Voyage Charters

Timothy Young KC; Michael Ashcroft; Julian Cooke; Andrew Taylor; John Kimball; LeRoy Lambert; David Martowski; Michael Sturley

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Chapter 37 Laydays – Cancelling

25. LAYDAYS. Laytime shall not commence before the date stipulated in Part I, except with the Charterer’s sanction. Should the Vessel not be ready to load by 4.00 o’clock P.M. (local time) on the cancelling date stipulated in Part I, the Charterer shall have the option of cancelling this Charter by giving Owner notice of such cancellation within twenty-four (24) hours after such cancellation date: otherwise this Charter to remain in full force and effect.

37.1 This clause contains two distinct parts: the first sentence relates to the commencement of laytime, and the rest of the clause relates to the charterer’s option of cancellation if the chartered vessel is late and the cancelling date is missed. 37.2 If the charterer agrees to commence loading before the date when stipulated laytime begins, some charters contain provisions, not present in the Asbatankvoy form itself, which extend the laydays by the amount of time saved as a result of the early loading. It is a matter of construction of such provisions whether the laydays are extended by the amount of time used in loading, before the commencement of the stipulated laytime, which would count as laytime under the ordinary charter provisions, or by the whole amount of the time thereby saved, including time after the completion of loading.1 Other laytime aspects of clause 5 will be discussed under clause 6, which is principally concerned with the commencement of laytime. 37.3 The cancellation option granted by the clause is materially similar to that granted by the Gencon form.2 Therefore, the clause gives no distinct right of action to a charterer merely because the vessel is late; there must be a breach of some other obligation by the shipowner for such a right to arise. Similarly, there is no anticipatory right of cancellation by which the charterer might be able to cancel before the cancelling date if it is inevitable that the vessel will be late.3 Several specific points may, however, be made. 37.4 The time when the option to cancel arises is 4 p.m. local time on the day stipulated in Part I of the charterparty as the cancelling date; a charterer does not have to wait until the day is passed. He has 24 hours in which to exercise or lose his option, but it is unclear whether

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those 24 hours run from 4 p.m. on the cancelling date or from midnight on that date; the clause appears to start the time running “after such cancellation date” and the date is that stipulated in Part I, not the time on that day stipulated in this clause. In any event, the 24 hours provision is an important qualification to the rule in Moel Tryvan v. Weir 4 to the effect that the charterer is not under any obligation to exercise his right of cancellation until the ship has arrived. 37.5 There is no express provision as to where the vessel must be in order to be “ready to load”, nor that a notice of readiness be given by 4 p.m. on the cancelling date. It is submitted that the linkage of the cancellation provisions with the laytime provisions, not only by the title of the clause but also by the opening sentence, indicates that the vessel should be at least at the customary anchorage and that notice of readiness should have been given by the instantaneous means described in clause 6.

Narrowing the laydays

37.6 Some charters contain a provision whereby the laydays specified in the charter itself are to be narrowed, by one or other party, on or before a specified date. A clause of this nature is primarily for the benefit of the charterer, and in Universal Bulk Carriers v. Andre et Cie,5 where the laydays were to be narrowed by the charterer, it was contended that the clause merely conferred on the charterer an option, and that their failure to narrow the laydays was not a breach of the charter. Longmore J. and the Court of Appeal rejected this contention, holding that the clause did indeed impose an obligation which the charterer had breached. However, the obligation was not a condition,6 and the charterer’s breach did not go to the root of the contract, with the result that the owner was not justified in terminating the charter.7

U.S. Law

Commencement of laytime before first layday

37A.1 Although clause 5 refers to “laytime,” the clause is primarily concerned with cancellation and the canceling period (sometimes also called “laydays”). The subject of laytime itself is discussed in the next section dealing with clauses 6 and 7, while this section deals with canceling. 37A.2 Clause 5 is concerned with the commencement of laytime only in so far as it relates to the first day of the canceling period. It provides that laytime does not commence prior to the date specified in Part I(B) unless the charterer sanctions an earlier commencement expressly or by unequivocal conduct. The majority view among New York arbitrators, however, is that, absent provisions to the contrary, notice of readiness can be effectively tendered prior to the date stated in Part I(B) which will trigger clause 6’s six-hour “free period” so that laytime commences to run as soon as permissible under the charter (i.e., at 0000 hours on the first layday specified in Part I(B)).8

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“Except with the charterer's sanction”

37A.3 The owner is obligated to proceed to the loading port with “all convenient dispatch” and, if the vessel is not ready to load on the canceling date specified in Part I(B), the charterer has the option of either canceling, by giving timely and unequivocal notice, or accepting the vessel. In the absence of an effective notice of cancellation, the charter remains in effect. The charterer may also have a right to damages if the owner breached its obligation to proceed with dispatch or its conduct was unreasonable and/or deceptive.9 37A.4 The charterer may be held to have sanctioned an earlier commencement of laytime by unequivocally accepting the owner’s tender and loading the vessel prior to the date specified in Part I(B).10

Canceling date

37A.5 In The Nedi,11 the panel held that the charterer had properly exercised its option to cancel the charter (albeit several days after the canceling date), but rejected the charterer’s claim for damages, stating:

The law is clear that a late tender in and by itself does not create a right to recover damages. The right may exist if an owner materially misrepresents the vessel’s position or breaches his duty to perform with reasonable dispatch, i.e., where an owner makes an unreasonable interim voyage or carries out repairs. Otherwise, the causes which give rise to a late tender only allow the charterer an option to cancel and not a right of action for damages.

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