Time Charters




“110. 18. That the Owners shall have a lien upon all cargoes, and all sub-freights for any amounts due under this Charter, including General Aver-
111. age contributions, and the Charterers to have a lien on the Ship for all monies paid in advance and not earned, and any overpaid hire or excess
112. deposit to be returned at once. Charterers will not suffer, nor permit to be continued, any lien or encumbrance incurred by them or their agents, which
113. might have priority over the title and interest of the owners in the vessel.”

Owners’ security for charterers’ obligations

30.1 Clause 18 of the New York Produce form gives the owners two rights of ‘lien’ with which they can enforce their rights to hire and other sums due under the charter: first, a lien over the cargo on board and second, a ‘lien’ over any freights earned by charterers or sub-charterers during the period of the charter. 30.2 In addition to these rights under Clause 18, the owners also have a separate right to intercept the freights payable under bills of lading, where they, the owners, are the carriers under the bills. This right of interception is discussed in et seq., below.

For what are the liens security?

“any amounts due under this Charter”

30.3 The owners’ liens can be exercised in respect of hire and other sums due from the charterers under the charter. This will include disbursements made by the owners which, by the terms of the charter, are the responsibility of the charterers and in respect of which the owners are entitled to reimbursement. However, whether the owners’ claim is for hire or for other amounts, the liens secure only sums accrued due at the time when the liens are exercised.

The Lindenhall was employed under a time charter which provided that the owner should have a lien upon all cargoes and all sub-freights for any amounts due under the charter. Hire was payable in advance. The ship was ordered to load cargo in the U.S. for Japan. The charterers issued bills of lading (to which the owners were not a party) under which part of the freight was payable on delivery. In the course of the voyage the charterers became insolvent and the owners had to pay for fuel and incur other disbursements which were the charterers’ responsibility under the terms of the charter. At the port of discharge, the master collected (in one sum) the balance of freight and then sought to set-off the cost of fuel and disbursements incurred on the voyage as well as an amount of charter hire which became due after the balance of bill of lading freight had been paid.

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