Laytime calculation in a voyage charter party agreement for cargo ships employment
Purpose, stages in calculations
The purpose of laytime calculations is to determine whether on completion of loading or discharge operations despatch is payable to the charterers or demurrage is due to the owners.
The port agent is normally responsible for calculating the sum due and rendering accounts, but the master should also keep a tally of laytime used as he may be required to confirm the agent’s figures.
The master should also be aware, at any given moment, of whether laytime has commenced, is still running, is interrupted or has expired. Laytime calculations are recorded on a laytime statement.
There are seven stages in a laytime calculation:
1. Read relevant clauses in the charter party.
2. Obtain Statement of Facts from agent.
3. Determine duration of laytime allowed.
4. Establish time of commencement of laytime.
5. Allow for interruptions to laytime as per the charter party.
6. Establish time of expiry of laytime.
7. Calculate despatch or demurrage payable.
The Statement of Facts is an extract from the port operations log kept by the charterer’s agent, and contains times of all relevant events, including:
• arrival of ship;
• tendering of Notice of Readiness;
• commencement of laytime;
• commencement of cargo operations;
• periods of suspension of laytime, with reason in each case (so that risk of stoppage can be apportioned);
• termination of cargo operations;
• termination of laytime.
The Statement of Facts should be approved by all parties involved (master, stevedore, agent, etc.), and will normally be presented by the agent to the master for his signature and return; the master should retain a copy. It is important before signing to compare the times stated with those recorded on board the ship, since the charterer’s agent may have obtained inaccurate times from his terminal supervisor, or may, for example, have recorded a period of rain in the vicinity of his office that did not affect the ship for the same period. For a ship on a demurrage rate of USD24,000 per day, 6 minutes of time on demurrage is worth USD100; it is therefore important that all times are accurately recorded.
The Statement of Facts is used by the agent in drafting up the Laytime Statement, from which any amount of demurrage or despatch money payable will be calculated.
The duration of the laytime allowed depends on whether the laytime is:
• definite, e.g. “2 running days”;
• calculable, e.g. where there is a given tonnage of cargo and a given rate of loading or discharging; or
• indefinite, e.g. on “FAC” (“fast as can”) terms - which are unusual.
Where calculable, the allowed laytime for the operation involved (loading or discharging) should be calculated to the nearest minute.
Interpretation of the contract laytime terms should be in accordance with the law governing the contract (which is determined from the Jurisdiction Clause), or, if expressly provided for, the internationally recognised Voyage Charter party Laytime Interpretation Rules 1993 . As a result of court rulings, definitions of certain laytime expressions under English law differ from those given in the Laytime Interpretation Rules.
Laydays and the cancelling date in a charter party agreement
Commonly used chartering terms and abbreviations
Benifits of voyage charter agreements
Defining arrived ship in a charter party agreement
Purpose of charter party demurrage clause in a sales contract
What is a despatch clause in a charter party agreement ?
How to tender notice of readiness in a chartered voyage ?
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