Cesser clause – terms of charterparty incorporated into bills of lading with exclusion of cesser clause
Wood was shipped from Miramichi, Canada to Liverpool.
The charterparty contained a clause reading as follows:
“As this charterparty is entered into by the charterers for account of another party their responsibility ceases as soon as the cargo is on board, the vessel holding a lien upon the cargo for freight and demurrage. The usual custom of each port to be observed by each party in cases were not specially expressed; and 17 days, Sundays and holidays excepted, are to be allowed the merchant (if the ship be not sooner despatched) for loading, and for discharging cargo 15 like days. Lay days to commence when ship is ready in a proper loading and discharging berth respectively; demurrage at the rate of fourpence per register ton per day to be paid to the ship if longer detained”
Bills of lading were issued addressed to the charterers in their capacity as consignees requiring them to pay freight and “all other conditions as per charterparty”.
A portion of the cargo was sold by the charterers and a portion retained by them.
The owners sued the charterers for delay at the port of discharge. The charterers claimed that the cesser clause had been incorporated into the bills of lading with the effect that they were absolved from liability.
In the Divisional Court, Pollock B and Lopes J found that the demurrage clause was incorporated into the bills of lading but not the cesser clause. The charterers were liable for demurrage at the port of discharge as consignees in terms of the bills of lading.
The Court of Appeal (Coleridge CJ, Brett MR and Bowen LJ) agreed with the Divisional Court.
The cesser clause is here given its proper meaning. Lopes J points out that the time at which cessation is to be determined is at loading. The cesser clause functions to absolve the charterers at that point in time leaving the owners to treat with the consignees regarding demurrage at the port of discharge.
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