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Thursday, June 21, 2018

CHARTER PARTY INFORMATION

Shelltime 4 – clause 24 (description/performance) – amendments may have unexpected consequences

We recently came across a time charter on the Shelltime 4 form, which included amendments to clause 24 (detailed description and performance). Clause 24 (b) had been amended so that the references to increases in the vessel speed, time gained, and decreases in bunker consumption had been deleted.

The effect of these amendments was that owners would be precluded from making any claims against charterers if owners in effect over-performed either in terms of the speed or the consumption of the vessel. However, by making these amendments to the printed form owners were prejudiced when it came to a claim by charterers for breach of the speed warranty.

For example, where a vessel failed to maintain the warranted speed, owners wished to offset the savings they had made on bunker consumption against the claim made by charterers. Although the speed of a vessel and the bunker consumption are inextricably linked, contractually the amendments to clause 24 meant that owners could not make any offset for the savings that had been made on the bunkers consumed.  One possible option for owners could be to have recourse to their brokers to see what the parties had agreed and whether they had specifically preserved this right of offset. If they had done so it could be argued that the charterparty as drawn up did not reflect what had been agreed. Such argument is far from easy to maintain. If no such agreement was reached owners would have no right of offset.

In order to preserve their position owners should consider whether clause 24 should be amended at all or alternatively, if it is amended, include a further amendment which expressly reserves owners’ right to offset a reduction in consumption against a claim for under-performance on the speed warranty.

Members’ charterparty questions should be directed to Mr John Fawcett Ellis by e-mail john.fawcett-ellis@intertanko.com