Vessel Lost

This risk of loss of freight is independent of when freight is physically paid. Thus, even if freight is paid in accordance with a charterparty term stating that ‘freight to be paid within seven days after signing and releasing bills of lading’, in the event of a total loss of ship and cargo, say fifteen days into the voyage, freight might have to be returned to charterers if the risk of loss was deemed to be the carriers. As a result of this, some carriers will put the issue beyond doubt by including in their contract the words such as: – ‘freight deemed earned upon loading, discountless and non-returnable, cargo and/or vessel lost or not lost’. It is essential, therefore, that care be taken with even the printed words of commonplace charterparties in this respect. The 1976 version of BIMCO’s Uniform General Charterparty – the GENCON -states, for example that ‘The freight to be paid in cash without discount on delivery of the cargo at mean rate of exchange ruling on day or days of payment, the receivers of the cargo being bound to pay freight on account during delivery, if required by Captain or Owners’. On the other hand, the MULTIFORM deals with this aspect in Clause 5, by using the wording ‘freight shall be deemed earned as cargo is loaded on board and shall be discountless and non-returnable, vessel and/or cargo lost or not lost’. It follows that under the terms of the 1976 printed GENCON, the risk of loss of freight is that of shipowners and under the MULTIFORM that of charterers, and so the appropriate party must insure accordingly. The 1994 version of GENCON provides an option to be exercised in Clause 4 between ‘prepaid’ and ‘on delivery’. Where Freight payable: It is extremely rare for a freight payment to be made simply by writing a cheque and mailing it. The shipowner will want the money in his bank account available to meet his financial commitments at the time stipulated – not several days later. Pause for a moment with your calculator at hand. A ‘capesize’ bulk carrier fixed at around $10 per tonne at a time when bank overdrafts are at 10% per annum and you will find that if the freight is not in the right place at the right time then something in excess of $10 per hour is being lost, lost until the money is in the right place.