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Subject: laycan LAY/CAN
Both in voyage charter and time charter it must be agreed when the vessel should be ready to load at the first port or delivered to the charterer. Usually a so-called Lay/Can is agreed, for instance "Lay/Can March 1-15"."Lay"
"Lay" is a short form of "Laytime not to commence before". If the ship, under a voyage charter-party, is ready at the first loading port before the agreed "layday" the owner cannot claim that the charterer should start to load the vessel or that the time should commence to count. This situation will be discussed further in Chapter 12, on voyage chartering ("Laytime" section page 178ff.).
If a vessel chartered under a time charter-party arrives at the port or place of delivery before the layday, the charterers have no obligation to take delivery of her and, unless the charterers agree to an earlier delivery, the ship has to wait without earning anything for the owners. Sometimes the charterers wish to commence the loading of the vessel before the first layday but without taking delivery of her and thus also without paying for her. The owner has no obligation to accept such a procedure and if the charterers wish to commence the loading before the first layday the owner and the charterer must be in agreement concerning the payment of hire, allocation of risks, etc., during the period up to the agreed layday.
The layday is not always exactly stated. For instance, in the preamble to the Gencon form the expression "expected ready to load under this Charter about the date indicated in Box 9" is used. To find out the meaning of the word "about", the circumstances in the relevant case must be taken into consideration. The longer the period between the fixture and the first layday, the wider the period covered by the expression "about". "Can"
If the vessel has not arrived at the loading port, or port or place of delivery, on the cancelling day most charter-parties give the charterer an absolute right to cancel the charter agreement. The ordinary Cancelling clauses, as for instance in Gencon and Baltime, are, in other words, applicable also when the ship has been delayed for reasons which cannot be controlled by the owner and when the owner and the master have done their utmost to speed up the vessel.
When it is obvious to the owner that he has no chance of arriving at the first loading port or place of delivery before the cancelling date, it is important for him to get the charterer's declaration whether or not he will cancel. Under English law the charterer is not obliged to give such a declaration unless this is expressly stated in the charter-party.
Both the Gencon and the Baltime Cancelling clauses deal with this question:
GENCON
10. Cancelling Clause
Should the vessel not be ready to load (whether in berth or not) on or before the date indicated in Box 19, Charterers have the option of cancelling this contract, such option to be declared, if demanded, at least 48 hours before vessel's expected arrival at port of loading. Should the vessel be delayed on account of average or otherwise, Charterers to be informed as soon as possible, and if the vessel is delayed for more than 10 days after the day she is stated to be expected ready to load, Charterers have the option of cancelling this contract, unless a cancelling date has been agreed upon.
BALTIME
22. Cancelling
Should the Vessel not be delivered by the date indicated in Box 23, the Charterers to have the the option of cancelling.
If the Vessel cannot be delivered by the cancelling date, the Charterers, if required, to declare within 48 hours after receiving notice thereof whether they will cancel or take delivery of the Vessel.
According to the Gencon form the charterer must on demand declare his option to cancel at least 48 hours before the vessel's expected arrival at the port of loading. This means that where the owner, a couple of weeks before the cancelling date, knows that the ship has no chance of arriving before the cancelling date, he has no right to demand the charterer's declaration and, if the charterer is not co-operative, the owner may have to start the ballast voyage towards the first loading port, or place of delivery, in order to avoid a claim for breach of contract from the charterer.
The solution in the Baltime cancelling clause is better for the owner because the charterer, according to this clause, has to declare whether he intends to cancel or not "within 48 hours after receiving notice" that the ship cannot be delivered by the cancelling date. Other, more modem, charter-party forms, sometimes contain a clause to the effect that the owner cannot require a declaration from the charterer before, for instance, the ship has reached the last port before the voyage to the loading port or delivery port (place). Usually, the vessel's position at the time of the fixture is stated in the charter-party. The statement of the position must be corrected and the estimated day for readiness for loading realistic.
The owner and the master have an obligation to do their utmost to ensure that the vessel reaches the first loading port or the place of delivery at or before the day stated for the expected or estimated readiness for loading. If the owner or master intentionally or by negligence delays the vessel and causes her to be late, the owner may be liable in damages for breach of contract.
With respect to the relation between shipowner and charterer under charter-parties there are no compulsory (mandatory) rules concerning cargo liability. Some charter-parties tend to relieve the owner from much of his cargo liability, whereas others have provisions more or less in line with the mandatory cargo liability rules. Although the parties in charter-parties are thus basically free to determine the extent of the owner's cargo liability it is not uncommon to find a separate provision, a so-called Paramount clause, concerning the liability for damage to or loss of the goods. A Paramount clause may be drafted in different ways; but the basic idea is that the Hague Rules and/or Hague-Visby Rules or local legislation based on these conventions shall be applicable in case of cargo damage.
The Paramount clause may prescribe that it shall be inserted only into all bills of lading issued in connection with the charter-party, that it shall cover the cargo liability under the charter-party, or that it shall apply to the charter-party entirely. In the latter case, various legal problems may arise, since the Hague Rules and amendments are geared to cargo liability and not to chartering in its entirety (cf. above page 55ff.). ++
LAYTIME
In voyage chartering the financial risk of delay during the sea voyage normally rests with the owners. The risk of delay during a vessel's periods in port can be shared in different ways between the owners and the charterers.
A great many of all the discussions and disputes that arise out of voyage charter agreements are connected with the calculation of laytime. Many of the problems could have been avoided if the laytime clauses had been worded more distinctly. Unfortunately, the printed clauses in the standard forms are also worded in a hazy way and therefore the well-known printed standard forms must often be amended to get a clear picture of how laytime should be calculated.
The fundamental idea is that the charterers, without extra payment to the owners, have a certain time, "allowed time", to spend for the loading and/or discharging of the vessel. If this time is exceeded they must pay compensation—demurrage—agreed beforehand to the owners for their loss of time. Sometimes it is also agreed that the owners will compensate the charterers if the ship is loaded and/or discharged before the agreed time expires. This situation and this compensation is called "despatch".
The most common mistake when drafting the laytime calculation is to mix the various rules or groups of rules. When the Laytime clauses are worded and when the calculation is made, a step-by-step method must be used as it is important not to mix, for instance, the rules dealing with notice time and the rules dealing with the laytime itself.
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