Time Charters


Liberty to Sublet

Liberty to Sublet

“16. Charterers to have liberty to sublet the vessel for all or any part of the time covered by this Charter, but Charterers remaining responsible for
17. the fulfillment of this Charter Party.”

Effects of sub-charter

6.1 Line 16 of the New York Produce form gives the charterers the express right to sub-charter the ship during the currency of the head time charter. A sub-time charter (or a sub-voyage charter) does not of itself create any contractual relationship between the owners and the sub-charterers. The owners may not, therefore, sue the sub-charterers, or be sued by them, under or by virtue of the head charter or the sub-charter. This is in accordance with the principle that a contract cannot, generally, confer rights or impose obligations on persons who are not parties to that contract. (The mere liberty to sub-contract will not engage the Contracts (Rights of Third Parties) Act 1999, so the sub-charterers will not enjoy rights under the head charter by virtue of that Act, nor will the owners under the sub-charter.) 6.2 Sub-charterers may, however, be in direct contractual relationship with the owners under bills of lading issued under the sub-charter, if both the owners and the sub-charterers are parties to such bills. In these circumstances the owners may sue (and be sued) under the bills of lading, although they have no rights or obligations under the sub-charter and are not entitled to enforce the terms of the head charter against the sub-charterers.

The Bombay was time chartered for six months with an option to sublet and was sub-chartered for a round voyage. The head charter provided that bills of lading were to be signed at any rate of freight the charterers or their agents might direct, without prejudice to the head charter. The head charter further provided that the owners were to have a lien “upon all cargoes for freight or charter money due under this charter”. Bills of lading were issued to the sub-charterers on terms that did not include a lien for money due under the head charter, but the owners sought to exercise a lien on the sub-charterers’ cargo for hire due under that charter. It was held that the owners had no right of lien for the time charter hire; that was a right enforceable only against the head charterers. Under the bills of lading, which constituted contracts between the owners and the sub-charterers and not mere receipts, the owners had a lien only for the freight due under those bills.

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