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Laytime

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Laytime. This expression means the agreed period of time (in days or in hours) during which the shipowner makes the vessel available to the charterer for loading and/or discharging the cargo.

Laytime. The main purpose of a voyage charter is that cargo is to be carried from place to place. The charterer agrees to pay freight for the use of the vessel to perform this service. However, before the cargo is carried it must be loaded and when it arrives at its contractual destination, it must be discharged. These operations take time. The value of a vessel's time can be considerable. Therefore the shipowner wishes to obtain a reimbursement from the charterer for the value of the time lost by the vessel when it is in port for loading or discharging. Initially, therefore, the owner makes the vessel available to the charterer for the cargo operations in addition to providing the service of carriage of the cargo. The owner could, of course, charge separately for the time in port. However, the owner will take into account the time the vessel may be expected to stay in port and include the value of this time into his estimate of the freight that he will expect from the charterer. It was said in an early case, Inverkip v. Bunge, 1917, that: "The sum agreed for freight in a charter covers the use of a ship fox an agreed period of time for loading and discharging, known as the lay days, and for the voyage."

The expression "Laytime" was developed to cover the period during which the owner makes the vessel available for loading and/or discharging. Because it is assumed that the cost of this time is included in the freight, the owner cannot expect any payment for loading or discharging time additional to the freight. Accordingly, a standard definition of "laytime" can be found in the "Charterparty Laytime Definitions 1980", that:

" `Laytime' means the period of time agreed between the parties during which the Owner will make and keep the ship available for loading/discharging without payment additional to the freight."

However, because time has value to the shipowner, the time allowed to the charterer is not indefinite. The old concepts of indefinite laytime, such as "customary" and "as fast as the vessel can . . . ", among others, are not generally found today. The modern approach is to have a time limit in the laytime. This is either fixed (for example, ".. . in . .. days .. .") or calculable (for example, ". . . at an average of . . . metric tans per . . . day : . . ") .

When same event triggers the commencement of the laytime, the quantity of time allowed to the charterer or shipper or consignee commences to reduce. It continuously reduces unless the charterparty contains "exceptions to laytime", during which the reduction of the charterer's stock of time is interrupted or suspended. Sundays, holidays, bad weather, strikes, ballasting, etc., are various events, which interrupt  the counting (down) of the charterer's laytime.

When this agreed ("allowed") period of laytime expires, the charterer must pay for the time lost if the cargo operations are still continuing. The payment is called "demurrage" where the compensation is agreed in advance ("liquidated damages") or "damages for detention" ("unliquidated damages"). (See Demurrage and Damages for detention.)

If, however, cargo operations are completed before the laytime expires, the owner may have to pay "despatch" to the charterer.

The entire idea of "time" and the value of time, especially to the owner, was well explained by the judge in The Corfu Island, 1953, when he said that:

"The shipowner's desire is to achieve a quick turn-round; time is money for him. The object of fixing lay days and providing for demurrage and despatch money is to penalise dilatoriness (`delay') in loading and to reward promptitude."

 

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