Normally, provision is made in the Time Charter for the vessel to be redelivered to its owner at a specified port or range of ports in like good order and condition, ordinary wear and tear excepted.
On failure to fulfill this obligation, the charterer will be liable in damages should such failure result from a breach of any of his obligations under the charterparty. Moreover, the obligation will extend to cover any damage to the vessel for which the charterer is responsible under the employment and indemnity clause. Opinions are, however, divided as to whether or not the clause imposes a strict obligation on the charterer to return the vessel in good order. In view of the fact that the owner normally undertakes to maintain the vessel in a thoroughly efficient state throughout the charter, it is arguable that the charterer’s responsibility does not extend beyond damage caused by himself or resulting from compliance with his orders.
Although the charterer is required to return the vessel in good order, the owner is not entitled to refuse redelivery until any defect has been remedied. In the words of Lord Denning MR, the requirement is ‘not a condition precedent to the right to redeliver, but only a stipulation giving a remedy in damages’.
Consequently, in a case where the cost of repairs would have substantially exceeded the value of the vessel when repaired, the owner was not permitted to claim hire until the repairs had been completed, but was required to accept redelivery and sue for damages. ‘Both legal and commercial considerations demand that the charter shall come to an end, even if the condition of the vessel on redelivery is unsatisfactory.’ So far as ‘ordinary wear and tear’ is concerned, this is purely a question of fact and, in reaching a decision on the point, account must be taken of the particular use for which the vessel was chartered.
Therefore, in a case where damages were claimed for refitting a liner which had been chartered for troop-carrying during the First World War, Lord Buckmaster remarked, ‘I find it difficult to see how the charterparty of a vessel which is expressly stated to be hired for the purposes of conveying troops and similar objects can have that fact excluded from the consideration of what are the expenses which are to be incurred in the course of the running.’
It is arguable that if a vessel is chartered to engage in a particular trade, and is so employed without negligence, then any resulting damage must be attributable to fair wear and tear.
The final obligation of the charterer is to redeliver the vessel at the port or place named in the charter. In the event of redelivery elsewhere, the owner ‘has a contractual right to have the ship kept in employment at the charter rate of hire until the service is completed. This does not happen until the ship reaches the redelivery range and the voyage to that range forms part of the chartered service . . . and full compensation for the breach requires the charterer to restore to the owner the hire which he would have earned if the voyage had in fact been performed.’
In practice this means that the assessment of damages will be based on the net profit to be made from a notional voyage to the agreed delivery point, less the net profit derived from any alternative employment during the period required to complete the notional voyage.