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Law and Sea.
Voyage Charterparty. Cesser Clause

For various reasons the charterer may be inclined to terminate his responsibility for payment of freight once the goods are loaded. Incorporation of so-called ‘cesser clauses’ into charterparty has an effect of discharging the charterer from liability to pay freight and other charges incidental to transportation of the goods when the cargo has been shipped.

Cesser Clause
Last updated: 06-Oct-2014

Per Erle J in Oglesby v Yglesias (1858) E.B. & E. 930 at p.934:

The charter party contains an express and unequivocal stipulation that [charterer’s] liability, ‘‘in every respect, and as to all matters and things, as well before as after the shipping of the said cargo, shall cease as soon as "the cargo is shipped." It may seem improbable that the owner would leave himself without a remedy at the port of discharge: still, if he chooses so to contract, it is not our office to interfere. It is impossible to construe that charter party otherwise than as exempting the defendant from all liability after shipment of the cargo.

Clink v Roadford & Co [1891] 1 QB 625 per Lord Esher at p627:

In my opinion the main rule to be derived from the cases as to the interpretation of the cesser clause in charterparty, is that the Court will construe it as inapplicable to the particular breach complained of, if by construing it otherwise the shipowner would be left unprotected in respect of that particular breach, unless the cesser clause is expressed in terms that prohibit such a conclusion. In other words, it cannot be assumed that the shipowner without any mercantile reason would give up by the cesser clause rights which he had stipulated for in another part of the contract. If that be true, then the question in this particular case, as in every other case, will depend upon this, whether if we apply the cesser clause to the particular breach complained of, and so hold the charterer to be free, the shipowner has any remedy for his loss. If he has, we should construe the cesser clause in its fullest possible meaning, and say that the charterer is released; but if we find that, by so construing it, the shipowner would be left without any remedy whatever for the breach, then we should say that it could not have been the meaning of the parties that the cesser clause should apply to such a breach.

Bowen LJ at pp.:629-630:

There is no doubt that the parties may, if choose, so frame the clause as to emancipate the charterer from any specified liability without providing for any terms of compensation to the shipowner; but such a contract would not be one we should expect to see in a commercial transaction. There is a principle of reason which is obvious to commercial minds, … that reasonable persons would regard the lien given as an equivalent for the release of responsibility which the cesser clause in its earlier part creates, and one would expect to find this lien commensurate with the release of liability.

Per Donaldson J in The Sinoe [1971] 1 Lloyd’s Rep 514 at p 516:

…cesser clauses are curious animals because it is now well established that they do not mean what they appear to say, namely, that the charterer’s liability shall cease as soon as the cargo is on board. Instead, in the absence of special wording …, they mean that the charterer’s liability shall cease if, and to the extent that, the owners have an alter¬native remedy by way of lien on the cargo.

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