NYPE AND GEAR BRAEKDOWN

zhengyoung

Dear MR. Yang,

Supposing at nype 46 and no other amend terms................if gear breakdown at loading port and then charterer arranged shore crane to load, can charterer deduct the shore crane fee immediately  from the next hire payment?

in practical , seems  charterers always deduct cost of hiring cranes from hire

in theory, the simple nype form is not detailed enough in clause 15 and 22 to cover the issue, a gear breakdown clause should be covered by a rider clause agreed by the parties.

I tried to find answer from your excellent book " time charter" but failed.

Thus, can shore crance charge offset hire immediately from next hire payment?

By the way, many thanks for your great contribution to maritime, both practial and knowledge.

Best regards

zheng yongmin

dry bulk charterer for tct vsl from china sea to pg, red sea and med sea.

SHINER

Deductions from hire
a) Deductions expressly permitted by the charterparty
The charterers may make deductions from hire if these are expressly permitted by the charterparty. Thus, the NYPE 46 form allows the charterers to deduct in respect of, inter alia, advances for ship’s disbursements (see lines 65 and 66), off-hire claims (see lines 97 to 99) and in respect of time lost, fuel consumed and expenses incurred as a result of a reduction in speed caused by a defect in or breakdown of the ship’s hull, machinery or equipment (see lines 99 to 101).

b) Deductions in respect of off-hire events
No deduction from hire can be made in respect of an anticipated period of off-hire (the "Lutetian"³ ). Strictly speaking, an off-hire claim does not give rise to a right to deduct from hire if the charterparty off-hire clause specifies that "the payment of hire shall cease" in respect of any period of off-hire since this prevents the hire in question falling due. However, since hire is generally paid in advance it has been accepted that advance hire overpaid in respect of a period of off-hire may be deducted from a subsequent hire payment: the "Nanfri"4 and the "Lutetian" (supra).

c) Deductions by way of equitable set-off
The charterers may make a deduction from hire by way of equitable set-off if they have been deprived of the use of the vessel, in whole or in part, by virtue of a breach of charter by the owners (the "Nanfri", supra). In this case, Lord Denning described the type of claims which can give rise to a right of set-off as those which "…. arise out of the same transaction or are closely connected with it .... [and] .… which go directly to impeach the plaintiffs’ demands, that is, so closely connected with his demands that it would be manifestly unjust to allow him to enforce them without taking into account the cross-claim .…". The operation of the doctrine of equitable set-off was further considered in the "Aditya Vaibhav"5. In this case, the charterers claimed that the owners’ breach of charter in failing to properly clean the vessel’s holds delayed the vessel at Jeddah and caused them to suffer consequential loss and expense. They subsequently made deductions from hire by way of equitable set-off in respect of a) time lost due to the vessel’s lack of cleanliness and b) their consequential loss and expenses. The owners challenged the charterers’ right to deduct for their consequential loss and expenses. The Commercial Court held that, although element b) of the charterers’ cross-claim arose out of the same transaction as the owners’ claim for hire, the owners’ claim for hire could not be impeached because they were asking to be paid for a service which they had provided (i.e. full use of the vessel after cleaning). Thus, the charterers had satisfied the first but not the second of the requirements outlined by Lord Denning in the "Nanfri" (supra).

The exact scope of application of this doctrine in the context of charterparty claims has not yet been established by the Courts and so it is difficult to provide more than general guidance from the few cases which have considered the issue. By way of example, equitable set-off has been permitted in relation to claims for breach of charterparty speed warranty (the "Chrysovalandou Dyo"6) and failure by the owners to load a full cargo (the "Teno"7 ). In contrast, claims in respect of damage to cargo do not give rise to a right of set-off (the "Nanfri", supra).

d) Quantification of the sum to be deducted
The judicial position on this issue is presently divided. In the "Nanfri" (supra), Lord Denning expressed the view that the charterers are entitled to quantify their loss by a reasonable assessment made in good faith and deduct the sum so quantified from hire. In contrast, Lord Goff opined that, where the charterers decide to make a deduction from hire, they do so at their peril. The distinction between the two approaches is quite significant. Lord Denning’s formulation means that the charterers will not be in breach of charter if their deduction turns out to have been wrongful provided they acted reasonably and in good faith in making it. The charterers are not so protected by Lord Goffs’ formulation.
STEAMSHIP MUTUAL June 1999 Sea Venture Volume 18)

zhengyoung

SHINER

Many thanks for your comments to clarify my view.

Following your guidance, I found "How to apply the principle of equitable set-off to time-charter hire" from internet, as expand reading article, which is also interesting.

Best regards