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Time Charter, Redelivery Date

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Law and Sea.

Under a time-charter contract the vessel is to be delivered by the owners to the charterers for their commercial use within stipulated period of time. At the end of this time, subject to any express provision contained in the contract, the charterers obliged to redeliver the vessel to the owners.

Time Charter, Redelivery
Last updated: 21-Jun-2015

Santa Martha Baay Scheepvaart & Handelsmaatschappij N.V. v Scanbulk A/S (The "Rijn"),[1981] 2 Lloyd’s Rep. 267, per Mustill J at p.269-270:

For the charterers it is pointed out that where a charterer has tendered the vessel for redelivery at a port within the redelivery range, the tender is valid even "if the vessel is not, as she ought to be, in the same good order and condition as on delivery": Wye Shipping Co. Ltd. v. Compagnie du Chemin de Fer Paris-Orleans, (1922) 10 Ll.L.Rep. 85, and The Puerto Buitrago, [1976] 1 Lloyd’s Rep. 250. They say that there should be a similar result where the complaint is reversed. If the charter terminates when the ship is redelivered at the right port in the wrong condition, then it should equally come to an end when she is redelivered at the wrong port in the right condition.

This argument sounds attractive, but I do not accept it. There is no true analogy between the two situations. Both legal and commercial considerations demand that the charter shall come to an end, even if the condition of the vessel on redelivery is unsatisfactory. So far as concerns the law, the contractual service is defined in terms of the place or time, or both, at which the vessel is redelivered. The stipulation concerning the vessel’s condition on redelivery is not part of this definition. Once the stated time has expired, or the stated port or range has been reached, the period of hiring is accomplished, even if the charterer is in breach at the time. Equally, from a commercial point of view, it would be absurd if the charter were to run on indefinitely, with the charterer obliged to retain the ship in service, even though there was no longer any voyage upon which she could permissibly be sent.

The position is quite different where the ship is tendered at a port which is not within the redelivery range. Here there is no question of the charterer breaking a collateral obligation attaching at the moment of redelivery, nor is it the owner’s sole complaint that the ship has been returned to him in the wrong place. He has a contractual right to have the ship kept in employment at the charter rate of hire until the service is completed. This does not happen until the ship reaches the redelivery range, and the voyage to that range forms part of the chartered service. In a case such as the present, therefore, the tender is not only in the wrong place but also at the wrong time; and full compensation for the breach requires the charterer to restore to the owner the hire which he would have earned if the voyage had in fact been performed.

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