GENCON 1994 – Tips and Pitfalls

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 table of contents
background ....................................................................... 3
part i .................................................................................. 4
part ii.................................................................................. 7
clause 1 – introductory clause ................................. 7
clause 2 – owners’ responsibility ............................. 8
clause 3 – deviation ................................................. 8
clause 4 – payment of freight................................... 8
clause 5 – loading/ discharging ............................... 9
clause 6 – laytime .................................................. 11
clause 7 – demurrage ............................................ 12
clause 8 – lien........................................................ 12
clause 9 – cancelling clause .................................. 13
clause 10 – bills of lading....................................... 13
clause 17 – war risks (“voywar 1993”) ................... 14
clause 19 – law and arbitration .............................. 14
our shipping & logistics practice...................................... 16
contact us ........................................................................ 18

This publication is intended to be an outline of the law and

procedures on this subject for the purpose of general
reference only and cannot be relied upon as legal advice in
any particular case. If any advice or assistance is needed,
please contact this firm on 2810 1212 or email us at
onc@onc.hk.

ONC Lawyers

June 2011
© ONC Lawyers 2011. All right reserved.

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 background
The Baltic and International Maritime Council (“BIMCO”)
Uniform General Charter, or “GENCON”, is the standard
form voyage charterparty most commonly used worldwide.
GENCON was first issued by BIMCO in 1922 and was
revised in 1976 and 1994. This article analyses the latest
revised version “GENCON 1994”.

GENCON 1994 consists of two parts. Part I is the “box

form” which all the necessary information can be
conveniently inserted and seen by the parties. The
details to be inserted in this part are freely negotiable and
may be traded back and forth. Part II contains all the
standard terms and conditions which are usually
non-negotiable, though it is common for the parties to
amend some of the printed clauses by way of attaching a
rider which overrides them or incorporates the standard
terms into a negotiated fixture note.

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 part i
There are 26 boxes in total in Part I. Boxes 1 to 7
describe the identity of the parties and the details and
capacity of the vessel. The phrase “DWT all told on
summer load line in metric tons (abt.)” in Box 7 refers to the
maximum weight of cargo, bunkers, constant weight, etc.
that the vessel can carry on summer draught. The stated
deadweight tonnage cannot be taken as a guarantee since
the maximum tonnage the vessel can carry is dependent
upon the stowage factor of the particular cargo being
carried.

Boxes 8 and 9 describe the present position of the vessel

and the expected date when the vessel is ready to load the
cargo. The word “abt” (about) in box 9 qualifies the date
with a reasonable allowance with reference to the distance
between the present position of the vessel stated in Box 8
and the loading port stated in Box 10. These two boxes
should be carefully inserted because there is usually a
span of some days until the vessel may be presented for
loading and if the owners are unable to present for loading
on the date specified in Box 9, they may be guilty of
misrepresentation which could be a ground for the
charterers to cancel the charter.

Boxes 10 to 11 provide information of the loading and

discharging ports. It should be noted that some loading
or discharging ports may not have enough water alongside
at low tide to allow vessels to remain afloat. If the
charterers wish the vessel to be loaded/ discharged at
such a place, this must be specifically agreed in the

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charterparty. It is important to specify whether the parties
intend to have a port or a berth charter. Upon arriving at
the contractual destination, be it a port or a berth, laytime
shall start to count. An expression like “good and safe
chtrs’ berth” means the charterers have the express right
to nominate the berth at the designated port.

Box 12 describes the type and quantity of the cargo to be

loaded and whether “full and complete” or “part” cargo. If
the charterers fail to supply the agreed minimum quantity,
the charterers may be liable to pay deadfreight on the
shortfall. Where a fixed amount of cargo is specified,

it is advisable to qualify the figure with a permitted

allowance. If the charterers did tender a full cargo but, for
safety reasons such as draught restrictions, the vessel was
unable to load the full cargo and rejected the “excess”, the
owners may not be able to claim deadfreight.

Boxes 13 and 14 give details of the freight rate (per tonne,

lump sum or other basis), freight payment currency and
method. When the calculation of freight is based on the
quantity of cargo carried, disputes may arise if there is a
discrepancy between the quantity shipped and the quantity
discharged. From the charterers’ point of view, the lump
sum freight is preferred if they are responsible for
supplying a “full and complete cargo” as that would
eliminate the risk of having to pay deadfreight

In relation to cargo handling gear, the charterers are

entitled to have free use of all of the vessel’s cargo
handling gear in loading and discharging of the cargo,
unless stated otherwise in Box 15.

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Box 16 states the “laytime”, i.e. the amount of time
available to the charterers free of charge for loading and
discharging operations.

Boxes 17 to 19 give particulars on the identity of the

shipper and the agents in the loading and discharging port.
Box 20 states the “demurrage rate” which is the penalty
rate payble to the owners if the charterers exceed the
agreed time in loading/ discharging the cargo.

Clause 21 sets out the cancelling date which means if the

vessel is not ready to load on that date the charterers may
cancel the charterparty.

General Average shall be adjusted in London unless

otherwise agreed in Box 22 according to an international
convention called “York-Antwerp Rules 1994”.

Box 23 states the freight tax payable if it is for the owners’

account.

Box 24 states the brokerage commission and the person to

whom it is payable. Lastly, Boxes 25 and 26 state the law
and place of arbitration and whether there are any
additional clauses agreed between the parties.

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 part ii
Part II of GENCON 1994 provides the standard terms and
conditions. Some of the more important clauses will be
highlighted below:

clause 1 - introductory clause

Clause 1 limits the owners’ obligation to proceed to the
loading port by allowing the owners to complete prior
commitments which were already in existence at the time
the charter was made. Under this clause, the owners
would not attract liability for being late at the loading port
as punctuality is made subject to the timely completion of
the previous voyage. That said, nothing in this clause
operates to displace the implied obligation of the owners to
give a date of expected readiness to load based on an
honest and reasonable belief.

Clause 1 also gives the owners an unfettered right to

refuse to put their vessel at the named port and instead
load or unload the cargo at the nearest safe port should it
be found that there is an unforeseeable hazard or
obstruction of a permanent nature at the named port which
would prevent the vessel from entering or leaving the
named port or result in delay of an unreasonable length of
time; or there is insufficient water alongside at the named
port to keep the vessel always afloat; or there is a political
danger at the named port.

If cargo is agreed to be carried on deck, it will be so carried

at the charterers’ risk and responsibility.

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 clause 2 – owners’ responsibility
Clause 2 provides that the owners are responsible for loss
of or damage to the goods or for delay in delivery of the
goods only in cases where the loss, damage or delay has
been caused by the personal lack of due diligence on the
part of the owners or their manager to provide a seaworthy
vessel and to secure that she is properly manned,
equipped and supplied, or by the personal act or default of
the owners or their manager.

Given that deck cargo is carried at charterers’ risk and

responsibility (see clause 1), clauses 1 and 2, when read
together, seem to suggest that even if the owners are
personally at fault, the owners may not be liable for any
loss or damage of deck cargo.

clause 3 – deviation
Clause 3 provides that the owners have an unfettered right
to call at any port or ports in any order, to tow and/ or to
assist vessels, and to deviate from its course for the
purpose of saving life and/ or property.

clause 4 – payment of freight

Under clause 4 the freight can either be “pre-paid” or “paid
on delivery”, though the prevailing practice is for freight to
be paid in advance. The choice is supposedly shown in
Box 13. If the parties agree that freight is to be pre-paid
on shipment, clause 4(b) provides that the freight is
deemed earned and non-returnable. This is so even if the

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cargo is subsequently lost in transit, provided that the loss
is covered by an exception in the charterparty, or that the
charter is subsequently terminated by frustration.
Therefore, if freight is agreed to be paid in advance, it is
advisable to state precisely when it is payable. Once paid
and earned, the advance freight becomes irrecoverable by
the charterers.

Conversely, if the parties agree that freight is to be paid on

delivery, clause 4(c) provides that freight only becomes
due and payable upon delivery of the cargo at the
destination. In cases where only part of the cargo is
delivered, the charterers have a right to decline payment of
freight on cargo lost or not delivered.

It is important to note that freight is calculated and paid on

the basis of intake quantity save where freight is to be paid
upon delivery. In the latter case, the charterers have the
option of paying the freight on the basis of delivered
weight/ quantity on condition that such option is declared
before breaking bulk and the weight/ quantity can be
ascertained at the destination.

clause 5 – loading/ discharging

Clause 5(a) provides that all the risks, liabilities and
expenses associated with the loading, stowage, trimming,
tallying, lashing and discharging of the cargo shall be
borne by the charterers solely. The effect is that the
owners are relieved of all such risks, liabilities and
expenses. In addition, the charterers shall provide for

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and lay all dunnage material as required for the proper
stowage and protection of the cargo on board. The costs
of removing the same upon discharge of the cargo shall
likewise be borne by the charterers. This effectively
displaces the “alongside rule” at common law. If the
vessel is unable to berth, the charterers may have to
engage lighters to bring the cargo to the vessel’s side at
charterers’ costs. In practice, the loading and discharge
operations are carried out by professional stevedores
acting on behalf of the charterers.

Clause 5(b) states that the owners shall provide free use of
the vessel’s cargo handling gear, if any, and the necessary
motive power, unless the parties otherwise agree; and
provide free of charge cranemen/ winchmen to operate the
cargo handling gear, unless prohibited by local regulations.
If certain cargo handling equipment is required to be
supplied by the owners for loading/ discharging, it is
advisable to be stated in clear terms otherwise the
absence of such equipment may not prevent the owners
from giving valid notice of readiness (“NOR”).

It is important to note that those cranemen/ winchmen

provided by the owners are deemed to be the charterers’
stevedores. The effect is that laytime or time on
demurrage will not be interrupted where a craneman/
winchmen has negligently caused a cargo handling gear
breakdown.

Clause 5(c) provides that the charterers shall be

responsible for damage (beyond ordinary wear and tear) to
any part of the vessel caused by stevedores provided that
the Master shall give notice of the damage to the

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charterers or their agents and the stevedores as soon as
reasonably possible and shall endeavour to obtain the
stevedores’ written acknowledgement of liability. If the
Master fails to give notice in the manner required, the
charterers may be excused from liability.

clause 6 – laytime
Clause 6 states that the cargo shall be loaded/ discharged
within the time frame as indicated in Box 16 in a weather
permitting condition, excluding Sundays and holidays. If
NOR is given by the owners on or before 12.00 hours, the
laytime for loading and discharging shall commence at
13.00 hours. If NOR is given after 12.00, then the laytime
shall commence at 6.00 hours on the next work day.
NOR shall be given to the parties identified in Boxes 17, 18
and 19 respectively.

It should be noted that even if the loading or discharging

berth is not available on the vessel’s arrival at or off the
port of loading or discharging, the owners may still give
NOR on arrival there, no matter whether the vessel is in
free pratique condition and whether the customs has been
cleared. Provided that the Master of the vessel warrants
that she is in fact ready to load or discharge, the laytime or
time on demurrage shall then count as if the vessel were in
berth. Accordingly, NOR can be given even when the
vessel is still outside the port limits and/ or the berth is not
available due to congestion. Though there is no
requirement how the Master’s warranty shall be given, a
warranty in writing is preferred. It is advisable for the

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charterers to immediately go on board to verify if the vessel
is truly ready to load/ discharge. If she is not, the time lost
after discovery shall not count as laytime. As to the
question whether in such a situation the NOR would be
invalidated, it seems that so long as it was given by the
Master in good faith, it remains effective.

The time used in moving from the place of waiting to the

loading/ discharging berth shall not count as laytime.
Such exception would not be applicable if the vessel is
already on demurrage.

clause 7 – demurrage
Clause 7 provides that demurrage at the loading and
discharging port as stated in Box 20 is payable by the
charterers upon receipt of the owners’ invoice. If it is not
paid accordingly, the owners shall give the charterers 96
hours to rectify, exhausting which the owners can
terminate the charterparty and claim damages.

clause 8 – lien
Clause 8 provides that the owners have a lien on the cargo
and all sub-freights payable in respect of the cargo for
freight, deadfreight, demurrage, claims for damages and
for all other amounts due under the charterparty. By
exercising the lien, the owners will be entitled to obtain
security up to an amount of a reasonably calculated claim,
including the costs of recovery.

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 clause 9 – cancelling clause
Clause 9 provides that if the vessel is not ready to load on
the cancelling date as stated in Box 21, the charterers shall
have the option to cancel the charterparty. If the owners
anticipate arrival beyond the cancelling date, they should
notify the charterers without delay of the vessel’s readiness
to load. If the charterers fail to exercise their option of
cancelling the charterparty within 48 hours after the receipt
of the owners’ notice, the charterparty shall be deemed to
be amended such that the seventh day after the new
readiness date stated in the owners’ notice shall be the
new cancelling date. If there is further delay, the
charterers shall have the option of cancelling the
charterparty.

clause 10 – bills of lading

Pursuant to Clause 10, the charterers are entitled to insist
upon the bills of lading as per the “Congenbill” Bill of
Lading Form, Edition 1994 being signed by the Master,
unless the charterers receive a copy of a written authority
of the owners or their agent authorising some other person
to sign.

Clause 10 also gives the owners an express right of

indemnity from the charterers for issuing bills of lading at
the charterers’ request and as a result of which the owners
may assume greater liabilities than under the charterparty.
The most obvious example is where the owners incur

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liabilities to holders of bills of lading under the Hague and
Hague-Visby Rules and are unable to rely upon the
protection of Clause 2.

clause 17 – war risks (“voywar 1993”)

Clause 17 incorporates the Voywar 1993 War Risks
Clause for voyage chartering, which has been revised and
modernised. In particular, the definition of “War Risks"
has been expanded and clarified taking into account
modern ways of war and interventions such as war threats
and belligerent events, etc. This clause stipulates in
detail what the Master and/ or the owners may do in case
the vessel, the crew (or other person on board) or the
cargoes are exposed to War Risks.

clause 19 – law and arbitration

Clause 19 deals with the choice of law and dispute
resolution procedures. In essence, the parties may opt
for (1) English law and London arbitration; (2) US law and
New York arbitration; or (3) any other governing law and
place of arbitration the parties wish to choose. In the
event that the parties make no specific choice in Box 25,
English law and London arbitration shall apply by default.

The parties may also agree that claims not exceeding the
amount stated in Box 25 be resolved by the Small Claims
Procedure of the London Maritime Arbitrators Association
(in cases where English law is elected) or the Shortened
Arbitration Procedure of the Society of Maritime Arbitrators,
Inc. (in cases where US law is elected).

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In summary, as compared to the previous versions,
GENCON 1994 is generally perceived as being more
favourable to the owners. From the charterers’ point of
view, it is advisable to exercise caution when using and
adopting GENCON 1994 in its entirety.

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 our shipping & logistics practice
We provide comprehensive services in both contentious
and non-contentious aspects of shipping and transport law.

We are particularly experienced in “dry” shipping work,

including such matters as bills of lading, charterparties and
international sale of goods. Examples of the matters with
which we regularly deal are: cargo claims, bunker disputes,
laytime and demurrage disputes, hire and off-hire claims,
ship repair claims, performance warranties, commodity
disputes, CIF and FOB contracts, trade finance and
documentary credits, cargo policies, haulage and freight
forwarding contracts, cross-border courier business as well
as claims for loss of life/ personal injury sustained on board
vessels.

We work closely with the leading experts, surveyors and

adjusters dealing with the loss of or damage to cargo and
related insurance problems.

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Our clients include shipowners and charterers, cargo
insurers, tug companies, ship-repairers, banks, marine
engineering companies, ship and chartering brokers, oil
companies, and government agencies.

Members of the team are frequently called upon to deal

with matters requiring an urgent response, such as the
application for or dismissal of an injunction, the exercise of
a lien or the arrest of a ship.

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 contact us
for enquiries, please contact members of our shipping &
logistics practice group

sherman yan
managing partner
head of litigation & dispute resolution
department
shipping & logistics practice group

direct line: (852) 2107 0343

email: sherman.yan@onc.hk

Prior to joining ONC Lawyers, Sherman practised with

an international law firm in its Hong Kong office, handling
a wide range of shipping and logistics related cases
including rendering advice on bills of lading; advising
insurers on cargo policies; handling cargo claims,
mortgagee actions, collision cases, bunkering disputes
and charter party disputes. At ONC Lawyers, Sherman
is the Head of Litigation & Dispute Resolution
Department handling a wide range of commercial
disputes especially disputes among shareholders and
contentious matters concerning the Securities and
Futures Ordinance, in addition to his shipping and
logistics practice.

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ONC Lawyers is a professional and dynamic legal practice
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