Late arrival at the load port under voyage charters
- Date: 06/05/1998
- Source: Clifford Chance Maritime Review
It is notoriously difficult to predict, at the time when a voyage charter is being negotiated, precisely when the ship will arrive at the intended load port, particularly when she is at that stage still subject to earlier contractual commitments. For this reason, owners are often understandably reluctant to guarantee that the ship will arrive by a specified date and most voyage charters will impose no absolute contractual obligation to do so. This can, however, place the charterer in an equally impossible position. He may well have contractual commitments of his own, for example, in relation to his sale or sub-chartering arrangements. If the ship does not arrive when anticipated, the charterer will need to know as early as possible whether to make alternative arrangements. These concerns can be met to some extent by inclusion in the charter of "expected readiness to load" provisions, and clauses requiring the ship to proceed to the load port with "due diligence" or "due despatch". In addition, it is almost invariable practice to include a "cancelling clause" under which, if the ship does not arrive by a specified cancelling date, the charterer is given a contractual right to terminate the charter even though the owner is not necessarily placed in breach of contract as a result. This article looks at the operation of such cancelling clauses, and how they interrelate with the charterer's remedies where the owner is in breach of some other provision of the charter relating to the vessel's arrival or readiness at the load port.
1. CANCELLING CLAUSES
Most standard forms of voyage charter contain some variety of cancelling clause. The 1994 Gencon form provides, at clause 9(a):-
"Should the Vessel not be ready to load (whether in berth or not) on the cancelling date indicated in Box 21, the Charterers shall have the option of cancelling this Charter Party ..."
Clause 5 of Asbatankvoy provides:-
"Should the Vessel not be ready to load by 4.00 o'clock P.M. (local time) on the cancelling date stipulated in Part 1, the Charterer shall have the option of cancelling this Charter by giving Owner notice of such cancellation within twenty four (24) hours after such cancelling date; otherwise this Charter to remain in full force and effect".
However, the owner is under no contractual obligation, merely by virtue of these provisions, to ensure that the vessel actually arrives by the date specified. If the vessel arrives after that time, the charterer can exercise his contractual right to cancel, but he will not have any right to treat the owner as in repudiatory breach or to claim damages, unless he can establish an independent breach by the owner of some other provision of the charter. Furthermore, since the cancellation clause is not concerned with breach, it does not matter that the failure to arrive has been caused by an excepted peril. The right to cancel exists regardless of the cause of the delay (Smith -v- Dart & Son (1884) 14QBD 105).
A right to cancel, in this sense, is not a right which exists under the general law - it is entirely dependent upon the right given in the contract itself. If there is no cancellation clause, there is no right to cancel. It follows that, if the clause imposes any requirements as to the manner in which the right is to be exercised, those requirements must be followed to the letter, and any failure to comply may well result in the charterer himself being in breach, for wrongfully terminating the contract. The burden of proving that a right of cancellation has arisen lies with the charterer. While the position will always depend upon the precise wording of the clause in question, there are a number of points to bear in mind when considering the exercise of rights of cancellation.
(a) When does the right to cancel arise?
The right to cancel is usually expressed to arise only when the vessel has failed to be ready on the cancelling date. Some charterparties specify a particular time on the relevant date by which the ship must be ready (see, for example, the Asbatankvoy clause quoted above); but, in the absence of an express provision (or one to be inferred by reference to the other provisions of the charter), the relevant time is probably midnight on the cancelling date.
Unless the clause provides otherwise, the right to cancel cannot be exercised earlier than that, even if it is quite clear to both parties that the ship has no prospect of arriving at the load port in time (The MADELEINE  2 Lloyd's Rep 224). It follows that, if the charterer elects to cancel early, in anticipation of the vessel's late arrival, he may himself be in breach of contract. Whether, in those circumstances, the owner can recover substantial damages may of course be doubtful since, if the charterer can establish that he could and would have exercised his right of cancellation anyway, then the owner may be unable to establish any loss (see the MIHALIS ANGELOS  1QB 164). The real danger to the charterer is that he may be unable to prove that his right to cancel would inevitably have occured had he not cancelled prematurely.
Conversely, if the charterer does purport to terminate prematurely, but the owner refuses to accept this as bringing the contract to an end, the charter will remain in full force and effect. The owner must in those circumstances still proceed to the load port and, if he then fails to arrive in time, the charterer will still have his right to cancel, since that right will survive together with the rest of the charter (see the SIMONA  1AC 788).
Of course, if it is clear to both parties that the vessel will not be able to arrive in time, they will often reach an agreement to cancel, prior to the cancelling date, since it may be of no benefit to either party to insist that the ship proceeds to the load port under a contract which is doomed to be cancelled anyway. Indeed, such a possibility is sometimes built into the cancelling clause itself. For example, the new Gencon form provides at clause 9(b):-
"Should the Owners anticipate that, despite the exercise of due diligence, the Vessel will not be ready to load by the cancelling date, they shall notify the Charterers thereof without delay stating the expected date of the Vessel's readiness to load and asking whether the Charterers will exercise their option of cancelling the Charter Party, or agree to a new cancelling date.
Such option must be declared by the Charterers within 48 running hours after the receipt of the Owners' notice. If the charterers do not exercise their option of cancelling, then this Charter Party shall be deemed to be amended such that the seventh day after the new readiness date stated in the Owners' notification to the Charterers shall be the new cancelling date ..."
This revision of the Gencon form clarifies a number of difficulties of construction which arose under the equivalent provision in the previous form, but there is still one point to watch out for. The clause appears to be mandatory. Will the owners therefore be liable in damages if, for example, they delay in giving the required notice, as a result of which the charterers miss an opportunity to charter in a cheap replacement vessel?
(b) What does "readiness" mean?
Most cancellation clauses provide that the charterers can cancel if the vessel is not "ready to load" by a given date. There are, of course, two aspects of readiness. Firstly, the ship must have reached the relevant position at the load port, and secondly, she must be physically ready to load.
In order to avoid cancellation, the vessel must have reached the place at which it can be said that she is "ready". The cancellation clause will seldom define readiness for this purpose, but the charter will usually contain provisions for the tendering of Notice of Readiness (NOR) for the purpose of the laytime and demurrage regime. There is a vast amount of case law as to when a ship is an "arrived ship" for this purpose, and it is perfectly possible for the cancellation and demurrage provisions to be linked in such a way that failure to give a valid NOR will also trigger the cancellation clause. This is the solution adopted in the Norgrain form of charter. But, it is not necessary for there to be an automatic link between the "readiness" of the vessel for the purpose of the cancelling clause and the tendering of NOR. Everything depends upon the precise words used. Thus, in the GEVALIA (1925) 30 Comm. Cas. 307, the vessel arrived at the load port prior to the time laid down for cancelling, but she could not enter the docks due to congestion. The charter provided that time was to count when written NOR was handed in between specified hours. It was impossible to hand in the NOR on arrival because of the Easter break. But, the charter also stated that "if steamer be prevented from entering docks ... by reason of congestion ... she is to be treated as a ready steamer from first high water on or after arrival ... and entitled thereupon to give written notice". It was held that, on the construction of these provisions, there was no direct link between the right to cancel and the tendering of NOR. The ship was in fact ready and the charterers were not entitled to cancel.
ii) Physical readiness
The second aspect of readiness is that, having reached the relevant position, the ship must in fact be able to load. If she still has to clean her holds or is in some other respect unseaworthy on the cancelling date, the charterers may still be entitled to cancel. (Indeed, if the nature of the ship's unseaworthiness also constitutes a repudiatory breach of contract, the charterer will be entitled to terminate on this ground as well.) Nevertheless, the consequences of cancellation are more draconian than those of holding merely that an NOR is invalid and, although similar considerations will undoubtedly apply to both situations, arbitrators will probably be more cautious in holding that minor defects prevent the vessel from being ready for cancellation purposes, than they would be for the purpose of assessing the validity of an NOR. This is particularly so if the defect in question relates to the vessel's gear, rather than the cargo spaces, and if it can be remedied quickly and without causing delay (see generally Noemijulia SS Co. -v- Minister of Food  1KB 223).
(c) Delay in exercising the right to cancel
Once the date for cancelling has arrived, the charterer may exercise his right to cancel if the ship is not ready; but when is that right lost? It appears that, if the ship is not then at the load port, the charterer need not cancel immediately. In the absence of express provision, he will usually be entitled to wait until the ship has arrived before making his decision. In Moel Tryvan -v- Andrew Weir  2KB 844, the cancelling clause provided
"The charterers ... have the option of cancelling this charterparty provided the ship is not arrived ... by 15th December 1907".
It rapidly became clear that the vessel was going to be considerably delayed, and the owners therefore called upon the charterers to indicate whether they proposed to cancel or not. This the charterers refused to do, so that the charter still subsisted and the owners remained under an obligation to send the vessel to the load port, as they in fact did. In the event, the ship did not arrive until 15th June 1908! Immediately on her arrival, the charterers cancelled, and the owners sued. They contended that the cancelling option should have been exercised within a reasonable time after the cancelling date and that, since it was not, the option to cancel had been lost. The charterers responded that they were entitled to wait until the ship had arrived at the load port. The Court of Appeal agreed with them. The owners were bound to send the ship to the load port, and the charterers could not be called upon to exercise their option until the ship had arrived there.
Once the ship has arrived at the load port, however, the charterer must generally exercise his right of cancellation promptly, since he is then under an obligation to load the cargo if he is not intending to cancel. In the Moel Tryvan case, it was held that, on a true construction of the charter, the right had to be exercised before the charterer's obligation to load the cargo arose. Where, however, the charter does not address the point (expressly or impliedly), the right to cancel will generally have to be exercised within a "reasonable time"; and, in a shipping context, it is clear that a reasonable time will generally be fairly short. If the charterer fails to act sufficiently swiftly, the right to cancel may be lost.
Of course, the clause itself may expressly deal with this point. As we have seen above, Asbatankvoy provides that notice of cancellation must be given within 24 hours after the cancelling date, otherwise the charter remains in full force and effect. In addition, the new Gencon form provides for the owners to give notice to the charterers calling upon them to make their decision as soon as it becomes clear that the cancelling date will not be met (see above).
(d) How to cancel
Unless the clause provides for a particular method of cancelling, there are no specific rules as to how this should be done. Notice should, of course, be given to the owner, and this should make it clear that the charterer is cancelling pursuant to the cancelling clause (and not merely that he is reserving the right to do so). Provided that this is made clear, there are no other formal requirements.
(e) Late arrival caused by the charterer
Not surprisingly, where the owner's failure to arrive on time has itself been caused by the charterer's own breach of contract (e.g. by failing to nominate the load port in time), it has been held that the charterer's right to cancel cannot be relied upon (see Shipping Corp of India -v- Naviera Letasa  1 Lloyd's Rep. 132, which was a case involving a cancellation clause in a time charter).
2. LATE ARRIVAL AND BREACH
Although failure to arrive by the cancelling date will not, of itself, constitute a breach of the contract, it may give an indication that the owner is in breach of some other provision of the charter. Conversely, a delay in arrival may give rise to a breach of charter even before the cancelling date arrives (see The MIHALIS ANGELOS  1 QB 164).
In considering issues of breach, the precise obligations of the owner will always depend upon the exact terms agreed. The owner may, of course, undertake a clear cut express obligation either to arrive by a specified date or, at least, to sail for the load port by a specified date. If he does so, such a clause will be given effect and may well be regarded as a condition, breach of which justifies termination. Such clear cut provisions are, however, relatively rare. More often, if the ship arrives "late", there are likely to be two less far reaching categories of clause on which the charterer will need to rely. Firstly, there are the provisions which deal with the vessel's present position and her expected readiness to load ("ERL"); secondly, there are those clauses which deal with the owner's obligation to proceed to the load port. Each of these types of clause may, when read separately, give rise to independent breaches of the charter. However, where the charter contains both types of provision, they may be combined to create an additional implied obligation that the ship must proceed to the load port at such a time as will enable her to arrive by the expected readiness date. We look at each of these provisions in turn.
(a) Representations as to the vessel's position, readiness and ETA
i) The vessel's "present position"
Most charters will contain provisions either as to the vessel's present position, or her expected readiness to load, or both. The new Gencon form, for example, contains boxes entitled "Present Position" and "Expected Ready to Load". Asbatankvoy contains equivalent provisions. The "Present Position" box is, of course, a statement of existing fact and, if that statement is inaccurate, this will generally give rise to breach. Whether it gives rise to a repudiatory breach, entitling the charterer to terminate, is less clear. Cases in the past have held that misdescriptions of the vessel's current position do amount to a repudiatory breach (see e.g. Behn -v- Burness (1863) 3 B&S 751), but most of these cases are somewhat old, and they were decided at a time when contractual clauses were categorised either as conditions (breach of which gave rise to a right to terminate) or warranties (which, while giving rise to a claim for damages, did not justify termination). There was no middle ground. The law now recognises an intermediate "innominate term" where the right of the innocent party to terminate depends on the severity of the breach. In deciding whether a misdescription is repudiatory, therefore, it may now be permissible to look at the extent or nature of the misdescription. If the ship is described as being "at Rotterdam", it may be of no real significance that she is just off the port, (particularly if this is because she has already left, and is therefore en route to the relevant load port). The position might be different if she is at Buenos Aires! There is, unfortunately, no recent case law directly on the point. A further factor to consider in this context is whether the charter also contains a warranty as to the vessel's expected readiness to load (see below). If it does, the "Present Position" box may lose much of its importance, and the courts may more readily infer that a misdescription which does not affect the ship's expected readiness should not, of itself, justify termination.
ii) The vessel's expected readiness to load ("ERL")
The "Expected Readiness to Load" provision is somewhat different, both in its nature and effect. This provision is concerned with the date on which the owner expects the vessel to arrive at the load port and be ready for service. (This date will usually of course be earlier than the cancelling date.) Such a clause is much more likely to be regarded as a condition, breach of which will give rise to a right of termination (see The MIHALIS ANGELOS  1QB 164 and The "BALEARES"  1 Lloyd's Rep. 215). However, the charterer's remedies may not be as clear cut as this might suggest. Firstly, where the expected readiness date is qualified by the word "about" (as is often the case), it will be necessary for the charterer to show that the ship has exceeded whatever tolerance is covered by that word before he can establish any breach at all. Much will of course depend on the facts and the precise wording of the clause, but in Louis Dreyfus -v- Lauro (1938) 60 Lloyd's Rep. 94 a delay of four days was considered to be within the permitted tolerance. Secondly, and more importantly, the ERL undertaking, taken on its own, is in any event of limited effect. It is clear that the estimate must, in the light of the facts known to the owner at the time of making the contract, be given in good faith and on reasonable grounds. If it is not, the owner will be in breach. However, the giving of an ERL is not a guarantee that the ship will arrive by the specified date; merely that she is expected to do so. If the vessel falls back from her expected date after it has been given, the owner will not generally be in breach. There is one situation, however, in which this may not be the case. If, having given a bona fide and reasonable estimate of readiness, the owner then enters into an intermediate commitment which will inevitably prevent the ship from meeting her ERL date, this will, not surprisingly, be held to constitute a breach (see Nelson -v- Dundee (1907) S.C. 927).
iii) The vessel's ETA
Sometimes the charter will provide not for an "estimated date of readiness to load", but an "estimated time of arrival". It is, of course, clear that these two provisions may refer to different factual stages in the course of the ship's stay at the load port. But similar legal principles will generally be applied to both clauses when assessing the consequences of their breach, and their relationship with the obligation to proceed with due diligence, which is discussed below (see Mitsui OSK -v- Garnac Grain  2 Lloyd's Rep. 449).
(b) The obligation to proceed with due diligence to the load port
The opening clauses of many forms of charter impose on the owner an express obligation to proceed to the load port, and this obligation is often required to be performed with "reasonable despatch" or "due diligence" or similar words. Asbatankvoy, for example, requires the vessel to proceed with "all convenient despatch". Even if this is not provided for specifically, a term will generally be implied to this effect. The difficulty arises in identifying when this obligation arises.
Where, at the time the charter is concluded, the vessel is already free of her previous commitments and it is contemplated that there are to be no intervening voyages, the requirement will seldom give rise to problems. However, subject to what is said below, there is no general principle that an owner may not undertake intermediate voyages and, if the charterer wishes to prevent this, he should insert express provisions to ensure that the owner proceeds "directly", "immediately" or "without deviation" to the load port. If a vessel then encounters delays during her approach voyage, as a result of a peril excepted by an exclusion clause in the charter, the owner will generally be protected by that clause.
But, where the charter is concluded in advance, so that it is envisaged that the ship will be performing intermediate commitments before presentation at the load port, the position is more complex. If there is no provision as to when the vessel is expected to be ready to load, there may be no satisfactory "marker" against which the obligation to exercise due diligence can be measured. In Evera S.A. -v- North Shipping  2 Lloyd's Rep. 367, Devlin J considered that in these circumstances the owner's obligation would usually be to proceed either forthwith or within a reasonable time. Further, if the only relevant date specified in the charter is the cancelling date, there may, by analogy with the time charter cases, be a "fall back" obligation to use due diligence to arrive by that date (see e.g. the DEMOCRITOS  2 Lloyd's Rep. 149). Such a completely open ended obligation is perhaps unlikely to arise very often in practice since, more often, the position will be as described in (c) below.
(c) The combined ERL and due diligence obligation
Usually, the charter will contain not only a "reasonable despatch" clause, but also an expected readiness clause, or an estimated time of arrival. Here, the position is clearer. Firstly, as we have seen, if the owner enters into an intervening charter which will inevitably result in the ship failing to meet her ERL date, this will normally constitute a breach, regardless of any question of due diligence in prosecuting the approach voyage. But secondly, even if the intervening voyage was one which could reasonably have been expected to be completed in time, the courts have held that the combined effect of the ERL date and the obligation to proceed with due diligence is to impose on the owner an implied obligation to start on the ship's approach voyage, from wherever she may be, at a date when, by proceeding with reasonable despatch, she should arrive by the expected date (see e.g. Monroe Bros -v- Ryan  2KB 28). It makes no difference that the intervening charter was already concluded at the time of the relevant fixture (Louis Dreyfus -v- Lauro (1938) 60 Lloyd's Rep. 94). Furthermore, this obligation is absolute in the sense that, if the ship encounters delay while she is subject to her earlier commitments, the owner will be in breach, even if that delay was one for which he was not at fault. The reason for this is that a voyage charter is generally regarded as "commencing" when the vessel starts on her approach voyage. Exceptions clauses in the charter will protect the owner from that time onwards, but will not (unless expressly otherwise provided) be construed as extending to events prior to that time. By definition, any delay during the previous charter which prevents the ship from being able to embark on her approach voyage in due time, must have occurred before that voyage has commenced. Thus, if the owner chooses to enter into an intervening commitment, he does so, in effect, at his own risk.
These principles have recently been reviewed and reaffirmed by the Court of Appeal in The BALEARES  1 Lloyd's Rep. 215. On 12th January 1987, Geogas chartered the BALEARES or sub to Trammo for the carriage of a cargo of LPG to be loaded in Algeria. The vessel was described as "now trading" and "expected ready 31.1.87". The cancelling date was 5th February 1987. The charter also required the vessel to proceed to the load port "with all convenient despatch". Trammo had purchased the intended cargo from Sonatrach on FOB terms, for lifting during January. On 20th January, the owners purported to effect a substitution of the BALEARES for another vessel which was not expected to arrive until after the cancelling date. Charterers protested, but to no avail. In the event, neither vessel arrived on time and Sonatrach refused to extend the date for the supply of a January cargo. On 6th February Trammo therefore cancelled the charter and claimed damages. (The case was primarily concerned with complex issues of damages which are not relevant here.)
Owners denied liability but they also contended that (i) by analogy with the principles as to the "commencement" of the charter outlined above, the obligation to proceed with "all convenient despatch" could not arise until the commencement of the approach voyage to the contractual load port; (ii) since the sailing time from the ship's previous port to the load port was only 22 hours, the breach (if any) only arose at 0200 on 31st January (which was 22 hours before the expiry of the expected readiness date) and (iii) since much of Trammo's loss was based on an increase in the value of the cargo which they had lost, and this increase had occurred prior to 31st January, it could not therefore have been caused by the breach. The arbitrators found that the owners had given an ERL which they had no reasonable grounds for believing could be complied with; and they had also failed to comply with their obligation to proceed to the load port with "convenient despatch". Despite this, Webster J. accepted the owners' argument that the breach only occurred when the vessel was free of her previous commitments. On appeal, the Court of Appeal rejected this view. They held that, since the combined effect of the "expected ready" clause and the "convenient despatch" clause was to impose on the owners an obligation to start from wherever the ship then happened to be at a date by which, proceeding with reasonable despatch, she would arrive at the port of loading by the expected date, the breach must have occurred when the ship failed to do so. It did not matter for this purpose that the vessel was still subject to a previous fixture at that time.
There are two points to make about this implied term. Firstly, it is not as yet conclusively decided whether it should be regarded as a condition or an innominate term. (It is plainly not merely a warranty). Cooke Young and Taylor on Voyage Charters (Lloyds of London Press 1993) takes the view that the obligation is probably an innominate term, at any rate where the contract also contains a cancelling clause. The position is not however free from doubt, particularly when one remembers that the ERL term, taken on its own, will generally constitute a condition, even where the effect of this is to enable the charterer to terminate before the cancelling date (see the MIHALIS ANGELOS, above). In the BALEARES, Neill LJ seems to have considered that a right to terminate would arise "when it becomes clear that there is no reasonable prospect of the vessel being able to perform the contemplated voyage". This passage was more concerned with when the obligation arose than its categorisation. If anything, however, it supports the view that the term is a condition (see also The ALMARE SECONDA  2 Lloyd's Rep. 433 where the owners appear to have conceded that the breach constituted a breach of condition).
Secondly, from an owner's perspective, the implied term can give rise to a potentially harsh result. If an owner, acting reasonably, so arranges his affairs that he should be able to arrive in time, and the ship is then delayed during her previous fixture for reasons wholly beyond his control, he will be placed in breach, and he will not be entitled to avail himself of the exceptions clauses in the charter. The rule is, however, only based on the implication of a term into the contract and it is, of course, possible to mitigate this result by providing for the point expressly. Firstly, it might be provided that the exceptions clauses in the charter should be extended to cover delays occurring prior to the approach voyage. Secondly, the owner could make arrival by the ERL date expressly conditional on timely completion of the previous fixture. Such a provision must, however, be drafted clearly and a mere reference to the existence of the earlier fixture will be insufficient. In Evera S.A. -v- North Shipping Co  2 Lloyd's Rep. 367, the ship was described as "now due to arrive UK to discharge about 30th August; estimating 14 days to discharge, expected ready to load under this charterparty about 27th September ...". The charter also provided for the vessel "to proceed with all convenient speed" to the load port. The vessel was delayed in performing the intervening fixture due to congestion, as a result of which the charterers terminated the charter and claimed for damages. It was held that, even though the intermediate fixture was expressly referred to, the vessel was still under an absolute obligation to proceed to the load port at such a time as would enable her to arrive by the ERL date. Devlin J considered that, if a shipowner wished to make the beginning of one voyage contingent on the conclusion of the other, he must do so in clear terms. In the light of this decision, the drafters of the new 1994 Gencon have therefore sought to address the problem by amending clause 1 as follows:-
"The said Vessel shall, as soon as her prior commitments have been completed, proceed to the loading port(s) ... and there load a full and complete cargo ..."
If the intention of this amendment is achieved, there will be no obligation to proceed to the load port until the ship is free of her prior commitments. This will not, of course, absolve the owner from all responsibility. If the owner enters into a commitment which will inevitably delay the vessel's expected arrival date, or if he otherwise misrepresents the vessel's ERL, it is submitted that he will still be in breach.
3. THE RELATIONSHIP BETWEEN CANCELLATION AND BREACH
We have seen that, when a ship arrives "late", the charterer may have both a right to cancel and a claim for damages. Furthermore, if there is a breach of sufficient severity, the charterer may also have a right to terminate for repudiatory breach. It is therefore necessary to consider three possible situations.
(a) Firstly, the ship may simply fail to arrive by the cancelling date, but in circumstances where this does not give rise to any breach of the charter whatsoever. (The ship may, for example, simply have been delayed by bad weather on her approach voyage, for which neither party was responsible). In this case, the charterer has the right to cancel, but no other remedy.
(b) Secondly, the ship may arrive "late" for reasons which do amount to breach (in one of the ways outlined above), but in circumstances where that breach does not justify holding the owner in repudiation. If the charterer then incurs loss flowing directly from the lateness of the ship, he may be entitled to recover damages in respect of that loss (for example additional storage charges for the goods during the period between the date when the ship should have arrived and the date when she did in fact arrive). These damages may be recoverable whether the charterer exercises any right of cancellation or not. If, however, the charterer also exercises his right of cancellation and thereby incurs additional losses as a result (what might be described as damages for "loss of bargain"), he may be unable to recover those additional costs, if they are held to flow from his own decision to cancel the charter, and not from any repudiatory breach by the owner.
(c) Finally, the late arrival of the ship may give rise not only to a right to cancel, but also to a right to treat the owner as in repudiatory breach. This may, for example, occur where the owner has, in breach of contract, substantially misrepresented the time at which the vessel will be ready to load and has failed to proceed with due diligence to the load port. Here, the charterer may wish to exercise both his right to treat the owner as in repudiatory breach and his right of cancellation; so that he can not only terminate the contract and make other arrangements for the carriage of the cargo, but he can also claim his additional costs and losses incurred in doing so. A message to this effect must be carefully drafted so as to preserve all of the charterers' rights. Of course, if the owner is in repudiatory breach, the right to cancel may be of less importance. Nevertheless, the charterer will often wish to invoke both rights simultaneously since, if he turns out to be wrong in treating the owner as in repudiatory breach, he may wish to have a fall-back position, based on the cancellation clause, so as to preclude the owner himself from seeking to recover damages for wrongful termination.
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