Lay0me$Brief$Notes

Sunday,$23$August$2015 9:24$pm

The$fundamental$idea$of$calcula0ng$lay0me$is$that$the$charterers,$without$extra$payment$to$the$owners,$
have$a$certain$amount$of$permi:ed$0me$to$spend$on$the$loading$and$/$or$discharging$of$the$vessel.$If$this$
0me$is$exceeded$they$must$pay$compensa0on$–$demurrage$–$at$a$rate$also$agreed$beforehand$to$the$owners$
for$their$loss$of$0me.$Some0mes$it$is$also$agreed$that$the$owners$will$compensate$the$charterers$if$the$ship$is$
loaded$and/or$discharged$before$the$agreed$0me$expires,$in$which$the$case$the$compensa0on$paid$is$called$
"dispatch"

Key$ques(on$that$can$help$in$the$calcula(on$of$lay(me$include$the$following:
1. $At$what$point$will$(me$start$to$count?$$Will$lay(me$start$if$the$berth$is$inaccessible$(or$will$it$be$
suspended$if$it$has$already$started)?$$Un(l$when$does$(me$run?
2. How$is$conges(on$in$the$port$treated
3. How$is$(me$lost$due$to$adverse$weather,$storms$or$swells$to$be$treated$on$and$off$the$berth?
4. Does$"all$(me$used$for$the$charterers'$purposes'$count$for$lay(me$and$demurrage?
AllG(me$Saved/Working$(me$saved
5. $How$is$shiKing$(me$in$a$port$to$be$treated?$who$pays$for$delays$on$port$authori(es$orders?

Arrived$Ship
As$the$risk$of$delay$during$the$sea$voyage$rests$with$the$owners,$while$the$risk$of$delay$when$the$vessel$is$in$port$is$
subject$to$the$charter$party$construc(on.$The$vessel$must$reach$the$agreed$des(na(on$before$she$can$be$considered$
as$an$arrived$ship.$$Consequently$the$more$precisely$the$des(na(on$is$described$the$more$(me$is$needed$before$the$
vessel$has$arrived.$$Therefore,$it$is$more$advantageous$from$the$owner's$perspec(ve$to$have$the$des(na(on$
described,$like$Port,$designated$berth$or$Anchorages$etc.

The$best$way$for$the$owners$to$protect$themselves$is$to$insert$a$special$“wai(ng$for$berth”$clause$or$to$
have$the$words$“whether$in$berth/port$or$not”$(w.i.b.p.o.no.)$inserted$into$the$lay(me$clause$to$make$it$
clear$that$the$(me$can$count$when$the$vessel$is$in$the$customary$or$indicated$wai(ng$place.$Such$clauses$
also$allow$(me$to$count$when$the$

No(ces,$No(ce$Time$and$Readiness
The$master$usually$gives$no(ce$of$readiness$when$the$vessel$has$arrived,$and$the$charterers$are$quite$oKen$
en(tled$to$no(ce$(me$(free$(me,$grace$(me)$before$lay(me$starts$to$run.$The$original$intent$of$no(ce$
(me$was$to$provide$the$charterers$(or$the$shipper$or$receiver)$with$a$certain$amount$of$(me$to$arrange$for$
loading$or$discharging$aKer$they$had$been$made$aware$of$the$ship’s$arrival$and$readiness$(a$need$which$
has$been$all$but$eradicated$with$today’s$communica(on$technologies).$Nevertheless,$it$is$s(ll$provided$
under$most$printed$voyage$charterGparty$forms.$For$example,$the$Gencon$1994$form$(clause$6)$deals$with$
no(ce$(me$as$follows:$
(c)$Commencement$of$lay(me$(loading$and$discharging)$
Lay(me$for$loading$and$discharging$shall$commence$at$13:00$hours,$if$no(ce$of$readiness$is$given$up$to$and$
including$12:00$hours,$and$at$06:00$hours$next$working$day$if$no(ce$is$given$during$office$hours$aKer$12:00$
hours.$No(ce$of$readiness$at$loading$port$to$be$given$to$the$Shippers$named$in$Box$17$or$if$not$named$to$
the$Charters$or$their$agent$named$in$Box$18.$No(ce$of$readiness$at$the$discharging$port$to$be$given$to$the$
Receivers$or,$if$not$known,$to$the$Charterers$or$their$agents$named$in$Box$19.$
Although$the$system$providing$for$no(ce$(me$is$obsolete$today,$such$a$clause$may$be$useful$in$cases$
where$a$ship$arrives$during$a$holiday$period$or$during$the$night,$when$the$charterers$have$no$prac(cal$
chance$of$being$able$to$commence$loading$or$discharging$opera(ons.$Given$the$risk$in$such$cases$that$the$
ship$will$be$idle$from$the$(me$of$arrival$un(l$the$commencement$of$ordinary$working$hours$in$the$relevant$
port,$the$par(es$may$agree$to$insert$a$clause$in$the$charterparty$s(pula(ng$that$the$risk$shall$rest$with$the$
owners$(e.g.$“Lay(me$to$commence$at$the$beginning$of$next$ordinary$working$shiK$aKer$the$vessel’s$
arrival.”).$Of$course,$it$is$also$possible$to$assign$this$risk%to%the%charterers%or%to%have%the%risk%shared%
between%the%two%parties%by%stipulating%that%only%half%such%time%shall%count%as%laytime.%

Readiness$includes$both$physical$readiness$and$legal$readiness.$Physical$readiness$means$that$the$vessel$
will$be$clean$and$ready$to$take$the$intended$cargo$on$board$or$to$discharge$the$cargo$that$is$already$on$
board.$Legal$readiness$means$that$the$ship$will$have$completed$all$the$formali(es$(customs$clearance$etc.)$
necessary$for$the$commencement$of$loading$or$discharging.$However,$the$vessel$does$not$necessarily$have$
to$be$physically$and$legally$ready$in$all$respects$in$order$to$be$able$to$give$a$valid$no(ce$of$readiness.$The$
charterers$may$have$to$accept$that$the$no(ce$(me$has$started$to$run$even$though$some$prepara(ons$on$
board$remain$to$be$done$(for$instance,$the$uncovering$of$hatches$and$rigging)$or$some$formali(es$remain$
to$be$dealt$with$(for$instance,$“free$pra(que”$as$required$by$the$health$authori(es).$

The$no(ce$of$readiness$should$be$delivered$as$soon$as$the$ship$is$ready$to$commence$loading$or$
discharging.$This$also$means$that$if$the$vessel$is$ordered$to$wait$outside$the$berth$or$port,$no(ce$should$be$
delivered.$If$the$charterGparty$states$that$the$no(ce$must$be$given$within$office$hours,$a$no(ce$given$aKer$
office$hours$will$be$not$valid$and$will$not$come$into$force$un(l$the$next$period$of$office$hours.$As$office$
hours$are$generally$understood$to$mean$ordinary$office$hours$in$the$relevant$port,$the$charterers$cannot$
postpone$the$no(ce$(me$(and$thereby$the$coun(ng$of$the$lay(me)$by$simply$closing$their$office!$

Once$the$no(ce$(me$has$started$to$run,$it$runs,$unless$otherwise$expressly$agreed,$notwithstanding$any$
excep(ons$in$the$lay(me$clause.$The$no(ce$(me$can$thus$normally$be$counted$during$a$Sunday$or$holiday$
even$though$these$days$are$excluded$from$lay(me$under$“the$lay(me$clause”.$In$many$cases$the$relevant$
clause$will$take$this$problem$into$considera(on.$When$loading$or$discharging$commences$before$the$no(ce$
(me$expires,$the$owners$are,$according$to$English$law,$not$en(tled$to$count$(me$unless$this$is$agreed$in$
the$charterGparty$(through,$for$example$a$clause$sta(ng$that$“Time$actually$used$before$commencement$of$
lay(me$shall$count.”).$

The$word$“lay”$in$the$expression$“lay/can”$is$a$short$form$of$“lay(me$not$to$commence$before”.$This$does$
not$prevent$the$master$from$giving$a$valid$no(ce$of$readiness$before$the$layday,$and$no(ce$(me$can$also$
run$before$the$layday.$Thus$if$the$no(ce$of$readiness$is$given$and$the$no(ce$(me$expires$before$the$layday,$
the$coun(ng$of$lay(me$normally$starts$at$midnight$on$the$layday.$
According$to$English$law$the$no(ce$of$readiness$must$be$given$at$the$first$loading$port$even$if$this$is$not$
expressly$stated$in$the$charterGparty.$A$no(ce$of$readiness$must$only$be$given$at$subsequent$loading$ports$
and$in$the$discharging$ports$only$if$such$has$been$expressly$agreed.$

Time$Allowed$
The$(me$allowed$for$loading$and$discharging$is$usually$fixed$in$the$charterGparty,$either$by$a$number$of$
days$or$hours$or$by$a$rate$per$day.$However,$as$an$alterna(ve$to$fixing$the$(me$allowed,$the$par(es$
some(mes$choose$to$use$f.a.c.$(fast$as$can)$clauses$in$the$charterparty,$which$s(pulate$that$“vessel$to$be$
loaded$or$discharged$as$fast$as$vessel$can$receive$and$deliver”$or$similar.$Such$clauses$oKen$result$in$
problems$and$disputes$when$the$par(es$try$to$determine$their$precise$meaning$in$a$par(cular$case.$
$
Fixed$(me:$The$length$of$(me$allowed$can$be$agreed$as$a$fixed$number$of$days$(e.g.
“Five$running$days$allowed$for$loading”).$Another$method$is$to$state$a$daily$rate$or$a$rate$per$day$and$
hatch$e.g.“$loading$at$a$rate$of$500$metric$tons$per$day”$or$“loading$at$rate$of$125$metric$tons$per$day$and$
hatch”).$Various$phrases$can$be$used$in$connec(on$with$rate$per$day$and$hatch.$“Workable$hatch”$and$
“available$hatch”$indicate$that$only$the$hatches$actually$used$shall$count$and$the$total$(me$allowed$is$
usually$calculated$by$dividing$the$quan(ty$in$the$largest$hatch$with$the$daily$rate$per$workable$or$available$
hatch.$This$method$is$less$favourable$to$the$owners$than$the$method$when$only$the$word$“hatch”,$not$
connected$with$the$words$“available”$or$“workable”,$is$used.$In$the$laler$case,$the$total$(me$allowed$is$
calculated$by$dividing$the$total$quan(ty$loaded$on$board$a$vessel$with$the$product$of$the$number$of$
hatches$and$the$daily$rate.$In$the$tanker$trades,$lay(me$is$oKen$counted$un(l$the$disconnec(on$of$hoses,$
or$un(l$the$deliver$of$the$necessary$documents.$

Time$not$fixed:$Clauses$such$as$“Liner$terms$with$customary$quick$dispatch”$or$“as$fast$as$the$vessel$can$
receive$(deliver)”$are$not$beneficial$to$the$owners,$as$it$is$invariably$difficult$to$prove$that$the$charterers$
have$loaded$or$discharged$the$ship$so$slowly$that$the$owners$are$en(tled$to$demurrage.$From$the$owners’$
perspec(ve,$it$is$important$that$the$f.a.c.$clause$be$connected$with$the$capability$of$the$vessel,$as$in$the$
second$of$the$two$cited$clauses.$If$the$f.a.c.$clause,$is$not$connected$with$the$capability$of$the$vessel$(as$in$
the$first$clause),$the$owners$have$very$lille$chance$of$obtaining$compensa(on$for$delays$that$are$beyond$
the$charterers’$control$(e.g.$lack$of$wagons$or$traffic$problems$ashore).$Some$charterGpar(es$also$contain$
farGreaching$force$majeure$clauses.$

Reversible$(me:$Unless$otherwise$agreed,$the$calcula(ons$for$demurrage$/$despatch$are$drawn$up$
separately$for$loading$and$discharging.$If$more$than$one$loading$port$or$discharging$port$is$involved,$one$
single$calcula(on$is$made$for$the$loading$ports$combined$and$another$calcula(on$is$made$for$the$
discharging$ports$combined.$If$the$par(es$do$decide$to$combine$the$calcula(ons,$a$charterparty$clause$
using$wording$such$as$“Time$allowed$for$loading$and$discharging,$eight$days$altogether”$or$“(me$allowed,$
eight$days$all$purposes”$can$be$used.$Some(mes$the$words$“reversible”$or$“average”$are$used,$as$in$“Three$
days$for$loading$and$five$for$discharging,$loading$and$discharging$(mes$to$be$reversible”$or$“three$days$for$
loading,$five$for$discharging.$Charterers$have$the$right$to$average$loading$and$discharging$(mes”.$In$the$
first$case$(reversible$(me)$the$(mes$are$added$to$a$total$(me$for$loading$and$discharging.$What$is$leK$from$
the$total$(me$aKer$the$loading$will$be$“allowed$(me”$for$discharging.$If$all$the$(me$is$used$for$loading,$the$
vessel$is$on$demurrage$on$arrival$at$the$discharging$port$and$the$(me$will$then$count$immediately$(in$such$
cases,$a$no(ce$of$readiness,$although$not$necessary,$should$be$delivered$in$order$to$avoid$disputes).$In$the$
second$example$(average)$the$loading$and$discharging$calcula(ons$are$drawn$up$separately.$ThereaKer,$the$
demurrage$and$despatch$(mes$are$added$or$set$off$(averaged)$against$each$other$and$finally$the$
demurrage$or$despatch$amount$is$calculated$on$the$result.$

The$result$will$oKen$be$the$same$whether$the$reversible$(me$system$or$the$average$system$is$used.$As,$
however,$the$rule$“once$on$demurrage,$always$on$demurrage”$(see$subsequent$pages$of$lecture$notes))$
may$cause$considerable$financial$difference$between$the$two$systems,$it$is$important$to$be$aware$of$the$
difference.$The$clauses$are$oKen$constructed$as$op(onal$in$the$charterers’$choice,$as$in$“Lay(me$for$
loading$and$lay(me$for$discharging$to$be$reversible$in$charterers’$op(on”.$In$such$cases$the$owners$will$
always$lose,$as$the$charterers$will$calculate$both$separately$for$loading$and$discharging$and$also$with$the$
reversible$(mes$system$and$thereaKer$use$the$system$which$gives$the$best$outcome.$

5.#Time#Counting#and#Exceptions#
Lay(me$will$actually$begin$coun(ng$when$all$the$prerequisites$for$it$to$start$running$have$been$met.$The$
principal$rule$is$that$once$lay(me$has$started$to$run,$it$runs$seven$days$per$week,$24$hours$per$day,$
notwithstanding$hindrances$to$or$disrup(ons$of$loading$or$discharging.$Although$loading$and$discharging$
in$some$ports$take$place$24$hours$per$day$seven$days$a$week,$it$is$more$common$for$the$vessel$to$be$
loaded$or$discharged$only$in$one$or$two$shiKs$during$the$weekdays$with$interrup(on$during$nights$and$
holidays.$Loading$and$discharging$may$also$be$interrupted$if$cargo$is$not$available,$if$the$receiver$cannot$
take$delivery$as$fast$as$the$ship$can$deliver,$if$the$weather$is$too$bad,$if$the$loading$or$discharging$
equipment$breaks$down,$if$strikes$or$work$slowdowns$occur,$etc.$

According$to$English$law,$these$and$other$disturbances$will$interrupt$the$(me$coun(ng$only$if$this$is$
expressly$agreed$in$the$charterGparty$(the$most$common$of$such$excep(on$clauses$being$related$to$
holidays$and$inclement$weather).$When$the$par(es$agree$that$(me$will$not$count$during$Sundays$and$
holidays,$the$expression$“Sundays$and$holidays$excluded”$(SHEX)$will$normally$be$used.$Conversely,$when$
Sundays$and$holidays$will$count,$the$expression$“Sundays$and$holidays$included”$(SHINC)$is$some(mes$
used.$Varia(ons$of$these$expressions$are$used$in$countries$where$Sundays$are$not$the$weekly$day$of$rest.

$For$instance$SHEX$and$SHINC$will$be$FHEX$and$FHINC$in$those$Arabian$countries$where$Friday$is$the$
weekly$day$of$rest.$It$is$also$common$that$a$soGcalled$“Saturday$clause”$is$linked$to$the$SHEX$clause.$In$a$
Saturday$clause,$(me$on$Saturday$and$some(mes$also$on$Friday$and$Monday$is$excepted$from$(me$
coun(ng.$The$expression$“unless$used,$but$only$(me$actually$used$to$count”$is$oKen$used$in$conjunc(on$
with$SHEX.$The$effect$is$that,$if$loading$or$discharging,$for$instance,$takes$place$from$08:00to$12:00$and$
from$13:00$hours$un(l$17:00$hours$on$a$Sunday,$these$eight$hours$shall$count$as$lay(me.$With$respect$to$
weather$hindrances,$the$expressions$“weather$permiong”$(w.p.)$or$“weather$working”$(w.w.)$are$used.$
Excep(on$clauses$are$usually$linked$only$to$the$loading$or$the$discharging$work$and$not$to$the$
transporta(on$of$the$cargo$to$or$from$the$vessel.$Unless$otherwise$expressly$agreed,$the$charterers$have$a$
strict$liability$to$furnish$the$ship$with$cargo$and$to$remove$the$cargo$from$the$ship$aKer$discharging.$Many$
other$wordings$are$used$in$the$excep(on$clauses,$and$those$cited$above$are$only$some$of$the$most$
common.$
Many$voyage$charterGparty$forms,$including$the$Gencon,$have$a$separate$clause$dealing$with$situa(ons$in$
which$the$vessel$is$wai(ng$for$a$berth.$For$example,$the$Gencon$1994$form$(part$of$clause$6)$states$the$
following:$

""If$the$loading/discharging$berth$is$not$available$on$the$vessel's$arrival$at$or$off$the$port$of$loading/
discharging,$the$vessel$shall$be$en(tled$to$give$no(ce$of$readiness$within$ordinary$office$hours$on$arrival$
there,$whether$in$free$pra(que$or$not,$whether$customs$cleared$or$not.

Lay(me$or$(me$on$demurrage$shall$then$count$as$if$she$were$in$berth$and$in$all$respects$ready$for$loading/
discharging$provided$that$the$Master$warrants$that$she$is$in$fact$ready$in$all$respects.

This$clause$is$important$for$the$owners$as$it$solves$many$of$the$problems$that$arise$when$the$vessel$cannot$
get$to$her$berth$immediately.$$Also,$fault$,$on$the$vessel's$or$owner's$side$hindering$the$loading$or$the$
discharging$interrupts$the$(me$coun(ng.