Thu, Oct

Gross terms (Gross Charter)


Gross terms (Gross Charter). If in addition to the full operating costs of the ship, all other expenses, tally charters, etc. are for owners' account the charter is a "gross charter" or fixture on "gross terms".

Voyage charters come under this category. In time charters the charterer pays all the loading, etc. costs. The expression "nett charter" and "gross charter" are almost entirely confined to American usage. The expression "gross terms" is in more common usage and conveys that the cost of loading, stowing, trimming and discharging is for account of the vessel. The alternative is f.i.o., f.i.o.t, and f.i.o.s.t. , when the cost of loading, stowing, trimming and discharging are not for account of the vessel. However, whether gross terms or f.i.o. terms apply, the port charges are payable by the vessel on a voyage charter.

The costs of loading and discharging can therefore be allocated differently between the shipowner and the charterer depending on the terms used in the charterparty. If a clause, such as in MULTIFORM, states that loading, stowing, trimming and discharging is to be carried out "free of expense" to the owner, these are "FIOST" terms. However, a charterparty may contain both gross terms and FIOST terms and allow the parties to delete one as appropriate during their negotiation before the fixture. For example, in GENCON "Clause S. Loading Discharging costs" has two sub clauses. Sub clause (a) deals with "Gross Terms" and (b) provides for "F.I.O. and free stowed/trimmed" terms. The former states:

"The cargo to be brought alongside in such a manner as to enable vessel to take the goods with her own tackle. Charterers' to procure and pay the necessary men on shore or on board the lighters to do the work there, vessel only heaving the cargo on board. If the loading takes place by elevator, cargo to be put free in vessel's holds. Owners only paying trimming expenses.
Any pieces and/or packages of cargo over two tons weight, shall be loaded, stowed and discharged by Charterers at their risk and expense. The cargo to be received by Merchants at their risk and expense alongside the vessel not beyond the reach of her tackle."

The owner is obliged to cover all expenses from "hook to hook" that is, from the time the cargo comes within reach of its tackle until the cargo leaves the ship's tackle at the discharging port.