Ship Chartering

MST 451
Ship Chartering Negotiations
Ship chartering is a
negotiations’-based procedure
between the shipowner and the
charterer.
u In a similar way to Marine
Insurance negotiations, the
display of ‘’good faith’’ from
both sides is a prerequisite.
u Negotiation revolves around
the terms of a standard
charterparty form chosen by
the parties.
The parties have the right to add,
delete, or modify the original
provisions to suit their
requirements.
When negotiations are
completed, the chartering
contract goes ‘’on subjects’’ for
final approval usually from the
charterer’s side.
• Subjects must be ready within
certain date, otherwise there is
no deal.
• The parties must be aware
there are rules by custom on
conduct which have taken the
form of Court decisions.
u Charter parties contain two
basic categories of terms,
express and implied, which are
both valid.
u Express are called the written
terms referenced in the charter
party.
Implied are called the terms
which are not written but
considered to be mutually
known, understood and accepted
by the contracting parties.
For example the need for the
vessel offered to be in a
seaworthy condition on arrival
and before sailing is an implied
term.
Representations:
These are statements made
during the course of negotiations
and it is important these are true.
In case found to be untrue there
are two possibilities.
 If made without intention to
mislead and/or by mistake the
representer must compensate the
other party for any damages it
may have suffered.
On the other hand, If the
representation was made
intentionally, we have a case of
misrepresentation which is serious
enough to give the right to the
other party to declare the contract
null and void.
For example, the owners may have
described their vessel as in very
good condition after extensive
repairs. If found that no such
repairs had taken, place the owners
may be found to have intentionally
misrepresented the case and the
charterer may choose to rescind
the contract.
Warranties and Conditions:
u Warranties: are usually given
concerning the performance of
a vessel or certain details of the
fixture.
u The breach of a warranty gives
the right to the other party to
claim compensation but it does
not give it the right to cancel
the contract.
uTypical cases of breach of
warranties are the speed of the
vessel and its fuel
consumption.
uThe Courts have also found a
delayed redelivery of a vessel
from Time Charter to be a
breach of a warranty.
Conditions:
The breach of a condition is a
very serious matter as it gives the
right to the other party, not only
to cancel the contract but also to
claim compensation for damages.
The fundamental implied
obligations of the contracting
parties are as follows:
The carrier

Is under obligation to provide a

seaworthy vessel, suitable in all
respects for the loading and
transportation of the cargo
mentioned in the charter party.
He is also obliged to execute the
voyage without any undue delay,
and not to deviate from the
proper route unjustifiably.
The charterer on the other
hand is obliged to:
Refrain from loading dangerous
cargo on the vessel without due
notice to the master, and to
indicate a safe port for the
discharge of the cargo (should
that become necessary as a result
of conditions rendering the
original port of discharge unsafe,
or for any other reason).