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Affreightment
Affreightment (from freight) is a legal term
used in shipping. Contract of Affreightment is the
expression usually employed to describe the contract
between a ship owner and some other person called
the freighter, by which the ship owner agrees to
carry goods of the freighter in his ship, or to give
to the freighter the use of the whole or part of the
cargo-carrying space of the ship for the carriage of
his goods on a specified voyage or voyages or for a
specified time; the freighter on his part agreeing
to pay a specified price, called freight, for the
carriage of the goods or the use of the ship. A ship
may be let like a house to some person who takes
possession and control of it for a specified term.
The person who hires a ship in this way occupies
during the currency of his term the position of ship
owner. The contract by which a ship is so let may be
called a charter-party; but it is not, properly
speaking, a contract of affreightment, and is
mentioned here only because it is necessary to
remember the distinction between a charter-party of
this kind, which is sometimes called a demise of the
ship, and a charter-party which is a form of
contract of affreightment, as will hereinafter
appear.
1. Rules of law.
2. In
defaults of express contract.
3.
Express stipulations.
4. Bills of
lading
5.
Charter-parties.
6. Customary
rights.
Rules of Law
The law with regard to the contract of affreightment
is, of course, a branch of the general law of
contract. The rights and obligations of the ship
owner and the freighter depend, as in the case of
all parties to contracts, upon the terms of the
agreement entered into between them. The law,
however, interferes to some extent in regulating the
effect to be given to contracts. Certain contracts
are forbidden by the law, and being illegal are,
therefore, incapable of enforcement. The most
important example of illegality in the case of
contracts of affreightment is when the contract
involves trading with an enemy. The law interferes
again with regard to the interpretation of the
contract. The meaning to be given to the words of
the contract, or, in other words, its construction,
when a dispute arises about it, must be determined
by the judge or court. The result is, that certain
more or less common clauses in contracts of
affreightment have come before the courts for
construction, and the decisions in these cases are
treated practically, though not perhaps quite
logically, as rules of law determining the sense to
be put upon certain forms of expression in common
use in shipping contracts. A third way in which the
law interferes is by laying down certain rules by
which the rights of the parties are to be regulated
in the absence of any express stipulation with
regard to the matter dealt with by such rules. This
is done either by statutory enactment, as by that
part (Part VIII) of the Merchant Shipping Act 1804
which deals with the liability of ship-owners; or by
established rules of the unwritten law, the common
law as it is called, as, for instance, the rule that
the common carrier is absolutely responsible for the
safe delivery of the goods carried, unless it is
prevented by the act of God or the king's enemies.
These rules of law, whether common law or statute
law, regulating the obligations of carriers of goods
by sea, are of most importance in cases which are
uncommon though not unknown at the present day, in
which there is an affreightment without any written
agreement of any kind. It will, therefore, be
convenient to consider first cases of this kind
where there is no express agreement, oral or
written, except as to the freight and destination of
the goods, and where, consequently, the rights and
obligations of the parties as to all other terms of
carriage depend wholly upon the rules of law,
remembering always that these same rules apply when
there is a written contract, except in so far as
they are qualified or negated by the terms of such
contract.
In
Defaults of Express Contract
The rules of the common or ancient customary law of
England with regard to the carriage of goods were no
doubt first considered by the courts and established
with regard to the carriage of goods by common
carriers on land. These rules were applied to common
carriers by water, and it may now be taken to be the
general rule that ship owners who carry goods by sea
are by the English law subject to the liabilities of
common carriers. (See, as to the grounds and precise
extent of this doctrine, the judgments in Liver
Alkali Company v. Johnson (1874), L.R., 9 Ex. 338,
and Nugent v. Smith (1876) 1 C.P.D. 423.) In
practice goods are not often shipped without a
written contract or acknowledgment of the terms upon
which they are to be carried. For each separate
consignment or parcel of goods shipped a bill of
lading is almost invariably given, and when a whole
cargo is agreed to be carried the terms are set out
in a document called a charter-party, signed by or
on behalf of the ship owner on the one part, and the
shipper, who is called the charterer, on the other
part. But at present we are considering the
relations of ship owner and shipper independently of
any express contract, as in a case when goods are
shipped and received to be carried to the place to
which the ship is bound for a certain freight, but
without any further agreement as to the terms of
carriage. In such a case the rights of the parties
depend on the rules of law, or, which is much the
same thing, upon the warranties or promises which
though not expressed must, as the courts have held,
be implied as arising from the relation between the
parties as shipper and carrier. The obligations on
the one side and the other may be defined shortly to
be as follows:--The shipper must not ship goods of a
nature or in a condition which he knows, or ought,
if he used reasonable care, to know to be dangerous
to the ship, or to other goods, unless the ship
owner has notice of or has sufficient opportunity to
observe their dangerous character. The shipper must
be prepared, without notice from the ship owner, to
take delivery of his goods with reasonable dispatch
on the arrival of the ship at the place of
destination, being ready there to discharge in some
usual discharging place. The shipper must pay the
agreed freight, and will not be entitled to claim
delivery until the freight has been paid. In other
words, the ship owner has a lien on the goods
carried for the freight payable in respect of the
carriage. On the other hand, the obligation upon the
ship owner is first and foremost to deliver safely
at their destination the goods shipped, and this
obligation is, by the common law, subject to this
exception only that the ship owner is not liable for
loss or damage caused by the act of God or the
king's enemies; but by statute (Merchant Shipping
Act 1894, Part Viii.) it is further qualified to
this extent that the ship owner is not liable for
loss, happening without his actual fault or privity,
by fire on board the ship, or by the robbery or
embezzlement of or making away with gold or silver
or jewelry, the true nature and value of which have
not been declared in writing at the time of
shipment; and, further, the ship owner is not liable
for damage to or loss of goods or merchandise beyond
an aggregate amount, not exceeding eight pounds per
ton for each ton of the ship's tonnage.
The ship owner is bound by an implied undertaking,
or, in other words, is made responsible by the law
as if he had entered into an express undertaking:
(1) that the ship is seaworthy; (2) that she shall
proceed upon the voyage with reasonable dispatch,
and shall not deviate without necessity from the
usual course of the voyage.
It
is not our purpose in this article to discuss minute
or doubtful questions; but in their general outline
the obligations of shipper and ship owner, where no
terms of carriage have been agreed, except as to the
freight and destination of the goods, are such as
have been described above. The importance of
appreciating clearly this view of the relations of
shipper and ship owner arises from the fact that
these fundamental rules apply to all contracts of
affreightment, whether by bill of lading,
charter-party or otherwise, except in so far as they
are modified or negated by the express terms of the
contract.
Bills of
Lading.
The document signed by the master or agent for the
ship owner, by which are acknowledged the shipment
of a parcel of goods and the terms upon which it is
to be carried, is called a Bill of Lading. Very many
different forms of bills of lading are used. For the
purpose of illustration the following form (from Mr
Scrutton's book on Charter-parties and Bills of
Lading) has been selected as a sample:--
Shipped, in apparent good order and condition by
_________ in and upon the good Vessel called the
_________ now lying in the port of ________ and
bound for ________, with liberty to call at any
ports in any order, to sail without Pilots, and to
tow and assist Vessels in distress, and to deviate
for the purpose of saving life or property; and to
be delivered in the like good order and condition at
the aforesaid port of _________ unto _______ or to
his or their assigns, freight and all other
conditions as per Charter Party. The act of God,
perils of the sea, fire, barratry of the Master and
Crew, enemies, pirates, and thieves, arrests, and
restraints of princes, rulers, and people,
collisions, stranding, and other accidents of
navigation excepted, even when occasioned by
negligence, default, or error in judgment of the
Pilot, Master, Mariners, or other servants of the
Ship owners.
Ship not answerable for losses through explosion,
bursting of boilers, breakage of shafts, or any
latent defect in the machinery or hull, not
resulting from want of due diligence by the Owners
of the Ship, or any of them, or by the Ship's
Husband or Manager.
General Average payable according to York-Antwerp
Rules.
In
Witness whereof, the Master or Agent of the said
Ship hath affirmed to three Bills of Lading, all of
this tenor and date, drawn as first, second and
third, one of which Bills being accomplished, the
others to stand void.
Dated in ________ this ________ day of _______ 188_.
The bill of lading is an acknowledgment of the
shipment of goods in a named vessel for carriage to
a specified destination on terms set forth in the
document. It is usually signed by the master of the
vessel, but very commonly by the agents of the
shipowner or sometimes of the charterers of the
vessel. A vessel may be employed by its owners to
earn freight in various ways:
(1) It may be placed, as it is said, on the berth as
a general ship, to receive cargo from any shippers
who may desire to send goods to the port, or one of
the ports, to which the vessel is bound. The mate or
chief officer usually superintends the loading, and,
as goods are shipped, a mate's receipt is given as
an acknowledgment of the shipment. The mate's
receipt is afterwards exchanged for the bill of
lading. In the case of a shipment by a general ship
the bill of lading is the evidence and memorandum of
the contract between the shipowner and the shipper.
(2) A shipper may, however, require the whole cargo
space of the vessel to carry, for example, a full
cargo of grain. In such a case the vessel will be
chartered by the shipowner to the shipper. and the
contract will be the charter-party. Even in such a
case a bill or bills of lading will usually be given
to enable the shipper to deal more conveniently with
the goods by way of sale or otherwise. By the
ancient custom of merchants recognized and
incorporated in the law, the bill of lading is a
document of title, representing the goods
themselves, by the transfer of which symbolical
delivery of the goods may be made. But when a cargo
is shipped under a charter party, although bills of
lading may be given to the charterer, it is the
charter-party, and not the bills of lading, which
constitutes the record of the contract between the
parties---of charter-parties we shall treat below.
(3) There is a third class of case which is a
combination of the two with which we have dealt
above. A vessel is very commonly chartered by her
owner to a charterer who has no intention to ship
and does not ship any cargo on his own account, but
places the vessel on the berth to receive cargo from
shippers who ship under bills of lading. The
charterer receives the bill of lading freight and
pays the charter-party freight, his object being of
course to obtain a total bill of lading freight in
excess of the chartered freight, and so make a
profit. The master, although he usually remains the
servant of the shipowner during the term of the
charter-party, acts nevertheless under the
directions and on behalf of the charterer in signing
bills of lading. The legal effect of this situation
is that shippers who ship goods under bills of
lading without knowledge of the terms of the
charter-party are entitled to look to the shipowner
as the person responsible to them for the safe
carriage of their goods. This right depends
essentially on the fact that the master who signs
the bills of lading, although in doing so he is
acting for the charterer, remains nevertheless the
servant of the shipowner, who is not allowed to deny
as against third persons, who do not know the
relations between the charterer and the shipowner,
that his servant, the master of the ship, has the
ordinary authority of a master to bind his owner by
signing bills of lading.
The forms of bills of lading vary very much, and
their clauses have been the subject of judicial
consideration and decision in a vast number of
reported cases. The essential particulars, or at all
events those common to all bihs of lading, may be
stated as follows:
1. The name of the shipper.
2. The name of the ship.
3. The place of loading and destination of
the ship.
4. A description of the goods shipped.
5. The place of delivery.
6. The persons to whom delivery is to be
made.
7. The freight to be paid.
8. The excepted perils.
9. The shipowner's lien.
The description of (1) the shipper and (2) the ship
calls for no remark. The (3) description of the
voyage is important, because there is, as we have
already explained, an implied undertaking by the
shipowner in every contract of carriage not
unnecessarily to deviate from the ordinary route of
the voyage upon which the goods are received to be
carried. The consequences of a deviation are
serious, inasmuch as the shipowner is liable, not
only for any loss or damage which the shipper
suffers in consequence of the deviation, but for any
loss of goods which occurs after the deviation, even
though such loss is caused by one of the excepted
perils. The only exception to this rule is that a
deviation may be made to save life, but not to save
property. It is, however, very usual to qualify the
strictness of this implied undertaking by
introducing in the bill of lading certain liberties
to deviate, as, for example, in the form given
above, liberty to call at any ports in any order, to
tow and assist vessels in distress, and to deviate
for the purpose of saving life and property. The
nature and extent of the liberty will depend on the
words of the contract. The inclination of English
courts has been to construe clauses giving a liberty
to deviate somewhat strictly against the shipowner.
(4)
The importance of the description of the goods
shipped and their condition is obvious, as the
contract is to deliver them as described and in the
like good condition, subject, of course, to the
exceptions. It must, moreover, be noted that, as
against the master or person who has himself signed
the bill of lading, the statement therein of the
goods shipped is absolutely conclusive. But as
against the shipowner, unless he has himself signed
the bill of lading, the statement of the goods
shipped is not conclusive. It is evidence as against
him that the goods described were shipped, but he is
allowed to rebut this evidence by proving, if he
can, that the goods mentioned, or some of them, were
not in fact shipped.
(5) As to the place of delivery, very serious
questions frequently arise. Primarily, of course,
the shipowner is bound to deliver at the place
named. Should he be prevented by some obstacle or
difficulty which is of a temporary nature, the
vessel must wait, and delivery must be made as soon
as possible. Where, however, the obstacle is
permanent, or at all events such as must cause
unreasonable delay, having regard to the nature of
the adventure, the shipowner is excused from
delivery at the place named in the bill of lading,
provided the difficulty arises from an excepted
peril, or in consequence of delivery at the place
named being forbidden by the law of England, as may
happen, for example, in the case of a declaration of
war between the United Kingdom and the state in
which the port named in the bill of lading is
situate. A party to a contract cannot be held liable
for breaking his contract if its performance has
become illegal. There may be other cases in which,
from the circumstances of the voyage and adventure,
it must be inferred that the parties intended the
performance of the contract to be conditional on the
existence at the time of performance of a certain
state of things, the non-existence of which would
render performance impossible. For instance, if the
port named in the bill of lading became permanently
closed and inaccessible to shipping in consequence
of an earthquake, it would probably be held that the
continued existence of the place named as a port was
an implied condition of the contract, and that the
shipowner was excused. Where, however, the
performance of the contract remains lawful, and is
not excused by the express terms of the contract, or
by some implied condition, the shipowner is liable
for any loss or damage suffered by the shipper by
reason of his goods not being delivered at the named
place, even though such delivery has become
impossible. There is another reason why the precise
description of the place of delivery often becomes
important. It is only on the arrival of the ship at
the place described as the place of delivery that
the obligation of the consignee of the goods to take
delivery commences. Delay involves considerable loss
and expense to the shipowner. The shipper or
consignee is not responsible for any delay which
occurs before the ship has arrived at the place of
delivery described in the bill of lading.
(6) The goods may be deliverable by the terms of the
bill of lading to a named consignee, and to him
only, but more usually they are made deliverable to
the order or assigns of the named consignee or of
the shipper. If the goods are made deliverable to
order or assigns the bill of lading is a negotiable
instrument, or, in other words, the right to the
goods, and the rights and liabilities under the
contract contained in the bill of lading, may be
transferred by indorsement and delivery of the
document. When an indorsement has once been made by
the shipper or consignee writing his name and
nothing more on the back of the bill of lading, the
rights in and under it may be transferred from hand
to hand by mere delivery. A bill of lading so
indorsed is said to be indorsed in blank. But the
shipper or consignee may restrict the negotiability
of the bill of lading by indorsing it not in blank,
but with a direction requiring delivery to be made
to a particular person or indorsee, or to his order.
This is called an indorsement in full. When an
indorsement has been made in full to a named
indorsee or order, such indorsee must again indorse
in blank or in full to effect a new transfer of the
rights in the bill of lading.
(7) The amount or rate of freight payable is stated
in the bill of lading, either expressly, or, not
uncommonly when the freight under the bill of lading
is the same as under the charter-party, by reference
to the charter-party. A common form of such
reference is freight and other conditions, as per
charter-party. It may here be mentioned that this
form of words does not incorporate in the contract
under the bill of lading all the terms and
conditions of the charter-party, but only those
which apply to the person who is to take delivery,
and relate to matters ejusdem generis, or similar to
the payment of freight, such as demurrage and the
like. The conditions of the charter-party thus
incorporated do not include, for instance, the
exceptions in the charter-party so as to add them to
the exceptions in the bill of lading. Freight,
unless it is otherwise provided by the contract, is
payable only on delivery of the goods at their
destination. If the voyage is interrupted and its
completion becomes impossible, the shipowner cannot
claim payment of freight even pro rata itineris. He
loses his freight altogether. This is so even when
the completion of the voyage is prevented by causes
for which the shipowner is not responsible, such as
the act of God or the king's enemies, or perils
which are within the express exceptions in the bill
of lading. When the voyage is interrupted by
accident, and indeed in any case, the goods may, by
agreement between the shipowner and the consignee,
be delivered at some place short of their
destination upon payment of a freight pro rata; that
is to say, proportional to the length of voyage
accomplished, and such an agreement may be implied
in certain circumstances from the conduct of the
consignee in taking delivery before they arrive at
their destination. In all such cases it will be a
question of fact whether the goods were in fact
delivered upon the terms, express or implied, that
freight pro rata should be paid. As a rule such an
agreement would not be implied where the shipowner
is unable or unwilling to forward the goods to their
destination, and the owner of the goods, therefore,
has no option but to take delivery where offered.
When the ship is disabled and cannot proceed, or she
is prevented by some obstacle from proceeding to the
place of delivery named in the bill of lading, and
the shipowner is unwilling or unable to forward the
goods by another ship, even though he may be excused
for his failure to carry the goods to their
destination, he is not entitled to be paid any part
of the freight; and the consignee is entitled to
have the goods delivered to him either at the place
where the vessel has taken refuge in her disabled
condition, or, if the obstacle arises without
disablement of the vessel, at the place which is
nearest and most reasonably convenient at the time
and in the circumstances when the further
prosecution of the voyage has to be abandoned. On
the other hand, after the goods have been shipped,
so long as the shipowner is ready and willing to
carry the goods to their destination, or, if the
ship is disabled, to forward them to their
destination by some other ship without unreasonable
delay, the owner of the goods cannot require the
goods to be delivered to him at any place short of
their destination without payment of the full
freight. Sometimes the freight, either wholly or in
part, is made payable in advance. If freight payable
in advance has become due, even though the ship is
lost before it is paid, it must, in the absence of
some special provision to the contrary, still be
paid, and freight already paid in advance does not
become repayable because the goods do not reach
their destination. If, however, goods upon which
freight has been paid in advance are lost, and the
shipowner is liable for their loss, the amount of
freight paid in advance must be taken into account
in assessing the damage recoverable from the
shipowner.
(8) There is no part of the bill of lading which is
of greater practical importance or which demands
more careful consideration by shipowner and shipper
alike than that which sets forth the excepted
perils: those perils, or in other words causes of
loss, for which the shipowner is to be exempt from
liability. By the common law, as we have seen, the
exemption of the carrier, apart from express
contract, extended only to loss by the act of God or
the king's enemies. The expression act of God
requires a word of explanation. It will be
sufficient to say that it is not synonymous with
force majeure; but it includes every loss by force
majeure in which human agency, by act or negligence,
has had no part. The list of excepted perils varies
much in different forms of bills of lading. In the
older forms it usually included perils of the seas,
robbers and pirates, restraint of princes and
rulers, fire and barratry (that is, wilful
wrongdoing) of the master and crew. The list,
however, has grown in modern times, and is still
growing; the tendency being to exempt the shipowner
from liability for all loss which does not arise
from his own personal default, or from the
negligence of his managers or agents in failing to
provide a vessel seaworthy and fit for the voyage at
its commencement. It is important to point out in
this connection that there are two duties which the
shipowner is always presumed to undertake, and which
are assumed to be unaffected and unqualified by the
exceptions, unless a contrary intention is very
clearly expressed by the terms of the contract. In
the first place, he undertakes absolutely that the
ship in which the goods are shipped is fit at the
commencement of the voyage for the service to be
performed. If during the voyage loss arises even
from dangers of the seas or other excepted peril
which would not have occurred if the vessel had been
seaworthy and fit for the voyage at its
commencement, the shipowner is not protected by the
exceptions, and is liable for the loss. In the
second place, there is an implied undertaking by the
shipowner that all reasonable care will be taken by
himself, his servants and agents, safely to carry
and deliver at their destination the goods received
by him for carriage. Should loss or damage occur
during the voyage, though the direct cause of such
loss or damage be perils of the seas or other
excepted peril, still the shipowner cannot claim
exemption under the exceptions, if the shipper can
prove that the loss or damage would not have
occurred but for the negligence of the master or
crew, or other servants of the shipowner. The
shipowner, in other words, is bound, with his
servants, to use all reasonable care to prevent loss
by excepted perils and by any other cause.
Express stipulations
• It must not be supposed that even these
primary obligations, which are introduced into every
contract of affreightment not by express terms of
the contract.
• It has now become common form to
stipulate that the shipowner shall not be liable for
any loss arising from the negligence of his
servants, or that he shall not be liable for loss by
the excepted perils even when brought about by the
negligence of his servants.
• And with regard to seaworthiness, it is
not uncommon for the shipowner to stipulate that he
shall not be responsible for loss arising even from
the unseaworthiness of the ship on sailing, provided
that due care has Been taken by the owner and his
agents and servants to make the ship seaworthy at
the commencement of the voyage.
• There is indeed no rule of English law
which prevents a shipowner from exempting himself by
the terms of the bill of lading from liability for
damage and loss of every kind, whether arising from
unseaworthiness or any other cause whatsoever.
• In such a case the goods are carried at
their owner's risk, and if he desires protection he
must obtain it by insurance.
• In this respect the law of England
permits greater freedom of contract than is allowed
by the law of some other states.
• The owners, agents and masters of
vessels loading in the United States of America are
forbidden by an act of Congress, commonly called the
Harter Act, passed in the year 1893, to insert in
their contracts of affreightment any clause
exempting the shipowner from liability for the
negligence of his servants; but it is at the rame
time enacted that, provided all reasonable skill and
care has been exercised by the shipowner to make the
vessel seaworthy and fit for the voyage at its
commencement, the shipowner shall not be liable for
any loss caused by the negligence of the master or
crew in the navigation of the vessel, or by perils
of the sea or certain other causes set forth in the
act.
• It is now very usual to insert in the
bills of lading of British vessels loading in the
United States a reference to the Harter Act,
incorporating its provisions so as to make them
terms and conditions of the bill of lading.
The difficulty of construing the terms of bills of
lading with regard to the excepted perils, often
expressed in obscure and inexact language, has given
rise to much litigation, the results of which are
recorded in the law reports. Where such difficulties
arise the question must be, What is the true and
natural meaning of the language used by the parties?
This question is not governed by the general rules
which we have endeavouted to explain: but the words
of the contract must always be considered with
reference to these rules, which are founded upon the
well-established customs of merchants recognized and
formulated by the courts of law.
(9) The bill of lading sometimes contains a clause
as to the shipowner's lien. Without any express
provision for it the shipowner has by the common law
a lien for freight. If it is desired to give the
shipowner a lien for demurrage (see below) or other
charges, it must be expressly provided for. The lien
is the right of the shipowner to retain the goods
carried until payment has been made of the freight
or the demurrage, or other charge for which a lien
has been given. The lien may be waived, and is lost
by delivery of the goods, or by any dealing with the
consignee which is inconsistent with a right of the
shipowner to retain possession of the goods until
payment has been made. The shipowner may preserve
his lien by landing the goods and retaining them in
his own warehouse, or by storing them in a public
warehouse, subject to the conditions required by the
Merchant Shipping Act 1894.
Charter-Parties.
Charter-parties are, as we have already explained,
either for a voyage or for a period of time.
(1) A charter-party for a voyage is a formal
agreement made between the owner of the vessel and
the charterers by which it is agreed that the vessel
being tight, staunch and strong, and every way
fitted for the voyage, shall load at a certain named
place a full cargo either of goods of a specified
description or of general merchandise, and being so
loaded shall proceed with all possible despatch
either to a specified place or to a place to be
named at a specified port of call, and there deliver
the cargo to the charterers or their assigns. There
are clauses which provide for the amount of freight
to be paid and the manner and time of payment; for
the time, usually described as lay days, to be
allowed for loading and discharging, and for the
demurrage to be paid if the vessel is detained
beyond the lay days; usually also a clause requiring
the cargo to be brought to and taken from alongside
at merchant's risk and expense; a clause that the
master shall sign bills of lading for the cargo
shipped either at the same rate of freight as is
payable under the charter-party or very commonly at
any rate of freight (but in this case with a
stipulation that, if the total bill of lading
freight is less than the total freight payable under
the charter-party, the difference is to be paid by
the charterers to the master before the sailing of
the vessel); and there is usually what is called the
lesser clause, by which the charterer's liability
under the charter-party is to cease on shipment of
the cargo, the shipowner taking a lien on the cargo
for freight, dead freight and demurrage. The
charter-party is made subject to exceptions similar
to those which are found in bills of lading. There
are also usually clauses providing for the
commissions to be paid to the brokers on signing the
charter-party, the address commission to be paid to
the agents for the Vessel at the port of discharge,
and other matters of detail. The clauses in
charter-parties vary, of course, indefinitely, but
the above is probably a sufficient outline of the
ordinary form of a charter-party for a voyage.
What has been said with regard to bills of lading as
to the voyage, the place of delivery, the exceptions
and excepted perils, and the liability of the
shipowner and his lien applies equally to
charter-parties. lt may be desirable to add a few
words on demurrage, dead Freight, and on the lesser
clause.
Demurrage is, properly speaking, a fixed sum per day
or per hour agreed to be paid by the charterer for
any time during which the vessel is detained in
loading or discharging over and above the time
allowed, which is, as we have said, usually
described as the lay days. Sometimes the number of
days during which the vessel may be kept on
demurrage at the agreed rate is fixed by the
charter-party. If no demurrage is provided for by
the charter-party, and the vessel is not loading or
discharging beyond the lay days, the shipowner is
entitled to claim damages in respect of the loss
which he has suffered by the detention of his ship;
or, if the vessel is detained beyond the fixed
number of demurrage days, damages for detention will
be recoverable. Sometimes there is no time fixed by
the charter-party for loading or discharging. The
obligation in such cases is to load or discharge
with all despatch that is possible and reasonable in
the circumstances; and if the loading or discharging
is not done with such reasonable dispatch, the
shipowner will be entitled to claim damages for
detention of his ship. The rate of demurrage (if
any) will generally be accepted as the measure of
the damages for detention, but is not necessarily
the true measure. When the claim is for detention
and not demurrage the actual loss is recoverable,
which may be more or may be less than the agreed
rate of demurrage. The contract usually provides
that Sundays and holidays shall be excepted in
counting the lay days, but unless expressly
stipulated this exception does not apply to the
computation of the period of detention after the lay
days have expired.
Dead freight is the name given to the amount of
freight lost, and therefore recoverable by the
shipowner from the charterer as damages if a full
and complete cargo is not loaded in accordance with
the terms of the charter-party.
The lesser clause has come into common use because
very frequently the charterers are not personally
interested in the cargo shipped. They may be agents
merely, or they may have chartered the vessel as a
speculation to make a profit upon the bill of lading
freight. The effect of the clause is that when the
charterers have shipped a full cargo they have
fulfilled all their obligations, the shipowner
discharging them from all further liability and
taking instead a lien on the cargo for payment of
all freight, demurrage or dead freight that may be
payable to him. It has become an established rule
for the construction of the cesser clause that, if
the language used will permit it, the cesser of
liability is assumed to be co-extensive only with
the lien given to the shipowner; or, in other words,
the charterers are released from those liabilities
only for which a lien is given to the shipowner. The
shipowner is further secured by the stipulation
already referred to, that if the total freight
payable under the bills of lading is less than the
full chartered freight the difference shall be paid
to the shipowner before the vessel sails. A
difficulty which sometimes arises, notwithstanding
these precautions, is that although an ample lien is
given by the charter-party, the terms of the bills
of lading may be insufficient to preserve the same
extensive lien as against the holder of the bills of
lading. The shippers under the bills of lading, if
they are not the charterers, are not liable for the
chartered freight, but only for the bill of lading
freight; and unless the bill of lading expressly
reserves it, they are not subject to a lien for the
chartered freight. The master may guard against this
difficulty by refusing to sign bills of lading which
do not preserve the shipowner's lien for his full
chartered freight. But he is often put into a
difficulty by a somewhat improvident clause in the
charter-party requiring him to sign bills of lading
as presented. See Kruger v. Moel Tryvan, 1907 A. C.
272.
(2) A time charter-party is a contract between the
shipowner and charterers, by which the shipowner
agrees to let and the charterers to hire the vessel
for a specified term for employment, either
generally in any lawful trade or upon voyages within
certain limits. A place is usually named at which
the vessel is to be re-delivered to the owners at
the end of the term, and the freight is payable
until such re-delivery; the owner almost always pays
the wages of the master and crew, and the charterers
provide coals and pay port charges; the freight is
usually fixed at a certain rate per gross register
ton per month, and made payable monthly in advance,
and provision is made for suspension of hire in
certain cases if the vessel is disabled; the master,
though he usually is and remains the servant of the
owner, is required to obey the orders of the
charterers as regards the employment of the vessel,
they agreeing to indemnify the owners from all
liability to which they may be exposed by the master
signing bills of lading or otherwise complying with
the orders of the charterers; and the contract is
made subject to exceptions similar to those in bills
of lading and voyage charter-parties. This is the
general outline of the ordinary form of a time
charter-party, but the forms and their clauses vary,
of course, very much, according to the circumstances
of each case.
It
is apparent that under a time charter-party the
shipowner to a large extent parts with the control
of his ship, which is employed within certain limits
according to the wish and directions, and for the
purposes and profit of, the charterers. But, as we
have already explained at the beginning of this
article, the shipowner continues in possession of
his vessel by his servant the master, who remains
responsible to his owner for the safety and proper
navigation of the ship. The result of this, as has
been already pointed out, is that the holder of a
bill of lading signed by the master, if he has taken
the bill of lading without knowledge of the terms of
the time charter-party, may hold the owner
responsible for the due performance of the contract
signed by the master in the ordinary course of his
duties, and within his ostensible authority as
servant of the shipowner, although in fact in
signing the bill of lading the master was acting as
agent for and at the direction of the time charterer,
and not the shipowner. In the language of the
ordinary time charter-party the ship is let to the
charterers; but there is no true demise, because, as
we have pointed out, the vessel remains in the
possession of the shipowner, the charterer enjoying
the advantages and control of its employment. Where
the possession of a ship is given up to a hirer, who
appoints his own master and crew, different
considerations apply; but though the instrument by
which the ship is let may be called a charter-party,
it is not truly a contract of affreightment.
Customary
Rights
There are certain rights and obligations arising out
of the relationship of shipowner and cargo-owner in
circumstances of extraordinary peril or urgency in
the course of a voyage, which, though not strictly
contractual, are well established by the customs of
merchants and recognized by the law. It is obvious
that, when a ship carrying a cargo is in the course
of a voyage, the master to some extent represents
the owners of both ship and cargo. In cases of
emergency it may be necessary that the master
should, without waiting for authority or
instructions, incur expense or make sacrifices as
agent not only of his employer, the shipowner, but
also of the cargo-owner. Ship and cargo may be in
peril, and it may be necessary for the safety of
both to put into a port of refuge. There it may be
necessary to repair the ship, and to land and
warehouse, and afterwards re-ship the cargo. For
these purposes the master will be obliged to incur
expense, of which some part, such as the cost of
repairing the ship, will be for the benefit of the
shipowner; part, such as the warehousing expenses,
will be for the benefit of the cargo-owner; and
part, such as the port charges incurred in order to
enter the port of refuge, are for the common benefit
and safety of ship and cargo. Again, in a storm at
sea, it may be necessary for the safety of ship and
cargo to cut away a mast or to jettison, that is to
say, throw overboard part of the cargo. In such a
case the master, acting for the shipowner or
cargo-owner, as the case may be, makes a sacrifice
of part of the ship or part of the cargo, in either
case for the purpose of saving ship and cargo from a
danger common to both. Voluntary sacrifices so made
and extraordinary expenses incurred for the common
safety are called general average sacrifices and
expenses, and are made good to the person who has
made the sacrifice or incurred the expense by a
general average contribution, which is recoverable
from the owners of the property saved in proportion
to its value, or, in other words, each contributes
rateably according to the benefit received. The law
regulating the rights of the parties with regard to
such contribution is called the law of General
Average. It must, however, be remembered that the
owner of the cargo is entitled under the contract of
affreightment to the ordinary service of the ship
and crew for the safe carriage of the cargo to its
destination, and the shipowner is bound to pay all
ordinary expenses incurred for the purpose of the
voyage. He must also bear all losses arising from
damage to the ship by accidents. But when
extraordinary expense has been incurred by the
shipowner for the safety of the cargo, he can
recover such expense from the owner of the cargo as
a special charge on cargo; or when an extraordinary
expense has been incurred or a voluntary sacrifice
made by the shipowner to save the ship and cargo
from a peril common to both, he may require the
owner of cargo to contribute in general average to
make good the loss.
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