Termination of rights under time charters

Abstract

Both voyage charters and time charters typically contain cancelling clauses, which permit the charterer to cancel the contract if the vessel does not arrive at the delivery port, ready to load, on or before a specified date. The New York Produce Exchange Form time charter permits an owner to withdraw the vessel and terminate the charter “failing punctual and regular payment of hire”. Under English law, an owner can terminate a charter even if late payment was not the charterer’s fault, but the fault of the charterer’s bank. Although the right to terminate a charterparty exists under English and American law in certain circumstances, some differences between the two legal systems can be noted. Under American law, after acceptance of delivery, a charter may not be terminated by reason of the ship’s condition unless the owner’s breach defeats the commercial purpose of the contract.