Delivery clause - Time Charter Party

Good day, Everyone.

I would like to start an explanatory course about basics of time and voyage charter. In this article I will enlighten the specifics of Delivery Clause of time charter. It will be based on materials from a very good book named "TIME CHARTERS", author Terence Coghlin.

Delivery

The ship is said to be delivered when she starts the charter service. There is no transfer of possession of the ship under a time charter, the ship is merely put at Charterers' disposal. The delivery of the ship marks both the start of the charter period (see lines 13 to 14 of the New York Produce form) and the time from which the Owners earn hire (see clause 4, line 53).

When must the Owners deliver the ship?

Some charters contain an undertaking by the Owners that the ship will be delivered at a particular time (see Baltime form). In such cases, ordinarily, the Owners are guilty of a breach of a charter if the ship is not delivered at that particular time. Indeed, the Charterers will be entitled to terminate the charter if the ship is not delivered by then. In the particular case of the Baltime form, however, the Owners' obligation to deliver the ship at the time agreed is qualified by clause 12, which provides, "The Owners only shall be responsible for delay in delivery of the Vessel ... if such delay ... has been caused by want of due diligence on the part of the Owners or their Manager in making the Vessel seaworthy and fitted for the voyage or any other personal act or omission or default of the Owners or their Manager."

Most time charters, however, do not specify a specific date for delivery. A trading ship will often be delayed by factors over which the Owners have no control, such as congestion or bad weather. Therefore a variety of clauses have been developed which impose on the Owners something less than an absolute obligation to deliver the ship by a particular date.

The effect of a cancelling clause

Many charters, including NYPE, do not contain a delivery date, but do contain a cancelling clause. In NYPE cancelling clause is clause 14. The primary effect of this clause is to give the Charterers an option to cancel if the ship is not ready for delivery by the cancelling date. However, a cancelling date also has another effect: it imposes on the Owners an implied obligation to exercise reasonable diligence to deliver the ship by that date.

It is thought, that at the time the charter is concluded, it can reasonably be expected that the ship will be delivered by the cancelling date. After the cancelling date has passed, if the Charterers have not cancelled the charter party, the Owners must tender the ship for delivery with reasonable dispatch.

ETAs

Some time charters contain vessel's estimated time of arrival (ETA) at the delivery port, or the date on which the ship is "expected ready" for service. Where a time charter contains neither a stated time of delivery, nor a cancelling clause, or an ETA, the Owners are probably under a duty to tender the ship for delivery with reasonable dispatch.

Advance notice of the date of delivery

It is common for time charters to provide that the Owners will give one or more advance notices of the ship's anticipated delivery date. The NYPE 93 form has such a provision in Clause 2. Where the parties have agreed such a provision, the Owners undertake that any notices they give will be honestly and on reasonable grounds.

Where must the Owners deliver the ship

It is a condition precedent to the Charterers' obligation to accept delivery of the ship that she is at the place for delivery, stipulated in the charter. If she is not in that place, the Charterers are entitled to refuse delivery. In many cases, the parties agree that the place of delivery will be at sea, for example at a pilot station or on passing a particular place. It is thought that provisions in particular charter party work as follows. If the berth, or loading place at which the ship is to be delivered is available when the ship arrives at the port, the ship must be delivered at the berth. On the other hand, if the Charterers' berth is not immediately available when the ship arrives at the port, the ship can be delivered where she lies, provided she is at the place within the port where she is at the immediate and effective disposition of the Charterers.

In what condition must the ship be on delivery?

The New York Produce form requires that, at the time of its delivery, the ship is to be "ready to receive cargo with clean-swept holds and tight, staunch, strong and in every way fitted for the service". The Baltime form requires that the ship is "in every way fitted for ordinary cargo service". Compliance with these requirements is a condition precedent to the Charterers' duty to accept the ship into the charter service. If the ship is not in the required condition, the Charterers are entitled to refuse delivery.

How do the Owners effect delivery of the ship?

The Owners deliver the ship to the Charterers by putting her at the Charterers' disposal. Unless the terms of the charter provide otherwise, there is no requirement that notice of delivery be given in any particular form. It is enough that the Owners make the Charterers aware that the ship is at their disposal. Once they have done so, provided the ship is in the required condition and at the required place, the delivery takes effect immediately, unless again the contract says otherwise.

That's it for today. If you want to learn more about this subject, please read a great book "TIME CHARTERS", author Terence Coghlin.