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Lansat Shipping V. Glencore Notes

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This is an extract of our Lansat Shipping V. Glencore document, which we sell as part of our Commercial Remedies BCL Notes collection written by the top tier of Oxford students.

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LANSAT SHIPPING V. GLENCORE FACTS The charterparty is dated 23 November 2006 and is on an amended New York Produce Exchange form under which the respondent ('the charterers') chartered the vessel Paragon for 'about minimum 3 to about 5 months (about means +/- 15 days)'. By clauses 4 and 36, the rate of hire was US$29,500 'per day or pro rata'. Clause 101 of the Charterparty provided: "The Charterers hereby undertake the obligation/responsibility to make thorough investigations and every arrangement in order to ensure that the last voyage of this Charter will in no way exceed the maximum period under this Charter Party. If, however, Charterers fail to comply with this obligation and the last voyage will exceed the maximum period, should the market rise above the Charter Party rate in the meantime, it is hereby agreed the charter hire will be adjusted to reflect the prevailing market level from the 30th day prior to the maximum period date until actual redelivery of the vessel to the Owners." The vessel was delivered under the charterparty at 16.45 GMT on 29 November 2006 and it is common ground that the latest time for redelivery of the vessel to the owners was 16.45 GMT on 14 May

2007. In the event the vessel was redelivered at 20.45 GMT on 20 May 2007, which was 6.166 days after the latest permissible time for redelivery under the charterparty. The owners claimed damages for breach of the charterparty by reference to clause 101. They said that the prevailing market rate calculated in accordance with the clause was US $46,083.22 per day as compared with the charterparty rate of US $29,500 per day. HOLDING For these reasons, the true position is that, in the absence of clause 101, if the final voyage order was an illegitimate order, and thus a breach of contract, and the owners had performed the voyage they would have been entitled to recover hire at the contractual rate until the contractual date for redelivery and damages at the market rate thereafter until actual redelivery. Rule against penalties applies to second sentence of Clause 101 The second sentence applies on the premise that there is a breach of the obligation in the first sentence, since it begins 'if, however charterers fail to comply with this obligation'. It is thus an agreement as to what should happen in the case of breach

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