Time Charter

Question 1

what is time charter

Answer 1

A fully manned and equipped ship’s capacity is made available to a charterer (time
charterer) for a certain period of time and A ship **performs voyages as directed by the charterer **in return for remuneration (hire)

a contract under which a fully manned and equiped ship’s capacity is made available to a time charterer for a specific period

Question 2

who bears the expenses of each voyages

Answer 2

the charterer bears the expenses connected with each voyage and pays hire to the owner based on the time the ship is at the charterer’s disposal

Question 3

if something is not clear in the contract?

Answer 3

we will look at the Norwegian maritime code
how do we interpret the issues, we go to the law - English law or Norwegian Law (will state in the contract)

Question 4

the ship

what ship would be used in time charter

Answer 4

a specifically named ship

the fate of the contract depends on the fate of the ship
if the ship is a total loss, the charter party is terminated

Question 5

why would thre be more detailed description of ship in time charter compared to voyage charter

two reasons

Answer 5

1. earnings of the charterer depend on the ship’s transport capacity and
2. the charterer bears a number of costs that under voyage charter falls under the owner’s responsibility

Question 6

the ship

what four elements will be included in the description of ship

Answer 6

• Cargo capacity
• Loading/discharging equipment
• Speed and consumption
• Seaworthiness

Question 7

the ship

why net cargo capacity is the most importnt from charterer’s view

Answer 7

**Deductions from the total capacity for:
*** Fresh water, supplies, luboils, spare parts (normally decided by the owner, but the charter may impose limits in the contract, e.g., when the charterer wants to buy more bunkers as the ship is in a ‘favourable’ port – remember load lines!)
* Bunkers (normally decided by the charterer)

Question 8

the ship: speed and consumption

• The ship’s speed capability and fuel consumption are among the most important commercial/business features in the contract

Answer 8

the faster the speed, the more fuel is consumed

Question 9

who pay and provide the bunkers
at delivery?
at re-delivery?

Answer 9

charterer

at voyage charter, charterer pay the freight including bunkers

Question 10

what would happen if the ship use more bunkers than agreed

Answer 10

the owner will be liable for the expenses of extra-use
as there is a correlation between speed and fule consumption
and speed is monitored by the master from shipowner part

Question 11

seaworthiness

NMC 372
the ship shall satisfy the requirments of ordinary trade in the trading area
Special trading areas will normally be for the account of the charterer (the charterer’s expenses)

Question 12

delivery of the ship

Answer 12

where to deliver
and when will be deliver

Question 13

1. place of delivery
2. time of delivery
3. last day of delivery (cancellation right)

Answer 13

1. agreement as where delivery is to take place
2. time of delivery - specificed within a margin
3. the latest date is considered a “cancellation date”, such that delivery after this dte entitles the charterer to cancel

Question 14

what’s the requirement of delivery of the ship

Answer 14

1. the vessel arrived at the designated palce
2. the ship is ready for loading (seaworthiness)
3. notice of readiness is given

Question 15

notice of delivery

Answer 15

when the ship arrives at the contractual delivery port in a timely manner, a notice of readiness will be given to the charterer

Question 16

“on hire survey”

• “on charter certificate” / “on hire certificate”

Answer 16

the vessel will be inspected when it is delivered
- to determine whether the ship is seaworthiness
- and to determine the extent of any damage to the vessel
- secure evidence regarding the condition of the ship at the time of delivery

Question 17

what is redelivery

Answer 17

the end of the contract

Question 18

what are the condition of “redelivery”

Answer 18

1. the ship should be located at the designated place of redelivery
2. ship should be free of carago - the cahrterer’s commercial use of the vessel come to an end
3. ship is in the same good order and condition as when delivered

Question 19

NMC 389 exceed the charter period
what is underlap
what is overlap

flat period - eg. 12 months

Answer 19

Question 20

what happened if the ship is redelivered too early (underlap)

Answer 20

1. the owner is obligated to take the ship
2. shipowner could claim for damages

Question 21

distinguish between employment and navigation

Answer 21

1. charterer determines the type of voyage the ship is to perform
2. the master decide the navigation, sailors

Question 22

off-hire
NMC 392

Answer 22

the charterer’s duty to cover “expenses relating to operation of the ship” does not apply when the ship is off-hire

if the ship goes off-hire while in port, the port expenses relating to the off-hire period are for the owner’s account

Question 23

unpaid hire cause serious issues for owner

what’s the risk for shipowner if charterer didnt pay hire on time

Answer 23

if the correct amount of hire is not paid at the correct time, the owner may suffer liquidity problem

the hire would have been intended to cover his expenses in the coming month - interest and principal on his mortgage loan, insurance premium, crew wages, etc.

Question 24

Page 520 - 521

hire payment time

Answer 24

the first payment is due when the ship is delivered

then hire is payable In advance every calendar month (if mid-month then until mid-month)

Question 25

hire place of payment

Answer 25

the charter party from the owner will determine where hire is to be paid

Question 26

NMC 391 delayed payment of time charter hire

Question 27

# off-hire Baltime Clause 6 Hire

Answer 27

**strict regulations - any breach of obligation to pay hire trigger a cancellation right** in the default of payment the owners shall have the right of withdrawing the vessel from the service of the charterers, without noting any protest and without interference by any court or any other formality whatsoever and without prejudice to any claim the owners may otherwise have on the charterers under the charter

Question 28

# hire payment Shelltime 4 Clause 9

Answer 28

in default of such proper and timely payment

Question 29

# off-hire NMC 392

Answer 29

whether loss of time is due to "hindrance on the part of the owner" is not a question of fault, - there is no need to consider whether the owner or anyone for whom he is responsible can be blamed for what has occurred - if the cause of the loss of time rests with the owner, the underlying reason is irrelevant (except if it was casued by charterer's negligence)

Question 30

off-hire 2-step test (NMC)

Answer 30

1. if there is an accident happened rests with the owner 2. if this occurence caused time to be lost - an engine breakdown during a voyage will cause loss of time - but occur while ship lying at the port may not be that significance

Question 31

loss of time circumstances for which the charterer is responsible***

Answer 31

P529 - 530

Question 32

settlement of off-hire