ship may perform commercially during the charter period and whether the agreed Hire is justified.

Unlike Voyage Chartering, where the cargo and ports are often known before the Fixture is concluded, the Time Charterer may not know every cargo, voyage, port, route, or operational requirement that will arise during the charter period. For this reason, the Time Charterer needs a broader and more reliable description of the ship. A ship that appears suitable for one trade may not be suitable for another if it has draft limitations, insufficient cubic capacity, high fuel consumption, inadequate cargo gear, unsuitable holds, limited certificates, or restrictions affecting particular ports or cargoes.

For longer Time Charters, Charterers often require supporting technical documents in addition to the basic description. These may include the General Arrangement plan (GA plan), capacity plan, deadweight scale, speed and consumption records, class status, survey status, certificates, cargo gear certificates, hold condition reports, tank coating details, stability information, and other documents showing the ship’s construction and operational capability. Information about ice class, special trading certificates, canal certificates, environmental compliance, emissions performance, and cargo-specific approvals may also be important, depending on the intended employment.

The description of the ship can have serious legal consequences. If the Shipowner gives inaccurate information about speed, consumption, capacity, gear, cargo suitability, class, flag, certificates, or any other material characteristic, the Time Charterer may suffer commercial loss. Incorrect description may lead to claims for underperformance, Hire reduction, off-hire arguments, damages, or, in serious cases, cancellation of the Time Charter Party for misrepresentation or breach. For that reason, Shipowners should avoid exaggerated or outdated descriptions and should qualify figures properly where they are approximate.

Ship's Cargo Capacity in Time Charter

The ship's cargo capacity in a Time Charter Party is generally described in the same basic way as in a Voyage Charter Party, most commonly by reference to Deadweight (DWT) and/or Cubic Capacity (CC). However, because the Time Charterer may use the ship for several voyages and different cargoes during the charter period, additional capacity details are often required. The Time Charterer needs to know not only how much weight the ship can carry, but also what types of cargo the ship can accommodate, how efficiently the cargo can be loaded and discharged, and whether the ship's layout restricts certain trades.

For dry cargo ships, relevant information may include grain capacity, bale capacity, hold-by-hold capacity, hatch dimensions, tank top strength, cargo gear capacity, grab suitability, ventilation arrangements, and the ability to load heavy cargo, bulk cargo, bagged cargo, steel products, logs, project cargo, or other commodities. For container-capable ships, it may be necessary to state the number of containers the ship can carry on deck and under deck, the number of reefer plugs, stack weight limits, lashing arrangements, and any restrictions on container sizes. For tanker and chemical ships, the relevant capacity information may include tank capacity, coating type, pump capacity, heating capability, segregation, stripping performance, and compatibility with different cargo grades.

Time Charterers generally have the commercial use of all spaces suitable for cargo, subject to the Shipowner retaining the space necessary for the ship’s crew, stores, equipment, provisions, spare parts, and safe operation. This principle is reflected in the SHELLTIME 4 form, Clause 10, “space available to Charterers,” which provides:

“The whole reach, burthen and decks on the ship and any passenger accommodation (including Owners’ suite) shall be at Charterers’ disposal, reserving only proper and sufficient space for the ship’s master, officers, crew, tackle, apparel, furniture, provisions, and stores, provided that the weight of stores on board shall not, unless specifically agreed, exceed (to be filled) tonnes at any time during the charter period.”

This type of wording confirms that the Charterer is entitled to use the ship’s carrying spaces for commercial employment, while protecting the Shipowner’s need to retain space for the safe operation and management of the ship. If passenger accommodation is available on board, the Charter Party should state whether Time Charterers may use those spaces and, if so, what additional payment is due per passenger per day. This may be relevant where Charterers need to carry supercargoes, technicians, surveyors, project personnel, riding squads, or other authorized persons connected with the cargo or trade.

Because cargo capacity is one of the main factors in determining the commercial value of a Time Charter, Shipowners must declare capacity information as accurately as possible. If the declared capacity is wrong, the Time Charterer may be unable to use the ship as expected and may suffer loss through reduced cargo intake, lost sub-employment, lower Freight earnings, additional voyages, or inability to perform cargo commitments. In such cases, Time Charterers may have grounds for a reduction in Hire, depending on the wording of the Charter Party and the seriousness of the discrepancy.

If the misdescription is substantial, the consequences may be more serious. The Time Charterer may argue that the ship is materially different from the ship described during negotiations and may seek to cancel the Time Charter Party on the basis of Misrepresentation, breach of condition, or another applicable legal principle. The Time Charterer may also claim damages if the inaccurate description caused financial loss. For this reason, ship descriptions, capacity figures, and supporting documents should be checked carefully before the Fixture is concluded, and any “about” figures should be used responsibly rather than as a substitute for accuracy.

Ship's Speed and Bunker Consumption in Time Charter

The ship's speed and bunker (fuel) consumption are among the most important commercial issues in a Time Charter Party. Since Time Charterers pay Hire by reference to time, the ship's ability to proceed at the warranted speed and consume fuel within the agreed limits directly affects the value of the charter. A slower ship may take longer to complete voyages, reducing the Time Charterer's earning capacity. A ship consuming more bunkers than described may substantially increase the Time Charterer's voyage costs. For this reason, speed and consumption warranties are central to the commercial calculation made before the Fixture is concluded.

In most Time Charter Parties, the stated speed and bunker consumption are qualified by reference to certain weather conditions, sea state, and the ship’s draught. The ship is not normally expected to achieve the same performance in heavy weather, adverse currents, restricted waters, or abnormal sea conditions as she would in fair weather on an open sea passage. For example, the GENTIME form, Part I, Box 5, “ship’s description,” refers to speed and consumption on summer DWT in good weather, with maximum wind speed of Beaufort Force 4. This type of qualification is important because performance claims usually depend on whether the ship failed to meet the warranted figures under the agreed good-weather conditions.

The type and specification of bunker (fuel) are equally important. A ship may consume different quantities depending on whether she is burning VLSFO, IFO, MGO, LSMGO, LNG, methanol, or another fuel type. The Charter Party should therefore identify the fuel grades required, the quality standards, sulphur content, compatibility requirements, and any fuel-related restrictions. GENTIME addresses fuel specifications in Part I, Box 23, “fuel specifications,” and Part II, Clause 6(d), “bunkers – bunkering.” Because modern ships are frequently ordered to proceed at economical speed, eco speed, or reduced speed, it is advisable for the Charter Party to include consumption figures not only at full speed but also at agreed reduced speeds. Without such figures, disputes may arise when Charterers order slow steaming and later compare performance against full-speed warranties.

Under English law, a Speed Clause is generally not interpreted as a Continuing Warranty unless explicitly stated in the Time Charter Party. Legal authority, including The Apollonius [1978] 1 LLR 53 and later cases, supports the view that a speed warranty may apply only at the time of delivery unless the Charter Party wording clearly provides that it continues throughout the charter period. If the parties want the ship’s performance warranty to apply during the whole Time Charter, they should say so expressly. Otherwise, the Performance Warranty may be treated as a representation of the ship’s capability at delivery into Time Charter service rather than a permanent promise for every voyage performed under the charter.

However, the question of a Continuous Performance Warranty remains commercially sensitive and sometimes difficult to apply. Many standard Time Charter forms require Owners to maintain the ship during the charter period and require the Ship Master to prosecute voyages with Utmost Despatch. For example, NYPE 2015 includes provisions such as Clause 6(a), “owners to provide,” and Clause 8(a), “performance of voyages,” which support the expectation that the ship must remain properly maintained and perform efficiently during the charter. These obligations may not always create the same legal effect as an express continuing speed warranty, but they can influence the assessment of whether Owners have fulfilled their obligations.

The FONASBA Time Charter Interpretation Code 2000 takes the practical view that the speed warranty should apply throughout the charter period, whether the ship is Fully Loaded, Partly Loaded, or in Ballast. This approach reflects commercial reality. Time Charterers usually fix a ship on the assumption that the described speed and consumption will be available for the charter service, not merely on the delivery day. If Owners intend the warranty to be limited, or if Charterers require a continuous warranty, the Charter Party should make the position clear.

NYPE 2015, Clause 12(a), “speed and consumption,” adopts a more detailed approach. It provides in substance that, upon delivery and throughout the duration of the Charter Party, the ship must be capable of the speed and daily consumption rates stated in Appendix A in good weather on all sea passages, with wind up to and including Beaufort Force 4 and sea state up to and including Douglas Sea State 3, unless Appendix A states otherwise. It also excludes from performance calculations periods during which the ship’s speed is deliberately reduced in accordance with Charterers’ orders, safety requirements, navigation in narrow or restricted waters, assistance to another ship in distress, or saving or attempting to save life or property at sea.

This type of wording is useful because it defines the weather standard, the period of application, the relevant performance benchmark, and the exclusions from performance calculation. It reduces uncertainty by making clear that performance is measured only under agreed conditions and that deliberate speed reductions ordered by Charterers should not automatically create an underperformance claim. At the same time, it protects Time Charterers by confirming that the performance obligation is not limited to the moment of delivery but continues during the charter period.

In practice, Time Charterers often prefer the Charter Party to refer to Average Service Speed or similar wording. This helps establish a realistic expectation of how the ship should perform over a series of voyages rather than focusing only on isolated performance under ideal conditions. Average service performance may be particularly important in longer Time Charters, where the commercial value of the ship depends on repeated voyage performance across different routes, weather patterns, cargo conditions, and operational circumstances.

Modern Tanker Time Charter Parties often contain more detailed speed and consumption provisions than traditional dry cargo forms. Some tanker forms allocate more of the weather risk at sea to Shipowners and contain extensive performance descriptions similar to the methodology used in Voyage Chartering. SHELLTIME 4, Clause 24, “detailed description and performance,” is an example of a more developed approach. Tanker Charterers often require detailed performance wording because delays, bunker consumption, cargo temperature requirements, pumping obligations, port restrictions, and oil major schedules can create substantial commercial exposure.

When assessing the ship’s performance, speed and bunker consumption must be considered together. A ship may achieve the warranted speed only by consuming excessive fuel, or may keep within the fuel warranty only by proceeding too slowly. The commercial question is whether the ship has performed within the combined speed and consumption description agreed in the Charter Party. Speed Claims, including claims for underperformance or overconsumption, are often complex because they require analysis of weather data, noon reports, engine records, routeing information, currents, sea state, wind force, draft, trim, fouling, engine condition, and periods excluded from calculation.

Because the amounts involved can be substantial, speed and consumption clauses should be drafted carefully. The Charter Party should identify the warranted speed, the permitted fuel consumption, the applicable weather and sea conditions, whether the warranty applies loaded and ballast, whether eco speed figures apply, how performance is to be calculated, which weather reports are accepted, whether currents are considered, and which periods are excluded from the calculation. If these elements are not clearly stated, disputes may become difficult and expensive to resolve.

Hull fouling is a particularly important issue in Time Charter performance. If a ship remains idle for a prolonged period, especially in tropical or warm-water regions, marine growth may develop on the hull and propeller. This bottom fouling can reduce speed and increase bunker consumption. The issue is often controversial because the cause of the fouling may be connected with Charterers’ employment orders, such as prolonged waiting at anchorage, slow orders, port delays, or trading in high-fouling areas. At the same time, Owners remain responsible for maintaining the ship and may be expected to manage hull condition within reasonable limits.

Some Charter Parties include specific hull fouling clauses to allocate this risk. NYPE 2015 includes Clause 30, the “BIMCO hull fouling clause for Time Charter Parties," which provides a contractual framework for dealing with hull fouling during Time Charter employment. Such clauses may address when an underwater inspection is required, who pays for inspection and cleaning, whether the ship is off-hire during cleaning, whether performance warranties are suspended, and how time and cost are allocated if fouling is caused by Charterers’ orders or employment pattern.

Speed, consumption, fuel quality, weather conditions, hull fouling, and performance calculations are therefore closely connected. A Time Charterer fixes the ship on the basis of her earning ability, while the Shipowner must ensure that the ship is accurately described and properly maintained. Clear drafting at the Fixture stage is the best protection for both parties. A well-written speed and consumption clause reduces disputes, improves voyage planning, supports accurate bunker budgeting, and helps ensure that the agreed Hire reflects the real commercial capability of the ship.

Ship's Seaworthiness and Maintenance in Time Charter

Time Charter Parties normally contain an express obligation requiring Shipowners to deliver the ship in a seaworthy and efficient condition. This obligation is particularly important because Time Charterers are hiring the commercial use of the ship for a period and must be able to rely on the ship's technical readiness, trading capability, and operational reliability. The GENTIME form, Part II, Clause 11, "owner's obligations," provides that Owners must deliver the ship in a thoroughly efficient condition as regards hull and machinery and must exercise due diligence to maintain the ship in every way fit for the agreed service throughout the charter period.

This means that seaworthiness is not only relevant at the moment of delivery. For a Time Charter to function properly, the ship must remain suitable for the contracted service during the entire employment. Charterers expect the ship to be capable of performing the commercial orders they are entitled to give, while Shipowners must ensure that the ship remains properly manned, equipped, maintained, certificated, classed, insured, and technically fit. In longer Time Charters, it is often sensible to include more detailed maintenance provisions, including clauses dealing with surveys, drydocking, class requirements, repairs, spare parts, hull condition, machinery performance, certificates, and the consequences of delay caused by technical deficiencies.

Maintenance clauses should also be read together with provisions dealing with damage to the ship, off-hire, performance claims, liability, exceptions, and indemnities. If the ship becomes inefficient, loses class, lacks certificates, suffers machinery defects, or cannot comply with trading requirements, Charterers may suffer loss through delay, missed employment, increased bunker consumption, or inability to perform sub-contracts. Shipowners may then face claims depending on the Charter Party wording and the cause of the problem.

Even where the Charter Party does not expressly state a seaworthiness obligation, Shipowners are generally expected to comply with Seaworthiness and Maintenance Duties. Under English law, a Shipowners’ warranty of seaworthiness may be implied unless the Charter Party clearly provides otherwise. The exact scope of that implied obligation depends on the contract, the type of ship, the intended service, the trading limits, and the circumstances of the charter. For practical purposes, both parties should avoid relying only on implied obligations and should state the required condition and maintenance standard clearly in the Time Charter Party.

Trade in Time Charter

Geographical Limits in Time Charter

In Time Chartering, the Charterer directs the commercial employment of the ship, but that right is always subject to the limits imposed by the Charter Party, insurance arrangements, law, safety requirements, and the Ship Master’s navigational authority. Both Hull Underwriters and War Risk Underwriters normally impose restrictions on where the ship may trade. These insurance restrictions are often supplemented by additional contractual limits agreed between Shipowners and Time Charterers.

The GENTIME form, Part II, Clause 13, “Charterers’ obligations,” reflects the basic Time Charter structure by stating that Charterers must provide the Master with full and timely instructions. Those instructions must be lawful, clear, commercially workable, and within the agreed trading limits. The Time Charterer may choose cargoes, routes, ports, and employment opportunities, but the Time Charterer cannot lawfully order the ship outside the contractual and insurance framework agreed with Shipowners.

Trading limits can be drafted in different ways. Shipowners commonly ensure that restrictions imposed by underwriters are incorporated into the Charter Party with wording such as “always within hull underwriters’ trading limits.” However, merely referring to Institute Navigating Limits (INL) may not be sufficient because underwriters may impose additional requirements, seasonal exclusions, ice restrictions, war risk conditions, piracy exclusions, or special notification obligations. The Charter Party should therefore identify not only the general navigational limits but also any extra insurance conditions that may affect employment.

The War Risk Clause may create a further layer of restriction. Such clauses commonly give Shipowners and the Ship Master liberty to comply with orders, directions, or recommendations given by persons or committees authorized under the ship’s war risk insurance. This is important because war risk underwriters may require the ship to avoid certain waters, ports, anchorages, or routes. If Charterers’ commercial orders conflict with insurance instructions, the Charter Party must make clear that Shipowners and the Ship Master may comply with the requirements necessary to preserve insurance cover and protect the ship, crew, and cargo.

Other geographical limits may be included for financial, logistical, crew, or technical reasons. For example, if the agreed trading area is very wide, such as “worldwide trading always within Institute Navigating Limits (INL) and excluding following countries . . .,” Shipowners may still need the ship to call periodically at or near the home country for crew changes, drydocking, class attendance, major maintenance, spare parts delivery, or technical inspections. In such cases, Shipowners may seek a clause requiring the ship to call a named country or region at agreed intervals, such as: “Ship to call China twice a year evenly spread.”

Political Factors may also justify express trading exclusions. Some countries restrict or ban ships that have previously traded with particular states, carried certain cargoes, called at politically sensitive ports, or are owned, managed, flagged, or controlled by certain parties. Sanctions, boycotts, blacklisting, cabotage rules, diplomatic restrictions, and local import or export controls may all affect the Time Charterer’s right to employ the ship. If these risks are foreseeable, the Charter Party should list the excluded countries, areas, ports, cargoes, or trades clearly.

Ambiguous geographical wording should be avoided wherever possible. Expressions such as “Mediterranean,” “Far East,” “Continent,” or “St. Lawrence in season” may be understood differently by different market participants. If the parties use such expressions, they should define them by listing included or excluded ports, countries, or boundaries. Where the phrase “in season” is used, the relevant dates should be stated expressly. Recognized geographical abbreviations can be useful in chartering communications, such as “ARA: Amsterdam – Rotterdam – Antwerp” or “Continent,” but they should still be used with care if the trade or legal consequences are significant.

Non-Geographical Limits in Time Charter

Even when the nominated ports, countries, and routes fall within the agreed geographical area, non-geographical restrictions may still apply. These restrictions may relate to lawfulness, safety, cargo type, port conditions, ice, disease, war risk, sanctions, crew obligations, or the physical ability of the ship to enter, lie, load, discharge, and depart safely. A Time Charterer’s employment orders must therefore comply with more than a map-based trading range.

GENTIME, Part II, Clause 2(a), “trading areas – trading limits,” provides that the ship shall be employed in lawful trades within Institute Warranty Limits (IWL) and within the trading limits stated in the relevant box, between safe ports or safe places where the ship can safely enter, lie always afloat, and depart. This wording contains several separate obligations. The trade must be lawful. The cargo must be lawful. The ports and places must be safe. The ship must be able to enter, remain, and depart safely. The ship must also remain afloat unless the Charter Party expressly allows otherwise.

Lawful trade means that the employment and cargo must comply with the laws of the loading country, the discharging country, the ship’s flag state, and the law governing the Charter Party. It may also require compliance with sanctions rules, customs regulations, export controls, dangerous goods regulations, environmental laws, and port authority requirements. A cargo or voyage that is commercially attractive may still be impermissible if it exposes the ship or Shipowner to illegality, detention, confiscation, insurance problems, or criminal penalties.

Ports must be safe, and the ship must normally “lie always afloat”. However, the parties may agree that the ship may lie safely aground in particular ports or areas where such practice is customary and safe for ships of similar size and draught. This may be expressed through wording such as “always afloat or safely aground (AABSA) where it is customary for ships of similar size or draught to be safely aground.” NYPE 2015, Clause 1(d), “duration/trip description,” gives Charterers the option to instruct the ship to load or discharge at places where the ship “may lie safely aground." However, this permission should apply only where the relevant places are clearly identified or where the Charter Party defines the areas in which such grounding is permitted.

Time Charter Parties may also contain clauses excluding particular ports or conditions. These provisions are often headed “Excluded Ports” or similar. LINERTIME 2015, Clause 17, “excluded ports,” provides an example by stating that the ship is not to be ordered to or bound to enter places where fever or epidemics are prevalent, or places to which the Master, Officers, and Crew are not legally required to follow the ship. The clause also excludes ice-bound places and places where navigational lights, lightships, marks, or buoys are withdrawn or likely to be withdrawn because of ice. It also protects the ship where there is a risk that she cannot reach the place or leave after loading or discharging because of ice.

The same type of wording may provide that the ship is not obliged to force ice and is not required to follow icebreakers when inward bound. If the Ship Master considers it dangerous to remain at the loading or discharging place because of the risk of the ship being frozen in or damaged, the Ship Master may sail to a convenient open place and await fresh instructions from Charterers. Detention arising from such causes is commonly placed for Charterers’ account.

The first part of such a clause protects the crew from exposure to serious illness, fever, epidemics, or legally prohibited destinations. The second part operates as an ice clause, designed to protect the ship from being forced into unsafe ice conditions or trapped in an ice-affected port. The War Clause may impose further restrictions on the Time Charterer’s commercial use of the ship by allowing Shipowners or the Ship Master to refuse orders involving war risks, piracy, terrorism, blockades, mines, hostilities, or similar dangers.

Breaking of Trading Limits in Time Charter

If Time Charterers wish to send the ship to ports, routes, or areas outside the agreed trading limits, they must first obtain Shipowners’ permission. Shipowners may then need approval from Insurance Underwriters, including hull underwriters, war risk underwriters, P&I insurers, mortgagees, flag state authorities, or classification societies, depending on the nature of the proposed employment. A Time Charterer cannot assume that payment of additional premium alone is enough to authorize trading outside the agreed limits.

Some Time Charter Parties contain wording suggesting that Charterers may break the ship’s trading limits if they pay the extra insurance premiums. From the Shipowners’ perspective, this wording is too broad and potentially unsafe. Shipowners cannot give Charterers an automatic right to exceed the Trading Limits because the decision may involve more than insurance cost. Underwriters must often be consulted each time, and they may impose conditions, refuse cover, require additional information, demand special precautions, or exclude certain risks entirely.

If a special agreement is made to permit trading outside the normal limits, that agreement should address more than the Extra Insurance Premiums (EIP). It should also deal with delay, deviation, additional bunkers, crew bonuses, security measures, icebreaker assistance, repair risk, survey requirements, loss of time, physical damage, loss of class, and any effect on Hire or off-hire. The agreement should be recorded clearly in writing before the ship proceeds outside the original limits.

Requirements of the Trade in Time Charter

Time Charterers often seek wording ensuring that the ship can be used within the agreed trading limits without avoidable interruption. A typical clause may provide:

“Owners to ensure both that the Ship is provided with such technical equipment and certificates, and that the terms and conditions on which the Master, Officers and Crew are engaged are such, as are necessary to avoid any delay or hindrance with respect to the use of the Ship within the trading limits.”

This type of clause is intended to protect Charterers by requiring Shipowners to provide the documents, certificates, equipment, and crew employment conditions needed for the ship to trade efficiently within the agreed area. It may cover matters such as trading certificates, canal certificates, class documents, flag state papers, safety certificates, labor documents, ITF-related requirements, local trading permits, and equipment required by ports or authorities within the trading range.

However, such clauses can create difficulty for Shipowners if new regulations, new documentary requirements, new port restrictions, or new crew-related demands arise after the Charter Party has been signed. A requirement that was not foreseeable at the date of the Fixture may impose additional cost or delay on Shipowners. A common solution is to provide that Shipowners’ obligations are limited to laws, rules, regulations, certificates, and requirements in force at the date of the Time Charter Party, unless the parties expressly agree how later changes will be handled.

For longer Time Charters, the parties should also consider who bears the cost of new regulatory requirements introduced during the charter period. Environmental rules, ballast water requirements, emissions regulations, canal rules, cybersecurity requirements, electronic documentation rules, crew certification changes, port state control requirements, and sanctions compliance obligations may all affect the ship’s ability to trade. Clear drafting can prevent later disputes over whether the cost of compliance belongs to Shipowners as part of maintenance and seaworthiness, or to Charterers as part of the commercial employment of the ship.

Trip Time Charter (TCT)

When a ship is fixed for a particular trip on a time basis, the arrangement is commonly described as a Trip Time Charter or Time Charter Trip (TCT). This form of employment sits between Voyage Chartering and Time Chartering. The commercial purpose may resemble a Voyage Charter because the ship is used for one defined cargo movement or route, but the payment mechanism and many operational provisions follow Time Charter principles because the Charterer pays Hire for the time used rather than Freight per ton of cargo carried.

A standard Time Charter Party may be adapted into a Time Charter Trip by inserting a specific trip description. For example, the Charter Party may state:

“One Time Charter voyage with loading 1 or 2 ports in Sweden and discharging 1 or 2 ports in Brazil. Redelivery on dropping outward pilot at last discharging port. Total period estimated to 30 days.”

This wording defines the commercial adventure by reference to the loading area, discharging area, redelivery point, and estimated duration. NYPE 2015, Clause 1(a), “duration/trip description,” reflects this flexibility by allowing the parties to state whether the contract is for a fixed time period, a trip, or another agreed employment structure. In practice, a Time Charter Trip is often used where Charterers want the commercial benefit of time-based control for one cargo movement without committing to a longer period charter.

Where the parties depart from ordinary Time Charter principles, the rest of the Charter Party must be reviewed carefully. Standard Time Charter forms often contain provisions dealing with late redelivery, minimum and maximum periods, final voyage orders, off-hire, bunkers, delivery, redelivery, and market-rate compensation after the agreed period. Some of these provisions may not fit a Time Charter Trip unless they are amended. For example, a clause giving Shipowners additional Hire if the ship is not redelivered on time may need to be adapted so that the agreed Hire applies for the estimated 30 days only, with Shipowners entitled to the market rate thereafter if that rate exceeds the agreed Time Charter rate.

Sometimes, the Charter Party contains both general trading limits and a specific Time Charter Trip (TCT) description. For example, the printed form may state:

“World-wide trading within Institute Navigating Limits (INL),"

while the trip description provides:

“One Time Charter Trip (TCT) from Argentina to one or two ports in China."

In such cases, the trip description should be read together with the wider trading limits. The general trading limits define the outer boundary of permissible employment, while the Time Charter Trip wording identifies the actual commercial service agreed by the parties. If there is any conflict between broad trading limits and the specific trip wording, the parties should clarify the position before fixing. Clear drafting avoids disputes over whether Charterers may order intermediate calls, alternative ports, additional cargoes, or route changes outside the commercial purpose of the Time Charter Trip.

Ballast Bonus (BB)

The place of delivery and redelivery is a major commercial factor in Time Chartering. Time Charterers generally prefer the ship to be delivered at or near a place where she can immediately load cargo and begin earning. Shipowners, on the other hand, benefit from redelivery at a location where the ship can quickly obtain a new cargo, enter another charter, or reposition efficiently at minimum cost. Because delivery and redelivery positions affect ballast time, bunker consumption, market exposure, and the ship's next employment, they often influence the agreed Hire level.

In some cases, instead of adjusting the Hire based on delivery and redelivery positions, Shipowners and Time Charterers agree on a Ballast Bonus (BB) payment. A Ballast Bonus (BB) is a lump sum or agreed compensation intended to reflect the cost of positioning the ship before delivery or after redelivery. For example, if the ship completes the final cargo under the Time Charter at port A, the Time Charterer may wish to redeliver the ship at that port. If there is no suitable follow-on cargo at port A and the nearest realistic cargo opportunity is at port B, eleven days’ steaming away, Shipowners must consider the time and bunker cost required to move the ship from port A to port B.

This repositioning cost can be handled in different ways. The parties may agree that the Time Charter continues until the ship reaches port B, meaning that Hire remains payable during the ballast passage. Alternatively, they may agree that the ship will be redelivered at port A and that Charterers will pay a Ballast Bonus (BB) as compensation for the estimated ballast time and bunker consumption from port A to port B. In some Fixtures, the Ballast Bonus (BB) is paid separately as a lump sum. In others, the economic value of the Ballast Bonus (BB) is built into the Hire rate for the Time Charter period.

The main advantage of a Ballast Bonus (BB), whether paid as a lump sum or incorporated into Hire, is that it can simplify the contractual relationship after redelivery. Once the ship is redelivered and the agreed Ballast Bonus (BB) has been paid, Charterers are normally released from responsibility for the later ballast movement. They do not bear the risk of port safety, channel conditions, weather delay, pilot strikes, congestion, or other events affecting the ship after redelivery. At the same time, Shipowners regain full freedom to decide whether to proceed to port B, seek another employment opportunity, slow steam, bunker, repair, deviate, or reposition elsewhere.

Depending on the situation, a Ballast Bonus (BB) may be paid by either the Shipowners or the Time Charterers, at delivery or redelivery. At delivery, a Ballast Bonus (BB) may compensate Shipowners for bringing the ship from her previous position to the delivery area. At redelivery, it may compensate Shipowners for the cost of moving the ship from the redelivery place to the next expected employment area. The clause should state the amount, timing of payment, currency, whether it is payable with first Hire or final Hire, whether it is non-refundable, and whether it is affected by early or late delivery or redelivery.

Cargo in Time Charter

Type and specification of cargo in Time Charter

Apart from trading limits, the main restriction on the Time Charterer’s freedom to employ the ship concerns the cargoes that may be carried. The type, construction, equipment, class, tank or hold arrangement, coating, gear, ventilation, and cargo-handling capability of the ship determine which cargoes she can safely and lawfully carry. Some ships are designed for a single cargo type or a narrow cargo group, and this should be clearly stated in the Time Charter Party. Other ships can carry a broader range of cargoes, but even then the Charter Party should define the permitted cargoes with enough precision to avoid disputes.

Many general-purpose dry cargo ships are described as suitable for “lawful merchandise non-injurious to the ship” or “ordinary dry cargo non-injurious to the ship.” This general description gives Charterers commercial flexibility while protecting Shipowners from unlawful, dangerous, corrosive, contaminating, or physically harmful cargoes. It also reflects an important difference between Time Charter and Voyage Charter. In a Voyage Charter, the cargo is usually known and described in detail at the time of fixing. In a Time Charter, the exact cargoes may change from voyage to voyage, so the Charter Party often defines broad categories of permitted and excluded cargoes rather than one specific commodity.

Excluded cargo in Time Charter

In some cases, the general cargo description automatically excludes certain cargoes. If the Charter Party permits “lawful merchandise non-injurious to the ship," cargoes that are unlawful, dangerous, harmful, or damaging to the ship are outside the agreed employment. However, general wording may not be enough where particular cargoes create special risk. For this reason, printed Time Charter forms often contain specific lists of excluded cargoes. GENTIME, Part II, Clause 3, “cargo – restrictions and exclusions,” is an example of a clause that identifies prohibited cargoes more directly.

Excluded cargo clauses may cover explosives, radioactive materials, livestock, scrap, sulphur, salt, fishmeal, cement, concentrates, petroleum coke, dirty cargoes, corrosive chemicals, cargoes requiring special temperature control, cargoes subject to sanctions, or any cargo that may damage the ship, contaminate holds or tanks, create cleaning problems, or expose the ship to legal or insurance risk. The list should be adapted to the ship and trade. A cargo that is normal for one ship may be inappropriate for another. Clear cargo exclusions protect Shipowners from unexpected exposure while giving Time Charterers a reliable framework for commercial employment.

Time Charter Period

Length of Time Charter Period

Time Charter Parties normally contain a clause stating the agreed length of the charter period. This is often called the "Flat Period." The traditional method is to fix the ship for a specified period, such as three months, six months, one year, or several years. GENTIME, Clause 1, follows this approach by stating that Owners let and Charterers hire the ship for the period or trip stated in Box 6, which identifies the "Period of Charter."

The agreement may also provide for one or more fixed voyages rather than a conventional period. This is common in Trip Time Charter (TCT) arrangements, where the duration depends on the time needed to perform the agreed trip. Because the precise redelivery date cannot always be predicted, Time Charter Parties usually contain some degree of flexibility. Weather, congestion, route changes, port delays, strikes, canal transits, cargo operations, and bunkering may all affect the final duration of the charter.

The flat period and redelivery date are often qualified by expressions such as “ABOUT." The Charter Party may also state a fixed period or redelivery date with wording such as “± 15 days in Charterers’ Option” or another agreed margin. These expressions are commercially important because they determine how much flexibility Charterers have when planning the final voyage and redelivery. The meaning of “ABOUT” depends on the length of the charter, the nature of the employment, the expected voyage pattern, and the surrounding commercial circumstances. A tolerance that may be reasonable for a long period charter may be excessive for a short Time Charter Trip.

Where Charterers have an option to extend the charter period, that option usually benefits Charterers alone unless the clause is drafted otherwise. If market Hire rates fall during the charter, Charterers may choose not to exercise the option and may instead seek another ship, or even renegotiate for the same ship, at a lower rate. If market Hire rates rise, Charterers are more likely to exercise the option and keep the ship at the agreed contract rate, which may then be a below-market rate. This is why Shipowners should price extension options carefully and consider whether the option period, declaration deadline, and Hire rate are commercially acceptable.

Large differences between market Hire and contract Hire frequently generate disputes over the length of the Time Charter Period and the timing of redelivery. If the contract Hire is higher than the market rate, Charterers may try to redeliver the ship as early as possible. If the contract Hire is below the market rate, Charterers may attempt to keep the ship for the longest period permitted by the Charter Party. The final voyage, tolerance period, redelivery notices, extension options, and “about” wording therefore become highly significant when market conditions move sharply.

To reduce disputes, the Time Charter Party should define the charter period clearly. It should state the minimum and maximum duration, any tolerance, who holds the option, when the option must be declared, whether the final voyage may exceed the period, what rate applies after the agreed period, and where redelivery must take place. In Time Chartering, a few words concerning duration can have major financial consequences, especially in a rising or falling market. Careful drafting at the Fixture stage is therefore essential.

Time Charter Overlap/Underlap – Last Voyage

A Time Charter may end earlier or later than the redelivery date or redelivery period agreed in the Charter Party. When the ship is returned before the agreed date or before the permitted redelivery window, this is known as Underlap. When the ship is returned after the agreed period, this is known as Overlap. Both situations can have important commercial consequences, particularly where the market Hire rate has changed significantly during the charter period.

If Time Charterers redeliver the ship too early, Shipowners cannot normally refuse to take the ship back merely because the redelivery is premature. However, early redelivery may constitute a Breach of Charter Party by the Time Charterers. Shipowners must then take reasonable steps to mitigate their loss by seeking alternative employment for the ship. If replacement employment is obtained at a lower rate than the contract Hire, Shipowners may claim damages from Charterers for the difference, subject to the terms of the Charter Party, the available market, and the evidence of loss. The calculation is not always straightforward because it may involve market comparison, waiting time, ballast costs, bunker consumption, and the timing of the next Fixture.

The last voyage under a Time Charter is often the most sensitive stage of the employment. Time Charterers must plan the Last Voyage so that the ship can be redelivered within the agreed redelivery period. Because weather, congestion, bunkering, canals, cargo operations, strikes, and port delays can make exact timing difficult, many Time Charter forms contain specific provisions dealing with last voyage orders. These clauses are designed to prevent Charterers from giving an order that could not reasonably be expected to permit timely redelivery.

GENTIME, Part II, Clause 4(d), “Redelivery – Last Voyage”, provides a useful example:

“The Charterers warrant that they will not order the Ship to commence a voyage (including any preceding ballast voyage) which cannot reasonably be expected to be completed in time to allow redelivery of the Ship within the period agreed and declared as per clause 1(a). If nevertheless such an order is given the Owners shall have the option; (i) to refuse the order and require a substitute order allowing timely redelivery; or (ii) to perform the order without prejudice to their rights to claim damages for breach of charter in case of late redelivery. In any event, for the number of days by which the period agreed and declared as per clause 1(a) is exceeded, the Charterers shall pay the market rate if this is higher than the rate stated in Box 24.”

This wording gives Shipowners important protection. If the proposed last voyage cannot reasonably be completed within the agreed charter period, Shipowners may refuse the order and require Charterers to give a substitute order that permits timely redelivery. Alternatively, Shipowners may perform the order while preserving their right to claim damages if late redelivery occurs. Where the ship is redelivered late, the clause entitles Shipowners to the market rate during the Overlap Period if the market rate is higher than the contractual Time Charter rate. If the market rate is lower, the original Charter Party rate continues to apply during the Overlap Period.

This provision does not give Time Charterers a general right to extend the Time Charter Period. It only regulates the financial consequence of late redelivery and preserves Shipowners’ rights where Charterers have ordered a voyage that exceeds the agreed period. The same issue may also arise in Time Charter Trips (TCT), where the parties may have agreed an estimated duration for a specific trip. In those cases, the Charter Party should make clear what happens if the trip takes longer than expected and whether Hire continues at the agreed rate, market rate, or another stated rate.

Extension of Flat Period due to off-Hire periods in Time Charter

Unless the Time Charter Party expressly provides otherwise, Time Charterers cannot extend the Flat Period merely because the ship has been off-hire during the charter. Off-hire provisions normally suspend the obligation to pay Hire for periods when the ship is not fully available for Charterers' service due to specified events. They do not automatically extend the charter period. Therefore, if a ship is off-hire for several days during the charter, Charterers do not receive extra days at the end of the period unless the Charter Party contains a clear extension clause.

If the parties wish to allow extension for Off-Hire Periods, the clause should be drafted carefully. It should state whether every off-hire period gives a right to extend, or only off-hire exceeding a particular number of hours or days. It should also identify the latest time by which Time Charterers must notify Shipowners that they intend to extend the Time Charter Period. Without a clear notice requirement, disputes may arise close to redelivery when Shipowners are already negotiating the ship’s next employment.

The clause should also define the Hire rate payable during any extension. The parties must decide whether the original Hire rate applies, whether the market rate applies, whether the higher of the two applies, or whether another formula is used. It should also state whether further off-hire during the extension period gives Charterers a right to extend again. If this is not addressed, an extension clause may become uncertain and may allow repeated extensions that were not commercially intended. In a moving market, the financial effect of such wording can be substantial.

Delivery and Redelivery of Ship in Time Charter

The Time Charter Period begins when the ship is delivered to the Time Charterers and ends when the ship is redelivered to Shipowners. Delivery and redelivery are therefore not merely operational events; they determine when Hire starts and stops, when commercial control passes to and from Charterers, when bunkers are valued, and when responsibility for voyage expenses changes. The Time Charter Party must therefore deal precisely with the place, time, condition, notices, and procedures for delivery and redelivery.

GENTIME, Part II, Clause 1(b) and 1(c), “period and delivery – delivery place & delivery time,” describes delivery as follows:

“(b) Delivery Place: The Owners shall deliver the Ship to the Charterers at the port or place stated in Box 8 or a port or place within the range stated in Box 8. (c) Delivery Time: Delivery shall take place no earlier than the date/time stated in Box 9 and no later than the date/time stated in Box 10. Delivery shall be effected at any time day or night, Saturdays, Sundays and holidays included.”

This wording identifies both the geographical place of delivery and the delivery window. The earliest delivery date protects Charterers from being forced to accept the ship too early, while the cancelling date protects Charterers if the ship is not ready by the agreed deadline. The provision that delivery may take place at any time, including Saturdays, Sundays, and holidays, avoids uncertainty where the ship becomes ready outside ordinary office hours.

GENTIME also deals with redelivery by Charterers to Shipowners in Part II, Clause 4(a), 4(b), and 4(c), “redelivery – redelivery place – acceptance of redelivery – notice,” which provides:

“(a) Redelivery Place: The Charterers shall redeliver the Ship to the Owners at the port or place stated in Box 17 or a port or place within the range stated in Box 17, in the same order and condition as when the Ship was delivered, fair wear and tear excepted. (b) Acceptance of Redelivery: Acceptance of redelivery of the Ship by the Owners shall not prejudice their rights against the Charterers under this Charter Party. (c) Notice: The Charterers shall give the Owners not less than the number of days notice stated in Box 18 indicating the port or place of redelivery and the expected date on which the Ship is to be ready for redelivery.”

These provisions protect Shipowners by requiring the ship to be redelivered in the agreed place and in the same general order and condition as at delivery, subject to fair wear and tear. The notice requirement is also important because Shipowners need to plan future employment, bunkering, inspections, repairs, drydocking, crew changes, and commercial commitments. Acceptance of redelivery does not mean Shipowners have waived claims for damage, late redelivery, underlap, unpaid Hire, bunker disputes, or other breaches of the Charter Party.

GENTIME, Part II, Clause 1(d), “period and delivery – cancellation,” also contains a delivery cancellation mechanism:

“Cancellation: Should the Ship not be delivered by the date/time stated in Box 10 the Charterers shall have the option to cancel the Charter Party without prejudice to any claims the Charterers may otherwise have on the Owners under the Charter Party. If the Owners anticipate that, despite their exercise of due diligence, the Ship will not be ready for delivery by the date/time stated in Box 10, they may notify the Charterers in writing, stating the anticipated new date of readiness for delivery, proposing a new cancelling date/time and requiring the Charterers to declare whether they will cancel or will take delivery of the Ship. Should the Charterers elect not to cancel or should they fail to reply within two (2) working days (as applying at the Charterers’ place of business) of receipt of such notification, then unless otherwise agreed, the proposed new cancelling date/time will replace the date/time stated in Box 10. This provision shall operate only once and should the Ship not be ready for delivery at the new cancelling date/time the Charterers shall have the option of cancelling this Charter Party.”

This clause balances the interests of both parties. Charterers receive a cancellation right if the ship is not delivered by the agreed deadline, while Shipowners receive a practical method of obtaining clarity where late delivery appears likely despite due diligence. The Shipowner can notify Charterers of the expected delay and require Charterers to decide whether they will cancel or accept a revised cancelling date. This avoids the commercial uncertainty of continuing toward delivery without knowing whether Charterers intend to take the ship.

When shall the ship be delivered and redelivered in Time Charter?

If the ship arrives at the delivery port or delivery place before the agreed Layday, Time Charterers are not obliged to accept delivery before that date. The ship may have to wait, and Hire will not normally begin until valid delivery is made. Conversely, if the ship arrives after the agreed delivery deadline or cancelling date, Charterers may have the right to cancel the Time Charter Party. Depending on the reason for the delay and the wording of the Charter Party, Charterers may also have a claim for damages if Shipowners have breached their obligation to proceed with due diligence or deliver as agreed.

Redelivery is more flexible in many Time Charter Parties because the exact end of the final voyage may be difficult to predict. Nevertheless, Charterers must redeliver within the agreed period or within any permitted tolerance. If Charterers redeliver late, Shipowners may claim compensation, particularly where the market rate during the Overlap Period is higher than the contract Hire. The outcome will depend on the Charter Party wording, the applicable law, the reason for the delay, and whether Charterers could reasonably have expected the final voyage to be completed in time.

If Time Charterers knew, or should reasonably have known, when ordering the last voyage that the ship could not be redelivered within the contractual period, Shipowners will usually have a stronger claim. If the last voyage appeared reasonable when ordered but was later delayed by unexpected events beyond Charterers’ control, the position may be more difficult. Some clauses still place the risk of late redelivery on Charterers, while others may require an analysis of reasonableness, foreseeability, and causation.

Many Time Charter Parties specify that delivery and redelivery must take place during weekdays and office hours, while others allow delivery and redelivery at any time, day or night, Saturdays, Sundays, and holidays included. The parties should state clearly whether time references are based on Universal Time Coordinated (UTC) or Local Times (LT). This is especially important where the ship is delivered or redelivered near midnight, across different time zones, or where Hire, bunkers, and notices are calculated by reference to exact time.

Where shall the ship be delivered and redelivered in Time Charter Party?

The delivery and redelivery location may be described narrowly or broadly. It may be a named berth, anchorage, port, pilot station, passing point, geographical range, or wider area. For example, the Charter Party may state that the ship is to be delivered and redelivered "in the Continent." Where only a general area or range is specified, the usual commercial approach is that Shipowners select the precise delivery place within the range, while Time Charterers select the precise redelivery place within the agreed range. However, this should be stated clearly if the parties intend that result.

Delivery and redelivery do not always take place while the ship is physically in port. Time Charter Parties often use delivery and redelivery points connected with pilot stations, passing points, or navigational locations. For example, delivery or redelivery may take place “on passing pilot station,” “on dropping outward pilot,” “on arrival at first loading port,” “on sailing from last discharging port,” “on passing Gibraltar,” or “on arrival at anchorage.” Such wording must be precise because it determines the exact moment when Hire begins or ends and when responsibility for bunkers, port costs, canal dues, and voyage expenses shifts between the parties.

The place of delivery and redelivery can have a major impact on the economics of the Time Charter. Delivery at a loading port may be attractive to Charterers because the ship can begin cargo operations immediately. Redelivery at an unattractive or remote location may disadvantage Shipowners because the ship may need a long ballast voyage before obtaining further employment. For this reason, delivery and redelivery ranges, Ballast Bonus (BB), bunker quantities, final voyage orders, and redelivery notices should be considered together during negotiations.

Where the delivery or redelivery place is described by a port range or region, the Charter Party should also state whether the place must be safe, whether the ship must lie always afloat, whether delivery or redelivery may occur at anchorage, whether port costs are for Owners’ or Charterers’ account, and who pays for bunkers consumed while moving to or from the precise place. If these points are left unclear, disputes may arise at the very beginning or end of the Time Charter, when the parties are already focused on payment, bunkers, final accounts, and the ship’s next employment.

“Ship to be delivered (redelivered) on dropping outward pilot at x-town."

This type of wording is frequently used in Time Charter Parties to identify the precise moment and place of delivery or redelivery. However, it can create practical uncertainty where both port pilots and river pilots are involved, or where the pilotage operation is divided into several stages. In such cases, the parties should define exactly which pilot station, pilot change point, or outward-pilot event is intended, because the timing of delivery or redelivery determines when Hire starts or stops and when responsibility for voyage expenses transfers between Shipowners and Time Charterers.

In what condition shall the ship be delivered and redelivered in Time Charter Party?

When the ship is delivered to the Time Charterers, the ship must be seaworthy and must comply with the contractual description agreed in the Time Charter Party. The required condition may be stated in wording such as:

“. . . she being in every way fitted for ordinary dry cargo service with cargo holds well swept, cleaned and ready to receive cargo before delivery under this charter.”

This type of clause protects Time Charterers by requiring the ship to be ready for the intended service at the moment of delivery. The ship should be properly manned, equipped, certificated, maintained, and prepared for the ordinary cargo operations contemplated by the Charter Party. If the ship is delivered with dirty holds, defective cargo gear, missing certificates, machinery problems, or other deficiencies that prevent proper employment, disputes may arise over delivery, off-hire, damages, cancellation, or Hire reduction.

At the end of the charter period, redelivery clauses commonly require the ship to be returned in substantially the same condition as when delivered, subject to normal trading wear. A typical clause may provide:

“. . . the ship to be redelivered on the expiration of the charter in the same good order as when delivered to the Charterers (fair wear and tear excepted). . . .”

If no damage has occurred during the charter, these clauses should allow the ship to move smoothly into her next employment. At delivery, the ship should be ready for immediate commercial service by the Time Charterers. At redelivery, the ship should be returned to Shipowners in a condition that allows Shipowners to trade the ship again without unnecessary delay, cleaning, repair, or dispute. The phrase “fair wear and tear excepted” recognizes that ordinary deterioration from normal lawful trading is not the responsibility of Time Charterers, but damage, misuse, negligent cargo operations, or improper employment may still give rise to claims.

A frequent area of disagreement concerns the condition of cargo holds at redelivery. Time Charterers may seek the right to redeliver the ship with holds that are not fully clean or swept, against payment of a fixed amount. NYPE 2015, Clause 10(a), “rate of Hire; hold cleaning; communications; victualing and expenses,” contains wording of this kind:

“Unless otherwise mutually agreed, the Charterers shall have the option to redeliver the Ship with unclean/unswept holds against a lump sum payment of . . . in lieu of hold cleaning, to the Owners (unless Ship lost).”

Such wording may be commercially convenient for Time Charterers, but it can be problematic for Shipowners. A fixed Lump Sum payment may not reflect the real time, labor, equipment, disposal cost, or opportunity loss involved in cleaning the holds. The problem becomes more serious if Shipowners have already fixed the ship for a following cargo requiring high hold-cleanliness standards, such as grain, fertilizers, minerals, food-grade cargoes, or sensitive bulk cargoes. If the ship cannot be cleaned during the Ballast Voyage, Shipowners may lose valuable trading time or risk failing to meet the next laycan.

From the Shipowners’ perspective, it may be safer to agree any hold-cleaning compensation after the ship reaches the Redelivery Port and after the next employment is known. At that stage, Shipowners can better assess the actual hold condition, the cargo previously carried, the cleaning standard required for the next cargo, the availability of cleaning gangs, and the likely time needed. If the parties agree a lump sum in advance, the clause should specify the amount, the standard of redelivery, whether cleaning time counts as on-hire or off-hire, and who bears any delay if the ship cannot meet the next cargo’s requirements.

Allocation of costs at delivery and redelivery of the ship in Time Charter

When a ship is delivered under a Time Charter Party, certain costs pass from Shipowners to Time Charterers. These usually include Variable Costs connected with the commercial employment of the ship, such as bunkers, port charges, canal dues, harbour dues, agency expenses, and cargo-related costs. When the ship is redelivered, responsibility for those costs normally returns to Shipowners. The exact point of transfer is therefore commercially important and should be tied clearly to the agreed delivery and redelivery time and place.

Special Survey Reports, including on-Hire and off-Hire Surveys, are commonly used to record the condition of the ship and to allocate costs accurately. These surveys identify the exact delivery or redelivery time, the quantities and grades of bunkers on board, the condition of holds, tanks, cargo spaces, decks, machinery, equipment, and any visible damage. Damage reports prepared at delivery and redelivery can become vital evidence if disputes later arise over whether damage occurred before, during, or after the Time Charter period.

Time Charterers and Shipowners may each appoint their own surveyors, but in practice the parties often arrange a joint survey by an Independent Surveyor. The Charter Party should state who appoints the surveyor, who pays the survey cost, and whose time is used while the survey is being conducted. Alternative wording may provide:

“Unless otherwise mutually agreed the Owners and Charterers shall each appoint surveyors for the purpose of determining the condition of the Ship at the time of delivery and redelivery hereunder. Surveys whenever possible to be done during service, but if impossible any time lost for on-Hire survey to be for Owners’ account and any time lost for off-Hire survey to be for Charterers’ account,”

or:

“A joint survey at delivery to be arranged by Owners and effected in their time. A joint survey on redelivery to be arranged by Charterers and effected in their time. Costs for both surveys to be shared equally.”

These clauses are important because survey time can affect Hire. If an on-hire survey delays delivery, the parties must know whether the time belongs to Shipowners or Time Charterers. The same issue arises at redelivery. A clear clause avoids arguments over whether the ship was on-hire during survey attendance, whether bunkers were measured at the correct time, and whether damage was recorded before or after responsibility changed.

Regarding bunkers (fuel), the Time Charter Party should state the quantity and price of bunkers at delivery and redelivery. Since bunker values can be substantial, unclear wording may produce serious financial disputes. NYPE 2015, Clause 9(a), “bunkers – bunker quantities and prices,” provides:

“The Charterers on delivery, and the Owners on redelivery or any termination of this Charter Party, shall take over and pay for all bunkers remaining on board the Ship as hereunder. The Ship’s bunker tank capacities shall be at the Charterers’ disposal. Bunker quantities and prices on delivery/redelivery to be (agreed prices to be inserted).”

Under this structure, Time Charterers buy the bunkers on board at delivery, and Shipowners buy back the bunkers remaining on board at redelivery. The parties should specify fuel grades, quantities, agreed prices, measurement method, sampling procedure, density, sulphur content, and whether the price is fixed, market-based, invoice-based, or otherwise calculated. The clause should also state minimum and maximum redelivery quantities, especially where Shipowners need sufficient bunkers to reach the next employment area.

Alternatively, a clause could stipulate:

“The Charterers shall not take over and pay for bunkers Remaining On Board at delivery but shall redeliver the Ship with about the same quantities and grades of bunkers as on delivery. Any difference between the delivery quantity and the redelivery quantity shall be paid by the Charterers or the Owners as the case may be. The price of the bunkers shall be the net contract price paid by the receiving party, as evidenced by suppliers’ invoice or other supporting documents.”

This alternative avoids a full bunker sale at delivery but requires Time Charterers to redeliver the ship with approximately the same bunker quantities and grades. It may simplify cash flow at delivery, but it can create disputes if fuel prices move sharply, if grades differ, or if the phrase “about the same quantities” is not defined. The parties should therefore identify tolerances, accepted fuel specifications, evidence of price, and the calculation method for any difference.

When delivery or redelivery takes place alongside a quay during a port call, responsibility for harbour dues and port charges may shift while the ship is still in port. This can make cost allocation difficult. Some charges may relate to cargo carried before delivery, some to cargo carried after delivery, and others to the ship’s presence in port. To avoid uncertainty, Time Charter Party forms often include specific provisions. LINERTIME and BALTIME contain wording reflected in LINERTIME 2015, Part II, Clause 5, “Time Charterers to provide”:

“The Charterers to pay all dock, harbour, light and tonnage dues at the ports of delivery and re-delivery (unless incurred through cargo carried before delivery or after re-delivery).”

This clause places port dues at delivery and redelivery on Time Charterers, except where the dues arise from cargo carried before delivery or after redelivery. The exception is important because it prevents Time Charterers from paying costs connected with Shipowners’ previous employment or future employment. As with bunkers and surveys, the exact allocation should be matched to the agreed delivery and redelivery points, especially where the ship is delivered or redelivered during cargo operations, at anchorage, at pilot station, or while shifting within the port.

Hire

Hire is the payment made by Time Charterers to Shipowners for the use of a manned, equipped, and operational ship during the Time Charter period. Hire is normally payable from the moment the ship is delivered to Time Charterers until the moment the ship is redelivered to Shipowners. During that period, Time Charterers have the right to employ the ship commercially within the agreed trading limits and cargo restrictions. However, the obligation to pay Hire may be suspended in specific circumstances under "Off-Hire" or suspension of Hire clauses.

Fixing of Hire

Hire may be calculated in several ways. Common formulations include “X US Dollars per 30 days,” “X US Dollars per day,” or “X US Dollars per 30 days and deadweight ton (DWT).” The chosen method depends on the ship type, market practice, trade, duration, and commercial negotiation between the parties. Dry bulk and tanker Time Charters commonly express Hire as a daily amount, while some specialized trades may use formulas connected with ship size, capacity, or period length.

It is generally advisable to avoid stating Hire simply as per month, because a month usually means a calendar month and calendar months vary from 28 to 31 days. This variation can create different effective daily Hire rates and complicate off-hire calculations, final Hire statements, and part-period adjustments. A clearer method is to express Hire by reference to a fixed daily rate or by stating that monthly payments are calculated “per month of 30 days." This produces a consistent daily equivalent throughout the Time Charter period.

For example, if Hire is agreed as USD 15,000 per day, the calculation is straightforward regardless of the month. If Hire is agreed as USD 450,000 per 30 days, the daily equivalent is also clear. However, if the clause merely states USD 450,000 per calendar month, the daily equivalent changes depending on whether the month has 28, 30, or 31 days. In a dispute involving off-hire, late redelivery, early redelivery, or final Hire adjustment, this difference can become commercially significant.

Payment of Hire

GENTIME, Part II, Clause 8(b), “Hire – payment,” describes the payment procedure as follows:

“Payment of Hire shall be made in advance in full, without discount every 15 days to the Owners’ bank account designated in Box 25 or to such other account as the Owners may from time to time designate in writing, in funds available to the Owners on the due date.”

In Time Chartering, Hire is paid in advance. This is a major difference from many Voyage Charter arrangements, where Freight may be paid after shipment, before discharge, or at another agreed stage. Advance payment protects Shipowners because, under a Time Charter, Shipowners may not have the same practical security over cargo as they may have in a Voyage Charter through a Lien over the cargo to secure payment. Since Time Charterers control the commercial employment of the ship, Shipowners rely heavily on punctual Hire payment to cover operating costs, financing costs, crew wages, insurance, and other continuing expenses.

Common Hire payment periods are 15 or 30 days in advance, although other arrangements may be negotiated. NYPE 2015, Clause 11(a), “Hire payment – Payment,” commonly reflects the 15-day advance payment structure, especially in shorter Time Charters. Longer period charters may use semi-monthly, monthly, or other agreed payment cycles depending on the relationship between the parties and the credit risk involved.

It is important not to confuse the interval for paying Hire with the unit used to calculate Hire. If Hire is calculated on a 30-day basis and paid in advance every 15 days, the payment amount can be calculated consistently. If Hire is described as payable “monthly in advance” at a fixed daily rate, the payment date may be fixed by calendar month, but the amount will vary depending on the number of days in that month. This distinction matters when calculating off-hire deductions, final Hire, redelivery adjustments, or Hire payable during an Overlap Period.

A well-drafted Hire clause should identify the amount, currency, payment interval, due date, bank account, payment method, responsibility for bank charges, whether deductions are permitted, what constitutes timely payment, and what remedies Shipowners have if Hire is not received in cleared funds by the due date. Because non-payment of Hire can lead to withdrawal rights, suspension of services, or serious disputes, the Hire clause should be drafted with precision and followed strictly by both Time Charterers and Shipowners.

Late Payment of Hire and Shipowners' Security in Time Charter

Hire is normally payable in advance under a Time Charter Party. If Time Charterers fail to make punctual payment, make only a partial payment, or make unauthorized deductions, Shipowners may have the right under English law and most standard Time Charter forms to withdraw the ship and terminate the Time Charter Party. GENTIME, Part II, Clause 8(c), "Hire – Default," expresses this right in strict terms:

“In default of punctual and regular payment of the Hire the Owners shall have the right to withdraw the Ship without prejudice to any other claim the Owners may have against the Charterers under this Charter Party.”

This wording appears severe because it may allow Shipowners to withdraw the ship even for a relatively small payment default. The commercial purpose is to protect Shipowners against Time Charterers who are insolvent, financially unstable, unwilling to pay, or attempting to use the ship without meeting the agreed Hire obligations. Since Shipowners continue to pay crew wages, insurance, maintenance, financing costs, technical management costs, and other fixed expenses, reliable Hire payment is essential to the commercial balance of the Time Charter.

In practice, however, the withdrawal right may not always provide complete security. Once cargo has been loaded and Bills of Lading (B/L) have been issued, Shipowners may owe obligations directly to the Bill of Lading (B/L) Holders. Even if Time Charterers fail to pay Hire, Shipowners may still be required to complete the voyage and deliver the cargo under the Bills of Lading (B/L). If Shipowners do not have an effective Lien over the Freight Payable under a sub-charter or Bill of Lading (B/L), they may be forced to carry and deliver the cargo without receiving payment from the Time Charterers.

Payment default disputes have produced significant legal difficulty. Shipowners may lose or weaken their right to withdraw if they have repeatedly accepted late payments without protest. If a course of dealing develops in which late payment is regularly tolerated, Time Charterers may argue that strict punctuality has been waived or that Shipowners must give warning before relying on the default. For this reason, Shipowners should always Protest promptly when Hire is paid late, paid short, or reduced by Unauthorized Deductions. Failure to object may create an adverse pattern of conduct and make future withdrawal more difficult.

Another practical complication is that Hire payments are normally made through banks. Payment may be delayed by banking cut-off times, time zones, intermediary banks, compliance checks, public holidays, currency controls, sanctions screening, or clerical errors. Hire is often treated as paid only when the funds are available in the Shipowners’ designated bank account. To avoid harsh results caused by minor or technical banking delays, many Time Charter Parties include a “Non-Technicality Clause” or “Anti-Technicality Clause."

A Non-Technicality Clause usually requires Shipowners to give Time Charterers notice of non-payment, short payment, or disputed payment and to allow Time Charterers a short period to correct the default before withdrawal can take place. GENTIME, Part II, Clause 8(c), “Hire – Default,” contains such a mechanism:

“Where there is a failure to make punctual and regular payment of Hire due to over-sight, negligence, errors or omissions on the part of the Charterers or their bankers, the Owners shall give the Charterers written notice of the number of clear banking days stated in Box 26 (as recognized at the agreed place of payment) in which to rectify the failure, and when so rectified within such number of days following the Owners’ notice, the payment shall stand as regular and punctual. Failure by the Charterers to pay Hire within the number of days stated in Box 26 of their receiving the Owners’ notice as provided herein, shall entitle the Owners to withdraw the Ship without further notice and without prejudice to any other claim they may have against the Charterers.

Further, at any time after the period stated in Box 26, as long as Hire remains unpaid the Owners shall, without prejudice to their right to withdraw, be entitled to suspend the performance of any and all of their obligations hereunder and shall have no responsibility whatsoever for any consequences thereof in respect of which the Charterers hereby agree to indemnify the Owners. Notwithstanding the provisions of Clause 9(a)(ii), Hire shall continue to accrue and any extra expenses resulting from such suspension shall be for the Charterers’ account.”

This type of clause gives Time Charterers a limited opportunity to correct a genuine payment error, while preserving Shipowners’ right to withdraw if the default is not remedied within the stated period. It also gives Shipowners an additional remedy by allowing suspension of performance while Hire remains unpaid. During suspension, Hire may continue to accrue and extra expenses may be placed on Time Charterers’ account. Such wording can be powerful, but it must be followed strictly. Shipowners should ensure that the notice is correctly served, the cure period is calculated properly, and the payment default is genuine before withdrawing or suspending performance.

Both Time Charterers and Shipowners must exercise caution. Time Charterers should arrange Hire payments well before the due date, allowing time for banking delays, time-zone differences, compliance checks, and public holidays. Shipowners should seek legal advice before withdrawing the ship for non-payment or late payment because a wrongful cancellation may itself amount to a serious breach and may allow Time Charterers to claim damages. The commercial consequences of wrongful withdrawal can be substantial, especially if the ship is carrying cargo, the market has moved, or Charterers have sub-charters and cargo commitments in place.

Time Charter Parties often contain a Lien Clause intended to strengthen Shipowners’ security. SHELLTIME 4, Clause 26, “lien,” provides an example:

“Owners shall have a lien upon all cargoes and all Freights, sub-Freights and demurrage for any amounts due under this charter; and Charterers shall have a lien on the ship for all monies paid in advance and not earned, and for all claims for damages arising from any breach by Owners of this charter.”

The purpose of such wording is to protect Shipowners against Insolvent Time Charterers by giving Shipowners rights over cargoes, Freights, sub-Freights, and Demurrage connected with the Time Charterer’s employment of the ship. However, the practical value of the clause may be limited. The cargo on board usually does not belong to the Time Charterers. It may belong to Shippers, Receivers, cargo buyers, banks, or other Bill of Lading (B/L) Holders. Once loading has begun and Bills of Lading (B/L) have been issued, Shipowners may be legally obliged to complete the carriage and deliver the cargo, even where Time Charterers have failed to pay Hire.

Enforcing a lien over sub-Freights or Bill of Lading (B/L) Freights can also be difficult. Shipowners may not know who is responsible for paying the sub-Freight, what amount is due, whether the Freight has already been paid, or whether the relevant contract permits interception. If sub-Freight or Bill of Lading (B/L) Freight has been prepaid before Shipowners give notice of lien, the security may be lost. Shipowners therefore need prompt and accurate information about sub-charters, cargo contracts, Freight payment arrangements, and Bill of Lading (B/L) terms if they intend to rely on a lien.

The late or non-payment of Hire and the Shipowners’ right to withdraw the ship are major issues addressed in the FONASBA Time Charter Interpretation Code 2000. The subject remains one of the most commercially sensitive areas of Time Chartering because it sits at the intersection of payment discipline, cargo obligations, sub-charter chains, Bill of Lading (B/L) liabilities, lien rights, and market movement. Clear drafting and disciplined conduct are essential for both sides.

Deductions from Hire in Time Charter

When Hire is paid in advance, Time Charterers often want to deduct amounts they believe are due from Shipowners. These deductions may relate to previous off-hire periods, cash advances made by Agents to the Ship Master, disbursements paid on Shipowners' account, Planned off-Hire such as drydocking, overpaid Hire, bunker adjustments, or other claims against Shipowners. From the Charterers' perspective, deduction may seem practical because Hire is a regular payment stream and the amount can be adjusted at the next instalment. From the Shipowners' perspective, unauthorized deduction may amount to a short payment and may trigger withdrawal rights.

Because late or insufficient Hire payment can give Shipowners the right to withdraw the ship, Time Charterers should be cautious before making any Deductions. The safest approach is to rely on an express Charter Party clause allowing the deduction or to obtain Shipowners’ prior written agreement. Without such authority, a deduction may be disputed as an unauthorized short payment. The legal position is not always simple, especially where Charterers claim that the deduction relates to a clear off-hire period or to sums unquestionably paid on Shipowners’ behalf. Nevertheless, if the Charter Party does not clearly permit deduction, Charterers take a real risk by reducing the Hire instalment unilaterally.

A well-drafted deduction clause should identify which items may be deducted, what documents must support the deduction, whether prior notice is required, whether disputed amounts must be paid first and argued later, and whether deductions may be made from the next Hire instalment or only from the final Hire payment. The clause should also distinguish between agreed off-hire deductions and disputed counterclaims. Time Charterers may have a valid claim against Shipowners, but that does not automatically mean the claim can be set off against Hire without contractual authority.

Shipowners should also handle deductions consistently. If Shipowners accept deductions repeatedly without objection, they may weaken their ability to object later. If a deduction is disputed, Shipowners should Protest promptly, reserve rights, and state whether they regard the deduction as unauthorized. Clear communication reduces the risk of later arguments over waiver, course of dealing, or acceptance of a modified payment practice.

Payment of last instalment of Hire in Time Charter

The final Hire instalment often requires special treatment because the remaining charter period may be shorter than the normal Full Hire payment cycle. In addition, Time Charterers may expect to receive credit for bunkers Remaining on Board (BOB) at redelivery, or may have other final account adjustments. To avoid overpayment and later recovery problems, many Time Charter Parties include a last Hire payment or redelivery adjustment clause.

GENTIME, Part II, Clause 8(e), “Hire – redelivery adjustment,” provides an example:

“Should the Ship be on her voyage towards the port or place of redelivery at the time payment of Hire becomes due, said payment shall be made for the estimated time necessary to complete the voyage, less the estimated value of the fuels remaining on board at redelivery. When the Ship is redelivered to the Owners any difference shall be refunded to or paid by the Charterers as appropriate, but not later than thirty days after redelivery of the Ship.”

This wording allows Time Charterers to pay only the estimated Hire needed to complete the final approach to redelivery, after deducting the estimated value of bunkers expected to remain on board. Once the ship is actually redelivered, the parties compare the estimate with the final figures. Any difference must then be refunded or paid by Time Charterers within the agreed period. This mechanism is practical because it reduces the risk of substantial overpayment while still ensuring that Shipowners receive Hire up to redelivery.

The final Hire clause should be drafted carefully because disputes frequently arise at the end of Time Charters. The parties should define how the estimated redelivery time will be calculated, which bunker prices apply, how bunker quantities will be measured, whether off-hire may be deducted, whether disputed claims may be included, and when the final balance must be settled. The clause should also state whether the last instalment must be paid in cleared funds before redelivery and whether Shipowners retain rights if the estimate proves too low.

Final Hire adjustment is closely connected with off-hire, bunkers, damages, redelivery notices, overlap, underlap, and final port expenses. If these matters are not coordinated, the end of the charter can become commercially difficult. A clear redelivery adjustment clause helps both Shipowners and Time Charterers close the charter account efficiently and reduces the risk that payment disputes continue long after the ship has been redelivered.

Off-Hire in Time Charter

Under a Time Charter Party, the general rule is that Time Charterers must pay Hire from the moment the ship is delivered to the Time Charterers until the ship is redelivered to the Shipowners at the end of the agreed Time Charter Period. During that period, Time Charterers usually bear the commercial risk of ordinary delays connected with the employment of the ship, including bad weather, pilot strikes, port congestion, Stevedore strikes, waiting time, or other delays that arise from the trading adventure rather than from the ship herself. However, where the ship is delayed or prevented from working because of events specified in the Charter Party, usually connected with the ship, crew, machinery, equipment, or Owners' side of the bargain, Time Charterers may be entitled to relief under an "Off-Hire Clause" or "Suspension of Hire Clause." Examples of such wording can be found in GENTIME, Part II, Clause 9, "off-Hire," SHELLTIME 4, Clause 21, "off-Hire," and NYPE 2015, Clause 17, "off-Hire."

Off-Hire is not available simply because the ship has been delayed. Time Charterers must show that the cause of the delay falls within the wording of the Off-Hire Clause or is otherwise recognized under the applicable law. The clause operates as an agreed contractual mechanism for adjusting Hire when the ship is not fully available for the service required by Time Charterers. In this respect, off-Hire has some similarity to liquidated damages, because the financial adjustment is based on the agreed Hire rather than on the actual loss suffered by Time Charterers. Time Charterers do not normally have to prove the exact commercial loss caused by the delay. If the loss suffered is greater than the Hire deduction, the ordinary off-Hire remedy may still be limited to the agreed Hire amount. If the actual loss is smaller, the deduction may still be calculated by reference to the period during which the ship was off-Hire.

A distinctive feature of off-Hire is that Time Charterers may deduct the relevant amount from Hire without first proving a Breach of Charter Party or Negligence by Shipowners. The clause is triggered by the occurrence of an agreed event and the resulting loss of time or efficiency. However, where Shipowners are also in breach of the Charter Party, or where the crew or Owners’ servants have acted negligently, Time Charterers may have additional remedies. Depending on the wording of the Charter Party and the facts, Time Charterers may claim off-Hire, damages, or in some cases both, although double recovery for the same loss will not normally be permitted.

Off-Hire Clauses sometimes include wording dealing with “detention for Charterers’ Account." This type of wording is intended to identify situations where the ship may be delayed, but the delay should remain for Time Charterers’ account rather than being treated as off-Hire. LINERTIME 2015, Part II, Clause 14(B), “suspension of Hire etc. – detention for Charterers’ account,” provides:

“In the event of the Ship being driven into port or to anchorage through stress of weather, trading to shallow harbours or to rivers or ports with bars or suffering an accident to her cargo, any detention of the Ship and/or expenses resulting from such detention to be for the Charterers’ account even if such detention and/or expenses, or the cause by reason of which either is incurred, be due to, or be contributed to by, the negligence of the Owners’ servants.”

This type of provision is commercially significant because it allocates certain categories of detention to Time Charterers even where the factual cause may involve circumstances connected with the ship or even contributed to by Owners’ servants. It protects Shipowners from losing Hire where the detention arises from the employment ordered by Charterers, such as trading to shallow harbours, rivers, ports with bars, or cargo-related incidents. The exact effect depends on the wording of the clause, but the intention is to prevent Time Charterers from treating every delay as off-Hire merely because the ship has been detained.

This wording does not necessarily deal with situations where the ship’s operations are hindered because Time Charterers have breached the Time Charter Party. If the delay is caused by Charterers’ breach, Shipowners should not bear the financial consequence. The issue may be handled in different ways. The ship may remain on-Hire throughout the period of hindrance, or the ship may technically go off-Hire while Shipowners recover their loss through damages. The distinction can matter in practice. For example, Time Charterers may have insurance covering liability for hull damage or contractual damages, but that insurance may not respond to ordinary Hire payable during a period described as “Detention for Charterers’ Account." The drafting therefore has practical consequences beyond the immediate Hire calculation.

Off-Hire Claim in Time Charter

When deciding whether the ship is off-Hire and when preparing an Off-Hire Claim, Time Charterers should work through a structured analysis. The main questions are:

• Is the cause of the delay expressly listed as an off-Hire event in the Charter Party or recognized under the applicable law?
• Does a threshold rule apply before the ship can be treated as off-Hire?
• How much time was actually lost because of the relevant event?
• What monetary adjustment follows from the lost time?
• What amount, if any, may properly be deducted from Hire?

Before these questions are answered, one preliminary point must be considered. If the delay was caused by the Time Charterers themselves, Time Charterers will usually be unable to claim off-Hire against Shipowners, even if the event might otherwise fall within the literal wording of the Off-Hire Clause. A party should not normally be entitled to benefit from its own default. This is why clauses such as LINERTIME 2015, Clause 14(B), are important: they identify circumstances where detention remains for Charterers' account even though the ship has been delayed.

An Off-Hire Claim should therefore be supported by clear evidence. The relevant documents may include the Statement of Facts, deck logs, engine logs, Master’s reports, weather records, repair reports, survey reports, class attendance records, correspondence with agents, port authority notices, bunker records, and communications between Shipowners and Time Charterers. Since Hire is paid in advance, the practical effect of an Off-Hire Claim is often a deduction from a later Hire instalment. If the deduction is not clearly justified, Shipowners may treat it as an unauthorized deduction or short payment, which can create a separate dispute over Hire default.

Grounds for off-Hire in Time Charter

The first step in any off-Hire analysis is to identify whether the cause of delay is covered by the Off-Hire Clause in the Time Charter Party. Standard forms differ significantly. Some clauses list a narrow set of events, such as deficiency of crew, breakdown of machinery, drydocking, detention by authorities, or damage to the ship. Others are broader and may include any cause preventing the full working of the ship, provided the cause falls within the clause. The exact wording is decisive.

Where English law governs the Time Charter Party, Off-Hire Clauses are often interpreted carefully and relatively narrowly. Time Charterers must usually bring themselves within the specific words of the clause. If the clause does not cover the particular event, the ship may remain on-Hire even though Charterers have suffered delay. Other legal systems may approach the issue more flexibly. Under Scandinavian law, for example, off-Hire may be viewed more as a general principle supported by maritime code provisions. As a result, Time Charterers may be more likely to obtain off-Hire relief under some non-English systems than under English law.

Common off-Hire events may include machinery breakdown, deficiency of crew, damage to hull or machinery, drydocking, detention due to ship-related causes, failure of cargo gear, arrest not caused by Charterers, or other events that prevent or reduce the ship’s ability to perform the service required. However, not every delay connected with the ship will automatically qualify. The clause must be examined to determine whether the event must prevent the working of the ship entirely, reduce efficiency, cause loss of time, or merely affect Charterers’ commercial use of the ship.

The wording may also require a causal connection between the off-Hire event and the loss of time. It is not enough to show that a qualifying event occurred. Time Charterers must normally show that the event caused a loss of time or prevented the ship from performing the service then required. If the ship suffers a technical defect but no time is lost, or if the delay would have occurred in any event because of port congestion or weather, the Off-Hire Claim may fail or be reduced.

Threshold Rule in Time Charter

If the delay falls within the wording of the Off-Hire Clause, the next issue is whether a threshold rule applies. Many standard Time Charter forms provide that Time Charterers are entitled to Off-Hire if the ship is hindered or prevented for more than a certain number of hours, usually 12 or 24 Hours. This type of rule is intended to protect Shipowners from minor interruptions and small operational inefficiencies that do not justify a formal off-Hire deduction.

BALTIME 1939, revision 2001, Part II, Clause 11, “suspension of Hire etc.,” includes a 24-hour threshold. By contrast, NYPE 2015 does not include the same type of threshold favoring Shipowners. The presence or absence of a threshold can significantly affect the financial result. A breakdown causing several hours of delay may not produce any off-Hire under a form with a threshold, but may produce an immediate deduction under a form without one.

Under the BALTIME threshold approach, the hindrance must continue for the specified number of consecutive hours. For example, if a main engine defect causes the ship to steam at half speed for 30 hours, the 24-hour threshold may be satisfied even if the net time lost is only 15 hours. The important question is whether the relevant hindrance continued for the required period, not merely whether the final time loss exceeded the threshold.

The BALTIME threshold is a threshold, not a deduction or deductible. This distinction is important. If the ship is stopped for 35 hours because of an engine breakdown and the 24-hour threshold is satisfied, the off-Hire period is 35 hours, not 35 hours minus 24 hours. Once the threshold is crossed, the whole qualifying period is usually counted, unless the Charter Party states otherwise.

Some Time Charter forms apply thresholds only to certain types of delay. LINERTIME 2015, Part II, Clause 14(A), “suspension of Hire etc.,” includes a threshold for certain delays, with the relevant number of hours to be inserted in Box 31. However, the same form does not apply the threshold to all causes of inefficiency. For example, LINERTIME 2015, Part II, Clause 14(A), “suspension of Hire etc. – winch breakdown,” provides:

“In the event of a breakdown of a winch or winches, not caused by carelessness of shore labourers, the time lost to be calculated pro rata for the period of such inefficiency in relation to the number of winches required for work. If the Charterers elect to continue work, the Owners are to pay for shore appliances in lieu of the winches, but in such cases the Charterers to pay full Hire. Any Hire paid in advance to be adjusted accordingly.”

This wording shows that off-Hire may sometimes be calculated proportionately rather than by treating the whole ship as unavailable. If one winch breaks down but cargo operations continue with reduced efficiency, the time lost may be calculated pro rata by comparing the number of working winches with the number required for the operation. If Charterers choose to continue cargo work using shore appliances instead of the ship’s winches, Owners may pay for the substitute appliances, while Charterers continue to pay full Hire. This type of clause is designed to produce a practical result where the ship is partly inefficient rather than wholly unavailable.

The threshold rule often leads to disputes because its commercial fairness is not always obvious. Time Charterers pay Hire in return for the use of the ship. If the ship cannot be used because of a breakdown or another cause on Shipowners’ side, Charterers may argue that they should not pay for that lost time. Shipowners, however, may argue that minor interruptions are part of ordinary trading and should not automatically suspend Hire. The threshold represents a negotiated compromise between these positions, but it must be drafted clearly. The clause should state the length of the threshold, whether the delay must be consecutive, whether the threshold is a trigger or a deductible, whether partial inefficiency counts, and whether different thresholds apply to different events.

In practical terms, off-Hire should not be treated as a simple accounting deduction. It is a contractual remedy that depends on wording, causation, evidence, timing, and proper calculation. A clear Off-Hire Clause helps both Shipowners and Time Charterers understand when Hire is suspended, when it continues, and how disputed periods should be handled. Without precise wording, even a short delay can become a serious commercial dispute, especially where the Hire rate is high or the ship is operating in a volatile market.

Loss of Time in Time Charter

After identifying that an off-Hire event has occurred, the next step is to calculate the actual loss of time. Time Charterers are not automatically entitled to place the ship off-Hire for every period during which something has gone wrong. The question is whether the event has prevented or reduced the ship's ability to perform the service then required by Charterers under the Time Charter Party. For example, GENTIME, Part II, Clause 9(a), "off-Hire – inability to perform services," provides that the ship is off-Hire only when she is "unable to comply with instructions of the Charterers." If the current instruction is merely to Await Orders, the ship may still be treated as on-Hire even if the main engine is temporarily defective, because the ship is not at that moment required to proceed on a voyage.

Time Charterers may take a different view. They may argue that a ship under Time Charter should remain ready for immediate service at all times, including while waiting for orders. On that basis, a main engine breakdown may be said to deprive Charterers of the commercial use of the ship even while the ship is waiting. Whether that argument succeeds depends on the wording of the Off-Hire Clause, the factual circumstances, the instructions in force at the relevant time, and the governing law. This is why off-Hire clauses should state clearly whether the ship must be unable to perform an actual instruction, or whether loss of general readiness is enough.

A further difficulty arises where the ship breaks down during a voyage and is forced to leave her route for repairs. For example, if a ship suffers an engine breakdown in the Black Sea and is towed to Istanbul for repairs, a question arises after repairs are completed. Does the ship come back on-Hire immediately when the engine is repaired, or do Time Charterers remain entitled to off-Hire until the ship has returned to the position where she first went off-Hire, or to an equivalent position on the voyage? This issue can be commercially significant because the time spent returning to the voyage route may be substantial.

To deal with this problem, Time Charterers often seek to include a “put back” or “put back to position” clause. NYPE 2015, Clause 17, “off-Hire,” contains wording of this nature:

“Should the Ship deviate or put back during a voyage, contrary to the orders or directions of the Charterers, for any reason other than accident to the cargo or where permitted in Clause 22 (Liberties) hereunder, the Hire to be suspended from the time of her deviating or putting back until she is again in the same or equidistant position from the destination and the voyage resumed therefrom.”

This wording is intended to prevent Shipowners from bringing the ship back on-Hire immediately after repairs if the ship is still geographically or commercially behind the position she would have reached but for the off-Hire event. The clause protects Time Charterers by treating the lost time as continuing until the ship has resumed the voyage from the same or an equivalent position. Without such wording, disputes may arise over whether the off-Hire period ends when the defect is corrected, when the ship becomes technically capable of service, or when the ship is back in the position required for the voyage.

The treatment of consequential loss of time is often uncertain. Suppose the ship was Off-Hire in port awaiting crew (due to a deficiency of men), but after the replacement crew arrives, the ship cannot sail because a tug strike has begun during the off-Hire period. The question is whether the later tug-strike delay remains off-Hire or whether the ship returns on-Hire once the crew deficiency is corrected. The answer depends on whether the later delay is considered a consequence of the original off-Hire event, an independent event for Charterers’ account, or a delay that would have affected the ship in any event. The wording of the Off-Hire Clause and the applicable law will be decisive.

Slow steaming may also create off-Hire issues. If the ship proceeds at reduced speed because of Charterers’ orders, economic instructions, weather routing, congestion planning, or fuel-saving instructions, that will usually be for Charterers’ account unless the Charter Party provides otherwise. However, if the ship steams slowly because of a defect, breakdown, machinery inefficiency, hull fouling, or another cause falling within the Off-Hire Clause, the time lost may be deductible from Hire. NYPE 2015, Clause 38, “slow steaming,” and the final part of Clause 17, “off-Hire,” deal with these issues by providing that time lost through slow steaming caused by defect, breakdown, or similar cause must be deducted from Hire.

Where the ship is off-Hire, bunker consequences must also be considered. If the Charter Party provides that bunkers consumed during off-Hire are for Shipowners’ account, the value of the fuel used during that period, together with any replacement cost where applicable, may be deducted from Hire. This is particularly important where the ship continues to consume fuel while drifting, waiting, deviating for repairs, testing machinery, or returning to the voyage route after a breakdown. A complete off-Hire calculation must therefore address both time and bunkers, not merely the daily Hire rate.

Deduction of off-Hire in Time Charter

Once the qualifying loss of time has been established, the next step is to convert that time into money. If Hire is expressed as a daily amount, or as a fixed amount per 30 days, the calculation is usually straightforward. The off-Hire period is converted into days, hours, or fractions of a day, and the corresponding Hire amount is deducted. If Hire is expressed simply "per month," the calculation may be more complicated because the daily equivalent may vary depending on whether the relevant month has 28, 29, 30, or 31 days. For this reason, Time Charter Parties should ideally express Hire on a daily basis or "per 30 days" to avoid unnecessary disputes.

Time Charterers must be careful before making off-Hire deductions from an advance Hire instalment. A wrongful deduction may be treated by Shipowners as a short payment of Hire. If the Charter Party gives Shipowners a right to withdraw the ship for non-payment or short payment, an unjustified deduction can create serious risk for Charterers. Therefore, before deducting off-Hire, Charterers should verify that the event is covered by the Off-Hire Clause, that any threshold has been satisfied, that the time loss has been calculated correctly, and that the Charter Party permits deduction from Hire.

Shipowners should also review off-Hire deductions promptly. If Shipowners disagree with the deduction, they should Protest clearly, reserve their rights, and identify the basis of objection. Delay in objecting may create arguments that Shipowners accepted the deduction or allowed a course of dealing to develop. Off-Hire deductions should therefore be supported by proper documentation, including logs, repair records, survey reports, weather evidence, position data, noon reports, bunker records, and communications between the parties.

Other Obligations During Off-Hire Periods in Time Charter

When the ship remains off-Hire for a long period, further questions arise concerning the continuing obligations of Time Charterers. The most common issues concern bunkers, harbour dues, port expenses, agency costs, security costs, and other expenses incurred while the ship is not earning Hire. Time Charterers may assume that, because Hire is suspended, their other obligations are also suspended. That is not necessarily correct.

As a legal principle, particularly under English and United States law, the Time Charterers’ other obligations remain in effect during Off-Hire Periods unless the Time Charter Party provides otherwise. Off-Hire normally suspends only the obligation to pay Hire. It does not automatically release Time Charterers from every other contractual duty. However, commercial practice may differ, especially in relation to bunkers consumed during off-Hire. In many cases, Charterers do not pay for fuel burned during off-Hire, but this result should be expressly stated in the Charter Party to avoid uncertainty.

A practical way to clarify the position is to use the phrase “whilst on Hire” at the beginning of clauses dealing with Charterers’ obligations. For example, a “Time Charterers to provide” clause may state that Charterers must provide and pay for bunkers, port charges, canal dues, and other voyage expenses only “whilst on Hire.” This wording helps distinguish between costs incurred during on-Hire employment and costs arising during periods when the ship is unavailable for Charterers’ service because of an off-Hire event. Without such wording, disputes may arise over who bears fuel, port, and operational costs during extended repairs, detention, or breakdown periods.

The allocation of expenses during off-Hire should be coordinated with other clauses, including the bunker clause, off-Hire clause, drydocking clause, deviation clause, port charges clause, and repair clause. If the ship is off-Hire because of a machinery breakdown, it may be commercially reasonable for Shipowners to bear the cost of bunkers consumed during repair-related movements. If the ship is detained because of Charterers’ cargo, employment orders, or port selection, the position may be different. Clear drafting is essential because off-Hire does not automatically answer every cost question.

Insurance for Loss of Hire in Time Charter

Long off-Hire periods can cause serious financial damage to Shipowners, especially Shipowners operating only one ship or a small fleet. While the ship is off-Hire, Shipowners may continue to pay crew wages, insurance premiums, loan instalments, technical management fees, maintenance costs, and other fixed expenses, but receive no Hire income. To reduce this exposure, Shipowners may arrange Loss of Hire Insurance or Loss of Earnings Insurance.

Loss of Hire Insurance is designed to protect Shipowners against loss of income when the ship is unable to earn Hire because of an insured event. Traditional Loss of Hire cover is often linked to the same types of physical damage risks covered under Hull and Machinery Insurance. For example, if machinery damage, hull damage, grounding, collision, fire, or another insured peril causes the ship to be off-Hire, the insurance may respond after any agreed deductible period. The cover is intended to replace lost income during the repair or recovery period, subject to the policy terms.

However, Loss of Hire Insurance does not cover every cause of lost time. Time lost because of strikes is usually not covered under standard Loss of Hire policies unless special cover has been arranged. Shipowners who are concerned about strike-related interruption may therefore consider separate Strike Insurance or other specialist cover. Similarly, Loss of Hire Insurance may not protect against market loss, Charterer insolvency, unpaid Hire, sanctions-related payment problems, or purely commercial delays unless the policy specifically provides such protection.

Shipowners should review Loss of Hire cover carefully before entering into long Time Charters or high-value employment. Important points include the insured daily amount, deductible period, maximum indemnity period, covered perils, exclusions, claims procedure, required notices, and whether the policy matches the ship’s likely charter earnings. For smaller Shipowners, this insurance may be especially important because a single long off-Hire event can create a severe cash-flow problem. For Charterers, awareness of the Shipowner’s insurance position may also be relevant where breakdown, repair, and off-Hire risks could affect the continuity of the commercial employment.

Damages and Pre-termination of Time Charter

When a time-chartered ship performs below the standard expected under the Time Charter Party, Time Charterers may face substantial commercial difficulty. If the ship repeatedly suffers technical problems, machinery breakdowns, crew deficiencies, cargo gear failures, or other interruptions that prevent proper service, Time Charterers may be able to obtain relief under the Off-Hire Clause. However, off-Hire usually compensates only for the agreed Hire during the period of lost time. It does not automatically compensate Charterers for wider consequential losses, such as lost sub-charter earnings, missed cargo commitments, additional port expenses, loss of market opportunity, or claims from third parties.

If the ship’s condition is seriously defective, Time Charterers may find it difficult or even impossible to use the ship effectively for the commercial purpose intended at the time of fixing. One possible protection for Time Charterers is to require a Performance Guarantee from Shipowners and include it expressly in the Charter Party. Such a guarantee may state that the ship must maintain defined operating standards, speed, bunker consumption, cargo gear efficiency, manning quality, or technical availability throughout the charter period. Drafting this type of guarantee is difficult because good performance depends not only on the ship’s technical condition, but also on maintenance, crew competence, management quality, spare parts availability, operational planning, and the willingness of Shipowners, Ship Master, officers, and crew to provide efficient service.

The main difficulty with performance guarantees is that Shipowners are often reluctant to accept them. A strict guarantee may give Time Charterers strong protection and, in some cases, a contractual right to terminate the Time Charter Party if the ship fails to meet agreed standards. From the Shipowners’ perspective, such a cancellation option may be commercially dangerous because it can expose Shipowners to loss of employment, financing problems, and uncertainty in the ship’s earnings. Banks, financiers, leasing interests, and other parties connected with the ship may also object to clauses that give Charterers a broad right to cancel for performance failures.

Where Time Charterers seek to Claim Damages beyond off-Hire, or where they wish to terminate the Time Charter Party before the end of the flat period, several legal and factual issues must be considered. The following are among the main grounds that Time Charterers may rely on when alleging ship’s Poor Performance:

• Misdescription of the ship, meaning that the ship does not correspond with the description given by Shipowners during Chartering Negotiations and recorded in the Time Charter Party.
• Failure by Shipowners to maintain the ship in accordance with the description and condition represented at the time of delivery.
• Failure to deliver or maintain the ship in a seaworthy condition, whether this obligation is stated expressly in the Time Charter Party or implied by law.
• Lack of formal qualifications, practical competence, or operational ability on the part of the Ship Master, officers, or crew to handle the ship, cargo, equipment, and service required under the Time Charter Party.

In practice, termination before the end of the Time Charter Period should be approached with caution. A ship may be inefficient or repeatedly off-Hire without necessarily giving Charterers a right to terminate. The right to cancel or terminate depends on the seriousness of the breach, the wording of the Charter Party, whether the breach goes to the root of the contract, whether any contractual cancellation mechanism exists, and whether Charterers have reserved their rights properly. If Charterers terminate too soon or without sufficient legal basis, they may themselves be in repudiatory breach and may become liable to Shipowners for damages.

Routines and Allocation of Costs in Time Charter

This section focuses on practical routines and cost-allocation clauses commonly found in Time Charter Parties. These provisions are important because Time Chartering divides technical control and commercial control between Shipowners and Time Charterers. Without clear routines, everyday operational matters can quickly become disputes over authority, cost, delay, evidence, and liability.

1- Ship Master’s Position in Time Charter

Under a Time Charter, the Ship Master occupies a central and sometimes delicate position. The Ship Master is appointed by Shipowners and remains responsible for navigation, safety, discipline, seaworthiness, and the proper care of the ship. At the same time, the Ship Master must follow the employment orders of Time Charterers within the limits of the Time Charter Party. In that sense, the Ship Master must serve the legitimate interests of both Shipowners and Time Charterers, even though those interests may not always be identical.

Time Charterers give Employment Instructions concerning the commercial use of the ship, including ports, routes, cargoes, bunkering arrangements, agents, documentation, and operational requirements. The Ship Master is expected to comply with those instructions where they are lawful, safe, clear, and within the Charter Party. However, the Ship Master is not required to obey every order regardless of consequence. The Ship Master must protect the safety of the crew, ship, cargo, and third-party property, and must also preserve the Shipowners’ interests where an order would expose the ship to danger, illegality, uninsured risk, or breach of contract.

If the Ship Master reasonably concludes that Time Charterers’ orders would endanger the crew, ship, cargo, or other property, the Ship Master is entitled and required to refuse those orders. In such circumstances, the Ship Master should communicate promptly with both Time Charterers and Shipowners, explain the reasons for concern, and seek alternative instructions that allow the ship to proceed safely and commercially. Clear communication is important because a refusal to follow orders can easily develop into a dispute if the reasons are not properly recorded.

If the Ship Master does not receive clear and acceptable orders from Time Charterers or Cargo Owners, the Ship Master should follow Shipowners’ instructions, provided those instructions are safe, lawful, and consistent with the Charter Party. Many Time Charter forms contain provisions dealing with situations where Charterers are dissatisfied with the Ship Master, officers, or crew. NYPE 2015, Clause 8(b), “Performance of Voyages,” provides a modern example, while some other forms contain stricter wording that may require Shipowners to replace the Ship Master or investigate complaints more actively.

Whether expressly stated or implied, Ship Master is obligated to prosecute the voyage with Utmost Despatch. Because Time Charterers pay Hire by reference to time, delay directly affects their commercial earnings. During the voyage, the Ship Master should follow the fastest safe route, taking account of weather, navigation, safety, routing advice, traffic separation schemes, war risks, piracy risks, and other relevant factors. Before arrival at port, documents should be prepared as early as possible to avoid unnecessary delay. During loading and discharging, the Ship Master must supervise operations properly and help achieve the Quickest Possible Despatch, while still protecting the safety and seaworthiness of the ship.

The Ship Master must also cooperate with Time Charterers and their Agents by providing operational information, records, and assistance reasonably required for the commercial use of the ship. This does not mean that the Ship Master becomes the servant of Time Charterers for all purposes. The Ship Master remains Shipowners’ representative on board and retains overriding authority on matters of safety, navigation, crew discipline, and seaworthiness. The balance between employment orders and navigational authority is one of the defining features of Time Chartering.

2- Directions and instructions to the ship in Time Charter

All Time Charter Parties include Employment Clauses that define the extent to which the Ship Master must follow Charterers’ orders. NYPE 2015, Clause 8, “performance of voyages,” provides a typical example:

“(a) Subject to Clause 38 (Slow Steaming) the Master shall perform the voyages with due despatch and shall render all customary assistance with the Ship’s crew. The Master shall be conversant with the English language and (although appointed by the Owners) shall be under the orders and directions of the Charterers as regards employment and agency; and the Charterers shall perform all cargo handling, including but not limited to loading, stowing, trimming, lashing, securing, dunnaging, unlashing, discharging, and tallying, at their risk and expense, under the supervision of the Master. (b) If the Charterers shall have reasonable cause to be dissatisfied with the conduct of the Master or officers, the Owners shall, on receiving particulars of the complaint, investigate the same, and, if necessary, make a change in appointments.”

This clause reflects the usual division between commercial employment and nautical control. Since Time Charterers have commercial use of the ship, they give employment and agency instructions to the Ship Master. They may nominate agents, direct the ship to lawful and safe ports within the trading limits, instruct the ship to load and discharge permitted cargoes, and require customary operational assistance. However, cargo handling remains under the supervision of the Ship Master because improper loading, stowage, trimming, lashing, securing, or discharge may affect stability, stress, seaworthiness, cargo safety, and the safety of the ship.

The Ship Master must keep accurate and complete records during the Time Charter period. These records may include deck logs, engine logs, noon reports, arrival and departure reports, bunker reports, weather reports, port statements, cargo operation records, speed and consumption data, and communications with agents and authorities. Time Charterers rely on these records in their dealings with sub-Charterers, Shippers, Receivers, terminal operators, cargo interests, and insurers. Shipowners also rely on them to verify performance, defend claims, and monitor the ship’s operation.

The Ship Master should provide Time Charterers with copies of log-books, port sheets, weather reports, speed and bunker consumption reports, and other documents reasonably required for the commercial employment of the ship. These documents are particularly important in disputes concerning off-Hire, underperformance, overconsumption, port delays, cargo claims, weather routing, bunker disputes, and Laytime or Demurrage under sub-charters. Proper records are therefore not merely administrative; they are essential evidence in Time Charter operations.

3- Customary Assistance and Overtime in Time Charter

Most Time Charter Party forms require the Ship Master and crew to provide customary assistance to Time Charterers. This obligation frequently gives rise to disagreement because the expression Customary Assistance is not always defined precisely. In general, it means that the Ship Master and crew must provide the ordinary level of assistance that they would provide if Shipowners were trading the ship for their own account. The duty is practical and operational, but it does not turn the crew into stevedores or require unlimited labor for Charterers’ commercial convenience.

Customary assistance may include ordinary hold cleaning after discharge, opening and closing hatches, rigging gear, preparing cargo spaces, assisting with routine cargo supervision, maintaining ordinary cargo watches where appropriate, and helping with the normal operational tasks needed to load, carry, and discharge cargo safely. These tasks are usually performed without extra charge to Time Charterers, subject to the limits of crew availability, safety, working hours, local regulations, and the Charter Party terms.

The obligation to provide customary assistance is not necessarily limited to work that can be done without crew overtime. However, Time Charterers must recognize that hold cleaning, hatch work, rigging, securing, and similar operations may take time. If Charterers want to avoid delay by hiring shore labor or additional workers, those costs are generally for Charterers’ account unless the Charter Party provides otherwise. Similarly, if local law, port rules, union regulations, or terminal practice prevents the crew from performing particular tasks, the cost of stevedores or shore labor will normally fall on Time Charterers.

During the voyage, the Ship Master and crew should, without additional payment, oversee the cargo and perform reasonable additional lashing, securing, checking, or routine care required for safe carriage. However, Time Charterers cannot normally require the crew, without additional compensation, to undertake major shifting, restowing, reworking, or handling of large quantities of cargo. Such work is closer to cargo-handling labor than customary shipboard assistance and should be addressed by express wording if Charterers require it.

For practical reasons, Shipowners and Time Charterers often agree more detailed hold-cleaning arrangements. For example, the Charter Party may provide that all hold cleaning is for Time Charterers’ Account and must be performed by shore labor if the Ballast Voyage is shorter than a specified number of days. If the Ballast Voyage is longer, the clause may allow the crew to carry out the cleaning. This type of wording is useful because it connects the cleaning method with the time realistically available before the next cargo.

Overtime for officers and crew should also be addressed clearly. In some Time Charters, Hire includes ordinary officer and crew overtime. In others, Time Charterers pay an additional monthly lump sum for overtime. These methods are often more practical than recording every individual overtime item and charging it separately to Charterers’ account. Detailed overtime accounting can create unnecessary administrative work for the Ship Master, crew, Shipowners’ office, and Time Charterers’ operations department. A fixed allowance or inclusive arrangement often provides a cleaner commercial solution.

4- Allocation of costs in Time Charter

In a Time Charter, Shipowners are responsible for providing the ship as a manned, equipped, maintained, insured, and technically operational unit. During the charter period, Shipowners normally pay for crew wages, provisions, stores, lubricating oil, maintenance, repairs, technical management, class matters, ordinary insurance, and other operating expenses connected with ownership and technical operation. Time Charterers, by contrast, usually pay costs arising from the ship’s Commercial Use, including bunkers, port charges, canal dues, pilotage, towage, agency fees, cargo-handling costs, loading and discharging expenses, and other voyage-related expenditure.

Modern Time Charter Parties contain detailed clauses allocating these obligations between Shipowners and Time Charterers. These provisions are often headed “Owners to provide,” “Charterers to provide,” “Obligations,” or “Requirements.” They are generally more detailed in modern forms than in older forms because the range of potential costs has increased. However, no Time Charter Party can list every possible expense. Disputes often arise where a cost is unusual, locally imposed, newly introduced, or partly connected with both technical operation and commercial employment.

As a general principle, compulsory costs arising from the ship’s call at a port ordered by Time Charterers are usually for Time Charterers’ Responsibility. The reason is that those expenses result from Charterers’ commercial instructions. Shipowners may have no choice but to pay the charge locally, but the ultimate contractual burden may still fall on Charterers. Examples may include port dues, pilotage, tug charges, canal dues, light dues, quarantine fees, security charges, and cargo-related costs, depending on the wording of the Charter Party.

Other expenses are more difficult to allocate. Watchmen, garbage disposal, slops, ballast water charges, security guards, launch services, immigration formalities, customs attendance, and agency expenses frequently give rise to disagreement. Agency Fees are a common example. In general, Agency Fees are the responsibility of the Time Charterers, because Time Charterers nominate agents and use them for the ship’s commercial employment. However, if the agency work relates solely to Shipowners’ matters, such as crew changes, medical treatment, spare parts, repairs, class surveys, or maintenance, Charterers may object to paying those charges.

To reduce uncertainty, Time Charterers sometimes include wording such as:

“Whilst on Hire the Charterers to pay for . . . agencies (unless attributable to maintenance and manning of the Ship or otherwise for the benefit solely of the Ship, Master, Crew or the Owners). . . .”

This wording attempts to distinguish between agency services needed for Charterers’ commercial employment and services required only for Shipowners’ technical or ownership interests. The phrase “whilst on Hire” is also important because it may affect whether Charterers remain responsible for certain expenses during off-Hire periods. If the parties want a different allocation, it should be stated expressly.

Additional guidance on cost allocation can be found in provisions such as GENTIME, Part II, Clauses 11–16, NYPE 2015, Clauses 6–7, and SHELLTIME 4, Clauses 6–7. However, printed wording should always be checked against the particular ship, trade, cargo, port range, and commercial arrangement. A clause that works well in one trade may be unsuitable in another, especially where special port costs, environmental charges, cargo-handling practices, or local agency customs apply.

5- Information in Time Charter

Efficient Time Charter performance depends on the timely exchange of information between Shipowners and Time Charterers. Both parties should keep each other properly informed about the ship’s present position, future schedule, expected employment, maintenance needs, operational restrictions, and any event likely to affect performance. Time Charterers need accurate information to plan cargoes, sub-charters, port calls, bunkering, agency arrangements, and customer commitments. Shipowners need the ship’s forward itinerary to arrange crew changes, spare parts, repairs, class attendances, inspections, surveys, and drydocking.

Advance communication is particularly important for planned maintenance and drydocking. Time Charterers require advance notice of Shipowners’ plans so that commercial employment can be adjusted and disruption minimized. Shipowners likewise need timely information about Charterers’ intended voyages so that maintenance, spare parts, surveys, crew relief, and technical services can be arranged at suitable ports. Poor communication may result in unnecessary delay, increased cost, off-Hire disputes, missed cargo opportunities, or avoidable claims.

The Charter Party should therefore contain practical reporting and information obligations. These may include voyage orders, ETA notices, itinerary updates, bunker reports, weather reports, performance data, maintenance notices, drydocking plans, cargo information, port restrictions, and incident reports. In modern Time Chartering, reliable information flow is as important as the physical availability of the ship. Clear reporting routines support better planning, reduce disputes, and help both Shipowners and Time Charterers use the ship efficiently throughout the charter period.

Cargo Liability in Time Charter

In Time Chartering, as in Voyage Chartering, cargo liability may be allocated between Time Charterers and Shipowners by agreement. However, once a Bill of Lading (B/L) is issued, the legal position can become more complex because cargo interests usually bring their claims under the Bill of Lading (B/L), rather than under the Time Charter Party. This creates two central questions. First, who is liable to Cargo Owners: Shipowners, Time Charterers, or both? Second, if one party pays the Cargo Owners, how should that liability ultimately be divided between Shipowners and Time Charterers under the Time Charter Party or any related contract?

1- Liability to Cargo Owners in Time Charter

Cargo liability is one of the most significant risks faced by Time Charterers. Depending on the wording of the Time Charter Party, the Bill of Lading (B/L), the governing law, and the place where the cargo claim is brought, a Time Charterer may be treated as the legal “Carrier” of the cargo. This risk arises in two principal ways. First, the Time Charterer may be directly liable to Cargo Owners where the Time Charterer issues its own Bill of Lading (B/L), or where the applicable law treats the Time Charterer as the Carrier because of the way the transport document is issued, signed, or presented.

Second, a Time Charterer may be indirectly liable for cargo damage through an indemnity obligation owed to Shipowners, Disponent Owners, sub-Charterers, or other contractual parties. For example, if cargo damage is caused by defective stowage, improper lashing, poor securing, or negligent cargo handling by Stevedores appointed by Time Charterers, Shipowners may have to answer a claim from Cargo Owners and then seek recovery from Time Charterers under the Time Charter Party. Similar exposure exists in Voyage Chartering where cargo operations are for Charterers’ account under FIOS terms.

Even where Time Charterers have a contractual right of indemnity against Shipowners, Disponent Owners, or sub-Charterers, that right may not provide full practical protection. The party from whom recovery is sought may be insolvent, may resist payment, may be outside an effective enforcement jurisdiction, or may rely on limitation, exclusion, or procedural defences. For this reason, Time Charterers should not consider indemnity rights as a complete substitute for careful Bill of Lading (B/L) drafting, cargo insurance, operational control, and proper supervision of cargo-handling responsibilities.

If Time Charterers issue their own Bill of Lading (B/L), the contract of carriage will usually be between the Time Charterers and the Shippers. In that situation, the Bill of Lading (B/L) must identify the Carrier clearly. If, however, the Bill of Lading (B/L) is issued on the Shipowners’ form, especially without any clear indication that the ship is under Time Charter, the contract of carriage may be treated as a contract between Shipowners and Shippers. This can create uncertainty where Time Charterers control the commercial employment of the ship but Shipowners appear as Carrier on the transport document.

Older Bill of Lading (B/L) forms often attempted to resolve this problem by using Identity of Carrier clauses or Demise Clauses. These clauses were designed to identify the Shipowner, or in some cases the Demise Charterer, as the Carrier under the Bill of Lading (B/L), even where the document was issued by another line, operator, or chartered carrier. Their purpose was to direct cargo liability away from the Time Charterer or operator and toward the owner or demise-chartered owner of the ship.

An Identity of Carrier clause, such as the wording found in CONLINEBILL 1978, Clause 17, may provide:

“The Contract evidenced by this Bill of Lading is between the Merchant and the Owner of the ship named herein (or substitute) and it is therefore agreed that said Shipowner only shall be liable for any damage or loss due to any breach or non-performance of any obligation arising out of the contract of carriage, whether or not relating to the ship’s seaworthiness. If, despite the foregoing, it is adjudged that any other is the Carrier and/or bailee of the goods shipped hereunder, all limitations of, and exonerations from, liability provided for by law or by this Bill of Lading shall be available to such other.

It is further understood and agreed that as the Line, Company or Agent who has executed this Bill of Lading for and on behalf of the Master is not a principal in the transaction, said Line, Company or Agent shall not be under any liability arising out of the contract of carriage, nor as Carrier nor bailee of the goods.”

A Demise Clause, by contrast, might state:

“If the ship is not owned or chartered by demise to the company or line by whom this Bill of Lading (B/L) is issued, the Bill of Lading (B/L) shall take effect as a contract with the Shipowner or Demise Charterer as the case may be as principal made through the Agency of the said company or line who act as agents only and shall be under no personal liability whatsoever in respect thereof.”

Under clauses of this type, cargo liability under the Bill of Lading (B/L) is directed toward the ship’s owners or the Performing Carrier, rather than toward the Time Charterers as the Contractual Carrier. However, the effectiveness of these clauses is not uniform. They have been treated as invalid or ineffective in a number of jurisdictions, with the result that Time Charterers or liner operators may still be held liable as Carriers. Under English law, such clauses have generally been treated as enforceable, but their use remains controversial and must be considered carefully in light of the governing law and the jurisdiction where a cargo claim may be brought.

There is also an important issue under the Hague/Hague-Visby Rules. It has been argued that Identity of Carrier and Demise Clauses may operate as non-responsibility clauses, which the Hague/Hague-Visby Rules restrict or prohibit where they reduce the mandatory obligations of the Carrier. The Hamburg Rules take a broader approach by imposing liability on both the Contracting Carrier and the Actual (Performing) Carrier. This can make Demise Clauses and Identity of Carrier Clauses ineffective in jurisdictions applying that regime. The Rotterdam Rules also focus on the contracting Carrier while extending obligations to performing parties acting under the Carrier’s request or control.

Documentary banking rules also affect the position. Since the introduction of UCP 500 in 1994, Article 23(a) required that the apparent Carrier be clearly identified on the Bill of Lading (B/L). Modern letter of credit practice expects transport documents to identify the Carrier in a clear and unambiguous way. A Bill of Lading (B/L) containing a Demise or Identity of Carrier Clause may create problems if it conflicts with Letter Of Credit (L/C) requirements or creates uncertainty over who the Carrier is. For this reason, accepting or using such wording may lead to documentary rejection, delay in payment, or allegations of non-compliance with the Letter Of Credit (L/C).

There is also a commercial reason to avoid these clauses. A Contractual Carrier attempting to rely on Demise or Identity of Carrier wording may appear to be trying to avoid all responsibility for the cargo, even though the Carrier marketed the service, issued the Bill of Lading (B/L), collected Freight, and dealt with Shippers. This can damage commercial confidence and create disputes with Cargo Owners, banks, insurers, and receivers. For modern operators, transparent Carrier identification is generally preferable to complex clauses that shift liability in a way that cargo interests may not expect.

Even where Time Charterers may have a technical legal defence to deny cargo claims by relying on an Identity of Carrier Clause or a Demise Clause, many operators deal with cargo claims as if they are liable. This is particularly common among large liner operators and major commercial carriers using their own Bill of Lading (B/L) forms. These operators often prefer to preserve customer relationships, protect their market reputation, and handle claims commercially rather than forcing Cargo Owners into technical disputes over the identity of the Carrier. In practice, they may settle or manage cargo claims as though the Time-Chartered ship were part of their own operated fleet.

Today, Identity of Carrier and Demise Clauses are widely regarded as outdated, confusing, and contentious. Many reputable liner operators have moved away from them. Modern standard Bills of Lading, including CONLINEBILL 2000 and CONLINEBILL 2016, adopt a clearer approach by requiring the Carrier’s name and principal place of business to appear in a designated box on the face of the document. This reduces ambiguity, improves documentary clarity, and makes it easier for Shippers, Receivers, banks, insurers, and courts to identify the party responsible as Carrier.

Ultimately, cargo liability depends heavily on identifying the Carrier under the relevant contract and cargo liability regime. The principal international conventions define the Carrier in different ways:

• Hague/Hague-Visby Rules Article I(a): the Carrier is "the owner or Charterer who enters into the contract of carriage with a shipper."
• Hamburg Rules Articles 1.1, 10, and 11: the Carrier is "any person by whom or in whose name a contract of carriage has been concluded with a shipper," with liability also extending to the "actual" or performing Carrier in defined circumstances.
• Rotterdam Rules Article 1: the Carrier is "a person that enters into a contract of carriage with a shipper," while obligations may also extend to performing parties acting at the Carrier's request or under the Carrier's control.

For Time Charterers and Shipowners, the practical lesson is clear. The Bill of Lading (B/L), Time Charter Party, sub-charter, booking note, Letter of Credit (L/C), and cargo liability clauses must be consistent. The Carrier should be identified clearly. The signing authority should be clear. The form used should be appropriate for the contractual structure. If the Time Charterer is intended to be Carrier, the document should say so. If Shipowners are intended to be Carrier, the wording should also be clear and legally effective. Ambiguity over Carrier identity can produce expensive cargo claims, indemnity disputes, insurance complications, and documentary problems long after the cargo has been loaded.

2- Allocation of Cargo Liability between Shipowners and Charterers in Time Charter

Time Charter Parties generally allow Shipowners and Time Charterers to decide between themselves how cargo liability will be allocated. This contractual freedom is important because the Time Charterer controls the commercial employment of the ship, while the Shipowner remains responsible for the ship, crew, technical management, and many aspects of seaworthiness. The allocation of cargo liability therefore depends on the wording of the Time Charter Party, the cargo operation, the Bill of Lading (B/L), the applicable law, and any incorporated standard liability regime.

Certain Standard Time Charter Party Forms reduce the liability of Shipowners considerably. BALTIME is a common example. Under BALTIME 1939, revision 2001, Clause 12, “responsibility and exemption,” Shipowners are generally responsible for cargo loss or damage only where the loss or damage results from lack of due diligence in making the ship seaworthy, or from the personal act, omission, or default of Shipowners or their Ship Managers. This type of wording is intended to protect Shipowners from wider cargo liability where the cause of loss lies outside their personal fault or due diligence obligation.

The position may become more complicated where the Time Charter Party incorporates a Paramount Clause applying the Hague Rules or Hague-Visby Rules. These rules were developed primarily for cargo claims under Bills of Lading (B/L) and similar contracts of carriage, and their incorporation into a Time Charter Party can create difficult questions. The parties must consider whether the rules apply only to cargo liability between Shipowners and Charterers, whether they apply to Bills of Lading (B/L) issued under the Time Charter, or whether they affect the wider Time Charter Party relationship.

To reduce long and costly disputes over cargo claims, several P&I Clubs within the International Group of P&I Clubs (IG) developed a standardized system for apportioning cargo liability under NYPE and ASBATIME Time Charter Parties. This agreement is officially known as the Inter-Club NYPE Agreement and is widely referred to as The Inter-Club Agreement (ICA) or The Produce Formula. The purpose of the Inter-Club Agreement (ICA) is to provide a practical and predictable method for dividing cargo claim liability between Shipowners and Time Charterers without requiring a full legal dispute in every case.

The Inter-Club Agreement (ICA) was first introduced in 1970 and has been revised several times, including in 1984, 1996, and 2011. It provides a framework for allocating cargo liability under Time Charter Parties and related contracts of carriage. In broad terms, the Inter-Club Agreement (ICA) allocates claims by reference to the nature and cause of the cargo claim. For example, claims caused by unseaworthiness, cargo handling, shortage, overcarriage, or other operational matters may be apportioned differently depending on the wording of the agreement and the facts of the case.

The current version of the Inter-Club Agreement (ICA) is automatically incorporated into the NYPE 2015 Form through Clause 27, “Cargo Claims,” unless the parties amend or exclude it. Although the Inter-Club Agreement (ICA) is most closely associated with NYPE and ASBATIME, it is not limited to those forms. Shipowners and Charterers may also incorporate it into other Time Charter Party forms, including BALTIME, even where a Paramount Clause is also included. However, the parties should ensure that the wording of the Charter Party and the Inter-Club Agreement (ICA) operate consistently.

Care is needed when incorporating the Inter-Club Agreement (ICA). Partial incorporation is possible, but it is usually undesirable because it can create uncertainty over which parts apply and which parts are excluded. If the parties want the Inter-Club Agreement (ICA) to apply, they should use clear and precise language stating the version incorporated, the scope of application, whether amendments are adopted, and whether the agreement applies to all cargo claims arising under the Time Charter Party or only to specific categories. Because cargo liability allocation can have major financial consequences, particularly in long-term Time Charters, Shipowners and Time Charterers should consult their P&I Clubs and legal advisers before finalizing the wording.

Damage to the Ship in Time Charter

During the Time Charter Period, the ship is exposed to ordinary Wear and Tear, as well as the risk of physical damage. Some deterioration is expected during normal lawful trading, but actual damage may create substantial repair costs, off-hire disputes, insurance issues, and disagreements over responsibility. It is therefore essential for the Time Charter Party to allocate liability clearly between Shipowners and Time Charterers.

Shipowners normally remain responsible for insuring the ship and maintaining her in a thoroughly efficient condition as regards hull, machinery, equipment, class, certificates, and technical performance throughout the Time Charter Period. At the same time, Time Charterers control the ship’s commercial employment and may expose the ship to particular ports, cargoes, stevedores, bunkers, routes, or operational risks. This division of control explains why damage allocation is often one of the most important parts of Time Charter drafting.

The Redelivery Clause usually requires Time Charterers to return the ship “in the same good order and condition as when delivered under the charter, fair wear and tear excepted.” This wording protects Shipowners against deterioration or damage beyond ordinary trading use. However, the clause does not always answer every question. If damage occurs during the charter period, the parties must still identify the cause, whether Time Charterers are responsible for that cause, whether Shipowners or the Ship Master contributed to the damage, and whether any special clause modifies the ordinary legal position.

Some Time Charter Parties contain express clauses stating when Time Charterers are liable for damage to the ship. In other cases, liability must be determined by interpreting the Charter Party as a whole, including clauses dealing with safe ports, cargo, bunkers, stevedore damage, redelivery condition, off-hire, indemnities, and applicable law. Because different forms use different approaches, the parties should not assume that responsibility for ship damage will be the same under every Time Charter Party.

1- Ship’s Damage from Bad Weather, Collision, and Grounding in Time Charter

As a general rule, Shipowners have limited rights of recovery from Time Charterers for damage caused by bad weather, collision, grounding, heavy seas, contact with floating objects, or similar marine incidents. These risks are usually treated as part of the Shipowners’ navigational, technical, and insurance exposure, unless the damage can be linked to Charterers’ breach of the Time Charter Party, negligence, or improper employment order.

For example, if Time Charterers order the ship to an unsafe port, unsafe berth, unsafe anchorage, shallow channel, poorly maintained terminal, or hazardous approach area, and the ship suffers serious damage as a result, Shipowners may have a claim against Time Charterers. The claim will depend on whether the port or berth was contractually required to be safe, whether the danger was avoidable by good navigation and seamanship, whether the danger was abnormal, and whether the Charterers’ order caused the damage. Safe port and safe berth obligations therefore remain central to damage claims in Time Chartering.

Collision and grounding claims can be particularly complex because they may involve navigational decisions by the Ship Master, pilotage, port authority instructions, weather, defective charts, tug assistance, berth conditions, or Charterers’ employment orders. Shipowners must show more than the fact that damage occurred during the Time Charter Period. They must identify a legal basis for shifting responsibility to Time Charterers, such as breach of safe port obligation, unlawful order, negligent nomination, or another breach of contract.

2- Ship’s Damage from Bunkers in Time Charter

Bunker-related damage is a frequent source of dispute in Time Chartering. Time Charterers normally arrange and pay for bunkers because fuel is a voyage expense connected with the ship’s commercial employment. Shipowners, however, remain responsible for the ship’s engines, auxiliaries, machinery performance, maintenance, and technical reliability. This creates a difficult interface: Charterers supply the fuel, but Shipowners must burn that fuel in machinery for which they remain responsible.

Periods of high bunker prices have historically encouraged the supply of cheaper and sometimes lower-quality bunker fuel. Older Time Charter forms often contained only brief references to bunker grades and specifications. As bunker quality disputes increased, modern Time Charter Parties began to include more detailed fuel clauses. Forms such as GENTIME, Part II, Clause 6, “Bunkers,” and Clause 13(b), “Charterers’ obligations – Bunker Fuel,” as well as NYPE 2015, Clause 9, “Bunkers,” now contain more developed wording dealing with bunker quality, specification, sampling, and liability.

NYPE 2015 addresses bunker quality and Time Charterers’ liability in Clause 9(d), “Bunker Quality and Liability," which provides:

“(i) The Charterers shall supply bunkers of the agreed specifications and grades: (text to be entered). The bunkers shall be of a stable and homogeneous nature and suitable for burning in the Ship’s engines and/or auxiliaries and, unless otherwise agreed in writing, shall comply with the International Organization for Standardization (ISO) standard 8217:2012 or any subsequent amendments thereof. If ISO 8217:2012 is not available then the Charterers shall supply bunkers which comply with the latest ISO 8217 standard available at the port or place of bunkering. (ii) The Charterers shall be liable for any loss or damage to the Owners or the Ship caused by the supply of unsuitable fuels and/or fuels which do not comply with the specifications and/or grades set out in Sub-clause (d)(i) above, including the off-loading of unsuitable fuels and the supply of fresh fuels to the Ship. The Owners shall not be held liable for any reduction in the Ship’s speed performance and/or increased bunker consumption nor for any time lost and any other consequences arising as a result of such supply.”

This type of clause is important because unsuitable bunkers can cause serious damage to main engines, auxiliary engines, purifiers, fuel pumps, injectors, filters, tanks, and fuel systems. Poor-quality fuel may also cause loss of speed, increased consumption, engine stoppage, detention, safety risk, or delay to cargo operations. If the fuel supplied does not meet the agreed specification or is unstable, contaminated, incompatible, or unsuitable for burning, Time Charterers may be liable for damage, delay, off-loading costs, replacement fuel, and related consequences.

To reduce disputes, bunker clauses should identify the required grade, sulphur content, ISO standard, compatibility requirements, sampling procedure, testing laboratory, delivery documentation, and steps to be taken if fuel is suspected to be unsuitable. The Ship Master and Chief Engineer should also preserve samples, bunker delivery notes, test results, engine records, and correspondence. In bunker disputes, evidence is often decisive because the parties may disagree over whether the damage was caused by poor fuel, poor fuel management, pre-existing machinery problems, or improper operation.

3 - Ship’s Damage from Cargo in Time Charter

If cargo damages the ship, Shipowners may have more than one possible route for recovery from Time Charterers. First, Time Charterers may be liable if they load cargo that is generally considered “Dangerous”, unlawful, prohibited, or outside the permitted cargo description in the Time Charter Party. Many Time Charter forms contain excluded cargo clauses or wording prohibiting cargoes that are harmful, corrosive, contaminating, explosive, toxic, unstable, wet, self-heating, abrasive, or otherwise likely to injure the ship.

Second, Shipowners may claim against Time Charterers where the cargo itself is not prohibited but is loaded, stowed, trimmed, lashed, secured, ventilated, heated, discharged, or handled improperly, causing damage to the ship. This may occur with heavy cargo, steel, logs, scrap, concentrates, bulk minerals, sulphur, salt, fertilizers, chemicals, petroleum cargoes, project cargoes, or other commodities that require careful handling and preparation. Damage may include tank top damage, frame damage, hatch damage, coating damage, corrosion, contamination, structural stress, or cargo gear damage.

This category is often more difficult because the Ship Master and officers retain responsibility for supervising loading and stowage so far as safety and seaworthiness are concerned. Even where Time Charterers arrange cargo operations and appoint Stevedores, the Ship Master must intervene if the cargo operation threatens the safety of the ship, crew, or cargo. Determining the boundary between Time Charterers’ and Shipowners’ Responsibilities can therefore be difficult. The general tendency is to hold Time Charterers responsible for damage caused by their cargo or cargo operations, unless the loss was caused or materially contributed to by negligence of the Ship Master or officers.

Clear cargo clauses are essential. The Time Charter Party should state the permitted cargoes, excluded cargoes, cargo information requirements, dangerous cargo procedures, cleaning obligations, ventilation requirements, lashing and securing responsibilities, and responsibility for damage caused by cargo characteristics or cargo operations. Shipowners should insist on accurate cargo descriptions, while Time Charterers should ensure that cargoes ordered are suitable for the ship and within the Charter Party limits.

4- Ship’s Damage from other Causes in Time Charter

Another common source of ship damage is Stevedore damage. Stevedores may damage hatch covers, hatch coamings, ladders, hold frames, tank tops, bulkheads, deck fittings, pipelines, rails, cranes, grabs, cargo gear, or other parts of the ship during loading, stowage, trimming, lashing, securing, tallying, or discharging. Because Time Charterers usually arrange and pay for cargo operations, the Time Charter Party should state clearly when Time Charterers are responsible for Stevedore-caused damage.

Many Time Charter Parties contain special clauses dealing with Stevedore damage. These clauses often impose strict procedural requirements on Shipowners. The Ship Master may be required to notify Time Charterers, agents, and Stevedores immediately or as soon as reasonably possible after the damage occurs. The Master may also be required to obtain written acknowledgment of liability from the Stevedores. These requirements can be difficult in practice because Stevedore damage is not always discovered immediately, and Stevedoring Companies often refuse to sign acknowledgments or accept responsibility.

Delayed discovery is a serious problem. Damage may be concealed by cargo, discovered only after discharge, or found weeks or months later during inspection, cleaning, or repair. By that time, it may be difficult to prove which port, cargo operation, Stevedore gang, or voyage caused the damage. For this reason, Ship Masters should keep careful records, conduct inspections before and after cargo operations, take photographs, issue letters of protest, involve agents promptly, and request written confirmation where possible.

Despite these difficulties, the Ship Master is expected to assist Time Charterers in collecting evidence against Stevedores where Time Charterers may have a recovery claim. This cooperation should be expressly stated in the Charter Party. If Time Charterers are responsible to Shipowners for Stevedore damage, but Time Charterers must recover from Stevedores or terminal operators, they will need the Ship Master’s reports, photographs, log entries, surveys, and notices. Without proper evidence, Time Charterers may be unable to pass the claim down the contractual chain.

NYPE 2015, Clause 37, “Stevedore Damage,” contains detailed provisions addressing this issue. The clause is designed to allocate responsibility for damage caused by Stevedores while also requiring prompt notification and evidence preservation. Clauses of this kind should be read carefully because failure to comply with notice requirements may prejudice Shipowners’ recovery, even where Stevedores clearly caused the damage. In practical terms, a Stevedore damage clause is only effective if the crew, agents, and operators understand the reporting procedure before cargo operations begin.

Damage to the ship during a Time Charter can arise from many sources, including cargo, bunkers, Stevedores, unsafe ports, bad weather, grounding, collision, or improper employment orders. Because responsibility depends on contract wording, evidence, causation, and applicable law, Shipowners and Time Charterers should address damage allocation clearly at the Fixture stage. A well-drafted Time Charter Party should coordinate redelivery condition, safe port obligations, cargo clauses, bunker clauses, Stevedore damage clauses, off-hire provisions, insurance, and indemnity wording so that damage claims can be handled efficiently and fairly.

“Notwithstanding anything contained herein to the contrary, the Charterers shall be responsible for any and all damage to the Ship caused by stevedores, provided that the Master has notified the Charterers and/or their agents in writing within twenty-four (24) hours of the occurrence. In the case of hidden damage, notice shall be given no later than the time when the damage could reasonably have been discovered by the exercise of due diligence. Such notice shall describe the damage and invite Charterers to appoint a surveyor to assess the nature and extent of the damage.”

The Ship Master and officers should supervise loading, stowing, trimming, lashing, securing, and discharging operations with proper care in order to reduce the risk of damage to the ship. If Stevedores ignore instructions given by the Ship Master or officers, or if the cargo operation is being carried out in a manner that may endanger the ship, cargo, crew, or equipment, both Shipowners and Time Charterers should be notified without delay. Prompt reporting is important because evidence may disappear quickly once cargo operations continue. In many cases, local representatives of underwriters or P&I (Protection and Indemnity) Clubs can assist by arranging surveys, advising on evidence preservation, contacting local parties, and helping protect the position of Shipowners and Time Charterers.

The ship may also suffer damage during port approach, berthing, shifting, unberthing, or departure as a result of pilots, tugs, mooring boats, terminal equipment, port structures, or other local services. Although pilots and tugs are commonly ordered, arranged, or paid for by Time Charterers as part of the ship’s commercial employment, damage caused by them is not automatically transferred to Time Charterers. Such damage will usually be attributed to Time Charterers under exceptional circumstances, for example where Time Charterers have ordered the ship to an unsafe port or berth, insisted on an improper operation, breached the Charter Party, or acted negligently in a way that caused or contributed to the damage.

5- Repair of Ship’s Damage in Time Charter

Many Time Charter Party forms require the ship to be redelivered in the same good order and condition as when she was delivered, fair wear and tear excepted. However, this wording does not always mean that Time Charterers must physically repair every item of damage before redelivery. In general, Shipowners cannot simply refuse to accept redelivery because the ship has been returned in a damaged condition. If Time Charterers are responsible for the damage, the usual remedy for Shipowners is to accept redelivery and then claim the reasonable cost of repairs, together with any recoverable loss of time, loss of earnings, survey costs, or related expenses caused by the damage.

The timing of repairs can be commercially sensitive. If the damage affects the ship’s seaworthiness, class, safety, cargo worthiness, or ability to proceed to the next employment, immediate repair may be necessary before the ship can trade again. If the damage is minor and does not affect safety or commercial use, Shipowners may decide to defer repairs until a convenient opportunity, such as a later port call, drydocking, or scheduled maintenance period. The Charter Party should therefore state whether damage must be repaired before redelivery, before sailing from the port where it occurred, before completion of the voyage, or merely compensated in money after redelivery.

Where the damage is disputed, an independent survey is usually important. The survey should record the nature of the damage, probable cause, estimated repair method, repair cost, and whether the damage affects seaworthiness, class, cargo operations, or the ship’s future employment. Photographs, log entries, Stevedore damage notices, pilot reports, tug reports, terminal records, protest letters, and correspondence with agents should also be preserved. Without reliable evidence, it may be difficult for Shipowners to prove that the damage occurred during the Time Charter Period or that Time Charterers are legally responsible for it.

Protective Clauses in Time Charter

Modern Time Charter Parties frequently contain Protective Clauses designed to protect Shipowners when Time Charterers issue or arrange contracts of carriage during the charter period. These clauses are particularly important because Time Charterers often control the commercial use of the ship and may issue Bills of Lading (B/L), Sea Waybills, booking notes, or sub-charters that expose Shipowners to cargo claims, war risk liabilities, General Average (GA) issues, collision liabilities, or other third-party claims. GENTIME, Part II, Clause 17(b), "Protective Clauses," provides an example:

“The Charterers warrant that Contracts of Carriage issued in respect of cargo under this Charter Party shall incorporate the clauses set out in Appendix A.”

Appendix A of GENTIME lists several important Protective Clauses, including the “VOYWAR 1993” war risk clause, the Paramount Clause, the General Average (GA) Clause, the Himalaya Clause, the New Jason Clause, and the Both-to-Blame Collision Clause. Each of these clauses serves a different protective function. The Paramount Clause helps identify the applicable cargo liability regime. The General Average (GA) Clause and New Jason Clause protect rights of contribution following maritime emergencies. The Himalaya Clause extends contractual protections to servants, agents, independent contractors, and other protected parties. The Both-to-Blame Collision Clause addresses collision-related cargo liability issues. War risk wording helps preserve rights where performance is affected by warlike or dangerous conditions.

The purpose of these provisions is to protect Shipowners by requiring Time Charterers to include equivalent wording in subordinate agreements and transport documents. This is important because Shipowners may be exposed to claims from Cargo Owners, Receivers, Shippers, Bill of Lading (B/L) Holders, sub-Charterers, or other third parties even though Shipowners did not directly negotiate the relevant document. If the subordinate contract omits necessary Protective Clauses, Shipowners may lose defences, limitations, indemnities, or procedural protections that would otherwise have been available.

In practice, these clauses are sometimes overlooked. Time Charterers may not always check whether the required Protective Clauses have been inserted into Bills of Lading (B/L), Sea Waybills, booking notes, or sub-charters. Similarly, Shipowners and Ship Masters may not examine every printed term in the documents presented for signature. This can create serious risk. A Bill of Lading (B/L) signed without the required clauses may impose wider liability on Shipowners than the Time Charter Party intended, especially where the document is transferred to a third-party holder.

If Shipowners suffer financial loss because Time Charterers fail to include the required Protective Clauses, Time Charterers may be obligated to compensate Shipowners for the resulting damage. Such compensation may arise through an express indemnity, a breach of the Protective Clause warranty, or a general claim that Time Charterers caused Shipowners to incur liabilities beyond those contemplated by the Time Charter Party. To avoid uncertainty, the Charter Party should state clearly which clauses must be incorporated, which documents must contain them, who is responsible for checking incorporation, and what indemnity applies if the clauses are omitted.

Protective Clauses should not be treated as standard wording with no practical effect. They can determine whether Shipowners retain cargo liability defences, whether General Average (GA) contributions are recoverable, whether servants and agents are protected, whether collision liabilities are contractually managed, and whether war risk rights are preserved. Time Charterers should therefore ensure that their sub-charters, Bills of Lading (B/L), Sea Waybills, booking notes, and related contracts are consistent with the Time Charter Party. Shipowners should also maintain a disciplined document-checking procedure before Bills of Lading (B/L) are signed. In Time Chartering, careful incorporation of Protective Clauses is an important part of managing the legal chain between Shipowners, Time Charterers, sub-Charterers, Shippers, Receivers, and cargo interests.