DE-PML

Deck Elective
Port Management and Logistics

(PRE-FINAL)

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 TABLE OF CONTENTS

Course Description.....................1
Course Guide .............................2
Module Mapping.........................7
Module Timetable.......................7

Module 3 – Element A-C

Study Schedule ………...……. 9

Learning Plans ……...…….…. 9
Introduction ……………...….... 9
Discussion Lesson 1 ………… 9
Discussion Lesson 2………… 19
Discussion Lesson 3………… 33
References …………...……… 43

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 COURSE DESCRIPTION

BACHELOR OF SCIENCE IN MARINE TRANSPORTATION

DECK ELECTIVE – PORT MANAGEMENT AND LOGISTICS
Course Code DE-PML
Course
Descriptiv Deck Elective-Port Management and Prerequisite None
eTitle Logistics
Course This course deals with the interface between land and a sea or a waterway
Description: connection providing facilities and services to commercial ships and their
cargo, as well as the associated multimodal, distribution and logistics
activities.
Course Lecture Laboratory
3 Units 3 Hours 0 Hour
Credits Contact Hours ContactHours
Per Week Per Week
Competence:

KUP

At the end of the course, the students shall be able to:

CO 1. Evaluate and portray the port/terminal
Course system using the four core components of agents,
Outcome/ operations, markets and services, and impact
s based on the published Port Operations,
Planning, and Logistics book.
CO2, Determine the contracts and agreements
including roles and responsibilities to ensure the
smooth and lawful operation of maritime activities
in port managements

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 COURSE GUIDE

There are no shortcuts to success here. The institution prepares you

to face the demands of the modern age of learning in this new standard
without compromising quality education and training in the maritime
sectors. The only secret to fulfilling this module’s requirements is
commitment to the institution's mission, dream, and aim with
perseverance, integrity, and dedication.
The module has been meticulously, perceptively and independently
designed to reinforce the cornerstone of good education for you to
resiliently learn the various underpinning technical and general
knowledge in maritime studies. As your facilitator, moderator and
assessor in this particular course, you will be greatly directed and trained
to test your ability to meet potential adversities in life as ship officers.
The common objectives of quality learning are to ensure that you meet
the competencies mandated by the STCW 1978, as amended. Minimum
criteria for achieving both theoretical and practical aspects consistent
with knowledge, understanding and skills captured through standards
assessment and evaluation. I am honing you as a conscientious learner
to conduct all of the tasks, assignments and tests in a very trustworthy
manner. Clearly remember that this module is just a learning tool with
all the convenience and complete all the tasks asynchronously to pave
the way for a rigid assessment of each end of the module. The following
guides and house rules will help you sustain the course line in the midst
of the sea obstacles and eventually say, "I HAVE ARRIVE TO THE
DESTINATION OF SUCCESS."

Here are the guidelines which you should follow:

1. Perform your time management by reading and relating every

part of the module to reach the various learning references. Do
advanced research using different essential learning kits from
books, magazines, interactive apps and applications that you
believe can help you complete the tasks. Despite internet
connectivity restrictions including government quarantine
policies and compliance procedures, it is your initiative to
scrupulously and with good conscience perform the institution's
designed blended programs in either synchronous or
asynchronous mode.

2. You are on a distance learning cycle that manifests the classes

by online, off-lineor hybrid approaches in coping with the highest
level of quality education without sacrificing other modules of the
other enrolled courses. It takes flexibility and efficient time
management to reach the deadlines set by the organization
and also by the facilitators. Using the devices such as mobile
phones, laptops and other automated reminders to inform you of
the production submission and alert you of the deadlines. It will
help you manage your time by putting the notices in a
conspicuous location.

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 3. Stick to the query schedule that your facilitators have set. We
are not members of the call-center that can answer all your
questions in 24/7 modes. Ask only relevant questions, and avoid
questions that are redundant.

4. Just know your status, whether you belong to almost any

modalities. Remindyour facilitators of what you have done. Take
the practice of logging in to the learning management system
sites in case you’re in a blended program to keep up with the
updated and relevant updates and discussions. Any time you
visit the site, check the latest updates on your account for any
related improvements and revisions. Religiously observe the
schedules of learning. Stay linked and chat with your
facilitators wherever you go.

5. Do not become a delay instrument. If you cannot complete the

tasks in the set schedules, you will find it difficult soon.
Remember you can't proceed to the next module unless you get
satisfactory and passing remarks.

6. Guidance is very important to execute the tasks easily. Keep in

mind that assumptions are particularly dangerous during
onboard operations. Learn to read the instructions before
attempting to carry out the assigned tasks or assessments.
Never settle to a median score but strive for the highest
standards of skills.

7. Study the lessons ahead of time. Utilize all the energy and
imagination effectively. Learn how to use all the learning kits and
references before doing the elements needed on your modules.
Make sure no missing links are found.

8. In all honesty, always answer the pre-test to help gauge the

level of knowledge and awareness of the topics. It is just a
diagnostic test of yours.

9. All the discussions are academic fora, meaning the relevant

academic meetings are applied.
a. Your performance will objectively be based on the rubrics of
your tasks. Check the notations or any assessment tool that
meets the competencies.
b. As much as you can, avoid using abbreviations and
acronyms unless they are entered in the readings and used
in your introduction. Avoid writing in all capital letters if using
digital learning kit. In a paper-based approach you are
expected to write without erasures and alterations in capital
and bold letters.
c. Please post corresponding and appropriate paragraphs on
your production. Work independently until your facilitators
give feedback, without disturbing others for approvals and
disapprovals. Never settle inputs that you composed
without reliable information and resources. Learn to identify

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 references or even quote other people's works even without
particular template types in your outputs. Do not post
uninformed or half-cooked opinions from scanty knowledge.
d. Read and analyze your classmates' contributions in the
discussion fora. Correct and courteous response. Never
leave the forum, unless you need to.
Use appropriate language always when participating in any
form of collaborative discussions.
e. When sharing ideas or questions, be polite and respectful,
and contradict your views and opinions. Never be
disrespectful and promote personal assault. Apply not to
people with reliable proof and references to ideas /
statements. Remember that the purpose of academic
discussion is to develop critical and analytical thinking skills
and camaraderie.

f. Do not post lengthy posts (don't accept turning around the

bush). Just stickto the point. Keep your main point clear and
express it in the shortest possible terms. Don't let the
conversation drift.
g. Secure your confidentiality. Ponder before you post so as to
prevent misinterpretation and offend other parties to your
ideas. If you want to share something private, please do so
by e-mail or private messenger.
10. Do not plagiarize, and do not write patches. Patchwriting is still
a plagiary type. To assess the percentage of resemblance and
remove copyright infringement, use the plagiarism checker. The
act of making small modifications and substitutions to copied
source material is referred to (Merriam-Webster, 2020). To be
more secure use a plagiarism check.

11. Do your best to remind your facilitator, by all means, of any

inevitable delays or "absences" or "silences" over the course of
a week or other questions at the specified time. No time as
peekaboo as this moment. Be transparent regarding your
situation.

12. Notice that the platform is an area of simulated learning, not a

social networking site or a social media gossip portal. Use a
recent and correct photo ID on your profile page and fill in the
details needed for proper identification.

13. Materials and other resources shall be made available to you

and it is strongly recommended that you be resourceful and
imaginative.

14. The assessment will be generated hierarchically via the digital

platform at the scheduled time. When you have failed the
evaluation by element, the platform will guide you from the start
to evaluate the element completely and restart the evaluation
and pass the evaluation before beginning the next element.

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 15. Follow guidelines and assumptions at all times are strictly
prohibited. Ask your facilitators about their convenient class
hours or appointed time for consultation.

16. Finally, you’re the learner; therefore, you’re doing the module
yourself. Your family members and friends at home will help you
but the requisite tasks MUST be performed and undertaken
entirely by you as your performance must be orally checked and
validated. The institution's core principles must be adhered to.

EVALUATION:
In order to meet the appropriate passing grades of this module, you must:

1. Read all your course readings and respond to your diagnostic

evaluation, self- assessment and other activities, including
reflections.

2. Participate in conversation or fora relevant to the modules with

the asynchronouslearning modalities.

3. Submit your appropriate assignments and participate in the

digital modular summary evaluation of each element.

4. Send your recommended final teaching-learning activities as per

schedule, such as portfolio, case review, investigation report,
action research, case study, term paper, and others.

5. Start your general assessment regularly.

RESULT:

Institutional assessment is divided into two categories: formative

and summative. The formative component is an assessment provided by
your facilitator by element in which you have to pass by the 80 percent
or as required otherwise you cannot proceed to the next element. The
institution will determine whether how many attempts are allowed for you
to enjoy or you will be required to pay the correct amount to be
recovered. Never try if you are not sure you are well equipped with the
critical knowledge and analytical skills of the learned outcomes. At your
most comfortable moment, you can try the quiz earlier; however, you
have to make sure you meet the minimum passing criteria for each item.
Therefore, the summative evaluation is called a general assessment
given to you only once at the end of the module. You must undergo the
"Course Outcomes Assessment" based on your most critical learning
skills provided by the CHED Memorandum Order (CMO) or the Joint
CHED-MARINA Memorandum Circular(JCMMC).

The reflective questions are designed to help you critically analyze

the courses for better understanding while the pre- and post-tests,

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 including the tasks and exercises, are a tool for review management to
prepare you for the general evaluation at the end of the module.

GRADING SYSTEM:

You have to meet the passing grades by referring it to the institutional

grading systemand procedures.

LECTURE WITH LABORATORY

 ASSESSMENT (Course/s with laboratory)
 LABORATORY ASSESSMENT: -60%
Simulator / Scenario Assessment
 SUMMATIVE ASSESSMENT: -40%
Periodical Examination
TOTAL - 100%
PURE LECTURE:
 ASSESSMENT (Course/s without laboratory)
 Formative Assessment: -60%
-Quizzes/Hands-on Activity -30%
-Recitation/Class Participation,
Project/Assignments -30%
 SUMMATIVE ASSESSMENT: -40%
Periodical Examination
TOTAL - 100%

OVER-ALL PASSING GRADE:

Sixty percent (60%) or given a remark as “COMPETENT”

When you earn a score below 60 percent, you are deemed "NOT
YET COMPETENT" and you are subject to a RESIT schedule. Your
required maximum number of RESITS will be granted in accordance
with the Quality Standard System (QSS) to improve your lowest
percentage of assessment and the most important thing is for you to
retake a specific element that you have achieved least in order to meet
the overall passing grade.

Pls. put a check mark if conformed


I have fully read and agree to
the above statement. I wholly
uphold the academicintegrity. Name & Signature:

MODULE MAPPING

Module Title DE-PML Module 2

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 Module This module will cover introduction to Port Management and Port operations
Description
Course Outcomes CO 1. Evaluate and portray the port/terminal system using the four
Addressed core components of agents, operations, markets and services,
and impact based on the published Port Operations, Planning,
and Logistics book.
CO2, Determine the contracts and agreements including roles and
responsibilities to ensure the smooth and lawful operation of
maritime activities in port managements
At the end of the module, you should be able to:

Module Learning a) LO1.7: Explain ISPS code and application of Maritime security level
Outcomes b) LO2.1: Identify and explain the different functions of Bill of lading
c) LO2.2: Discuss the content of the Voyage charter party and explain
the legal implications of some important conditions of the voyage
charter party contract
a) Port Security
a) health safety and environment and security/ISPS
Element Title Port logistic
b) Bill of Lading – procedure and documents for issuance for
bill of lading
c) Voyage charter Party
Time Period Week 9-12
Periodic Term PRE-FINAL

MODULE TIMETABLE

Course Code: DE-PML Time Frame

Course Description:
Element

Deck Elective-Port Management and Logistics

Module
Week
No.

No.

Title of the Element HRS DAY

Port Security
9- a) health safety and environment 6
III 10 A
and security/ISPS
Bill of Lading – procedure and 3
III 11 B documents for issuance for bill of lading

III 12 C Voyage charter Party 3

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 MODULE 3
(ELEMENT A - C)
STUDY SCHEDULE

Module DE-PML Module 1

Course Outcome

Port Security
Module Learning
Week 9-12

a) health safety and environment and

security/ISPS Port logistic
Outcome

Element Bill of Lading – procedure and documents

for issuance for bill of lading

1 CO1 MLO1 Time Period (Flexible time is considered)

Specific Learning Objectives by Element Resources Assignment

Format
- Work/textbook
Engage:
- Explain ISPS code and application of Maritime - e-Hand- out
security level
- Video Clips
Explore: Activity No. 1:
- Identify and explain the different functions of Bill of - Multi Illustration
lading media
Explain: Prese Activity No. 2:
- Discuss the content of the Voyage charter party and ntation Reaction
explain the legal implications of some important Paper
conditions of the voyage charter party contract - Google
Classroom
and other
social media
Platform

- Paper-based
modules
ASSESSMENT DATE: ASSESSMENT TYPE:
1. and ca re o f pe rsons on b oar d at t he O per ational Level

2. REFERENCES:
1. R1 PPA ADMINISTRATIVE ORDER No. 13-77
2. R2 Joint CHED MARINA MEMORANDUM Cir. No.1 s.2023 – Policies, Standards and Guidelines for the Bachelor of Science in
Marine Transportation (BSMT)

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 DISCUSSION OF LESSON 1
Port Security
a) health safety and environment and security/ISPS

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 INTERNATIONAL CODE FOR THE SECURITY OF SHIPS
AND OF PORT FACILITIES

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 DISCUSSION OF LESSON 2

THE BILL OF LADING

OBJECTIVES
After reading through this lesson, you should be able to:
 define a bill of lading;
 identify and explain the functions of a bill of lading;
 distinguish the different types of bill of lading;
 explain the commercial background and reasons for the use of a bill of
lading;
 describe the bill of lading under charter party; and
 describe the electronic bill of lading

5.1 INTRODUCTION
The contract of carriage evidenced by a bill of lading is widely used in the
liner trade. It is partly regulated by mandatory international rules. The
importance of this document is evidenced by the internationalization of rules
covering the maximum obligations, liabilities and limitations of liability of the
carriers and the rights and duties of parties to the document. This chapter
deals with the major functions of a bill of lading and the legal implications to
concerned parties of the subject document.

5.2 DEFINITION OF A BILL OF LADING

As explained in the previous chapter of this book, a bill of lading is a
document signed and issued by a shipowner/carrier or his agent
acknowledging that goods have been received for shipment or shipped on
board a particular vessel, which is bound for a particular destination on
which the goods are to be carried.

The bill of lading is the owner's or charterer's bills. It means that the shipper
is one principal party to the contract evidenced by the bill of lading. Majority
of the printed bills of lading used in shipping contain the words "for the
Master" at the bottom right-hand corner below the space for a signature.
Therefore, in most cases, the bill of lading is signed and issued by the
ship's captain. The bill of lading is the receipt for the goods stating the terms
on which they are to be carried.

The bill of lading is used for the carriage of cargo in the liner trade where
ships have fixed sailing schedule and ports of call. As mentioned in the
previous chapter of thig textbook, the contract of carriage is initiated
through announcement/publication of the carriers. The sailing schedule can
be concluded when an agreement is reached as evidenced by a booking

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note.

In other cases, when goods are placed on board, the mate issues informal
receipt, which is later exchanged for a bill of lading. Still in some cases, the
goods are delivered without any preliminary contract or booking note.
However, contractual relationship between the carrier/liner and the cargo
owner does exist, which needs confirmation specifically with regard to the
terms and conditions of carriage.

Cargo owners or shippers need assurance or guarantee that the goods

have been delivered or received by the ship, as well as a promise that the
goods will reach its final destination This is why after receipt of the goods
on board, the carrier or his agent usually issues a bill of lading.

5.3 INFORMATION IN THE BILL OF LADING

The information in the face of a bill of lading regarding the cargo, origin and
destination and name of the ship are in the boxes on one side of the
document. The reverse side of the document contains information on the
nature of the contract itself. Usually, the boxes in the face document of a bill
of lading contain the following information:

1. Shipper or the person dispatching the goods

2. Consignee or the party designated to take delivery of the goods
3. Notify party or the person who should be notified by the shipping line of
the arrival of the goods. (This could be a customs broker or a sales
agent for the exporter.
4. Place of receipt or inland place where the goods are placed in the care
of the shipping line
5. Name of the carrying ocean vessel
6. Port of loading
7. Port of Discharge
8. Place of delivery or inland place where the shipping line is contracted to
deliver the goods
9. Marks and numbers
10. Number and kind of packages
11. Description of the goods
12. Gross weight
13. Measurement or the total number of cubic meters per item
14. Freight details and charges
15. Freight payable at or the place where freight is to be paid
16. Place and date of issue

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17. Signature (usually, the bill of lading is signed and dated by the master of
or his agent)

Most liner bills of lading are printed on both sides. On the face of the
document (front)are boxes or spaces wherein information on identity of the
particular cargo, the journey, the names and addresses of cargo interests
and other details (including freight) are written. The reverse side (back) of
the Bills of Lading under a charter party contains a reference to the charter
party together with a small number of more important clauses.

The carrier or his agent or master of the ship shall issue a bill of lading on
demand of the shipper. Article 3, paragraph 3 of the Hague-Visby Rules
requires that the documents contain the following information:

1. Leading marks that are necessary for identification of the goods.

2. Either the number of packages or pieces or the quantity or weight as the
case maybe.
3. The apparent order and condition of the goods.

The information required to be in the bill of lading must be furnished by the

shipper but should the carrier have reasonable grounds for suspecting that
the particulars are wrong, or if he has actually checked them, he does not
have to put them in the bill of. lading. This information shall help the buyer
to determine whether the goods for shipment are in conformity with the
sales contract or not.

Although the Rules require only minimum information to be placed in the bill
of lading, it does not prohibit the shipper from putting additional information,
such as: the nature of the goods, or designation of brand or model of
machines, and type of packaging.

The statement in the bill of lading that the goods are "in apparent order and
condition" is a prima facie proof that the goods are in normal, good
condition. However, the carrier is allowed to make reservations/
qualification or notation if after inspection there are obvious discrepancies
on the description provided by the shipper.

This was provided in Article 3.3 of the Hague-Visby ules, which states that
"no carrier, master or agent of a carrier shall be bound to state or show in
the bill of lading any marks, number, quantity or weight which has a
reasonable ground to suspect does not accurately to represent the goods
actually received or which he has had no reasonable means of checking."

5.4 COMMERCIAL BACKGROUND AND REASONS FOR THE USE OF

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BILL OF LADING
The contract of carriage is always preceded by sale/purchase contract. For
vessels plying in the international trade, it also follows that sale transactions
are international in nature. It involves distance sales, where the goods, and
payment cannot be exchanged simultaneously, as in direct sales.

One of the complexities of a transaction is the guarantee for both buyer and
seller to receive the goods and payment, respectively. In most cases, the
buyer and seller do not know each other.

If payment is made earlier before the receipt of goods, the question often
asked is: How can the buyer be protected from damages? The condition is
similar on the part of the seller. He waits for the buyer to receive the goods
and checks if they are received as agreed upon in the sales contract.

There is no guarantee that the seller will reserve the payment. In short the
seller does not surrender the goods before he has received payment and
conversely, the buyer will not pay until he is satisfied that the goods are in
conformity with the contractual specifications (i.e. quantity and quality).

In practice, there are special rules to bridge the gap between the seller and
the buyer in distance sales using the bill of lading. The transport provider
and banks now enter into the picture to facilitate international trade. A bank
issues' Letters of Credit to another bank for the payment of goods, while
the carrier issues the bill of lading. The "Uniform Customs and Practice
for Documentary Credit" requires a bill of lading to be issued by the
carrier.

The bill of lading contains the description of the goods, based on the
condition when received on board. The buyer can check if they conform to
the sales agreement. Through this description, the bill of lading may
expressly name the person demanding delivery as the consignee, instead
of inspecting the goods himself before shipment.

Below is the procedure and documents related to the sale of goods and
issuance of bill of lading and letter of credit:

Step 1
The buyer and seller conclude a purchase/sales contract providing for
payment by documentary credit. · The purchase contract, for example,
involves 10,000 tons of paper products at the price of $1 million (United
States) dollars. The buyer is Philippine Paper Products Corporation, which
is based in Manila and the seller is Swedish Manufacturing Company,
which is based in Stockholm.

Step 2

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The buyer instructs his bank (also called the issuing bank) to issue a credit
in favor of the seller (also called the beneficiary). The issuing bank here is
usually a bank where the buyer is based. In this case, it is a bank in.
Manila.

Step 3
The issuing bank asks the other bank (which refers to a bank in Sweden) to
advise or confirm a credit.

Step 4
The advising or confirming bank informs the seller that the credit has been
issued.

Step 5
When the seller receives the confirmation and is satisfied that the buyer
meets the terms (according to the contract) the seller loads the goods.

Step 6
The carrier issues a bill of lading upon receipt of goods

Step 7
The seller sends the bill of lading to the bank where the credit is available.

Step 8
The bank checks the documents. If the documents meet the requirements
of credit, the bank pays, accepts or negotiates according to the terms of the
credit.

Step 9
The bank sends the documents to the issuing bank.

Step 10
The issuing bank checks the documents. If they meet the requirements of
credit to the bank, the issuing bank either:

a. effects payment in accordance with the terms of the credit (to the seller
if he sent the documents directly to the issuing bank); or to the other
bank which made the funds available in anticipation, or
b. reimburses in the pre-arrange manner the confirming bank that has paid
or accepted the credit.

Step 11
The documents are checked by the issuing bank and if found to have met
the credit terms, these documents are released to the buyer upon payment
of the amount due (or upon the terms agreed between him and the issuing
bank).

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Step 12
In the meantime, the vessel performs the journey and freight is paid. Upon
arrival of the vessel, the buyer presents the bill of lading to the vessel as
evidence of his entitlement to claim the goods.

Step 14
The goods are delivered to the buyer. Upon receipt of goods, the buyer
finally surrenders
the bill of lading to the carrier.

5.5 CLEAN BILL OF LADING AND CLAUSED BILL OF LADING

It is now relevant to discuss the difference between a clean bill of lading
and the dirty or claused bill of lading and the effects of the letter of
indemnity.

Clean bill of lading means that there are no clauses inserted on the face
of the document
that would be detrimental to the goods and packages being shipped.

Dirty or claused bill of lading means that the carrier does not agree with
the statements made in the bill of lading by the shipper and put some
clauses or notation in the bill of lading.

A bill of lading, which has no clauses or words inserted on its face, is said to
be "clean" and is prima facie evidence that the goods were in apparent
good order and condition when received and shipped by the carrier. It also
implies that the carrier has conducted a reasonable inspection of the goods
and that no evident defect was found. But, the carrier has also the right to
write clauses or insert words on the bill of lading if he found that the goods
are damaged or there is an evident defect or if the quantity is not correct.

Article 34 of the Uniform Customs and Practice for Documentary Credits

requires the following:

1. A clean bill of transport document is one which bears no superimposed

clause or notation on the good and/or the packaging.
2. Banks will refuse transport documents bearing such clauses or
notations unless the credit expressly stipulates the clauses, which may
be accepted.
3. Banks will regard a requirement in a credit for transport document to
bear the clause "clean on board" as complied with if such transport
document meets the requirements of this Article and of Article 27.

If the carrier has reasonable grounds for suspecting that the particulars

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written in the bill of lading are wrong or when there is no opportunity to
check them, he needs not set them out in the Bill of Lading (Gaskell, et.al.,
1987). This is specifically provided in Article 3.3.3 of the Hague-Visby
Rules.

Below are two examples to explain the above-mentioned provision:

1. A container was received by the carrier for shipment. The shipper

declared that the container contains 100 new washing machines. The
carrier or his agent has no means of checking the actual number of
washing machines inside the container or see if the washing machines
are new.
2. The shipment is 1,000-bags of rice (50 kg each bag). Although the
1,000 bags are counted and tallied, there is no way to checking the
weight of each bag to confirm that they really weigh 50 kg.

In the above-given examples, the carrier should not specifically write the
100 new washing machines. It should not write also the weight of the
shipment as 50,000 kg in the bill of lading.

Another important issue related to this provision of the law is the extent of
the carrier's obligation to inspect the goods. Reasonable inspection does
not mean that the carrier has to inspect the goods in detail. It simply means
that the carrier or his agent should conduct external inspection of the
packages in which the goods are to be shipped or in cases wherein goods
are not packed like lumber, machinery, cars, etc.

In the given example above, the carrier's obligation is to inspect the

container as to number and its condition, or the number and condition of the
boxes of washing machines or the bags of rice.

5.6 THE FUNCTIONS OF THE BILL OF LADING

A bill of lading performs three functions, namely:

1. As Evidence of a Contract of Carriage

A bill of lading contains a promise to transport the goods. It
acknowledges that the goods have been delivered to the carrier for
shipment to a stated destination and repeats in details or by-reference
the terms of the contract concluded. The terms of contract or the
promise to transport goods shall be in conformity with the booking note.
In case no booking note is made, the bill of lading can be considered as
the evidence of contract previously agreed upon.

It is not necessarily the contract itself which may be verbal or may be

written, but it is considered best evidence of the contract. When the bill

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 of lading is transferred to a third party, it may become the contract. Most
of the contracts are port to port and contracted between the shipowner
or shipping line and the shipper of the cargo.

2. As Evidence of the Receipt of Goods

The carrier acknowledges that the goods have been received either on
board a named vessel or into the carrier's custody for placing them on
board a vessel. The bill of lading is a prima facie evidence of receipt of
the goods as they are described in the document. It should enumerate
the goods according to quantity description and shipping marks,
packaging, as well as the apparent condition of the goods in which they
are shipped.

The description of the goods received is very essential because it is the

obligation of the carrier to deliver what he received as he received it. In
case of discrepancy, particularly in the condition and quantity, the
discrepancy will represent the loss/damage during transport, which the
shipowner should be able to show and prove otherwise.

3. As Document of Title to the Goods

The bill of lading entitles the holder to receive the goods from the carrier
upon arrival of the ship. Possession of the bill of lading is equivalent to
possession of the goods. The bill of lading also entitles the holder to
make any claim against the carrier for loss of or damage to the goods.
The holder must present the bill of lading before delivery and surrender
it afterwards.

The right to release is transferable, which means that the bill of lading is
negotiable. The carrier has the right to get the bill of lading as proof that
he has performed his duty to carry and deliver the goods. The carrier is
not duty-bound to deliver the goods, if the bill of lading is not presented
since he shall be liable for damages if the goods are delivered to the
wrong person.

Normally, three or four original bills of lading are issued. The shipper
retains one, the other is traveling with the documents and the third is
sent to the consignee. For the holder to claim the goods or for delivery
at the port of destination, one original bill of lading is sufficient.

However, if the cargo is delivered at a port other than the named

destination/port, all original bills of lading should be presented. There
are also cases wherein the bill of lading has not arrived on time for
presentation at the port of destination.

The foregoing scenario commonly happens at short-sea voyages,

particularly, in tanker trade. Cargoes are often sold several times while

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 the cargo is on board or in transit. A temporary storage facility and
warehouses are usually provided at the port of destination, while waiting
for the presentation of the Bill of Lading by the rightful consignee.

The carrier can deliver the goods even without presentation of the bill of
lading if there is a guarantee against the risk of liability towards the
holder of the bill of lading for the delivery of the goods to the wrong
person. The amount of guarantee should include the cost of the cargo at
destination, interest and other consequential damages The Protection
and Indemnity (P & I) Club advises that insurance cost for that matter is
twice the invoice value of goods.

5.7 TYPES OF BILL OF LADING

There are different types of a bill of lading. The type depends on the
conditions of the goods and the policy terms of the carrier: However, each
type contains the three basic and essential functions of the bill of lading
(evidence of the contract of carriage, evidence of the receipt of goods and
document to the title to goods).

Below are the various types of the bill of lading:

1. Shipped Bill of Lading
Also referred to as on board, is a bill of lading whereby the carrier
acknowledges that the goods are loaded on board. "Notes of any
apparent defect in either their goods or their packaging are indicated on
the face of the bill of lading (if there is any).

2. Received for Shipment Bill of Lading

It states that the goods have been received into the carrier's custody,
which could be at a warehouse or an inland container terminal. It does
not confirm that the goods are onboard the vessel for a particular
sailing. Occasionally, the shipowner's agent issues the bill of lading and,
therefore, the goods are left to his custody prior to the arrival of the
vessel.

3. Through Bill of Lading

Provides for the carriage to be partly performed by someone other than
the carrier. This is issued in case the voyage requires on-carriage with
at least one transhipment. On-carriage means that the carriage of
cargoes goes beyond the port of discharge from the ship. A through bill
of lading may provide that the person who issued the bill of lading also
takes charge of the transport of goods throughout the voyage,

4. Combined Transport Document

Combined transport consists of a voyage involving more than one leg.
Very often the voyage is made up of one ocean leg and one or more
inland legs. However, it can also be a voyage with two legs using the

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 same mode. Responsibility for the goods belongs to the carrier from the
time they are received under his care until the time the goods are
delivered at the fixed destination.

The documents evidencing the contract of carriage is called the

combined transport document or combined transport bill of lading.
The term "intermodal transport” is used when the voyage includes an
inland plus an ocean leg. Multi-modal transport refers to more than one
mode of transportation, including an ocean leg.

The forwarding agent usually acts as carrier when "door to door" service
is offered These forwarding agents are also called the multi-modal
transport operator or the “MTO". The service provider of a multimodal
transport contract usually accepts responsibility for the goods from the
time they are received into his care until the time they are delivered at
destination.

5.8 THE BILL OF LADING UNDER A CHARTER PARTY

One of the complexities of the contract of carriage of goods by sea is the
use of charter parties and bill of lading issued under charter parties. What
will be the terms of the contract of carriage? Who will be the carrier when a
charterer also holds a bill of lading or when a third party holds the bill of
lading?

As discussed earlier, charter parties are contracts for the use of the entire
ship while the bill of lading is the evidence of a contract, which serves as a
receipt of goods, contract of transport and the title to the goods. In the first
situation, the charterer contracted the shipowner for the use of ship and as
a shipper. In the second situation, the charterer, acting as a shipper, needs
the bill of lading because it is also an evidence of the receipt of goods and a
document of title to the goods. A charter party and bill of lading share the
same function that is as evidence of the contract of carriage.

When a ship is on a voyage charter party, a bill of lading may also be

issued. Provisions of the charter party are made part of the bill of lading
through the use of incorporation clause. Two specific examples are the
provisions in Article 1 of the NUVOY 84 Universal Voyage Charter Party
and NUVOY 84 BILL OF LADING. In both documents it was stated, that "all
terms of the Charter Party, dated as overleaf, are herewith
incorporated'(Polish Chamber of Foreign Trade, 1984).

The bill of lading issued under charter parties is considered only as receipt,
while it is in the possession of the charterer. It becomes an independent
contract when transferred to a third party. In this case, the Hague-Visby
rules apply.

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The paramount clause in the bill of lading states that the Rules of the
International Convention for the Unification of Certain Rules Relating to Bills
of Lading singed in Brussels in 1924 should apply. The general paramount
clause under NUVOYBILL-84(1984) states the following provisions:

1. "Provisions of the International Convention for the Unification of Certain

Rules Relating to Bills of Lading signed in Brussels on 25*h August
1924 (the Hague Rules) shall apply to this Bill of Lading. In respect of
shipment to which national enactment of the said rules is compulsory,
applicable provisions of such enactment shal prevail. In trades where
the above convention as amended by the Protocol dated 23 February
1986 (Hague-Visby Rules) is compulsory, applicable provisions of the
Hague-Visby Rules shall apply."
2. "The carrier shall in no case be responsible for loss of or damage to
cargo howsoever arising prior to the loading into the charter discharge
from the vessel nor in respect of deck cargo and live animals" (Item. No.
2, p. 1).

5.9 ELECTRONIC BILL OF LADING

Electronic Data Interchange (EDI) and other electronic means of
communication such as the e-mail and internet have been developed very
rapidly and radically over the last few years. This development affected. the
manner of trade transaction. Electronic communications are fast replacing
paper documents. The use of these communications, however, raised a
number of legal issues. One of the challenging issues is the replacement of
the traditional negotiable bill of lading with electronic equivalents.

There are systems and rules developed or in the process of being

developed to assist the implementation -of negotiable electronic documents
such as the bills of lading. The Committee Maritime International (CMD)
Rules on electronic bill of lading, which was adopted in 1990, has been a
major accomplishment in this aspect, though it is not yet enforced.

The main feature of the CMI Rules is the creation of an electronic bill of
lading by the carrier, who acts as depository and central registry for
negotiations under the system. The parties agreed that the carrier does not
have to issue a bill of lading to the shipper.

The important provisions of the CMI rules (CMI Rules for the Electronic
Transfer of
Rights to Goods in Transit, 1990) include, among the others, the following:
1. The rules are applicable to parties who expressly agree to its
application.

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2. The rules provide detailed regulations relating to:
a. the form and content of the receipt message which in fact is the
same information about the goods as described on a bill of lading;
b. terms and conditions of the contract carriage, the reference to which
should be contained in the message;
c. right of control and transfer during transit;
d. private key which is in a technically appropriate form such as a
combination of numbers and/or letters which the parties may agree
to securing the authenticity and integrity of a transmission;
e. carriers' notification of the place and date of the intended delivery of
goods; and
f. the option to receive a paper document widening the contract of
carriage.

Another development that will give a higher level of security and

predictability to electronic commerce is the electronic signatures or digital
signatures. The United Nations Commission on International Trade Law
(UNCITRAL) Working Group on Electronic Commerce began the
preparation of the draft uniform rules on digital signatures before the turn of
the new century. With this development, it can be said that the international
community has laid down significant foundation to address anticipated legal
problems relative to the use of international trade contracts, such as
electronic bills of lading and other trade documents.

In 1999 a multilateral contract called "Bolero" was lunched and this was
participated in by sellers, buyers or carriers. It involved the creation of a
central registry and the transfer of title to goods being effected by electronic
message. However, many participants still regarded the form as a bill of
lading, although the form does not come from COGSA 1971 and the Hague
-Visby Rules. Voluntary incorporation of statutes is an option which the
parties to the electronic system can perform.

Today, with the rapid use of computers and electronic mails, the traditional
paper system is being replaced. The proliferation of electronic fraud
depends on the protocols developed and applied for the use of electronic
transactions. The development of the system is evolving and time can only
tell whether there would be an increase or decrease in the electronic fraud.

5.10 BILL OF LADING AND INTERNATIONAL CONVENTIONS

Under the common law system, the carrier/shipowner is liable for the safety
of goods for carriage by sea. Only a few exceptions are admitted (e.g. loss
or damage caused by the Act of God). In order to protect their interests,
shipowners insert special provisions or exceptions from absolute liability in
the contract carriage. The insertions resulted in complications of the
implementation of certain common laws of some countries. Certain

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provisions of common law were displaced or modified by the contractual
terms agreed upon by the carrier and the shipper.

The created problem resulted in a meeting of members of the. International

Law Association. The meeting was held in The Hague, Netherlands in
1921. The parties agreed to a number of rules. These rules were adopted in
Brussels in August 1924 and the instrument containing the rules is called
the International Convention for the Unification of Certain Rules of Law
Relating Bills of Lading, also known as The Hague Rules.

The Hague Rules (1924) covers only the contract of carriage using a bill of
lading. It contains uniform regulations, on what the bill of lading should
include in the terms and conditions, as well as the liability associated with
the description of the cargo. It entered into force in 1931.

In practice, there are substantive, systematic and technical weaknesses in

the Rules resulting in its amendments through a meeting held in Visby,
Sweden in 1968. The amendment was signed in Brussels in February 1968
and is now known as the Hague-Visby Rules. The Convention was later
amended by the 1979 Protocol.

The Hague-Visby Rules (1968) applies to every bill of lading relating to the
carriage of goods between ports in two states, if the bill of lading is issued
in a contracting State or if the carriage is from a port in a contracting State.
Certain types of carriage are not covered by these rules. These exemptions
are the carriage of live animals and contract of carriage for deck cargo.

The implementation of the Hague-Visby Rules resulted in unjust overall

allocation of responsibility and risks favoring carriers at the expense of the
shipper. These included unclear and outdated provisions on exempted
perils and limitation of liability, difficulties in the settlement of cargo claims
and enforcement of cargo liabilities imposed on carriers. All of these legal
reasons gave rise to the demand for revision of present rules. Hague-Visby
Rules were considered to favor the ship too much.

UNCITRAL then worked from 1968 to 1978 to come up with another

convention. This is the 1978 UN Convention on the Carriage of Goods by
Sea, better known as the Hamburg Rules. It entered into force on
November 1, 1992. The central provisions of the Hamburg Rules (1978) are
as follows:

1. Scope of Application - rules apply to maritime carriage but not those

under charter parties, between two states, either the port of loading or
the port of discharge must be a convention State or those States who
ratified the convention
2. Carrier liability is still based on fault or negligence.

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3. Exemption of liability is extended from the time the carrier receives the
goods until the delivery of goods to the cargo owner.
4. Includes the shipper's liability for information provided to the carrier
which shall be contained in the bill of lading as well as in the letters of
guarantee.

SUMMARY
1. A bill of lading is a document signed and issued by a shipowner/carrier
or his agent acknowledging that goods have been received for shipment
or shipped on board a particular vessel, which is bound for a particular
destination on which the goods are to be carried.
2. A bill of lading performs three functions, namely: as evidence of a
contract carriage, as evidence of receipt of goods and as document of
title to the goods.
3. There are several types of bill of lading. These are the shipped bill of
lading received for shipment bill of lading, through bill of lading and
multi-modal transport document.
4. Other shipping documents used in the carriage of goods by sea are
non-negotiable waybills, mate's receipt and booking notes.
5. A bill of lading may be issued also when the ship is on a voyage charter
party. However, in this case, the bill of lading is considered only as a
receipt when in possession of the charterer. When transferred to a third
party, the bill of lading becomes an independent contract.
6. Liabilities for loss and damage in the carriage of goods by sea have
been defined in the international conventions, namely: the Hague Rules
(1924), the Hague-Visby Rules (1968) and the Hamburg Rules (1978).

REVIEW QUESTIONS
1. What is a bill of lading and explain its different functions?
2. Differentiate a shipped bill of lading from received for shipment bill of
lading
3. What are the major weaknesses of the Hague-Visby Rules?
4. Explain a bill of lading under a charter party.
5. What is the most recent form of bill of lading and explain its
advantages?
6. Discuss the differences among Hague rules, Hague-Visby rules and
Hamburg Rules, as far as bill of lading is concerned.
7. What is the importance of a paramount clause?

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 DISCUSSION OF LESSON 3

THE VOYAGE CHARTER PARTY

OBJECTIVES

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  After reading this chapter, you should be able to:
 define a voyage charter contract and explain the reasons why a
voyage charter contract is concluded;
 discuss contents of the voyage charter party and explain the legal
implications of some important conditions of the voyage charter
contract;
 understand the charter parties for consecutive voyages;
 interpret and understand the meaning of laycan in charter parties;
 explain the common exception clauses in the contract and
understand the loading process;
 know when the ships is considering an "arrived ship"; and explain
the meaning of laytime, demurrage and despatch

6.1 Introduction
A shipper has a large quantity of cargo. He wants the cargo to be carried by
a single vessel that is especially suited for the cargo. Oftentimes, this is not
possible to be loaded if a liner trade where other cargoes are also
accommodated. The shipper then becomes the charterer of the vessel
when he decides to make a contract with a shipowner for the carriage of his
cargo.

Voyage chartering is different from a bareboat and time chartering. Unlike in

the time charter or in the bareboat charter, the contract for voyage charter
does not give opportunity for a charterer to control or temporarily own the
vessel.

In many aspects, the voyage charter differs from the time charter in terms of
remuneration, description of ship, conditions for cargo, the expenses for the
transport of goods, etc.

Most of all, the legal implications to the parties concerned of binding

themselves to the voyage charter party are different from other charter
parties.

This chapter discusses the meaning of the voyage charter, reasons why a
charterer prefers the voyage charter party and the legal implications of the
various terms or conditions stated in the voyage charter contract.

6.2 THE VOYAGE CHARTER PARTY

The voyage charter contract is also called the voyage charter party. It is a
document or contract between the shipowner and charterer containing the
terms and conditions for the use of a ship's cargo space for one or more
than one voyage.

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There are two major parties to the voyage charter contract. One party is the
shipowner (or carrier) who promises to undertake the carriage. of a large
quantity of goods on a named vessel against remuneration for one or more
voyages between named ports. The other party is the charterer
(sometimes a shipper) who promises to deliver the named cargo to the
vessel and to pay the shipowner a remuneration (or freight) for that
transport of cargo.

The owner retains the operational control of the vessel and is responsible
for all the operating expenses such as port charges, bunkers, extra
insurances, taxes, etc. The charter's costs are usually cost and charges
pertaining to the cargo. Loading and discharging charges are divided
between the owner and the charterer, but based on agreement in the
contract. Agreement could be under the term "free in and out" (f.i.o.), which
means that the charterer bears the costs involved in connection with
loading and discharging.

6.3 REASONS WHY A VOYAGE CHARTER PARTY IS CONCLUDED

Voyage charter parties are concluded because the charterer wants a
specific type of vessel for a large consignment of cargo. Although the
charterer can make a consignment through a liner shipping company (liner
shipping provides fleet of ships regularly calling in various ports), voyage
chartering is preferred because of the following reasons:
1. The volume or quantity of cargo is too big, which cannot be
accommodated by the liner ship.
2. The liner company does not have a ship that directly service the ports,
where the charterer wants his cargoes to be loaded or discharged.
3. Chartering a whole vessel for one or more voyage is less costly than
contracting spaces on a liner vessel for large quantities of cargo.

6.4 RING PROCESS UNDER A VOYAGE CHARTER

The voyage charter parties are normally negotiated and concluded through
a broker. In voyage chartering, the charterer looks for a broker who is an
expert in dealing with contracts for the kind of cargo that the charterer
wants to transport. For example, if the cargo is a large shipment of coal,
then he looks for a broker who is an expert on contracting shipment for this
type of cargo.

The broker contacts the shipowner and gets the proposal or offer from him.
The shipowner may also have his own broker or agent. If he has, the
charterer's broker deals with the shipowner's agent or broker. The
negotiations could be through telephone, telefax, e-mail or person to
person. It takes some time until an agreement is reached and the contract
is executed.

6.5 FREEDOM OF CONTRACT

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The shipowner and the charterer can choose what form of voyage charter
contract shall be used. There are many forms available for a variety of
cargoes. There are forms for oil, grain, coal, salt, etc. A number of these
forms have been enumerated in chapter 5.

The most commonly used form in voyage charter is the GENCON charter
form. The documentary committee of the shipping chamber of United
Kingdom approved this form. The GENCON is a code name and an
abbreviation for the words "general conference."

The documentary committee of a particular sector in a country approves

most of the forms used in charter parties. The Baltic and International
Maritime Conference (BIMCO) is an international organization of
shipowners and brokers, which formulates some forms.

Another example of voyage charter contract form is the RUSSWOOD. This

is the code name for the contract form used in consignment of timber
(woods) from the former USSR. For grain trade, many countries used the
BALTIMORE charter form which is the Code name given by the Association
of Shipbrokers and Agents (USA) Inc. in New York. Parties may alter or
make amendments or changes to the terms or words written in the forms if
they think of other words that are more suitable than the ones written on the
contract form.

6.6 THE CONTENTS OF A VOYAGE CHARTER CONTRACT

Some of the important provisions commonly included in a voyage charter
contract are as follows:
1. Condition that the shipowner shall provide a ship for the cargo. The
details of the ship are described in the contract.
2. Condition that the shipowner shall perform the preliminary voyage to the
Port of Loading identified in the contract with reasonable dispatch.
3. Condition that the shipowner shall provide statement of fact about the
fitness of the ship for the voyage.
4. Condition that the shipowner shall transport the goods to the identified
destination.
5. Condition that the charterer shall provide a full cargo.
6. Condition that the charterer shall pay the freight.
7. Condition on exception of liabilities.
8. Condition on canceling date.
9. Condition on the application of relevant rules of the Hague-Visby or
Hague Rules (paramount clause).

6.7 PROVISION OF THE VESSEL

In the voyage charter party, the shipowner promises to provide a vessel to

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the charterer for the carriage of goods. The description of the vessel
includes the identity of the vessel, her carrying cargo capacity and
seaworthiness. The legal implications of this clause in the contract are
discussed below.

1. Identity of the Vessel

In identifying the vessel to be used in the carriage, the parties may
agree to give the name of the vessel. When the vessel is specifically
named in the contract, the shipowner is legally bound to use that vessel.
He is not allowed to provide any other vessel for the voyage that is
being contracted. He has to use only the vessel that is named in the
contract.

In some contracts, the shipowner does not give the name condition in
the contract may be written in the following way of the vessel. The
vessel is (to be named later) ... This type of contract means that the
name of the vessel to be used in the particular voyage charter shall be
given by the shipowner at a later time.
There will be no legal problem if the kind of the vessel that will be
named later by the shipowner is very clearly described in words.
Problems come out when no further description of the vessel is written
and as the vessel arrives at the port of loading, she turns out to be
unsuitable to the need of the charterer.

The other scenario is when the contract bears the name of the vessel
and the words “or substitute" is added. In this type of contract, the
shipowner gives the particular name of the ship that will perform the
voyage but in case the ship becomes unavailable for unavoidable
circumstances, a substitute vessel shall perform the voyage. Again, the
description of the substitute vessel shall be written clearly in words in
order to avoid any problems with regard to the particular need of the
charterer.

The terms in the contract pertaining to the vessel is an important

condition of the contract and deviation from the agreed terms shall
mean a breach of contract, which entitles the injured party to claim for
damages and losses.

2. Cargo Carrying Capacity

The provision in cargo carrying capacity of the vessel is important to the
charterer. It is expressed either in deadweight or cubic meter capacity or
sometimes both. The deadweight capacity and the cubic capacity are
the very common. The deadweight capacity is the ship's weight-carrying
capacity. It is usually expressed in metric tons and sometimes in long
tons.

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 The deadweight capacity of the ship usually includes the vessel's
capacity for cargo, fuel, fresh water and stores. There are voyage
charters in which the cargo-carrying capacity figure is used instead of
using deadweight capacity figure. One example of this type of voyage
charter is the "Gencon 1976 form" which uses the expression "dwt all
told". it means that the deadweight capacity of the ship includes all such
as cargo, fuel, freshwater and stores.

The main difference between the deadweight capacity figure of the ship
and the cargo-carrying capacity figure is that the cargo-carrying capacity
does not include the capacity necessary for fuel, freshwater and stores.

Accurate information about the cargo carrying capacity of the vessel is

important because the charterer wants to be sure that the ship being
chartered can accommodate all his cargo. Likewise, the information
shall enable him to decide on what to do with his cargo in case the
capacity of the ship is not enough for all the cargo that he intends to
load on board the ship. The charterer can decide how much cargo can
be deducted from the total cargo and be sub-chartered to another.

Any misrepresentation (false statements of facts) on the part of

shipowner about the cargo carrying capacity of his ship would give the
charterer the right to revoke the contract. The charterer can sue him in
court for breach of contract and claim for damages and losses.

3. Seaworthiness
Seaworthiness is a common clause in all types of charter parties. On
the part of the shipowner, seaworthiness is an implied undertaking in
the contract of the voyage charter. It is not expressly stated in the
contract because the duty to provide a vessel that is seaworthy is an
obligation on his part.

In the book of Chorley and Giles, seaworthiness is defined by the

authors as “... to be seaworthy a vessel must have that degree of fitness
which an ordinary, careful and prudent owner would require his vessel
to have at the commencement of her voyage, having regard to all the
probable circumstances of it"(Gaskell, et al., 1987).

The above definition means that when the voyage charter starts, the
ship is seaworthy for that voyage. Seaworthiness means the vessel is fit
to encounter the perils of the voyage. She is fit to carry her cargo safely.
The shipowner is responsible for a defect of the ship. He must prove
that his ship is not unseaworthy (e.g., unseaworthiness includes lack of
sufficient bunker fuel for the voyage).

If the charterer finds that the ship has a defect and is unseaworthy

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 before the "beginning of the voyage and that the defect cannot be
repaired within reasonable time, the charterer has the right to end or
rescind the contract. He can later file a claim for damages or losses
suffered because of unseaworthiness.

If the ship is seaworthy upon sailing but becomes unseaworthy while at

sea due to certain dangers or perils encountered, and the charterer
suffered losses and damages because of the unseaworthiness, the
shipowner is free from liability for any loss or damage that may be
claimed by the charterer.

If the charterer delivers cargo that is less than the promised quantity,
the charterer shall pay to the shipowner for freight of the cargo not
delivered. This is based on the principle of deadfreight, wherein the
shipper or charterer pays to the shipowner an amount of money for the
charterer's failure to provide the quantity of cargo he promised to load
on the voyage charter party.

6.8 PRELIMINARY VOYAGE

Fixtures are made for the employment of a vessel under a voyage charter
after an order from the charterer and offer from the shipowner and a series
of counter offers. Most of the time, fixtures are concluded even when the
vessel. is still sailing or carrying goods for the charterer. In this case, there
is a need for the shipowner to take the vessel to the port of loading, which is
called preliminary voyage.

6.9 THE PORT OF LOADING

An order is usually placed by the charterer when he needs a ship to be
contracted and the
loading port must be specified prior to the preliminary voyage. However, if
the shipowner knows that there might be circumstances, which could delay
the ship while proceeding to the nominated loading port, the "near clause" is
used in the charter party, in which it is indicated that instead of proceeding
to the nominated Port by the charterer, the vessel shall proceed to another
port which is nearer and safer for the vessel to berth and load. In this case,
the charter party shall contain the words "proceed to Port A or so near
thereto as the vessel may safely get."

Another clause or phrase is included in the contract in cases where the port
designated is
unsafe or dangerous for ships to reach and remain due to weather, season,
and political problems, war, etc. It is the charterer's obligation to nominate a
"safe port" and therefore,
he is liable for damages if the ship is damaged in the nominated port.

A provision in TANKERVOY 87 charter party could help the charterer to

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avoid such liability. It states that "charterer shall exercise due diligence to
ascertain that any port or place to which they order the vessel are safe for
the vessel and that she can lie there always afloat and to ensure that any
transshipment operation at sea conform to standards not less than those
set out in the latest edition of ICS/OCIMF ship-to-ship transfer guide
(Petroleum). The charterer shall, however, not be deemed to warrant the
safety of any place and shall be under no liability on respect of any loss to
prove the exercise of due diligence as aforesaid' (Intertanko, 1987).

Other charter parties have incorporated clauses to qualify nominated port of

loading/discharging. Some examples are ; ice clauses, strike clauses and
force majeure clauses. One good example of strike clause can be found
both in the amended Centrocon and Continent Grain Charter parties

The strike clause of Continent Grain Charter Party expresses that "if the
cargo cannot be loaded by reasons of riots, civil commotion or of a strike or
lockout of any class of workmen essential to the loading of the cargo, or by
reason of obstructions of stoppages beyond the control of the charterer
caused by riots... "In case of ang delay by reason of before-mentioned
causes, no claim for damages 'or demurrage shall be made by the
charterers"[Sindicat National Du Commerce Exterieur Des Cereales
(Synacomex),1990].

Another example of strike and force majeure clause is the provision in the
Sugar Charter Party, which states that "strikes or lockouts of men, or any
incidents or stoppages on railway and/or any other force majeure causes
including government's interference's occurring beyond the control of the
shipper or consignee which may present delay the loading and discharging
of the vessel are always excepted" (Synacomex, 1990).

6.10 CANCELLATION OF A CHARTER AND CANCELING DATE

Every charter has a date by which the shipowner must tender the notice of
readiness to the charterer that the ship has arrived at the port of loading
and said ship is ready to receive or load the cargo.

Canceling date is the last date agreed in a voyage charter party or time
charter party by which a ship must be available to the charterer at the
agreed place at the commencement of the contract. If the ship is not
available by that date, the charterer may have the option to cancel the
charter" (Brodie, 1997). In short, it is the last date on which vessel must be
ready to load.

Another important date or term; which is always associated with canceling

date, is the laydays. It means the days allowed by the shipowner to the
voyage charterer in which to load and/or discharge the cargo. In charter
parties you will see the clause "laycan" which is the combination of the

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laydays and canceling date.

Laycan is usually expressed in two dates. An example of the laycan clause

is shown below:

laycan – 30 July/ 08 Aug.

The above clause is an abbreviation of the term:

laydays 30 July canceling 08 August.

Considering that the charterer might have been fixed while the ship is still
completing another voyage or the vessel is at another port, delay may
occur. What are the remedies available to the charterer if delay does occur?
First, the charterer has the option to cancel the charter/ contract. Second,
he can claim damages for the loss. However, the shipowner should provide
the charterer with information on the ship's position and its prior obligations.
Otherwise, he will be liable for damages.

Most voyage charter party has clauses for the cancellation of the charter.
One example is the BIMCO's general purpose charter-party. It gives the
charterer the option to cancel the voyage contract if the vessel is not ready
to load on or before the date indicated in the agreed schedule, provided that
the option to cancel is declared at least 48 hours before the vessel's
expected arrival at the port of loading.

Delay is unlikely to happen if the ship is fixed spot prompt or the vessel is
already located in the loading port and is ready to take cargo on board.
Another instance which may give rise to claim for damages is when the
vessel is in another port and according to the contract, the ship should
"proceed with due dispatch". If it is the case and the ship, after discharging
at said port, is allowed by the shipowner to perform unrelated voyage, the
shipowner will be liable for any loss incurred by the charterer

To be exempted from liability for claims due to delay, excepted perils should
have occurred while the ship was engaged in the chartered voyage.
Additionally, the charter party should declare that certain perils are always
accepted.

6.11 THE LAYTIME AND AN "ARRIVED SHIP"

Laytime is the time agreed by parties during which the owner will make and
keep the vessel available for loading and discharging. Laytime could be
separate for loading and separate for discharging or combined for both.

The critical issue on laytime is when laytime begins to run. The

requirements for laytime to start counting are when the ship has been

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considered as an "arrived ship". By that time, the ship must be ready to
receive cargo with adequately cleaned cargo holds and a notice of
readiness must be given upon arrival.

As defined by Brodie (1997) an "arrived ship" means the requirement of the

voyage charter before laytime can commence. The ship must reach the
agreed destination before she can be considered as an arrived ship.

Where the charterer has nominated a berth or dock, the ship must have
arrived at that berth or dock. When a port is nominated, the ship must have
arrived at the port, although various legal decisions have defined differently
a port in this context in cases where there is no berth available and the ship
is obliged to wait.

When the charterer nominated a berth in the charter party, the owner bears
the risk of waiting if the berth is not yet available. He has to bear the cost of
waiting as contrasted when a port is nominated wherein the charterer bears
the risk of waiting.

An important document relating to an arrived ship is the NOR or notice of

readiness. In a berth charter party, arrival of the ship and commencement
of laytime and the readiness to load coincide. When a vessel has arrived
the master usually gives a notice of readiness and quite often the charterers
are entitled to notice time (i.e., free time, grace period of time), prior to the
start of laytime. This grace period is given to allow preparation for the
loading or discharging operations.

With the 'advent of email, telefax and direct dialing systems of

communications, the owners are usually in constant contact with the
charterer. Thus, notice of time is considered obsolete. However, in certain
situations charterers have no chance to begin the loading or discharging
operations immediately after the ship's arrival in a port because the ship
arrived during holidays or during nighttime or at a time when there is a
calamity in the port. In these cases, there are risks that the vessel will be
idle from the time of arrival until the commencement of ordinary or routine
working hours in a port.

Many disputes arise from the voyage charter agreements relating to the
calculation of the laytime. This is because of the vague and complicated
statements in the clauses of the charter party. In order to come up with a
uniform interpretation of the laytime clauses, international associations such
as BIMCO, CMI, INTERTANKO and FONASBA joined altogether and
issued the "Voyage Charterparty Laytime Interpretation Clauses" in 1993 It
is popularly called the "VOYLAYRULES 93". The rules can be applied to
any form of contract of carriage or affreightment including contracts
evidenced by the bills of lading. The "VOYLAYRULES 93" has 28 terms and

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phrases with uniform interpretations from the concerned parties.

After knowing the time when laytime is to commence, another important

factor is how long shall laytime be allowed. There are ways to determine
laytime period. These are as follows:
Example: 72 running hours SHINC

Which means: 72 running hours, Sundays & Holidays

included

When the parties agreed that time shall not count during Sundays and
holidays, the expression "Sundays and holidays excluded" (SHEX) is
normally applied. If the parties agreed that Sundays and holidays shall
count, the expression " Sundays and holidays included'(SHINC) is used.
These terms are expressed in the different forms of voyage charter party.

Example: 500 metric tons per day, or

125 metric tons per day per hatch

There are many abbreviations of terms and description used in determining

loading time,
the most common refer to weather hindrances. Some terms used are as
follows:

WD Working Days
WHD Working Hatch Per Day
WWD Weather Working Days
WP Weather Permitting

Other terms such as clear days, running days and consecutive days are
also commonly
used.

6.12 EXCEPTION FROM LAYTIME/TIME NOT COUNTED

The time lost caused by some circumstances, which are specifically
mentioned in the
charter party, is not to be counted as laytime. These exemptions are as
follows:

1. interference in loading which the shipowner or his representatives is

responsible for. Examples: a) a crane broke down; b) inavailability of the
ship's personnel;
2. strike, lockout or other restraint of labor, of pilot or tug personnel;
3. stoppages on the vessel's orders;
4. time waiting for next high tide or daylight to proceed on inward passage
from waiting place to a loading or discharging berth;

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5. waiting time for pilot or tugs in order to move; and
6. moving from waiting place to loading berth.

Laytime and exceptions to laytime are all stipulated in the charter parties.
When the laytime is used up, the ship goes on demurrage

6.13 UNREASONABLE DEVIATION

After completion of cargo loading at the nominated port, the next important
phase is the voyage itself. Under the bill of lading, there is an implied
undertaking that the ship should proceed with reasonable dispatch and
without unjustifiable deviation. When the voyage is completed, the cargo
will be discharged and subsequently delivered to the consignee.

Deviation has been defined in the previous chapter as a departure from the
prescribed ordinary trading route. It could also be defined as the voluntary
substitution of the contracted voyage with another voyage.

The contracted voyage is one which has been expressly agreed, or in the
absence of a specifically prescribed route (which is normally not
prescribed), the ordinary trading route for ships engaged in similar
circumstances.

Geographically, the contracted voyage refers to the most direct route, but
the carrier is entitled to show evidence that the most direct route would be
unreasonable for this particular ship at the particular time, as long as it is
not inconsistent with the express terms of the charter. A particular route
may be reasonable and usual even if it is used only by ships of a particular
line and has only recently been adopted.

6.14 DEVIATION ALLOWED BY THE HAGUE-VISBY RULES

The Hague-Visby Rules (1968) states that "any deviation in saving or
attempting to save life or property at sea or any reasonable deviation shall
not be deemed to be an infringement or breach of the said Convention or of
the contract of carriage, and the carrier shall not be liable for any loss or
damage resulting therefrom" (Art.4.4).

Correspondingly, the Hamburg Rules (1978) also provides that "the carrier
is not liable, except in general average, where loss, damage or delay in
delivery resulted from measure to save life from reasonable measures to
save property at sea'" (Art.5.6).

Clearly, under the Hague-Visby Rules, a deviation for the purpose of saving
life at sea is permissible (it is even an obligation for the vessel). The same
is true under the cited provision of the Harmburg Rules.

In any case of deviation, it is necessary to first determine the route, which

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has been contracted. Normally, the bill of lading only declares the ports of
loading and discharge and rarely specifies the route (but could say, for
example, "via Suez Canal," in which Case that is the agreed route). The bill
of lading is not the whole contract but it is evidence of the contract. Other
"sources" for determining the ordinary trading routes used line in the past
are notices and advertisements, the booking note and the charter party
there is one).

6.15 DEVIATION ALLOWED IN COMMON LAW

In Common Law, the deviation is justified when it is necessary for the safety
of the adventure. A vessel may, therefore, deviate in order to avoid
threatening danger (hurricanes, icebergs, pirates, etc.) or when, due to a
breakdown, she is in urgent need of repair.

In case there is urgent need for repair, the vessel does not necessarily have
to go to the nearest port. However, it should go to the nearest port where
repairs can be reasonably carried out. The vessel, however, should
consider the danger, distance, repair facilities expense, total time, etc. in
making the decision to go to the nearest port for repair.

A deviation for repairs is still justifiable when the repair is needed to make
the vessel seaworthy and even if the need for repairs would mean that the
vessel could be liable for any damage or delay.

6.16 DEVIATION ALLOWED BY A "DEVIATION CLAUSE”

It is common for contracts of carriage to contain an "express deviation
clause". Courts normally permit and uphold such clause, provided that the
effect of deviation would not render the whole performance of the contract
impossible or it would not destroy the commercial object of the contract.

If the deviation is not permissible, the effect of such non-permissible

deviation is that the carrier loses the right to invoke exemptions of liability
from losses and damages cited under UN convention (UNCITRAL) and the
Carriage of Goods. However, in order for the carrier to lose the exemptions,
the claimant /complainant will have to prove the following:

1. That there was a deviation

2. That the deviation was unreasonable
3. The loss or damage was a result of the deviation

6.17 EFFECTS OF UNREASONABLE DEVIATION

When the ship deviates from her contracted route unreasonably, the
charterer has the right to sue him in court for breach of contract. The
charterer is discharged from the terms and conditions of the contract and
can claim damages from the shipowner.

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The defenses of the shipowner, such as Act of God, the Queen's enemies
inherent vice of goods, defective packing and general average sacrifice
against claims from cargo owners could not be invoked when the ship
departs from the proper route. The only defense for the shipowner is to
prove that the loss was likely to occur on the proper route,

This is further explained by Ivamy (1989) when he stated that "where there
has been unjustifiable deviation, the shipowner cannot rely on the exception
clauses in the charter party and is then only entitled to the benefit of the
exceptions available to a common carrier, e.g., Act of God, loss by the
Queen's enemies if he can prove that the loss would have occurred even if
no deviation has taken place" (p. 23).
A shipowner, who has deviated from the contracted route, has in effect,
revoked the contract, and therefore, cannot claim to be remunerated. With
regard to the freight, the shipowner cannot claim the contracted rate of
freight under the charter party. He may, however, claim a reasonable sum if
the goods are safely delivered to the destination.
In general average, the shipowner cannot claim contributions from the
charterer on limitation of liabilities, a shipowner cannot rely on any clause in
the charter party entitling him to limit his liability (Ivamy, 1989, p. 24).

6.18 STOPPAGE IN TRANSIT

There might be instances, when after receiving the cargo, the buyer
becomes insolvent and the seller instructed the shipowner/carrier to
redeliver the goods to him instead of the buyer. However, there may also be
a third party claiming the goods to who would stop them in transit.
In case there are two parties claiming the goods as a result of stoppage in
transit, the shipowner is placed in a very difficult situation. The case should
be brought to court to determine the rightful claimant. The shipowner wants
to avoid risk of giving or delivering the goods to the wrong person. His only
interest is on the freight for the cargo.
6.19 DISCHARGE, DELIVERY, AND FREIGHT PAYMENT
1. Discharge
At the end of the voyage is the discharge of the goods and subsequent
delivery to the consignee.

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 Figure 6.1 - Discharge of Ro-Ro cargoes in a port of discharge

The Port of Discharge is named in the contract. It is where the vessel is

supposed to unload the shipment prior to the delivery to the owner
Sometimes there are clauses in the bill of lading that state that the
goods may be discharged on the quay and into lighters at the
consignee's risk and expense.

Although the port of discharge is named, it is not necessary in the

voyage contract to nominate the port of discharge because the basic
feature of the voyage charter is that the nominated vessel shall be put at
the disposal of the charterer (Gorton, Hillenius,Ihre and Sandevarn,
2004). In this case the charterer has the right to direct the ship later
within a certain range to a specific port of discharge.

Discharge operation depends on the agreement made by the parties as

well as the practices in the port discharge. In the provisions of the
Hague-Visby Rules (1968),i is an obligation of the carrier to properly
and carefully discharge the goods carried(Art.3.2)

2. Delivery
Delivery means the actual passing of possession of cargo to the
consignee. The obligation of the carrier to deliver the goods is not
imposed under the Hague-Visby Rules. There are cases when the
carrier gave information regarding the place and date of the vessel's
arrival where the consignee is ready to receive the cargo immediately
after discharge.

However, in most cases, delivery is made some time after discharge

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 and the cargo is placed into a safe place ready for delivery. The
consignee collects the cargo at a later time. There is no obligation
imposed on the consignee to take the delivery. The dury is contained in
the Bill of Lading, giving the consignee reasonable, time to collect the
goods. Gorton, et al (2004) explains this condition when they cite as
follows: "The charterer has a duty to deliver cargo and to perform his
undertakings and may not, unless there is an express agreement to the
contrary, allege that it is difficult to find cargo or to have it made
available to the vessel."

Delivery is made to the claimant/consignee after presentation of a bill of

lading. If a bill of lading is lost or delayed, the goods may be delivered
against a letter of indemnity issued by a bank.

3. Freight and Payment of Freight

After delivery of cargo, the shipowner/carrier is entitled to the payment
of the freight for the carriage of goods or hire for the use of the ship.
Freight is the amount of money paid by the charterer to the shipowner
for the carriage of cargo. Ivamy(1989) defined freight in his book as "the
remuneration payable to the carrier or shipowner for the carriage by
sea. When there are no provisions to the contrary, freight is payable on
the delivery of goods and is calculated on the amount actually delivered'
(p. 257).

Freight is the main obligation of the charterer. The rate of freight is often
negotiated between the shipowner and the charterer. It can be paid on
the basis of a certain fixed amount for every ton of the cargo, or in lump
sum. In practice, the freight is paid when the goods are discharged at
the port of discharge. Therefore, the shipowner has to wait for the
payment by the charterer of freight until after the ship arrives at the port
where she can discharge the cargo.

Freight is also paid according to the fate of the ship and her cargo. If
something happens to the ship during voyage and the ship is lost
together with the cargo, the shipowner is not entitled to any freight. If the
charterer made advance partial payments, problems usually arise
because the charterer demands the shipowner to return to him
(charterer)'the advance payments. It depends on what has been written
in the contract.

When the ship arrives at the port of discharge and the cargo is found
damaged, problems arise. Normally, it is not always the fault of the
carrier that the cargo is damaged. If the shipowner can prove that
damages are caused by the negligence of the shipper or the charterer in
packing the goods or failure in giving sufficient information to the
shipper for handling the goods, the shipowner cannot be held liable for

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 damages.

The freight shall be payable after the carrier has performed his duty
under the contract of the delivery of the good. Delay in the payment of
hire entitles the owner to withdraw the vessel. Ordinarily, the carrier is
not entitled to freight, if it has not, delivered the goods. However, if he
was prevented from performing his duty, by acts of the shipper,
consignee or other bill of lading holder, the freight becomes payable on
discharge of the cargo.

When the vessel cannot reach the port of destination due to perils of the
sea or other excepted perils, then, the carrier can either forward the
cargo to another convenient port or to bring back the cargo, and he can
claim back the freight.

Even if the goods are damaged but the carrier is ready to deliver, the
freight is still payable in full. Claim for damages should not be deducted
from the freight. If the delivery is short of place of destination, the freight
shall not be payable when it is due to the default of the cargo owner.

If as a result of initial unseaworthiness the cargo was discharged

somewhere, the shipowner shall be responsible for transshipment costs
or carriage of the goods another ship to the intended destination.

Another case is when the goods are carried part of the way only and
continuation o the voyage is impossible. The consignee or cargo owner
should accept the delivery of the goods at ports short of final
destination. Pro rata payment is acceptable if the cargo owner agreed to
pay.

6.20 TYPES OF FREIGHT

According to Ivamy (1989), the following are the types of freight used in the
charterin.
of ships:

1. Freight Payable Upon Delivery

Payment of freight is made at the port of discharge unless other
agreements are expressed in the voyage charter party. The manner of
payment in this case anchored on the principle that the freight is earned
when the owners have fulfilled their obligation to carry the cargo and are
ready to deliver said cargo to the consignee.

If the shipowners fully or partly fail to fulfill their obligations to carry the
cargo then, they lose their right to collect freight. If the vessel sinks
together with the cargo in case of a maritime accident, the owner is not
entitled to freight. If only part of the cargo is delivered to the agreed

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 destination, the shipowner can proportionally claim for freight.

2. Lump Sum Freight

Lump sum is paid to the shipowner for the carriage of cargo upon
completion of the voyage and delivery at the destination. If the ship fails
to fulfill this obligation and some cargoes are lost, questions may arise.

If the loss is due to perils of the sea or act of God, the shipowner is
entitled to the whole freight because he can be exempted from any
liability arising from such natural causes. The provisions on clauses are
usually included in the contract.

3. Advance Freight
Payment is made to the shipowner even if the cargo is not yet delivered
to the shipper or charterer. If freight is paid in advance, it cannot be
recovered anymore even if the voyage is abandoned and if the goods
are lost before and after payment.

The place where payment shall be paid is more important to the

charterer because if the vessel was lost on voyage, he is not obliged to
pay the freight. The vessel at the identified place where freight is
supposed to be paid discharged no cargo.

4. Pro Rata'Freight
This refers to the payment of freight proportionate to the part of the
voyage accomplished or the part of cargo delivered. The conditions for
paying pro rata occurs when a portion of the total cargo is written to be
discharged at one named port and the rest at another named port.

When an unavoidable circumstance happens and the carrier discharges

all the cargo in one named port instead of two identified ports, the
charterer has the right to refuse payment of pro rata freight. Discharging
all cargo in one port instead of the two named ports in the contract
where pro-rata shall be paid at each port upon arrival of the vessel is
legally not considered as a complete voyage. The charterer can sue the
shipowner for breach of contract and even claim for damages resulting
from the noncompletion of the voyage agreed in the charter party.

5. Back Freight
This is the "freight payable to a shipowner for the carriage of goods
back to the port or to another convenient port when" the vessel is
unable to reach the port of destination because of an excepted peril or
because the consignee fails to take delivery of the goods or provide
instructions for their disposal'"(Brodie, 1997).

Back freight may be claimed by the shipowner from the charterer in

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 situations such as when the master of the ship was not able to deliver
the cargo at the port of destination (e.g., there is a strike, war, or
emergency situation prevailing at the port of destination). The master
decides to carry the cargo where he thinks it is for the best interest of
cargo owner or charterer. For expenses incurred in doing this, the
shipowner can claim for back freight from the charterer or cargo owner

6. Deadfreight
An amount of money is paid by the shipper or charterer to the
shipowner for the charterer's failure to provide the quantity of cargo he
promised to load on voyage charter party.

6.21 DEMURRAGE
Demurrage is the agreed amount payable to the owner with respect to
delays of the vessel beyond laytime. In short, demurrage is paid when
actual loading/discharging time exceeded laytime. The demurrage rate is
the amount entitled to' the owners when the loading 'or discharging of cargo
is not completed before the agreed time expires Calculation and payment of
demurrage is made after the final discharge and delivery of the cargo.

The rate is usually agreed per 24 hours or "pro rata". The owners do not
have to prove their loss to be entitled to the demurrage because it is a kind
of liquidated damages subjected to a prior agreement. Since 'charter parties
contain demurrage rate, which is agreed upon by the parties, demurrage
shall be paid for the whole day, including Sundays. It is practically so
because if the vessel had not been delayed, she would be at sea day and
night and is supposed to be earning money while carrying cargo. It is often
expressed by saying that "once on demurrage, always on demurrage."

The expression "Once on demurrage, always on demurrage" means that

exception clauses do not apply to demurrage, unless they are clearly
worded so as to have that effect. In many cases, it means that when the
laytime expires and the vessel is on demurrage, all the time thereafter (24
hours per day, 7 days per week) shall count even though there are weather
hindrances, holidays, etc. However, time counting can be interrupted if it is
caused by the owner or owner's servants or by, fault on the vessel's side.
(Gorton Hillenuis, Ihre and Sandevarn, 2004).

In a voyage charter party, there is also an excepted period clause or period

during which any time used to load or discharge does not count for the
purpose of calculating demurrage or despatch other than by prior
agreement. This clause sets out the periods which may vary according to
contract. The period excepted are weekends, public holidays and certain
periods of bad weather. Sometimes, the excepted period is also called
“suspension of laytime".

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Although exceptions to laytime may also apply to demurrage, it is important
that the charter party should expressly say so. There is no limit to the
number of days, which the ship must be on demurrage except in GENCON
charter party where it is limited to only ten (10) days.

6.22 DESPATCH
If the situation is reversed and actual loading time is shorter than laytime,
then the shipowner will pay the charterer, a bonus "despatch money."
Despatch, therefore, is the reverse of demurrage. It is the amount paid by
the owners as compensation to the charterers for loading or discharging the
vessel in a period of time that is shorter than the allowed laytime.

Despatch rate is always fixed at half the demurrage rate. The provision in
the charter parties sometimes has the phrase "despatch on all time saved
or despatch on loading time saved."

Despatch on all time saved means that dispatch money shall be payable
from the time loading/discharging is completed to the expiry of the laytime
including periods excepted from laytime.

Example:

Laytime for five working days to end 1.700 hours Monday

Loading time finished 1200 hours Friday

If despatch is on all time saved, despatch money shall be computed for 67

hours.Despatch

Despatch could be on loading time saved which means that despatch

money shall be payable from the time completion of loading or discharging
to the expiry of the laytime excluding periods accepted from laytime.

In our example above, if despatch is loading time save, then, despatch rate
shall be multiplied by 12 hours only. An assumption is also made that
Saturday is not a working day.

6.23 CARGO DAMAGE AND FREEDOM OF CONTRACT

As discussed earlier, when the ship arrives at the port of discharge, there
are instances when the charterer discovers some damages on his cargo. If
this damage is proven to be due to unseaworthiness of the vessel at the
commencement of the voyage, the shipowner can be held liable under US
and English laws.

The above-cited case is based on the doctrine of "warranty of

seaworthiness." In many countries, the warrant of seaworthiness is not
recognized, so the shipowner's liability is based on his gross negligence.

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Even if the master or crew of the vessel causes the unseaworthiness, the
shipowner
normally bears the liabilities rising from such negligence of his servants,
under the principle of vicarious liabilities. It appears, however, that the
shipowner is liable for almost all kinds of omissions or negligence
committed by his servants (master and crew).

For this reason, the freedom of contract prevails in the voyage charter. This
means that the shipowner and the charterer agree to distribute the risks to
both of them. Normally, many voyage contracts insert riders and emphasize
exception clauses to either free the shipowners from many liabilities arising
from gross negligence and unseaworthiness or limit his liabilities on these
claims. All these insertions are allowed as long as both parties agreed and
provided that statutes do not prohibit the contents of the clauses.

6.24 EXPENSES BORNE BY THE SHIPOWNER AND THE CHARTERER

Unlike in the time charter and bareboat charter, the shipowner generally
bears all the expenses under the voyage charter party. The expenses borne
by the shipowner are capital costs, maintenance, wages, supplies,
loading/discharging costs, port dues, bunkers, etc.

The charterer pays the freight but sometimes bears the expenses for the
overtime of crew that is related to cargo handling in port. If the term is "free
in out" (FIO) which is an INCO term, the charterer bears the expenses
related to discharging and loading of cargoes at the named port.

6.25 CHARTER PARTIES FOR CONSECUTIVE VOYAGES

The normal voyage under a voyage charter party is usually a single voyage.
For example, the shiploads at Port X and proceeds to Port Y for
discharging, thus, completing the single voyage charter. It does not happen
all the time.

There are charter parties for consecutive voyages. Consecutive voyage

charters are a special type of voyage charter wherein the vessel is
contracted for several voyages in consecutive order.

The charterer and shipowner agree to have two or more voyages within a
certain period of time under one document. This happens when in the
contract it is stated that a named ship shall load cargo at Port X and
proceed to Port Y to discharge.

After discharging, the ship will return on ballast voyage (without cargo) to
Port X for
loading again then proceeds to Port Y to discharge. This is within a period
of time.

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There are also voyage charter parties for consecutive voyages wherein the
shipowner and the charterer agree to fix the chartering for a long period of
time, say, one year. The shipowner provides the ships, which shall perform
the loading, discharging and transport of goods in various ports named by
the charterer within the agreed period of one year.

Normally, there are problems regarding the completion of the voyage for the
last round. This arises when the end of the term is very close and the
vessel has to make another voyage to complete the one-year period. It is
usually accepted that when the vessel arrives at the named port of loading
and tendered the notice of readiness to accept the cargo and the charterer
has the cargo ready to be loaded at the port before the end of the one-year
period, the last voyage continues.

The above practice usually applies in the tanker voyage charter parties.
With regard to payment of freight, which varies for every distance of the
port, this is solved by the adoption of the worldscale rate system. A ship is
normally given a rating number. This rating number has an equivalent scale
in the worldscale rating system, which is correlated to the distances
between ports. The charterer and shipowner simply consult the worldscale
to compute the freight rates for consecutive tanker voyage charter.

SUMMARY
1. Voyage charter party is a document or contract between the shipowner
and the charterer containing the terms and conditions for the use of a
ship's cargo space for one or more than one voyage.
2. The charterer prefers a voyage charter party for a large quantity of
consignments that cannot be accommodated by liner shipping.
Chartering process under the voyage charter is closely similar to time
chartering.
3. In the voyage charter party, the shipowner and charterer have the
freedom of contract. The contract for the voyage charter party contains
conditions for the vessel, freight, cargo, canceling date, cargo damage,
and other exception clauses that are commonly found in the time
charter.
4. Some provisions of the contract include the identification of the vessel,
the cargo, the cargo carrying capacity, the freight rate, and the
expenses to be borne by the charterer.
5. It is important for the shipowner to describe the ship and cargo carrying
capacity of the ship because the voyage charterer's calculation of profit
and expenses depend on it. This disclosure is a condition in the contract
and misrepresentations made by the shipowner would entitle the
charterer to sue in court the shipowner for breach of contract.

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6. Failure of the charterer to describe the cargo and provide the cargo at
the named port of loading would entitle the shipowner to claim for
damages or losses.
7. Seaworthiness is an implied undertaking under the voyage charter
parties. Providing an unseaworthy ship gives the charterer the right to
sue the shipowner in court fof breach of contract and file claims for
losses and damages which he may have suffered.
8. Canceling date is the last date agreed in a voyage charter party or time
charter party,by which a ship must be available to the charterer at the
agreed place at the Commencement of the contract. If the ship is not
available by that date, the charterer may have the option to cancel the
charter.
9. Laydays means the days allowed by the shipowner to the voyage
charterer in which to load and/or discharge the cargo. Laytime is the
time agreed by parties during which the owner will make and keep the
vessel available for loading and discharging. Laytime could be separate
for loading and separate for discharging or combined.
10. The requirements for laytime to start counting are: the ship must be an
arrived ship; the ship must be ready to receive cargo with adequately
cleaned cargo holds; and the ship must give notice of readiness upon
arrival
11. Demurrage is the agreed amount payable to the owner in respect of
delay to the vessel beyond laytime. Despatch is the bonus money paid
by the owner to the charterer for finishing loading/discharging ahead of
the agreed laytime.

REVIEW QUESTIONS
1. Explain the meaning of a voyage charter and the reasons why this
contract is concluded.
2. Discuss the meaning of freedom of contract under the voyage charter.
3. What are the legal consequences if the shipowner has committed
misrepresentations of the cargo carrying capacity of the ship to be used
in the voyage charter party?
4. What are the legal effects of unseaworthiness to the shipowner?
5. If the charterer, was not able to deliver the cargo at the named port of
loading, what actions can be taken by the shipowner against the
charterer?
6. Can the charterer recover his prepaid freight when the ship is
abandoned and the goods are lost or undelivered to the destination?
7. Explain the charter parties for consecutive voyages.
8. Explain the importance of laycan clause in the charter contracts.

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9. Is the owner liable to damages or loss or delay in port in case of war or
other political unrest?
10. What are the requirements for laytime to start counting?
11. When is a ship an arrived ship?
12. Differentiate demurrage from despatch.

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 REFERENCE:
Port Operations, Planning and Logistics (aiu.edu)

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