The charterers under a strict obligation to pay freight to the owners under a voyage charter. This obligation is not qualified by such external factors as financial difficulties, drop in freight rates, market conditions, etc. In such cases there is no doubt that the charterers are liable.
Voyage Charters by Igor Sterzhantov LLM Voyage Charter Party - Renunciation See this article in full on http://www.lawandsea.net The charterers under a strict obligation1 to pay freight to the owners under a voyage charter. This obligation is not qualified by such external factors as financial difficulties, drop in freight rates, market conditions, etc. In such cases there is no doubt that the charterers are liable2. The English law on the subject of renunciation is well settled. In Universal Cargo Carriers Corpn v Citati  2 All ER 70,  2 QB 401,  2 WLR 713, affd CA,  3 All ER 234,  2 QB 254, Devlin J. defined several main principles as below: A renunciation can be made either by words or by conduct, provided it is clearly made. It is often put that the party renunciating must "evince an intention" not to go on with the contract. The intention can be evinced either by words or by conduct. The test of whether an intention is sufficiently evinced by conduct is whether the party renunciating has acted in such a way as to lead a reasonable person to the conclusion that he does not intend to fulfil his part of the contract... Since a man must be both ready and willing to perform, a profession by words or conduct of inability is by itself enough to constitute renunciation. But unwillingness and inability are often difficult to disentangle, and it is rarely necessary to make the attempt. Inability often lies at the root of unwillingness to perform. Willingness in this context does not mean cheerfulness; it means simply an intent to perform. To say "I would like to but I cannot" negatives intent just as much as "I will not". ...If a man says "I cannot perform", he renounces his contract by that statement, and the cause of the inability is immaterial. It is also well settled that the party in breach is under a secondary obligation to pay damages related both to breaches committed before rescission and to losses suffered as a result of the defaulting party's repudiation of future obligations3. In Zodiac Maritime Agencies Ltd v Fortescue Metals Group Ltd  EWHC 903 (Comm) the High Court has been invited to decide the issue of an awkward renunciation of Consecutive Voyage Charterparty (CVC) by the charterers. 1 Strict liability means that it is not usually necessary to prove fault in order to establish the existence of a breach, McKendric 2 It is axiomatic that, in relation to claims for damages for breach of contract, it is, in general, immaterial why the defendant failed to fulfil his obligation, and certainly no defence to plead that he had done his best. Per Lord Edmund-Davies in Raineri v Miles  AC 1050 at 1086 3 The Law of Contract, G. Treitel, 10Th ed., 790 Voyage Charters by Igor Sterzhantov LLM The owners let their capesize bulk carrier "the Kildare to the charterers under (CVC) dated 5 December 2007. In November 2008, when there was 4 and a half years remaining for CVC to run, the charterers, on the plea of financial crisis and changed market conditions, proposed to the owner reduction in the Charterparty freight rate (from US$16 pmt to US$6 pmt) and together with its extension from 5 to 10 years. The owners in their reply called such proposals as "totally unacceptable" and that there are no “permissible excuse for failing to perform a contractual obligation under English law". In subsequent correspondence the charterers approached the owners advising that they exercised suspension of all of its long term contracts. In their respond the owners requested the length of suspension period and the precise cause for the suspension, which request has never been replied. Meanwhile the vessel completed her sixth consecutive voyage and arrived at loading port and tendered NOR. Continue reading here
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