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Laydays and the cancelling date in a charter party agreement & laytime clause

What is Laycan

Laydays refers to a period of specified days (e.g. “Jan 7/16”) during which owners must present the vessel for loading. Laydays should not be confused with laytime, which is the period allowed to the charterers for loading and/or discharging without payment additional to the freight.

The cancelling date is the final layday and the date beyond which, if the chartered vessel has not been presented for loading, the charterers may reject her and cancel the charter. Will usually be found in a Cancelling Clause, which provides that the charterers will not be entitled to cancel the charter before the stated cancelling date, even when it is obvious that the vessel cannot arrive at the loading port by this date.

Together, laydays/cancelling or, as it is often called, the “laycan” is the period within which the vessel must be presented at the agreed port or place. If the vessel arrives before the first day of the period, the charterers do not have to accept her until commencement of the agreed laydays. If she arrives after the final layday, the charterers are entitled to reject the vessel and cancel the charter.

The charterers cannot be made to declare whether they intend to cancel or not before the vessel arrives at the loading port. Even after the cancelling date has passed, owners can still not compel the charterers to declare whether or not they will load the vessel (and in practice the charterers will often stay silent, hoping to make a new contract with owners). To avoid delay to the vessel in awaiting the charterer’s decision on cancellation, some charter parties have an extension to the Cancelling Clause compelling the charterers to declare within a specified time whether or not they elect to cancel after being informed of the vessel’s late arrival.

In charter parties and related documents the laycan will usually be written as (for example) “10/20 May”, meaning 10 May is the first layday while 20 May is the cancelling date.

Laytime clause

Laytime clause states the period of time allowed for loading and for discharging. It states the conditions under which Notice of Readiness (NOR) may be tendered.

Laytime is defined in Voyage Charter party Laytime Interpretation Rules 1993 as “the period of time agreed between the parties during which the owners will make and keep the vessel available for loading or discharging without payment additional to the freight”. The words “without payment additional to the freight” are important.

It is time allowed to the charterers for cargo operations without additional payment and should, in the interests of the owners, commence as soon as practicable. The clause may provide for separate laytime for loading and discharging or for total laytime.; the master should check the charter party.

There may be of three types with respect to the method of determining the duration:

• definite laytime;
• calculable laytime; or
• indefinite laytime.

If definite will be stated in the charter party as a specified period of time, e.g. “6 (six) days....” or “.....48 running hours”. In the oil tanker trades, 72 running hours is the industry norm.

If calculable must be determined by making a computation from information in the charter party, e.g. where a cargo weighing 20,000 tons is to be loaded at a rate of 10,000 tons per day, the laytime will be 2.00 days.

If indefinite the charter party may state that the cargo is to be loaded with “customary despatch” or “customary quick despatch” or “as fast as the vessel can receive”.

Laytime can only start to count against the charterers after three conditions have been fulfilled:
1. the vessel has become an “arrived ship” within the terms of the charter party;
2. the vessel is in all respects ready to load/discharge; and
3. notice of readiness has been served on the charterers or their agent (or, in a few cases, such as under the SHELLVOY 4 charter party, has been received by the charterers or their agent) in accordance with the charter party.

Laytime normally runs until completion of loading (or discharging). However, some charter parties provide that if, after completion of loading, there is a delay of one hour or more for the charterer’s purposes (e.g. testing of samples, preparation of documentation), time will be deemed to run until termination of the delay.

Masters should obtain from their owners or managers a copy of Voyage Charter party Laytime Interpretation Rules 1993, which explain all the usual terms associated with the calculation of laytime, demurrage and despatch.

Loading and discharging costs clause

A general purpose dry cargo voyage charter party will usually incorporate clauses covering the basic provisions for loading and discharging costs . The provisions may be expressed in different charter parties by clauses bearing different names, or by numbered clauses with no names.

Loading and discharging costs clause allocates responsibility for the costs of bringing cargo alongside and loading, stowage, any required trimming, and discharging. In the dry bulk trades it is normal for the charterers to make arrangements for bringing cargo forward and for payment of all loading and discharging costs, in which case the terms are known as “free in an out” (FIO).

Where the owners are responsible for the cargo handling costs, terms are “liner terms”, sometimes called “gross terms”. Standard terms may contain clauses covering both Liner and FIO arrangements, the inappropriate one to be deleted. An agreement may provide for a combination of the above, such as “Free in/Liner out”.

Read more on :
Voyage charter party clauses

Voyage charter party laytime calculation

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