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Law Notes Shipping and International Trade Notes

Charterparties And Freight Notes

Updated Charterparties And Freight Notes

Shipping and International Trade Notes

Shipping and International Trade

Approximately 359 pages

Shipping and International Trade Law notes fully updated for recent exams at Oxford. These notes cover all the major LLB aspects and so are perfect for anyone doing an LLB in the UK or a great supplement for those doing LLBs abroad, whether that be in Ireland, Canada, Hong Kong or Malaysia (University of London). These notes were formed directly from a reading of the cases and main texts and are vigorous, concise and very well written. Everything is conveniently split up by topic as you can se...

The following is a more accessible plain text extract of the PDF sample above, taken from our Shipping and International Trade Notes. Due to the challenges of extracting text from PDFs, it will have odd formatting:

CHARTERPARTIES; FREIGHT

SUMMARY

Incorporating a term into the B/L

  • What do you do if you want to ensure that you are successful in incorporating a term?

  • 1) The more specific you are, the more effective it will be

  • 2) If you use general words, the Courts tend to take a narrower approach

    • They will tend to focus on the terms of the charterparty that relate to the carriage of goods

    • E.g. a demurrage clause is more likely to be incorporated than an arbitration clause if you use only general words

    • In the Varenna, arbitration clause wasn’t incorporated by virtue of the word “condition”

    • Varenna: “all conditions” was taken to incorporate only conditions applicable to the carriage and delivery of goods

  • 3) Even if an incorporation clause satisfies those first 2 rules, it may still fail to incorporate IF it is inconsistent with the other terms of the B/L

    • E.g. if you have conflicting provisions relating to freight, then the freight clause from the charterparty will NOT be incorporated successfully

    • Consistent with the fact that you’re interpreting the B/L contract!

  • 4) Even if a charterparty term is successfully incorporated into a B/L contract, the effect of that term, obviously depends on what the term actually says

    • For e.g. if you manage to incorporate a demurrage clause, but that term says that “charterer has to pay demurrage” in a situation, it’s not going to bind an indorsee!

Loading/Unloading Cases

  • Three consecutive chronological periods to talk about: laydays (contractually available for charterer to use as he wishes), demurrage (liquidated damages for detention of vessel beyond laytime), damages at large

  • When does laytime start to run?

    • (1) Ship must be an arrived ship

      • For a port charter: ship must be (1) within port limits and (2) at immediate and effective disposition of charterer (The Maratha Envoy)

        • In Maratha Envoy, this wasn’t met, because they were at the waiting area that was outside the jurisdiction of the port

        • They tried to dip inside the port limits briefly, but this didn’t affect the final outcome

      • For berth charter: ship must be in the berth or dock

    • (2) Notice of readiness must be issued

    • (3) Ship must be in fact ready to load

      • IMPT: consider whether an event that causes damages in addition to demurrage might also affect readiness to load

      • E.g. if barnacles form on the ship, you can argue that it’s not ready to load as a result! So laytime ceases to run

  • Exceeding laytime is a breach of contract (AS Reidar)

Damages in Addition to Demurrage

  • Need to establish (1) separate breach and (2) separate type of loss (AS Reidar as interpreted in The Bonde)

    • But make sure you point out that there can be alternate interpretations of AS Reidar -> that only separate type of loss is required

    • For e.g. DN’s view that even though Atkin LJ thought that there were two breaches, it’s not clear whether he was actually resting his decision on there being a separate breach

    • Then consider the implications for your answer on either interpretation of AS Reidar

  • Separate breach

    • Separate breach alone is insufficient

      • In Chandris, a vessel was chartered to carry general cargo, excluding “dangerous cargo”. Charterers loaded some turpentine in steel drums (amounting to 1,546 tons).

      • It was held that this was a “dangerous cargo” and that the owners had not agreed to vary the charterparty so as to permit this cargo to be carried.

      • This subsequently caused a delay in unloading of 16 days

      • An arbitrator awarded the owners 16 days’ damages for detention.

      • However, Devlin J allowed the owners only to recover demurrage in respect of the 16 days

    • In AS Reidar, this was the failure to load a full and complete cargo

  • Separate type of loss

    • What does demurrage clearly cover?

      • Loss of freight

      • Costs of running the ship during the delay (e.g. fuel, port fees, etc)

    • What might be a separate type of loss?

      • Deadfreight (AS Reidar)

      • The loss of freight due to the ship carrying less cargo

Rights of the Carrier to Claim Freight

  • (a) Delivery at an intermediate port

    • Starting position is NO

    • It’s an entire obligation, and the obligation is to deliver to the stipulated port

    • Exception: could be an implied contract for pro rata freight if charterer voluntarily accepts intermediate delivery (Hopper v Burness)

    • Another Exception: if delivery was at intermediate port due to fault of charterer

  • (b) Delivery of only part of the goods

    • In Thomas v Harrowing, they only got 2/3rds of the cargo to the destination, but they were entitled to the entirety of the freight because it was lump sum

    • So you can get the entirety of the freight so long as you deliver more than a de minimis amount

    • If they’ve lost most off your goods, you might have a claim for damages

      • Depends on why they were lost

      • If lost due to peril, then no claim!

      • But in any case, the counterclaim for damages is separate from payment of freight

  • (c) Delivery of the goods in a damaged condition, the damage being due to his breach of the contract of carriage

    • Asfar v Blundell

    • Unless the cargo is, in a commercial sense, no longer the same thing

  • (d) Delivery of no goods at the agreed destination, the loss being due to an excepted peril

    • To earn a freight, you’ve got to earn something

    • Even though it’s not your fault you can’t deliver something, you’ve got to earn a freight

  • Thus if the carrier delivers any part of the cargo, at the port of destination, in a merchantable condition, he is still entitled to freight

  • What difference does it make if the freight is advance freight?

    • Payable after loading

    • Once paid, freight is deemed to be earnt

    • Even if goods are entirely lost, freight is still validly earnt

    • Subject to counterclaim for damages

    • Could you not claim for restitution for unjust enrichment?

      • NO, because they have done what they have to do to earn the freight which is loading

Withdrawal/Cancellation Clauses

  • Is late payment of hire a breach of condition?

    • Probably not (Spar Shipping)

    • Probably an innominate term (Spar) so you need...

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