102. Aktiebolaget Nordiska Lloyd v J Brownlie & Co (Hull) Ltd [1925] 21 Ll.L Rep 128; [1925] 22 Ll.L 79

“Readiness” for the purposes of a cancellation clause not dependent on Notice of Readiness

The facts

The vessel was ordered to load a cargo of coal at Hull for discharge in Europe.

The charterparty provided for notice of readiness to be given during office hours.

A further clause provided that the vessel was to be regarded as “ready” despite being unable to reach the docks due to congestion.

A cancellation clause gave the charterers the right to terminate the charterparty should the vessel not be ready before a certain cut off time.

The vessel arrived in the Huill roads on the Easter weekend and was unable to give Notice of Readiness before the cut off time described in the cancellation clause. The charterers purported to cancel the contract in terms of the cancellation clause.

Findings

Branson J held that on a construction of the contract, the time for loading or the commencement of laytime, for which a Notice of Readiness was required, was the equivalent of “readiness” for the purposes of the right to cancel.

Accordingly, he held that the charterers were entitled to cancel.

The Court of Appeal (Bankes, Scrutton and Atkin LJJ) came to the opposite conclusion. They reasoned that as the vessel was considered to be “ready” and thus able to give notice of readiness before docking, the state of readiness necessarily preceeded the giving of the notice of readiness.

Because the vessel had reached the point at which she was considered to be “ready”, prior to the cut off time but before she was able to give notice of readiness, the charterers were not entitled to cancel.

Commentary

All the judges recognized that the solution lay in the wording of the particular contract and none attempted to lay down any rules of law.

Branson J pointed out that the fact that the vessel may have “arrived” did not assist in the interpretation of this particular cancellation clause. In this he was correct but he appears to have been misled by the fact that the commencement of laytime, for which a Notice of Readiness was required was in the same provision as the right to cancel which had nothing to do with the notice but rather the actual state of readiness.

Scrutton LJ referred to the effect of knowledge of readiness on the part of the receivers separate from a formal NOR. This issue did not arise because of the specific wording of the contract.

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