Time Charters



I.1 This book concerns time charters. Its focus is time charters of cargo ships, although many aspects of the law set out in the book will be relevant to time charters of any type of ship. The book aims to present the legal principles and decided cases concerning time charters in a manner that will be of practical assistance to parties interested to identify and understand the rights and liabilities arising under them, whether they are negotiating a charter, considering some question arising during the course of a charter, or pursuing or defending legal claims arising out of a charter. Throughout the book, passages on U.S. law are distinguished from those on English law by a margin line, and by an A in the paragraph number. I.2 As in all previous editions of this book, the law is organised principally by working through the provisions of the 1946 version of the New York Produce form, which remains the most important standard form for dry cargo charters. Thus, each of to 36 takes as its text the wording of the New York Produce form on the subject matter of that chapter. The discussion of the law there presented, however, is not limited to a textual analysis of that particular wording. Rather, the topic in question is considered generally, so as to be of assistance to readers whatever charter form they have in front of them. For users of the NYPE 93 form or the Baltime form (2001 revision), material differences in that form are highlighted as they arise in to 36. We have not retained for this edition a separate commentary on the Baltime form. English and U.S. case law on tanker time charters is highlighted in, respectively, on the Shelltime 4 form and on the ExxonMobil Time 2005 form.

Introduction to time charters under English law

I.3 Here, as an introduction to the English law of time charters set out in the rest of the book, the basic nature of a time charter is explained and the main features of a time charter of a cargo ship are outlined. Some general material, found in various places in the book prior to the 6th edition, is now collected here or in the Glossary of English Legal Terms that follows .

Nature of a time charter

I.4 “Under a time charter-party… the shipowner undertakes to make the vessel available to the charterer for the purposes of undertaking ballast and loaded voyages as required by the charterer within a specified area over a stated period”: per Donaldson, J., in The Berge Tasta , at page 424. Or similarly, “A time charter… is a contract for services to be rendered to the charterer by the shipowner through the use of the vessel by the shipowner’s own servants, the master and the crew, acting in accordance with such directions as to the cargoes to be loaded and the voyages to be undertaken as by the terms of the charter-party the charterer is entitled to give to them”: per Lord Diplock in The Scaptrade , at pages 256 to 257. I.5 A time charter is not a lease. Under a time charter, the charterers do not acquire possession of the ship or any other right of property in her: see The Scaptrade, above, and Port Line v. Ben Line , per Diplock, J., at page 299. They acquire, rather, the right, within the limits set by the charter, to direct the use to which the owners put their ship. That is the sense in which Lord Reid spoke of the charterers’ right to the ‘use’ of the ship when he said this, in The London Explorer , at page 526: “Under [a time] charter there is no hiring in the true sense… the chartered vessel remains in the possession of the owners, and the master and crew remain the owners’ servants. What the charterer gets is a right to have the use of the vessel.” Similarly, in The Hill Harmony , at page 156, Lord Hobhouse said that the owners of a ship under time charter transfer to the charterers “the right to exploit the earning capacity of the vessel”. Since time charterers have no ownership interest in the ship, or right of possession of the ship, if a negligent third party damages a ship under time charter, the time charterers generally have no claim against the third party in tort: see The Mineral Transporter (P.C.)

Contrasted with demise charters

I.6 Time charters are, therefore, to be contrasted with demise charters, also called “bareboat” charters, which in the Lloyd’s Shipping Law Library are the subject of Bareboat Charters, and not this book. A demise charter is a contract for the leasing of a ship under which the charterers take possession of the ship, and also provide their own crew and ship management to operate her. In Sea & Land Securities v. Dickinson , at page 163, Mackinnon, L.J., said that the difference between the two kinds of charter was like the difference between “hiring a boat in which to row yourself about, in which case the boat is handed over to you, and contracting with a man on the beach that he shall take you for a row, in which case he merely renders services to you in rowing you about”. Thus, under a time charter the owners continue to officer and crew their ship, but agree that the ship, through her master, will follow the charterers’ orders, within the limits set by the charter. That a time charter does not operate by way of demise is confirmed expressly in Clause 26 of the New York Produce form (Line 170): “Nothing herein stated is to be construed as a demise of the vessel to the Time Charterers.”

Contrasted with voyage charters

I.7 Time charters are also to be contrasted with voyage charters, which are, naturally, the subject of Voyage Charters. Under a voyage charter the owners agree that their ship, officered, crewed and bunkered by them, shall carry specified cargo on an agreed voyage in exchange for freight, characteristically a single payment for the voyage calculated by reference to the quantity of cargo loaded or discharged. In The Hill Harmony, above, Lord Hobhouse explained, at page 156, that the owner who, instead of time chartering his ship, fixes her on voyage charters, “is using the vessel to trade for his own account. He decides and controls how he will exploit the earning capacity of the vessel, what trades he will compete in, what cargoes he will carry. He bears the full commercial risk and expense and enjoys the full benefit of the earnings of the vessel.” I.8 A voyage charter may cover more than one voyage, these voyages being separated either by the necessary ballast voyages (a “consecutive voyage” charter: see, for example, The Saxon Star (H.L.)) or by repositioning voyages upon which the owners may carry cargoes for others than the charterers (an “intermittent voyage” charter: see, for example, The Oakworth ). When, as is often the case, a consecutive voyage charter is expressed to be not for a specified number of voyages, but for as many voyages as can be completed within a certain period, it will share at least some of the attributes of a time charter: see the comments of Donaldson, J., in The Berge Tasta , at page 424. This will also be true of a ‘slot’ charter, under which a specified part of a containership’s capacity is made available for the charterers’ containers in exchange for ‘hire’: see the judgment of Teare, J., in The MSC Napoli at paragraph 14, in which he says: “Thus it appears that HPL’s and Stinnes’ slot charter agreements with MSC have some features in common with a time charter. They last for a period of time and hire is paid for the use of cargo carrying capacity. It is not however comparable to a time charter in that the charterer does not direct the vessel where to go. Clause 5.1 of the Implementing Agreement provides that the itinerary of each voyage shall be as mutually agreed. In this respect it is more akin to a voyage charter or consecutive voyage charter.”



I.9 Although time charters are not leases, nevertheless it is the norm – adopted by all the charter forms considered in this book – to say that by a time charter the owners “let” the ship and the charterers “hire” it. For that purpose, the ship is said to be “delivered” to the charterers and, at the end of the charter, “redelivered” to the owners. I.10 As will be appreciated, this is not a strictly accurate use of language. So, in Sea & Land Securities v. Dickinson , above, MacKinnon, L.J., said, also at page 163, “There is no ‘letting’ or ‘hiring’ of the steamer, or anything of the sort, here … ‘Redelivery’ is only a pertinent expression if there has been any delivery or handing over by the shipowners to the charterers. There never has been anything of that sort here; the ship has at all times been in the possession of the shipowners and they simply undertook to do services with their crew in carrying the goods of the charterers.” I.11 In this judgment, MacKinnon, L.J., suggested that words such as these were found in time charters because this type of charter had grown out of the demise charter (which, in 1942, he said “has long been obsolete”, although it has revived strongly since). However, although modern time charters may contain verbal echoes of earlier forms of demise charter, their historical roots may be found as much among early voyage and consecutive voyage forms. I.12 It may also be that in nineteenth-century shipping parlance the words “let” and “hire” did not necessarily connote a transfer of possession as we would understand it. For example, in the first edition of Abbott on Shipping (1802) “let” forms part of the general definition of “charter-party”, which clearly includes the voyage charter, perhaps to emphasise that under any normal charter-party, by contrast to a bill of lading, it is “an entire ship, or some principal part thereof ” that is “let to a merchant”; Abbott also uses ‘hire’ freely in this context.

“Delivery” and “redelivery”

I.13 In all events, as with the word ‘let’, the terms “delivery” and “redelivery”, when used in a time charter, do not signify any transfer of possession of the ship. Rather, they are used in the sense of delivery into and redelivery out of the service of the charterers. Speaking of a time charter in Tankexpress v. Compagnie Financiere Belge des Petroles , Lord Wright said at page 52: “The charter-party was not a demise, and ‘delivery’ was the term used to describe the rights to the service of the vessel enjoyed by the charterers under the contract.” See also The Berge Tasta , per Donaldson, J., at page 424. The ship is delivered when it begins the charter service and redelivered when the charter comes to an end. As there is no transfer of the ship in the meantime, “redelivery” in the context of a time charter is “something of a metaphor since, under a time (as distinct from a demise) charter, the vessel remains in the possession of her owner, albeit at the disposal of her charterer”: per Rix, L.J., in The Achilleas , at page 558.


I.14 It is common to refer to “the charter service” or “the employment of the ship”. This refers either to the services demanded by the charterers’ orders, or the performance by the ship of those services, or to the period of time during which the ship is engaged in this way. To exploit the earning capacity of the ship, most obviously the charterers will direct her to undertake particular cargo-carrying commitments. The charterers’ orders in that regard are commonly referred to as “voyage orders”.


I.15 The owners’ reward for putting the ship into the charterers’ service is the right to be paid hire. A key feature of any time charter is that the charterers agree to pay for the services of the ship on a time basis, paying “hire”, as it is called, at a rate per time unit (most often a day) shorter than the whole period of the charter. “Hire” is another word which, when used in a time charter, has no connotations of leasing (and thus of a transfer of possession of the ship). As Lord Denning, M.R., pointed out in The Nanfri at page 140, it was at one time common to describe the owners’ remuneration under a time charter as “freight” – later “time chartered freight” or “time freight”. But for many years now, the word “freight” has been reserved for all forms of voyage charter (and bills of lading) and the word “hire” used, by way of distinction, in time (and demise) charters. Time charter hire is typically payable in advance at set intervals throughout the course of the charter.

Period charters

I.16 It is customary to distinguish between different types of time charter by reference to the manner in which their intended duration is set by the charter. The charter may provide that the ship is to be chartered for a period of time defined in the abstract, be it short or long, fixed or variable, for example “6 months”, or “6 to 9 months”, or “6 months 15 days more or less”. Such a charter is referred to as a period time charter, or period charter for short, and the charterers may direct the ship to undertake as few or as many individual voyages within the agreed period as they wish.

Trip charters

I.17 On the other hand, the charter may both define its period and confine the services to be undertaken to a particular voyage or “trip” (or a number of specified trips). Such a charter is referred to as a time charter for a trip, or trip time charter, and the service (or each service) to be performed is a “time charter trip”. Although, as in any other time charter, the owners’ remuneration will still be periodic (typically daily) hire, a trip time charter may in other respects have more in common with a simple voyage charter than with, for example, a long period charter for worldwide trading carrying all manner of cargoes. Whether all of the ordinary incidents of a time charter apply equally to a trip time charter for a fixed or narrowly-defined particular trip has not been fully explored in the cases. That said, it can be a source of error too readily to consider such a time charter as akin to a voyage charter: see, for example, the criticism in the Court of Appeal of aspects of the first instance judgment in The Doric Pride , per Rix, L.J., at pages 178 and 179, albeit they did not affect the result in that case. For a recent decision by Teare, J., as to whether a particular fixture was a voyage charter or a trip time charter, see The Sabrina 1 .


I.18 Between the classic period time charter and the single trip time charter for a specifically defined trip there are other variants. Of owners’ and charterers’ ability to construct any manner of particular hybrid, Hobhouse, J., said in The World Symphony , at page 257, “The variety of contractual structures that can be adopted by charterers and shipowners for any given transaction are as various as the ingenuity of chartering brokers and the ever changing demands of the market may determine. It is not for Courts to fit the parties’ transactions within a strict and limited frame-work which the parties themselves may not have chosen to adopt.” Lord Donaldson, M.R., echoed his words in the Court of Appeal , at page 117, noting at page 118 that by Clause 18 of the Shelltime 3 charter the parties had in effect “bolted on” a round trip charter to their basic time charter.

Governing law

I.19 It is a fundamental legal concept that any contract is governed by a particular system of law. In England, the question which law applies to a contract is governed by the Rome I Regulation. Or more precisely, in any case brought before an English court, or before arbitrators who apply English choice of law rules, the governing law of any contract entered into on or after 17 December 2009 is determined by Regulation (EC) 593/2008 dated 17 June 2008 (the “Rome I Regulation”). The Rome I Regulation replaces, for such contracts, the Convention on the Law Applicable to Contractual Obligations (the “Rome Convention”), which has the force of law in England under the Contracts (Applicable Law) Act 1990 and which now only applies to contracts entered into after 1 April 1991 but before 17 December 2009. (Neither the Regulation nor the Convention apply to arbitration or jurisdiction agreements.) I.20 By Article 3.1 of the Rome I Regulation or Rome Convention, as applicable, where contracting parties have chosen what law is to govern their contract, that choice is generally valid. That is to say, the law so chosen generally is the law governing the contract, so long as the choice is “made expressly or clearly demonstrated by the terms of the contract or the circumstances of the case” (to quote the Regulation; the Convention wording is similar). A full consideration of the law in this area is not undertaken here and if that is required reference should be made to Dicey, Morris & Collins, paragraphs 32–039 et seq. I.21 In time charter cases, the parties will usually have made a clear choice as to which law is to govern their agreement. First, there is often an express governing law stipulation either in the standard form used (see, for example, Clause 22 of the Baltime form or Clause 46(a) of Shelltime 4) or in the clauses added by the parties. Second, if there is no express governing law stipulation there is usually an arbitration provision requiring arbitration of any disputes in a particular forum (for example, London). That is ordinarily taken to imply a choice of governing law (English law, where London arbitration is selected): see Dicey, Morris & Collins, paragraph 32–064, Egon Oldendorff v. Libera Corporation , Egon Oldendorff v. Libera Corporation (No. 2) , and The Wisdom C . Similarly, a provision requiring disputes to be referred exclusively to the courts of a particular country ordinarily implies a choice that the law of that country should govern. I.22 In the rare case where the law governing a time charter is not determined by Article 3.1, the position under the Rome I Regulation or Rome Convention, as applicable, is somewhat complex. Article 4.1(b) of the Rome I Regulation then stipulates that a contract for the provision of services shall be governed by “the law of the country where the service provider has his habitual residence”. For a time charter, which is a contract for the provision of services, that would be the law of the country of the “habitual residence” of the owners. By Article 19 of the Regulation, that will be determined by locating the “place of central administration” of the owners or, if the charter is “concluded in the course of the operations of a branch, agency or other establishment” of the owners, by identifying “the place where the branch, agency or… establishment is located”. It is thought this will apply the law of the location of the commercial and technical management of the ship, rather than the law of the place of incorporation of the owners. I.23 Article 4.1 of the Rome Convention is in different terms, stipulating a general rule that the governing law in the absence of a choice under Article 3.1 is “the law of the country with which [the contract] is most closely connected”. In applying that test, one may find that the services to be undertaken under a time charter tie the charter closely to a particular jurisdiction; for example, a time charter expressly restricted to coastal trading between U.S. ports. Or if the charter is fixed through an intermediate broker in a particular country, or through owners’ and charterers’ brokers both being in the same country, that could be taken to connect the charter closely to that country. Very often, however, the range of services capable of being ordered under the time charter is so broad that the contract cannot be said to be closely connected to any one country, and the charter will have been fixed through agents or brokers operating in more than one territory. I.24 In that case, if Article 4.1 of the Rome Convention has to be applied, resort can be had to the presumption stated by Article 4.2, namely that, where a contract is entered into in the course of a party’s trade or profession, the contract is most closely connected with the country where the party who is to effect the performance characteristic of the contract has its principal place of business, unless that presumption is disapplied by Article 4.4 (see below). The Article 4.2 presumption points to the law of the country of the principal place of business of the owners, because in contracts for services the provision of the services, rather than payment for them, is taken to be characteristic for the purposes of Article 4.2: see Dicey, Morris & Collins, paragraphs 32–075 to 32–077 and The Wisdom C, supra, at [30]. Where (as is common) the business of a shipowning company is carried on by a management company on the shipowners’ behalf, the management company’s place of business is to be regarded as the shipowners’ principal place of business: see Dicey, Morris & Collins, 11–118 et seq and, again, The Wisdom C, at [30]. I.25 By Article 4.4 of the Rome Convention, Article 4.2 does not apply to a “contract for the carriage of goods” and for that purpose “single voyage charter-parties and other contracts the main purpose of which is the carriage of goods shall be treated as contracts for the carriage of goods”. Although the possibility has been raised that this may cover time charters (see Dicey, Morris & Collins, paragraph 33–094), Popplewell, J., has now decided, in The Wisdom C, supra, at [28]–[29], that it does not and that, therefore, the Article 4.2 presumption does apply to time charters. It is tentatively suggested in any event that, in the absence of any other factor particularly connecting the contract to one territory, the law of the country from which the ship is managed would probably determine the law of a time charter under Article 4.1 even if Article 4.2 did not apply.

Key terms of art in English contract law

I.26 In the rest of this book, a degree of familiarity with certain basic contract law concepts is assumed or may be helpful. For the assistance of readers unfamiliar with them, certain important and frequently used terms are identified and briefly defined or explained in the alphabetical Glossary of English Legal Terms at the end of the book (after ). A detailed or comprehensive review of the law of contract is far beyond the scope of this book. If more detail is needed, reference should be made to contract law texts, for example Chitty.

The scheme of a time charter

I.27 In this section, the principal obligations arising under a time charter governed by English law are identified, guiding the reader to where they are dealt with in the main part of the book ( to 36), and then an overview of the primary features of a time charter is provided so as to complete this Introduction to the subject.

Principal obligations

I.28 The owners’ main obligations under a time charter are as follows: I.29 For their part, the charterers’ most significant obligations are these: I.30 There are also important duties falling on both parties equally:
  • (1) There is an implied duty to co-operate in the performance of the contract and, it is suggested, to communicate honestly in that regard. A time charter is a complex contract and many of the stages of its performance require the parties to co-operate.
  • (2) There is an implicit obligation, in particular, to co-operate to settle the charter account. Any sums due on the charter account must be paid within a reasonable time.

The parties

I.31 The time charter will identify the parties contracting as owners and charterers, and the ship to be chartered, or provide a mechanism by which they are to be identified, for example, by nomination. Issues relating to the identification of the parties to the contract are considered in detail in .

The ship

I.32 As regards the ship to be chartered, the charter will normally do more than merely identify her by name. Some detail as to the characteristics and capabilities of the ship will ordinarily be stipulated, whether by reference to standard particulars such as those in Lines 4 to 11 of the New York Produce form or by an additional, detailed vessel description, or both. An additional, detailed description is sometimes based on a questionnaire completed during the negotiation of the charter. I.33 It will be the responsibility of the owners to ensure that the ship complies with the description given in the charter. That responsibility may have to be discharged at the time the charter is concluded, at the time when the ship is delivered, or both. This may be an ‘absolute’ obligation or a qualified obligation, typically a due diligence obligation. When considering such matters, it may be important whether the charter incorporates any version of the Hague or Hague-Visby Rules, for example, the United States Carriage of Goods by Sea Act 1936 in the case of the New York Produce form, under Clause 24. These matters are discussed in , 8 and 34 (as regards the impact of the Hague Rules). I.34 There will normally be a further promise by the owners concerning the maintenance of the ship’s condition and fitness for service during the course of the charter. That could, in theory, be an absolute undertaking. Far more commonly, however, it is only an obligation of due diligence. Indeed, the arguably unqualified maintenance language of Clause 1 of the New York Produce form is interpreted as imposing only an obligation of diligence. For discussion of the owners’ maintenance obligations, see .


I.35 In order to trigger the start of the charter service, various requirements may have to be satisfied. For example, the ship may have to reach a particular location or the owners may have to serve a notice of readiness. However, subject to any such requirements in any particular case, the delivery of the ship consists simply in putting the ship at the charterers’ service. In The Niizuru , at page 68, Mance, J., said that, “… delivery refers to the placing by the owners of the vessel at the disposal of the charterers, … with a view to starting the time for payment of hire running”. Similarly Roskill, J., said in The Madeleine , at page 238: “An owner delivers a ship to a time charterer … by placing her at the charterers’ disposal and by placing the services of her master, officers and crew at the charterers’ disposal, so that the charterers may thenceforth give orders (within the terms of the charter-party) as to the employment of the vessel to the master, officers and crew, which orders the owners contract that their servants shall obey.” On delivery generally, see further . Under the New York Produce form, there is a particular question whether delivery occurs before time starts to run: see and . I.36 The charter will normally make provision for when delivery is to take place. The typical pattern, as under Clause 14 of the New York Produce form, is to entitle the charterers to refuse delivery earlier than a certain time and to cancel the charter if delivery has not occurred, or at least if the ship has not made herself ready for delivery, by a certain time. Time charterers’ cancellation rights are specifically considered in .


I.37 Redelivery occurs when the charter comes to an end. Everything going well, the ship will be redelivered when the owners have completed the charterers’ final voyage orders, so that the charter service is at an end. The charter may require the ship to have reached a certain place before it is redelivered or it may require the charterers to serve a notice of redelivery. However, in the absence of such requirements, a time charter ends “in exactly the same way as a voyage charter-party ends when the last cargo is discharged”: see The Berge Tasta , per Donaldson, J., at page 424. I.38 Where the charter comes to an end prematurely, ‘redelivery’ is said to occur there and then. For example, if one party repudiates the charter and the innocent party elects to terminate the charter, the ship is thereupon ‘redelivered’. Some of the consequences of a premature ‘redelivery’ may be different from those of a redelivery in the ordinary course at the end of the intended period as provisions of the charter that operate on redelivery may, properly construed, relate only to the latter. On redelivery, see further and 15.


I.39 As already noted ( and , above), what the charterers pay for under a time charter is, fundamentally, the right to exploit the chartered ship as a revenue-generating chattel. The charter will set limits upon the employment that the charterers are entitled to direct, for example, limits of geography or limits upon the types of cargo that may be carried. The effect of trading limits generally is the subject of , which also comments on war risks clauses. The two particular trading limits most often giving rise to disputes and claims – safe cargoes and safe places – are considered in detail in and 10 respectively. I.40 Within the trading limits set by the charter, it is the charterers’ right to have the ship comply, and comply promptly, with whatever orders they may give as to her employment. That being the fundamental right conferred upon the charterers under a time charter, it features in the analysis of particular issues throughout the rest of this book. It is, however, directly the subject matter of and 19.

Bills of lading

I.41 Time charterers may enter into a time charter exclusively for the purpose of moving their own goods. Far more common, however, and a key expectation of almost all time charters, is that the ship will be carrying cargoes, albeit on the time charterers’ orders, ultimately for third party cargo interests. Shipment of such cargoes will typically be acknowledged by the issue of bills of lading. Such bills of lading may be issued by or on behalf of the owners, the time charterers or some other carrier (for example, sub-time charterers). They will govern the carriage as between the holders of the bills and the bill of lading carrier, regulating in particular that carrier’s responsibility and liability to the holders of the bills for loss of or damage to the cargo. I.42 The owners will normally promise, by the time charter, that the master will sign bills of lading “as presented” by or on behalf of the time charterers. Moreover, the time charterers will normally be entitled to bind the owners to bills of lading by signing themselves, personally or by an agent, on behalf of the master. Various important issues arising out of this feature of time charters are discussed in . I.43 Bills of lading issued pursuant to a time charter are also important in connection with requirements commonly imposed by the time charter for owners to have a “lien” over cargoes being carried or freight being earned by the ship, to secure sums payable to the owners under the time charter. In relation to that, see further .


I.44 Whether in connection specifically with bills of lading issued under the charter, or in connection more generally with the employment of the ship, many time charters contain express indemnities, in favour of the owners, against liabilities or other harmful consequences incurred as a result of complying with the charterers’ orders. In any event, in respect of matters of choice exercised by the time charterers in relation to the employment of the ship, such an indemnity will ordinarily be implied. As will be seen from the discussion in and 21, the precise scope of and limits upon the implied right to indemnity are not yet fully worked out.


I.45 In return for giving the time charterers the right to dictate how the ship is employed, the owners receive the benefit of a regular, defined cash flow, by way of hire payable periodically under the time charter. The charterers’ most basic obligation under a time charter, therefore, is to make full and punctual payment of hire. At any time, and for any period between delivery and redelivery, the ship is ‘on hire’, that is to say hire is payable, unless the charterers can bring themselves within some exception. The principal exception in most cases is the ‘off-hire’ clause, by which in specified circumstances hire may cease to be payable for a time. Off-hire clauses are discussed in . Other possible exceptions are identified in .


I.46 Unless an off-hire clause or other lawful excuse justifies it, the consequence of not paying hire is normally that the owners will be entitled to ‘withdraw’ the ship from the charterers’ service, putting an end to the time charter. There are frequently detailed terms imposing restrictions upon the owners’ right of withdrawal or imposing conditions upon its exercise. Such ‘anti-technicality’ clauses, as the name suggests, are typically designed to ensure that the charterers do not lose the charter through inadvertent, minor error in complying with their hire obligations. The charterers’ obligation to pay hire and the owners’ associated right of withdrawal are dealt with in .

Supplying the ship

I.47 Since a ship under time charter is managed, maintained and operated by her owners, it is the owners’ obligation to supply the ship with most of what she needs to operate and to comply with the charterers’ employment orders. Express provision will normally be made as to the matters that, by way of exception, it is for the charterers to “provide and pay for”, which is the time-honoured phrase in this context. Chief among these is fuel. That is to say, it is ordinarily made the charterers’ duty to supply the ship with the fuel she needs to carry out the charter. The charterers’ responsibility to “provide and pay for” fuel and certain other matters is discussed more fully in and 13. Another requirement commonly placed upon the charterers, at least in dry cargo charters, is that of providing any special or unusual fittings or equipment particularly required by the cargo directed to be loaded: see, for example, Lines 45 and 46 in Clause 2 of the New York Produce form ( et seq., below).

Cargo operations

I.48 For historical reasons, bills of lading issued under a time charter will typically impose on the carriers under the bills (be they the owners or the time charterers) legal responsibility for the cargo from the ship’s rail or its equivalent (for example, the ship’s permanent manifold connection for bulk liquid cargoes) at the loadport to the ship’s rail or equivalent at the discharge port. I.49 As between the owners and the charterers, the owners are responsible for loading, stowing and discharging cargo unless the time charter provides otherwise. Very commonly, however, the time charter does provide otherwise, that is to say responsibility for some or all cargo operations is very often placed upon, and accepted by, the charterers. For example, under Clause 8 of the New York Produce form, “Charterers are to load, stow, and trim the cargo”. The standard form wording is often supplemented and it may be specially provided, in any given case, either that the charterers’ responsibility has been confirmed or extended, or that it has been negated altogether, restoring responsibility to the owners. I.50 Where the time charter also incorporates, in one form or another, the Hague or Hague-Visby Rules, the question has arisen whether it is open to the owners to allocate responsibility for cargo operations to the time charterers. Under English law, it is settled that in general, the Hague or Hague-Visby Rules do not prevent owners and time charterers agreeing between them an allocation of responsibility for cargo operations. It is suggested the better view is that this is true even where the cargo operation has an impact on the seaworthiness of the ship, although this remains somewhat contentious. I.51 The complexity and uncertainty involved in deciding who is responsible, as between owners and time charterers, for loss of or damage to cargo carried under a time charter, led to the Inter-Club Agreement, an agreement between major P. & I. Clubs providing for a relatively simple, mechanistic apportionment between owners and charterers of different types of claim. Time charters frequently stipulate that cargo claims are to be apportioned between owners and charterers under that Agreement. I.52 All these matters are considered in detail in .


I.53 It is an important implied term of any contract that the parties will co-operate with each other, where co-operation is required for the proper performance of the contract by one or other of them. The smooth performance of any time charter is likely to require good co-operation between owners and charterers at many stages, if not every stage, of the service. As a result, whichever party bears primary responsibility for an operation, as allocated under the time charter, final responsibility for a difficulty that arises may in fact turn upon the co-operation shown, or not shown, by the other party. This should never be lost sight of when analysing any particular issue or dispute that has arisen. As part of the duty to co-operate, it is suggested, it is ordinarily to be implied that the parties will communicate honestly with each other in relation to the performance of the contract. The scope of such an implied obligation of honesty in the context of time charters has yet to be explored, but see generally Yam Seng v. International Trade Corporation , per Leggatt, J., at [119] – [156].

The charter account

I.54 At the end of the charter, the parties will attempt to calculate whether any balance is owed by one to the other on the charter account. The most important elements of the account are hire, taking into account any off-hire periods, and bunkers taken over by the charterers on delivery and by the owners on redelivery. However, there are numerous other expenses which may be paid during the course of the charter by one party which are “for the account of ” the other, that is to say which, according to the charter, are to be paid or borne by the other. The parties’ respective statements of the account are usually described and referred to as their “final hire statements”. It is suggested that, as an incident of the general duty of co-operation, the parties are each obliged to provide a final hire statement to the other, so as to identify all areas of agreement and any areas of disagreement on the amounts due in each direction.

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