Press release: Using the “Notice of Readiness” clause from a previous fixture can have unintended consequences, warns ITIC

The Notice of Readiness (NOR) clause in a previous fixture may not have the same effect if used in a new fixture. Shipbrokers should bear this in mind when copying wordings from previous fixtures says the International Transport Intermediaries Club (ITIC).

When NOR is tendered by the Master, they are stating that their vessel is ready in all respects to begin loading or discharging its cargo. Laytime usually starts running from the tendering of the NOR although some exclusions will apply if they have been agreed. In a recent case referred to ITIC, a fixture for a vessel trading from the Black Sea to Spain used the NOR clause from a previous fixture where the same vessel was trading into China.  The clause contained an exclusion that time did not count on Saturdays and Sundays (which the principals had agreed to). 

However, it also contained an exclusion in respect of time outside of local working hours. Whilst Chinese local working hours allowed for NOR to be tendered up until 2359 on the day of arrival, in Spain local working hours were only until 1700 and then from 0800 the following day. The owners did not notice that the broker had reproduced the whole clause from the China fixture.

The vessel arrived at the Spanish port at 2155 on Friday (when NOR was tendered) but had to wait until 2000 the following Monday for a berth. The owner calculated laytime to include time from arrival at 2155 until 2359 on the Friday and then to include the period from 0001 until 2000 on the Monday. Charterer’s calculation excluded these hours – calculating only from 0800 on the Monday. This resulted in a difference of just over US$ 50,000 in demurrage between the two calculations.

The issue was eventually resolved by mutual agreement whereby the owner, charterer and shipbroker each contributed a third of the disputed amount. The shipbroker, therefore, paid around US$17,000 which was covered by ITIC.

It is important that shipbrokers do not simply copy and paste wordings from previous fixtures, if those wordings do not accurately reflect what their principals want in the current fixture. Here it was clear that the Owners did not ask for the local working hours exclusion and would not have agreed to it if it had been brought to their attention. That said, they did have a chance to see it if they had read the clause properly, but they did not do so. This is why the parties agreed to split the costs evenly on this occasion. 

Ends

For further information please contact:

Katerina Dimitropoulos, Navigate PR
T: +44 203 326 8463
E: kdimitropoulos@navigatepr.com

About ITIC

International Transport Intermediaries Club (ITIC) is the world’s leading provider of professional indemnity insurance to transport professionals across the globe.

As a mutual insurer, it has over 90 years’ experience providing cover to companies in the marine, naval architecture, aviation, offshore and hydrographic industries. With 2,900 members in over 110 countries and with a worldwide network of correspondents, ITIC is the acknowledged leader in its field.

ITIC’s insurance has been developed primarily to cover claims of negligence – errors or omissions. Cover can also extend to specialist areas such as debt collection, loss of commission income, cyber liability, cash in transit and directors’ and officers’ insurance. ITIC’s wide cover also includes a unique discretionary insurance which could support claims not normally be paid by other professional indemnity insurers.

ITIC is managed by Thomas Miller. More details about ITIC and the services it offers can be found at www.itic-insure.com