Shipping Lawyer Bills of Lading and Charter Parties 2 — Questions and Answers
Question 1: What is 'demurrage' in the context of a voyage charter party?
- Liquidated damages paid by the charterer for detaining the vessel beyond the agreed laytime (Correct answer)
- A fee paid to the port for berth usage
- The cost of maintaining the vessel during a voyage
- A penalty for early departure
Correct answer: Liquidated damages paid by the charterer for detaining the vessel beyond the agreed laytime
Demurrage is a pre-agreed rate of compensation payable to the shipowner when the charterer exceeds the laytime allowed for loading or discharging.
Question 2: What does 'dispatch' mean in a charter party context?
- A payment from the shipowner to the charterer for completing cargo operations before laytime expires (Correct answer)
- The speed at which cargo is loaded
- A penalty for slow loading
- An expedited freight rate
Correct answer: A payment from the shipowner to the charterer for completing cargo operations before laytime expires
Dispatch is a reward paid by the shipowner to the charterer when loading or discharging is completed in less than the agreed laytime.
Question 3: What is a 'time charter' arrangement?
- The shipowner provides the vessel and crew for a fixed period, with the charterer directing commercial employment (Correct answer)
- The charterer owns the vessel and pays the owner daily
- A charter for a single voyage only
- A lease with an option to purchase
Correct answer: The shipowner provides the vessel and crew for a fixed period, with the charterer directing commercial employment
Under a time charter, the shipowner operates the vessel but places it at the charterer's commercial disposal for a defined period in exchange for hire.
Question 4: Under a time charter, what is the effect of 'off-hire' periods?
- Hire ceases to accrue when the vessel is not in efficient service due to causes specified in the charter (Correct answer)
- The charterer must pay double hire
- The shipowner forfeits the vessel
- Demurrage is automatically triggered
Correct answer: Hire ceases to accrue when the vessel is not in efficient service due to causes specified in the charter
Off-hire provisions suspend the charterer's obligation to pay hire when the vessel breaks down or is otherwise unavailable for service through the owner's fault.
Question 5: Which provision in a charter party protects the shipowner against cargo claims by third-party bill of lading holders?
- The Himalaya clause and the incorporation of COGSA terms into the charter (Correct answer)
- The arbitration clause
- The demurrage clause
- The lien clause
Correct answer: The Himalaya clause and the incorporation of COGSA terms into the charter
Charter parties often incorporate COGSA and Himalaya clauses to ensure the shipowner's COGSA defenses and liability limits apply to bills of lading issued under the charter.
Question 6: What is a 'sub-charter' and what are its legal implications?
- A charterer re-chartering the vessel to a third party, remaining liable to the head owner (Correct answer)
- A charter for less than the full vessel
- A partial assignment of the charter party
- A government-approved secondary charter
Correct answer: A charterer re-chartering the vessel to a third party, remaining liable to the head owner
A sub-charter occurs when the head charterer charters the vessel to another party; the head charterer remains obligated to the shipowner under the head charter.
Shipping Lawyer Bills of Lading and Charter Parties 2
What is 'demurrage' in the context of a voyage charter party?