Cargo ships employment - liability as a carrier in time charter agreement

Cargo ships employment - liability as a carrier in time charter agreement

Cargo ships employment for time charter

When cargo is shipped, the shipper may be given a mate’s receipt (or equivalent document) as acknowledgement. The information in a mate’s receipt forms the basis of a bill of lading, which in many non-liner trades is prepared by the shipper.

The bill of lading functions as a receipt, as a document of title (if appropriately worded) and as evidence of a contract of carriage. Although a time charterer is a “disponent owner”, the contract of carriage evidenced by a bill of lading, if a bill is issued to a shipper, is between the real shipowner and the shipper. If the ship fails to deliver the goods described in the bill of lading, the owners (and not the charterer) will therefore be liable to the owners of the goods.

Whether or not time charter hire has been paid, the shipowner must deliver the goods to the final holder of the bill of lading and frauds occasionally occur where a time charterer was the original cargo owner but sells the cargo to a consignee, fails to pay the next hire payment due, and disappears. In these cases the shipowner is (usually) still legally obliged to deliver the cargo to the holder of the bill of lading, but receives nothing for carrying the goods.

If a time-chartered ship issues a bill of lading using her owner’s own “house” bill of lading form and without mention of the fact that the vessel is time-chartered (e.g. in a statement that “all terms and conditions of carriage are in the relevant charter party dated.....”, the contract of carriage may be deemed to be between the shipowner and the shipper.

If the charterers insist on the issue of their own (charterers’) bill of lading forms, the contract of carriage will normally be between the charterers and the shipper; in this case the terms on the bill of lading should make the identity of the carrier clear.

Where there is any doubt as to the identity of the legal carrier, it is safer for a shipmaster to assume that even where his vessel is time-chartered, the shipowner will be the carrier under the contract evidenced by bill of lading, and to take care with documentation accordingly.

The Master Clause, which may appear in some charter parties as an Employment and Indemnity Clause, transfers from the owners to the charterers the freedom of choice as to the way the vessel is employed under the charter, but in return the charterers agree to indemnify the owners for the consequences of the master complying with the charterer’s orders. The charterers may only give the master orders regarding employment of the vessel, and not regarding navigation, safety, etc. (If the master did obey the charterer’s orders regarding navigation, and loss or damage occurred, the owners would be liable, with no recourse from the charterer.) For related notes on charterers’ instructions,

The charter party may provide for a supercargo to be carried in order to protect the charterer’s interests during the voyage (e.g. with respect to care of the cargo, discharge, etc.). Since the supercargo’s meals will normally be paid for by the charterer, the master should keep records of meals provided.

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Various chaterparty freight clauses- How they are calculated

Cargo ships employment - liability as a carrier in time charter agreement

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