Charter Party

Clauses
 Identify which Charter Party has the clauses below – what are they?
(eg BIMCO Website – Orevoy, Gentime, Barecon)

Purpose Voyage Time Bareboat

Deviation
Laytime
Laydays & Cancelling
Notice of Readiness
Lien
Bill of Lading
Agency
War Risks
Ice
Law & Arbitration
Demurrage
Master
Bunkers
Cancelling
 Identify which Charter Party has the clauses below – what are they?
(eg BIMCO Website – Orevoy, Gentime, Barecon)

Purpose Voyage Time Bareboat

Deviation  Liberty of vessel to call at ports in any order
 Liberty of vessel to tow and assist vessels Yes Yes No
 Liberty of vessel to deviate for purpose of saving life or property,
etc
Laytime
Laydays &
Cancelling
Notice of
Readiness
Lien
Bill of Lading
Agency
 Identify which Charter Party has the clauses below – what are they?
(eg BIMCO Website – Orevoy, Gentime, Barecon)

Purpose Voyage Time Bareboat

Deviation  Liberty of vessel to call at ports in any order Yes Yes No
 Liberty of vessel to tow and assist vessels
 Liberty of vessel to deviate for purpose of saving life or property,
etc
Laytime  Duration of laytime allowed
 exceptions to laytime Yes No No
 commencement of laytime
 time and manner of tendering of notice of readiness
Laydays &
Cancelling
Notice of
Readiness
Lien
Bill of Lading
Agency
 Identify which Charter Party has the clauses below – what are they?
(eg BIMCO Website – Orevoy, Gentime, Barecon)

Purpose Voyage Time Bareboat

Deviation  Liberty of vessel to call at ports in any order Yes Yes No
 Liberty of vessel to tow and assist vessels
 Liberty of vessel to deviate for purpose of saving life or property,
etc
Laytime  Duration of laytime allowed Yes No No
 exceptions to laytime
 commencement of laytime
 time and manner of tendering of notice of readiness
Laydays &  Laydays
Cancelling  cancelling date
 conditions under which charterers have option to cancel charter Yes No No
 charterers’ obligation to declare intention to exercise option to
cancel
Notice of
Readiness
Lien
Bill of Lading
Agency
 Identify which Charter Party has the clauses below – what are they?
(eg BIMCO Website – Orevoy, Gentime, Barecon)

Purpose Voyage Time Bareboat

Deviation  Liberty of vessel to call at ports in any order Yes Yes No
 Liberty of vessel to tow and assist vessels
 Liberty of vessel to deviate for purpose of saving life or property,
etc
Laytime  Duration of laytime allowed Yes No No
 exceptions to laytime
 commencement of laytime
 time and manner of tendering of notice of readiness
Laydays &  Laydays Yes No No
Cancelling  cancelling date
 conditions under which charterers have option to cancel charter
 charterers’ obligation to declare intention to exercise option to
cancel
Notice of Stipulates the when and how the NOR should be tendered, and when
Yes No No
Readiness the vessel has ‘arrived’

Lien
Bill of Lading
Agency
 Identify which Charter Party has the clauses below – what are they?
(eg BIMCO Website – Orevoy, Gentime, Barecon)

Purpose Voyage Time Bareboat

Deviation  Liberty of vessel to call at ports in any order Yes Yes No
 Liberty of vessel to tow and assist vessels
 Liberty of vessel to deviate for purpose of saving life or property,
etc
Laytime  Duration of laytime allowed Yes No No
 exceptions to laytime
 commencement of laytime
 time and manner of tendering of notice of readiness
Laydays &  Laydays Yes No No
Cancelling  cancelling date
 conditions under which charterers have option to cancel charter
 charterers’ obligation to declare intention to exercise option to
cancel
Notice of Stipulates the when and how the NOR should be tendered, and when Yes No No
Readiness the vessel has ‘arrived’

Lien  Whether owners are to have a lien on cargo for freight,

deadfreight, demurrage and/or damages for detention Yes Yes Yes
 whether charterers are to be responsible for freight and
demurrage, etc. incurred at the discharge port.
Bill of Lading
Agency
 Identify which Charter Party has the clauses below – what are they?
(eg BIMCO Website – Orevoy, Gentime, Barecon)

Purpose Voyage Time Bareboat

Deviation  Liberty of vessel to call at ports in any order Yes Yes No
 Liberty of vessel to tow and assist vessels
 Liberty of vessel to deviate for purpose of saving life or property,
etc
Laytime  Duration of laytime allowed Yes No No
 exceptions to laytime
 commencement of laytime
 time and manner of tendering of notice of readiness
Laydays &  Laydays Yes No No
Cancelling  cancelling date
 conditions under which charterers have option to cancel charter
 charterers’ obligation to declare intention to exercise option to
cancel
Notice of Stipulates the when and how the NOR should be tendered, and when Yes No No
Readiness the vessel has ‘arrived’

Lien  Whether owners are to have a lien on cargo for freight, Yes Yes Yes
deadfreight, demurrage and/or damages for detention
 whether charterers are to be responsible for freight and
demurrage, etc. incurred at the discharge port.
Yes Yes Yes
Bill of Lading The Master’s obligation to sign bills of lading.

Agency
 Identify which Charter Party has the clauses below – what are they?
(eg BIMCO Website – Orevoy, Gentime, Barecon)

Purpose Voyage Time Bareboat

Deviation  Liberty of vessel to call at ports in any order Yes Yes No
 Liberty of vessel to tow and assist vessels
 Liberty of vessel to deviate for purpose of saving life or property,
etc
Laytime  Duration of laytime allowed Yes No No
 exceptions to laytime
 commencement of laytime
 time and manner of tendering of notice of readiness
Laydays &  Laydays Yes No No
Cancelling  cancelling date
 conditions under which charterers have option to cancel charter
 charterers’ obligation to declare intention to exercise option to
cancel
Notice of Stipulates the when and how the NOR should be tendered, and when Yes No No
Readiness the vessel has ‘arrived’

Lien  Whether owners are to have a lien on cargo for freight, Yes Yes Yes
deadfreight, demurrage and/or damages for detention
 whether charterers are to be responsible for freight and
demurrage, etc. incurred at the discharge port.
Bill of Lading The Master’s obligation to sign bills of lading. Yes Yes Yes

Yes Yes No
Agency Owner’s (or charterer’s) obligation to appoint agents at loading and
discharge ports
 Identify which Charter Party has the clauses below – what are they?
(eg BIMCO Website – Orevoy, Gentime, Barecon)

Purpose Voyage Time Bareboat

War Risks
Ice
Law &
Arbitration
Demurrage
Master
Bunkers
Cancelling
 Identify which Charter Party has the clauses below – what are they?
(eg BIMCO Website – Orevoy, Gentime, Barecon)

Purpose Voyage Time Bareboat

War Risks  Owner’s liberty to cancel the charter in event of outbreak of war or
warlike acts
 Master’s liberty to sail from the loading port before completion of Yes Yes Yes
loading in event of outbreak of war
 Master’s liberty to comply with the instructions from the vessel Flag
State Govt, war risks underwriters, or other recognised authorities
Ice
Law &
Arbitration
Demurrage
Master
Bunkers
Cancelling
 Identify which Charter Party has the clauses below – what are they?
(eg BIMCO Website – Orevoy, Gentime, Barecon)

Purpose Voyage Time Bareboat

War Risks  Owner’s liberty to cancel the charter in event of outbreak of war or Yes Yes Yes
warlike acts
 Master’s liberty to sail from the loading port before completion of
loading in event of outbreak of war
 Master’s liberty to comply with the instructions from the vessel Flag
State Govt, war risks underwriters, or other recognised authorities
Ice Master’s liberties in event of inaccessibility of, or threat of trapping at, Yes Yes Yes
loading and/or discharge ports due to ice.
Law &
Arbitration
Demurrage
Master
Bunkers
Cancelling
 Identify which Charter Party has the clauses below – what are they?
(eg BIMCO Website – Orevoy, Gentime, Barecon)

Purpose Voyage Time Bareboat

War Risks  Owner’s liberty to cancel the charter in event of outbreak of war or Yes Yes Yes
warlike acts
 Master’s liberty to sail from the loading port before completion of
loading in event of outbreak of war
 Master’s liberty to comply with the instructions from the vessel Flag
State Govt, war risks underwriters, or other recognised authorities
Ice Master’s liberties in event of inaccessibility of, or threat of trapping at, Yes Yes Yes
loading and/or discharge ports due to ice.
Law & Jurisdiction to which any dispute will be referred, ie place of any
Yes Yes Yes
Arbitration arbitration; appointment of arbitrators, etc.

Demurrage
Master
Bunkers
Cancelling
 Identify which Charter Party has the clauses below – what are they?
(eg BIMCO Website – Orevoy, Gentime, Barecon)

Purpose Voyage Time Bareboat

War Risks  Owner’s liberty to cancel the charter in event of outbreak of war or Yes Yes Yes
warlike acts
 Master’s liberty to sail from the loading port before completion of
loading in event of outbreak of war
 Master’s liberty to comply with the instructions from the vessel Flag
State Govt, war risks underwriters, or other recognised authorities
Ice Master’s liberties in event of inaccessibility of, or threat of trapping at, Yes Yes Yes
loading and/or discharge ports due to ice.
Law & Jurisdiction to which any dispute will be referred, ie place of any Yes Yes Yes
Arbitration arbitration; appointment of arbitrators, etc.
Yes No No
Demurrage Rate and method of payment.
Remedies of the Owner if demurrage not paid in accordance with the C/P
Master
Bunkers
Cancelling
 Identify which Charter Party has the clauses below – what are they?
(eg BIMCO Website – Orevoy, Gentime, Barecon)

Purpose Voyage Time Bareboat

War Risks  Owner’s liberty to cancel the charter in event of outbreak of war or Yes Yes Yes
warlike acts
 Master’s liberty to sail from the loading port before completion of
loading in event of outbreak of war
 Master’s liberty to comply with the instructions from the vessel Flag
State Govt, war risks underwriters, or other recognised authorities
Ice Master’s liberties in event of inaccessibility of, or threat of trapping at, Yes Yes Yes
loading and/or discharge ports due to ice.
Law & Jurisdiction to which any dispute will be referred, ie place of any Yes Yes Yes
Arbitration arbitration; appointment of arbitrators, etc.

Demurrage Rate and method of payment. Yes No No

Remedies of the Owner if demurrage not paid in accordance with the C/P
Master  Master’s speedy prosecution of voyages
 Master’s and crew’s assistance to charterer No Yes No
 Master’s obedience of charterers’ orders relating to vessel’s
employment, agency, etc
 Charterers’ indemnification of owners against consequences of
owners’ servants signing bills of lading or other documents, or
complying with charterers’ orders, etc.;
 Exclusion of owners’ liability for cargo claims; and
 Owners’ agreement to investigate charterers’ complaints about crew.

Bunkers
Cancelling
 Identify which Charter Party has the clauses below – what are they?
(eg BIMCO Website – Orevoy, Gentime, Barecon)

Purpose Voyage Time Bareboat

War Risks  Owner’s liberty to cancel the charter in event of outbreak of war or Yes Yes Yes
warlike acts
 Master’s liberty to sail from the loading port before completion of
loading in event of outbreak of war
 Master’s liberty to comply with the instructions from the vessel Flag
State Govt, war risks underwriters, or other recognised authorities
Ice Master’s liberties in event of inaccessibility of, or threat of trapping at, Yes Yes Yes
loading and/or discharge ports due to ice.
Law & Jurisdiction to which any dispute will be referred, ie place of any Yes Yes Yes
Arbitration arbitration; appointment of arbitrators, etc.

Demurrage Rate and method of payment. Yes No No

Remedies of the Owner if demurrage not paid in accordance with the C/P
Master  Master’s speedy prosecution of voyages No Yes No
 Master’s and crew’s assistance to charterer
 Master’s obedience of charterers’ orders relating to vessel’s
employment, agency, etc
 Charterers’ indemnification of owners against consequences of
owners’ servants signing bills of lading or other documents, or
complying with charterers’ orders, etc.;
 Exclusion of owners’ liability for cargo claims; and
 Owners’ agreement to investigate charterers’ complaints about crew.
No Yes No
Bunkers Clause stipulating who is liable for payment of Bunkers

Cancelling
 Identify which Charter Party has the clauses below – what are they?
(eg BIMCO Website – Orevoy, Gentime, Barecon)

Purpose Voyage Time Bareboat

War Risks  Owner’s liberty to cancel the charter in event of outbreak of war or Yes Yes Yes
warlike acts
 Master’s liberty to sail from the loading port before completion of
loading in event of outbreak of war
 Master’s liberty to comply with the instructions from the vessel Flag
State Govt, war risks underwriters, or other recognised authorities
Ice Master’s liberties in event of inaccessibility of, or threat of trapping at, Yes Yes Yes
loading and/or discharge ports due to ice.
Law & Jurisdiction to which any dispute will be referred, ie place of any Yes Yes Yes
Arbitration arbitration; appointment of arbitrators, etc.

Demurrage Rate and method of payment. Yes No No

Remedies of the Owner if demurrage not paid in accordance with the C/P
Master  Master’s speedy prosecution of voyages No Yes No
 Master’s and crew’s assistance to charterer
 Master’s obedience of charterers’ orders relating to vessel’s
employment, agency, etc
 Charterers’ indemnification of owners against consequences of
owners’ servants signing bills of lading or other documents, or
complying with charterers’ orders, etc.;
 Exclusion of owners’ liability for cargo claims; and
 Owners’ agreement to investigate charterers’ complaints about crew.

Bunkers Clause stipulating who is liable for payment of Bunkers No Yes No

Cancelling Charterer’s right to cancel and under which conditions Yes Yes Yes
Effect of Owners giving charterers notice of potential delay
Laydays/Laycan
A charterparty usually contains a stipulation, namely a range, of days,
within which the owner must present vessel at load port and a further
option entitling the charterer to cancel the contract if the ship is not
ready to load within a specified time.
Voyage Charters: Laytime
Laytime
Period of time agreed in the C/P, where the ship is be to made available by the owner to
the charterer without additional payment for loading or discharging.
Commences when the ship ‘arrives’.

Laycan Laytime
Cancelling
Laydays Despatch Demurrage
date
LAYDAYS LAYCAN Despatch Demurrage
The range of Laydays & cancelling Monetary Liquidated
days within date reward to the damages
which the Includes the final day charterer for payable to the
owner must after which the early ship’s owners
present vessel charterer can cancel completion of for detaining the
at load port, ie the contract if the cargo ship beyond
it must have ship is not ready to operations. laytime.
‘arrived’ as per load within a
the C/P. specified time.
 Arrived
- Port

Arrived
- Berth
Arrived Ship
Requirement of all voyage charters that the ship must have
‘arrived’ before laytime can commence.

Berth Charter
Where the charterer has nominated a berth or dock, the ship must
have arrived at that berth or dock.

Port Charter
When a port is nominated, the ship must have arrived at the
port.

Arrived when:
1) The vessel must have arrived at the loading or discharging
berth or port, as stipulated in the charter.
2) The vessel must be fully prepared to load or discharge.
3) Notice of Readiness tendered in writing, as prescribed, must
have been given to shippers or consignees.
 Notice of Readiness
(NOR)

The time and manner of tendering

of notice of readiness will be
stipulated in the charter party
(C/P)

Requirements for NOR to be

served by Master:

• The vessel is ready, in all

respects, to receive or
discharge the cargo
• NOR is tendered to & received
by the proper person according
to the C/P
• NOR is tendered at a time
allowed by the C/P
 Demurrage
A sum of liquidated damages which
becomes payable by charterers to
owners for each day, or part thereof if
stipulated, that the ship is detained
beyond the time of expiry of laytime.

Despatch
A monetary reward, normally payable
by owners to charterers for
completion of cargo operations within
the agreed laytime period.
3. Deviation Clause
The Vessel has liberty to call at any port or ports in any order, for any purpose,
to sail without pilots, to tow and/or assist Vessels in all situations, and also to
deviate for the purpose of saving life and/or property.

6. Laytime
(a) Separate laytime for loading and discharging
(b) Total laytime for loading and discharging
(c) Commencement of laytime (loading and discharging) NOR
(d) Time to count.

8. Lien Clause
The Owners shall have a lien on the cargo and on all sub-freights payable in
respect of the cargo, for freight, deadfreight, demurrage, claims for damages
and for all other amounts due under this Charter Party including costs of
recovering same.
 Master Clause
(1) Master’s speedy prosecution of voyages
(2) Master’s and crew’s assistance to charterer;
(3) Master’s obedience of charterers’ orders relating to vessel’s
employment, agency, etc.;
(4) charterers’ indemnification of owners against consequences
of owners’ servants signing bills of lading or other
documents, or complying with charterers’ orders, etc.;
(5) exclusion of owners’ liability for cargo claims; and
(6) owners’ agreement to investigate charterers’ complaints
about crew.
 19. Law and Arbitration 382

a) This Charter Party shall be governed by and construed in accordance

with English law and any dispute arising out of this Charter Party shall
be referred to arbitration in London in accordance with the Arbitration
Acts 1950 and 1979…

Bunkers
(1) Charterers’ obligation to buy bunkers remaining on board at delivery
port;
(2) owners’ obligation to buy bunkers remaining on board at redelivery
port;
(3) minimum quantity of bunkers to be on board at redelivery.
STATEMENT OF FACTS
What matters are usually (1) Suspension of hire payment for duration of
covered in the any “downtime” of vessel in specified
Suspension of Hire circumstances; and
Clause in a time charter (2) charterers’ responsibility for loss of time in
party? specified circumstances.

What matters are usually Charterers’ option to sublet vessel; original

covered in the Sublet charterers’ responsibility for due performance
Clause in a time charter of charter.
party?
Incoterms (International Commercial terms)
Pre-defined commercial terms published by the ICC widely used in
international commercial transactions.
Common Examples used:
FIO Free In and Out. Ship not liable for loading/discharging charges
SHEX Sundays Holidays Excluded
SHINC Sundays Holidays Included
SSHEX Saturdays Sundays Holidays Excluded
SSHINC Saturdays Sundays Holidays Included
WCCON Whether Custom Cleared Or Not
WIBON Whether In Berth Or Not
WIFPON Whether In Free Pratique Or Not
WIPON Whether In Port Or Not
WP Weather Permiting
WWD Weather Working Days
WWR When Where Ready
WWWW Wibon Wccon Wifpon Wipon
YAR York Antwerp Rules
Incoterms rules
Intended primarily to clearly communicate the tasks, costs and risks
associated with the transportation and delivery of goods.
They are accepted by governments, legal authorities and
practitioners worldwide for the interpretation of most commonly
used terms in international trade.
They are intended to reduce or remove altogether uncertainties
arising from different interpretation of the rules in different
countries.
Statement of Facts (BIMCO)
 Laytime - Exercise
Charter Details
Laydays: 0000, 1/2/16 to 2359, 3/2/16
Load Dumai Crude – 80,000t (+/- 10%) Laycan - 3/2/16
Port Charter Laytime: Load & discharge 4 days SHINC
FIO (Free in/out)
Demurrage - $10,000/day
Despatch - $5,000/day
Vessel released upon completion of discharge of cargo.

From Statement of Facts:

• Vessel Arrived (NOR Tendered): 1/2/16 – 1800

• All fast: 2/2/16 - 0206
• Commence Loading Cargo: 2/2/16 - 0824
• Complete Loading Cargo(Lines disconnected: 4/2/16 – 0230
• Last line: 4/2/16 - 0430
• All fast at berth (NOR tendered): 11/2/16 - 0000
• Commence Discharge Cargo: 11/2/16 – 1830
• Cargo stopped Weather: 11/2/16 - 2254
• Cargo recommenced: 12/2/16 – 1300
• Complete Discharge Cargo: 13/2/16 – 0330
• Last Line: 13/2/16 – 0430
 Laytime - Exercise
Charter Details
Laydays: 0000, 1/2/16 to 2359, 3/2/16
Load Dumai Crude – 80,000t (+/- 10%) Laycan - 3/2/16
Port Charter Laytime: Load & discharge 4 days SHINC
FIO (Free in/out)
Demurrage - $10,000/day
Despatch - $5,000/day
Vessel released upon completion of discharge of cargo.
Timesheet - Exercise
Load Discharge
Date Event Port Laytime Port Laytime
 Load Discharge
Date Port Laytime Port Laytime
01/02/2016 NOR tendered 18:00 0d 0h
02/02/2016 All fast 02:06 0d 2.1h
02/02/2016 Commence loading 08:24 0d 8.4h
04/02/2016 Complete loading 02:30 2d 2.5h
04/02/2016 Last line 04:30 2d 2.5h

Complete exercise and calculate any demurrage or despatch due.

 Load Discharge
Date Port Laytime Port Laytime
01/02/2016 NOR tendered 18:00 0d 0h
02/02/2016 All fast 02:06 0d 2.1h
02/02/2016 Commence loading 08:24 0d 8.4h
04/02/2016 Complete loading 02:30 2d 2.5h
04/02/2016 Last line 04:30 2d 2.5h
11/02/2016 All fast 00:00 0d 0h
11/02/2016 Commence discharge 18:30 0d 18.5h
11/02/2016 Cargo stopped 22:54 0d 22.9h
12/02/2016 Cargo recommenced 13:00 1d 13h
13/02/2016 Complete discharge 03:30 2d 3.5h
13/02/2016 Last line 04:30 2d 3.5h
Does clause (b) refer to weather stoppages?
No
 Load Discharge
Date Port Laytime Port Laytime
01/02/2016 NOR tendered 18:00 0d 0h
02/02/2016 All fast 02:06 0d 2.1h
02/02/2016 Commence loading 08:24 0d 8.4h
04/02/2016 Complete loading 02:30 2d 2.5h
04/02/2016 Last line 04:30 2d 2.5h
11/02/2016 All fast 00:00 0d 0h
11/02/2016 Commence discharge 18:30 0d 18.5h
11/02/2016 Cargo stopped 22:54 0d 22.9h
12/02/2016 Cargo recommenced 13:00 1d 13h
13/02/2016 Complete discharge 03:30 2d 3.5h
13/02/2016 Last line 04:30 2d 3.5h

Total Laytime 4 days 6 hours (No suspension of laytime due to weather - Cl 9)

Permitted 4 days
Demurrage 6 hours
Demurrage due 6 hours (6/24) x $10,000 = $2,500
 Charter Party Questions
1. Expain a:
a) Voyage Charter
b) Time Charter
c) Bareboat Charter
2. What are:
a) Voyage Costs
b) Operating Costs
3. Explain the following terms:
a) Laytime
b) Laycan
c) Demurrage
d) Despatch
4. What is an ‘Arrived’ ship?
5. What is a deviation clause?
6. What does SHINC, SHEX and FIO mean?
Kahoot: SMLB - Charter Scenario Tutorial 1 Questions