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Time Charter

Malcolm Maclachlan
Time charter
• Agreement between shipowner and charterer
whereby shipowner agrees to let and charterer
agrees to hire a named vessel for agreed
duration in return for an agreed sum of hire.
• Charterer is responsible for all voyage expenses
(bunkers; canal dues; cargo-handling; berth
dues; light dues; pilotage; harbour towage; line-
handling).
• Similar to hire of a chauffeur-driven car.
• Charterer hopes to make profit from ship.
Shipowner’s obligations
1. Bring ship to agreed delivery port or
place by agreed time on Cancelling Date.
2. Provide master and crew. Master to be
under charterer’s orders as regards
employment matters (i.e. cargo, etc.).
3. Pay all vessel operating expenses
(“running costs”).
4. Perform voyages, load/discharge
cargoes, etc. as required by charterer.
Charterer’s obligations
• Pay monthly or half-monthly hire (or
“charterhire”) into bank a/c as per C/P.
• Employ vessel within agreed geographical limits
for agreed purposes, carrying lawful cargoes.
• Issue B/Ls, etc. to shippers if appropriate.
• Provide bunkers as required and pay all voyage
expenses.
• Re-deliver vessel at agreed port/place on
expiration of charter in same good order as when
delivered, fair wear and tear excepted.
• Compensate shipowner for any damage caused
by charterer’s cargo or other operations.
Master
• To prosecute all voyages with the utmost
despatch.
• To render all customary assistance with
ship’s crew and equipment.
• To be under the orders and directions of
the charterers as regards employment.
(Means following charterer’s routeing
instructions, unless an encountered hazard
necessitates a deviation.)
The vessel

• To meet charterer’s specifications re-


type, length, draught, speed,
consumption, etc.
• Goes “off-hire” (payment of hire is
suspended) if not available to
charterer, as specified in C/P.
Period of hire
• As agreed. May be for one voyage (“trip
T/C”) to several months or 20 years
(“period T/C).
• Optional margin? E.g. “One month more or
less at charterer’s option”.
• Disputes common re- “legitimate” or
“illegitimate final voyage”. Was there
reasonable expectation that ship could be
redelivered by redelivery date?
Trade
• For agreed lawful purposes only.
• Any owner’s restrictions? Any prohibited
cargoes, e.g. DGs, livestock, fishmeal,
scrap?)
• Any political restrictions? (Israel? Cuba?)
• Industrial restrictions? (Scandinavia,
Australasia?) (ITF strongholds.)
• Otherwise often “Worldwide within Institute
Warranty Limits” or “Within IWL”.
Delivery of vessel
• Vessel to be delivered by owner to charterer at
specified port/place, e.g. “DOSP Hong Kong”;
“passing Skaw”; “passing Cape Passero”.
• On specified date/range of dates.
• On-hire survey required?
– Check of general condition.
– Existing damage/defects noted (charterer doesn’t
want to pay for existing damage).
– Check of bunkers ROB quantity; charterer “buys”
from owner.
Hire (charterhire)

• Paid monthly or half-monthly in advance


to owner.
• US dollars or other agreed currency.
• Into specified bank account by agreed
date.
• Charterer may suspend in agreed cases.
• Disputes over late payment.
Suspension of hire

• Standard clause: hire payment


suspended 24 hrs after ship
unavailable due to breakdown,
shortage of crew, drydocking, etc.
• Rider clause may modify standard
clause (e.g. in ro-ro: hire suspended
30 mins after breakdown of ramp or
lift).
Redelivery

• Vessel to be delivered by charterer


to owner at specified port/place on
specified date.
• Off-hire survey?
– Damage caused by charterer’s ops?
– Bunkers ROB quantity; shipowner
“buys” from charterer.