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Withdrawal Clause and Notice of Withdrawal

Law and Sea.
Time Charterparty. Withdrawal

the common law does not treat the late payment of hire by the charterers as a breach of sufficient gravity to give the owners a right to rescind the contract, unless the conduct of the charterers show unwillingness or inability to pay or delay in payment amounts to repudiation of the charter.

Anti-technicality Clauses
Last updated: 06-Oct-2014

Afovos Shipping Co SA v Pagnan and another (The Afovos) [1982] 3 All ER 18, per Lord Denning MR at p.22:

This is almost the first anti-technicality clause we have had to consider. But we did consider it in Italmare Shipping Co v Ocean Tanker Co Inc (The Rio Sun), [1982] 1 All ER 517 at 522, [1982] 1 WLR 158 at 164, where I agreed with the arbitrator when he said:

'A notice (notice of withdrawal) under cl 30 [cl 31 in this case] need not be legally perfect in its draftsmanship, but it must be clear beyond doubt that the owners are putting the charterers on notice that, if the correct hire is not paid within the 48 hours’ grace, they will withdraw the vessel.'

That seems to me to be the right approach to these clauses. They are inserted in case something has gone wrong causing the charterer to fail to make payment on the due date. The notice is to be given to the charterer so that he may have an opportunity of putting things right within 48 hours. The anti-technicality clause comes in to relieve the charterer from forfeiture.

The Scaptrade [1983] 1 Lloyd’s Rep. 148, per Lord Justice Robert Goff at p.153:

In the first place a time charter is a commercial transaction in the sense that it is generally entered into for the purpose of trade between commercial organisations acting at arm’s length. It is for the parties to bargain about the terms of the contract … The possibility that shipowners may snatch at the opportunity to withdraw ships from the service of time charterers for non-payment of hire must be very well known in the world of shipping; it must also be very well known that anti-technicality clauses are available which are effective to prevent any such occurrence. If a prospective time charterer wishes to have any such clause included in the charter he can bargai…

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