Time Charterers to Provide and Pay For Under a Time Charterparty

Time Charterers to Provide and Pay For Under a Time Charterparty

In a time charterparty, the commercial operation of the ship is divided between two broad spheres of responsibility. The shipowner keeps the ship crewed, insured, maintained, classed and technically efficient, while the charterer normally provides and pays for the trading expenses generated by the charter employment. The allocation is especially clear in the New York Produce Exchange Charterparty Form, where the time charterer is responsible for fuel, port charges, pilotage, agency expenses, commissions, consular charges not relating to the crew, ordinary trading expenses, fumigation in specified circumstances, dunnage, shifting boards and any extra fittings required for a special trade or unusual cargo.

The clause is practical rather than theoretical. A time charterer directs where the ship trades and what commercial work she performs, so the time charterer bears many of the expenses that arise from those orders. At the same time, the clause preserves the shipowner’s responsibility where the expense is caused by a matter for which the ship is responsible. The central question in many disputes is therefore whether the cost arose from ordinary charter employment, from the charterer’s cargo and trading choices, or from the technical condition, navigation, crew, seaworthiness or fault of the ship.

The Character of the Time Charterer’s Obligation

The time charterer’s duty to provide and pay for the listed items is generally treated as absolute. This means the charterer must provide the item or service required by the charter, not merely attempt to obtain it with reasonable care. If a charterer undertakes to provide a necessary service, the risk that the service cannot be obtained from third parties will ordinarily remain with the charterer unless the charter contains wording to the contrary.

That principle does not remove the shipowner’s duty of cooperation. The time charterer cannot properly supply fuel, arrange pilotage, appoint agents or manage port expenses without reliable operational information from the ship. The master and shipowner must therefore provide accurate and reasonable information about the ship’s needs, consumption, restrictions, condition and operational requirements. If the time charterer reasonably relies on incorrect information supplied from the ship and suffers loss as a result, the shipowner may not be able to shift that loss back to the charterer.

The time charterer’s right to provide items under the clause is also limited by the purpose of the charter service. The charterer may not use the clause as authority to load the ship with unnecessary bunkers, supplies or services that are not required for the chartered employment. The right to provide and pay exists to enable the ship to perform the charter, not to impose irrelevant cargo, fuel or operational burdens on the shipowner.

Fuel (Bunkers) in Time Charterparty

Bunkers are usually the most commercially important item in the time charterer’s cost responsibilities. Under standard time charterparty forms, the time charterer normally purchases the bunkers (fuel) on board (BOB) at delivery, supplies bunkers (fuel) during the charter period, and then sells or accounts for the bunkers (fuel) remaining on board (ROB) at redelivery. Once the time charterer has bought or supplied the fuel, that bunkers (fuel) will normally be the charterer’s property unless the contract clearly provides otherwise.

This ownership point can be important on insolvency, attachment or redelivery issues. Fuel supplied and paid for by the charterer is not automatically the shipowner’s property merely because it is physically on board the ship. The position may affect claims by creditors, bunker suppliers and parties asserting rights against property connected with the charterer.

Quantity of Fuel (Bunkers) in Time Charterparty

The time charterer must provide and pay for bunkers, but the practical calculation of how much fuel the ship requires depends heavily on the master, engineers and shipowner. The master remains responsible for the safety of the ship and must ensure that sufficient fuel is available for the ordered voyage. If the chief engineer miscalculates consumption or the master gives an inaccurate requirement, the resulting deviation or delay may be for the shipowner’s account rather than the charterer’s.

The decision in MacIver v. Tate illustrates the point. The time charterer was required to provide and pay for coal, but the ship had insufficient bunkers for a stage of the voyage because of a miscalculation by the ship’s engineer. The court held that the charterer’s duty to provide fuel did not displace the shipowner’s seaworthiness obligation. The shipowner still had to ensure that the ship had enough fuel to safely perform each stage of the voyage.

The same reasoning works in the opposite direction where the master asks for a proper quantity and the time charterer fails to supply it. If the shipowner has given correct information and has done what is required to keep the ship seaworthy, the time charterer may be liable for additional expenses caused by its failure to provide the required fuel. The issue is therefore not simply who pays for bunkers, but whether the shipowner supplied accurate operational data and whether the charterer then fulfilled the request properly.

Disputes can also arise when too much fuel is supplied. Excessive bunkers (fuel) may reduce cargo capacity, affect trim or create redelivery valuation issues. If the master accepts an excessive supply without protest, the shipowner may find it difficult to complain later. However, where the charterer forces or creates an unreasonable excess that prejudices the shipowner, the charterer may face a claim for the financial consequences.

Quality of Fuel (Bunkers) in Time Charterparty

The time charterer’s obligation is not only to provide fuel in sufficient quantity but also to provide fuel of suitable quality. In principle, the fuel must be of reasonable general quality and appropriate for the type of engines and auxiliaries fitted to the particular ship. Where the charter specifies grade, viscosity, sulphur content, compatibility or other fuel standards, the charterer must comply with those specifications.

Modern time charterparties frequently include express bunker-quality clauses because unsuitable fuel can cause serious consequences, including engine damage, poor combustion, excessive consumption, loss of speed, off-specification disputes and operational delay. NYPE 93 addresses this more directly by requiring bunkers suitable for the ship’s engines and auxiliaries and conforming to agreed specifications. Where unsuitable bunkers cause damage or performance loss, the shipowner may recover the resulting loss if causation is proved.

Proof is often difficult. The shipowner normally needs reliable sampling, testing, handling records and engineering evidence to show that the fuel supplied by the time charterer was defective and that the defect caused the damage complained of. If the shipowner burns suspect fuel despite warning signs, fails to obtain prompt test results, mixes it with earlier bunkers, or cannot eliminate alternative causes of engine trouble, the claim may fail or be reduced.

American arbitration decisions show the same practical approach. Time Charterers have been held responsible where fuel did not meet the charter description or was not merchantable, but shipowners have also failed where they could not prove that the supplied fuel caused the damage. In some cases, responsibility has been apportioned where questionable bunkers and the ship’s own handling or engineering decisions both contributed to the loss.

Property in Bunkers and Bunker Supplier Claims in Time Charterparty

The charterer’s ownership of bunkers does not mean that the shipowner automatically becomes liable to bunker suppliers for fuel ordered by the time charterer. Unless there is actual or apparent authority binding the shipowner, the bunker purchase is normally the charterer’s transaction. A supplier who contracts only with the charterer may face difficulty establishing that the shipowner is personally liable for the bunker price.

The legal position must always be checked against the wording of the bunker supply contract, local maritime lien law, the governing law, any no-lien notices, and the conduct of the shipowner or master. Nevertheless, as between shipowner and charterer under the charterparty, bunkers ordered for charter employment are normally within the charterer’s cost sphere.

Safety of the Bunkering Place in Time Charterparty

The time charterer’s responsibility may extend to damage suffered at a bunkering location in limited circumstances. If bunker suppliers are acting as the time charterer’s agents for selecting the precise bunkering place, or if the time charterer’s order is properly understood as an order to bunker wherever the supplier directs, the time charterer may face liability if the ship is sent to an unsafe bunkering location. The issue depends on agency, construction of the charterer’s order, and whether the bunkering instruction is sufficiently connected with charter employment.

This area overlaps with safe port, safe berth and employment-indemnity principles. A time charterer is not automatically responsible for every decision made by a bunker supplier or port authority, but the charterer may not avoid liability where the practical effect of its order is to send the ship to a dangerous place selected on its behalf.

Port Charges in Time Charterparty

Port charges are generally expenses that the ship must pay in order to use or leave a port. Port charges may include dues, harbour charges, dock charges and other ordinary port-related payments arising during the charter period. The guiding principle is that the time charterer pays the charges generated by charter employment, while the shipowner pays charges caused by matters for which the ship is responsible.

Newman & Dale v. Lamport & Holt treated port charges as charges that the ship must pay before leaving the port, even if some benefit of the charge continues after departure. However, only charges payable during the charter period normally fall on the charterer unless the contract expressly extends the obligation to delivery or redelivery expenses incurred outside the charter period.

The Baltime Charterparty Form contains wider wording for certain dock, harbour and tonnage dues at delivery and redelivery ports. Because such wording can place on the charterer costs incurred outside the ordinary charter period, it is normally construed carefully. The NYPE (New York Produce Exchange) Charterparty Form does not contain the same express extension, so delivery and redelivery expenses must be analysed under its own language.

Pilotage Charges in Time Charterparty

Where pilotage is required by local law, safe navigation or port practice, the time charterer normally provides and pays for the pilot. The duty to provide pilotage is also generally treated as a duty to provide the required service, not merely to attempt to find a pilot. The time charterer may therefore be exposed if a pilot cannot be obtained when the charterer is contractually required to provide one.

Payment for the pilot does not usually make the pilot the time charterer’s servant. Navigation remains the responsibility of the ship master and shipowner. A pilot assists navigation, but the master remains responsible for the ship, and standard charter wording does not normally transfer the risk of pilot negligence to the charterer merely because the time charterer pays the pilotage expense.

Fraser v. Bee reflects that principle. A pilot paid for by the time charterer negligently grounded the ship, but the court rejected the argument that the pilot was the charterer’s servant. The result is commercially important because loading, discharging and cargo operations may sometimes be shifted toward charterer responsibility, whereas navigation remains fundamentally within the shipowner’s sphere.

NYPE 93 (New York Produce Exchange 1993) makes this still clearer by expressly keeping the shipowner responsible for acts of pilots and tugboats. The time charterer’s duty to pay for pilotage is therefore not the same as an assumption of navigational liability. Under U.S. law, a voluntary pilot is also generally treated as a borrowed servant of the shipowner rather than the charterer, although the charterer may still have a duty to exercise due diligence in arranging a reasonably qualified pilot for the assignment.

Pilotage Contracts and General Average (GA) in Time Charterparty

The time charterer’s obligation to provide and pay for pilotage does not usually authorize the charterer to bind the shipowner to special terms in a separate pilotage, towage or dockage contract. If a charterer contracts with a third party and includes a pilotage clause purporting to make the pilot the servant of the ship or to exclude the third party’s liability, that clause may not bind the shipowner unless the charterer had authority to agree it on the shipowner’s behalf.

A different result may arise in General Average (GA). In Royal Insurance v. Cineraria Shipping, the time charterer remained liable for a general average contribution even though pilot error caused the casualty and the pilotage clause prevented a direct negligence claim against the time charterer. The result turned on the general average and New Jason Clause framework, not on treating the pilot as the charterer’s servant.

Agencies in Time Charterparty

The time charterer is usually required to provide and pay for agencies. The agent handles ordinary port business and assists with the practical arrangements needed for the charter employment. The charterer should appoint a competent agent where one is available, but the extent to which the charterer is liable for the agent’s negligence depends on the task involved and whether the agent was acting in the charterer’s sphere or performing work that the master or shipowner should have handled directly.

The distinction is important. An agent may be treated as the charterer’s agent for ordinary port and cargo arrangements, but some duties remain so closely connected with the ship, navigation or the master’s own responsibilities that delegation to the agent will not shift the risk to the charterer. The practical answer depends on the nature of the act, the charter wording and the commercial context.

Commissions, Consular Charges and Usual Expenses in Time Charterparty

The time charterer’s cost responsibilities include commissions, consular charges not relating to the crew and other usual expenses of the charter employment. Crew-related consular matters remain for the shipowner because crew wages, crewing costs and crew administration are part of the shipowner’s operational sphere. The dividing line therefore follows the broader allocation between commercial employment and ship management.

The expression all other usual expenses is broad but not unlimited. It may include ordinary tug assistance and similar port services associated with trading the ship, but it should not be used to convert shipowner matters into time charterer matters. Where an expense is caused by a defect in the ship, crew illness, navigational fault or another cause for which the ship is responsible, the shipowner will normally bear it.

Fumigation Costs in Time Charterparty

The NYPE (New York Produce Exchange) Charterparty Form wording contains a specific allocation for fumigation. Fumigation ordered because of illness of the crew is for the shipowner’s account. Fumigation required because of cargo carried or ports visited while the ship is employed under the time charter is for the time charterer’s account. Other fumigations are also for the charterer’s account after the ship has been continuously on charter for six months or more.

This allocation reflects the same commercial logic as the rest of the clause. Crew illness belongs to the shipowner’s management of the ship. Cargo and port-related fumigation belongs to the charterer’s employment of the ship. Long continuous charter service may also justify shifting other fumigation costs to the charterer because they are treated as part of the trading consequences of the charter employment.

Dunnage, Shifting Boards and Special Fittings in Time Charterparty

The time charterer must provide necessary dunnage and shifting boards and any extra fittings required for a special trade or unusual cargo. The shipowner must allow the charterer to use any dunnage and shifting boards already on board. The charterer may also use shifting boards as dunnage, provided any damage is made good.

This rule is significant where the charterer orders cargo that requires special preparation. The shipowner is expected to provide a ship fit for ordinary charter service, but the charterer must supply additional fittings required only because of a special trade or unusual cargo. The distinction can be difficult where the charter is fixed with a particular cargo or trade in mind. If the cargo is the very subject of the charter, it may be harder for the shipowner to describe it as unusual.

In practical terms, the parties should spell out responsibility for special fittings, lashing material, grain fittings, cargo-protection equipment, dunnage standards and cargo-specific arrangements. The more unusual the cargo or trade, the greater the need for express wording.

Expenses During Off-Hire Periods in Time Charterparty

The time charterer’s obligation to provide and pay for listed items usually continues throughout the charter period unless the charter contains wording that suspends or reallocates the obligation during off-hire. Under the Baltime form, charterers have been held responsible for fuel consumed during repair periods while the ship was off-hire, because the cost clause continued to operate unless expressly limited.

The NYPE form contains specific wording dealing with fuel during off-hire periods. In many fixtures, parties also add words such as “while on hire” to narrow the charterer’s cost obligation. Such wording can be important because it may shift responsibility for fuel, port costs and other ordinary trading expenses during off-hire from the charterer to the shipowner.

The obligations do not normally begin before delivery or continue after redelivery unless the charter says so. Therefore, timing matters. A charge paid at the delivery port before the ship has been delivered may remain for the shipowner unless the charter expressly places that category of charge on the charterer.

Expenses Caused by the Ship in Time Charterparty

The time charterer’s obligation is subject to an important exception: if the ship puts into a port for causes for which the ship is responsible, the resulting charges are paid by the shipowner. This protects the charterer from bearing ordinary port and service costs generated not by charter employment, but by breakdown, crew illness, technical failure, unseaworthiness or another ship-side cause.

The allocation may be straightforward where the ship calls at a port only because of a machinery breakdown. It becomes more difficult where several causes overlap, such as weather, cargo requirements, navigational decisions and technical deficiencies. The question is not simply where the expense was incurred, but why it was incurred and whether the cause falls within the charterer’s employment sphere or the shipowner’s ship-management sphere.

U.S. Law Approach: Time Charterers to Provide and Pay For Under a Time Charterparty

U.S. law follows the same broad commercial division. Clause 2 of the NYPE (New York Produce Exchange) Charterparty Form places on the charterer the cost of fuel, port charges, pilotage and agency expenses unless the expense is caused by a matter for which the ship is responsible. The time charterer remains responsible while the charter is in force, subject to any express exception such as the NYPE off-hire fuel provision.

American arbitration decisions show that the time charterer may continue to bear port charges and bunker costs even after a withdrawal notice if the charter remains practically in force while cargo is still on board and the ship is still completing the charter service. The key question is whether the charter relationship and its cost-allocation machinery remain operative at the time the expense is incurred.

U.S. decisions also emphasize that the master must determine safe and sufficient fuel quantities. If the master miscalculates and the ship loses time by deviating for bunkers, the shipowner may bear the consequence. If the charterer supplies off-specification fuel (bunkers), the time charterer may be liable, but the shipowner must prove defect, causation and loss. Where both sides contribute to the damage, responsibility may be divided.

For hold cleaning, U.S. law also distinguishes between cleaning made necessary by the ship’s own condition and cleaning caused by residue from charterer-loaded cargoes. Rust scale, paint chips or ship-condition problems usually fall on the shipowner. Cargo residue from charter employment normally falls on the time charterer.

Commercial Importance of the Clause

The time charterer’s duty to provide and pay is one of the most practical parts of a time charterparty. It determines who funds the day-to-day trading of the ship, who carries the risk of fuel supply and quality, who pays ordinary port and agency charges, who bears special cargo fittings, and how expenses are treated during off-hire or abnormal calls.

The clause should be read together with the safe port provisions, the off-hire clause, the bunkers on delivery and redelivery clause, the employment and indemnity clause, the maintenance clause and any rider clauses dealing with fuel specifications, fumigation, cargo gear, cleaning, tugs, pilotage, agencies and special trades. Most disputes arise not from the basic principle, but from the point where charter employment, ship condition and operational judgment overlap.

Clear drafting is therefore essential. Parties should identify fuel grades and standards, specify responsibility for off-hire consumption, define cleaning obligations, allocate fumigation costs, state who pays for tugs and special fittings, and address the authority of agents, pilots and bunker suppliers. Without express wording, the standard allocation remains workable, but it leaves room for disputes over cause, timing, authority and proof.