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Off hire clause

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Off hire clause. The Off hire clause. and other clauses in the time charterparty specify the circumstances which cause the ship to become off hire and payment of hire to be reduced.

These clauses and the circumstances they describe are different from another general clause headed with words, which include "off hire". This is the "On/Off hire Survey" clause. This clause deals with surveys to determine issues such as the quantity of bunkers and other fuel on board and any visible damage when the ship is delivered to the charterers and on its redelivery to the owners. The reference to "off hire" is a reference to the point in time when the ship's hire permanently ceases under the time charter in which the clause is found.

The Off hire clause can also be known in some charterparties as a "Suspension of hire" clause.

In different time charters the off hire provisions may have different consequences for the charterer's right to avoid paying hire. The period for which no hire is payable can commence from the event itself or from an agreed time after the event.

In the New York Produce Exchange form the Off hire clause states that if there is loss of time (for one of the agreed reasons) thus preventing the full working of the ship, the payment of hire ceases for the time lost. This phrase, "loss of time", is significant. If, for example, there is a breakdown of the main engine but the ship is waiting outside a port waiting for a berth, the vessel is not off hire. The breakdown must prevent the full use of the vessel at the time of the breakdown. When the ship is waiting for a berth it is not being "used" by the charterer. This charterparty states that payment of hire ceases for the time lost. 'This can be quite difficult for the owner because all the time lost to the charterers, including consequential loss of time, can be treated as off-hire even though the ship is restored to its non-off hire condition. This type of off hire clause is called a "Net loss of time" clause.

The BALTIME charterparty "Suspension of Hire" clause provides that if certain circumstances hinder or prevent the working of the vessel and continue for more than 24 hours: ". . . no hire to be paid in respect of any time lost thereby during the period in which the vessel is unable to perform the service immediately required." The LINERTIME Suspension of Hire clause is in almost identical terms to the BALTIME clause. These are also "net loss of time" clauses but there is a "threshold" of an agreed number of hours after which the ship is treated as being off hire, and the non-payment is for any time lost from the event causing the off hire. For example, if there is a breakdown of the main engine lasting 20 hours, the threshold is not crossed and there is no off hire. If the breakdown lasts for 30 hours, the threshold is crossed and the off-hire is from the time of the breakdown, that is, for 30 hours, not for 30 less 24 hours.

If the off hire clause is worded slightly differently it could state that ". . . if the full working of the vessel is stopped for more than . . . consecutive hours, the payment of hire shall cease until the vessel is again in an efficient state to resume its service. . . .". In this clause there is still a threshold period, but the period during which the hire is not payable is defined and ends when the vessel is restored to an efficient state to resume its service. This gives more certainty to the off hire provisions, when the off hire period commences with a specific incident and ends with another event. The full hire becomes payable when the ship becomes efficient enough to resume its service. This type of off-hire clause is called a "Period Off hire clause".

In a Period off hire clause the charterers can deduct hire for the actual time lost. It would seem that in a Net loss of time clause the charterers can deduct hire for all time lost even though the event occurs which restores the vessel to its non off hire condition.

Suppose a time chartered vessel is due to berth and on the way to the berth there is an engine breakdown. This causes the vessel to become off hire from the instant of the breakdown. The breakdown has caused the berthing to be delayed because the berth has been allocated to another ship. Under the Period off hire clause, the hire becomes payable when the engine repairs are completed. Under the Net loss of time clause the ship would remain off hire until it is berthed. However, English cases (for example, The Marika M, 1981) have established that the payment of hire is restored from the time the ship becomes fully efficient. Under U.S. law, the charterer's use of the ship is critical. If an event takes place that will cause the ship to become off hire and thereafter if the Charterer loses the use of the ship because of a consequent delay, the ship remains off hire until the delay is removed.

It may be interesting to mention the case of The Aquacharm, 1982, again, in relation to off hire. The ship was loaded to a draught more than that permitted for transiting the Panama Canal. It had to be part discharged and the partly discharged cargo had to be reloaded on the other side of the Canal after the ship had completed its transit. The, entire operation took nine days longer than the normal transit time. The Charterers argued that the ship was off hire. The English Court of Appeal held that the ship was not off hire because its efficiency as a working ship was not reduced by the lightening and reloading of the part cargo.

 

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