221. Inverkip Steamship Company Limited v Bunge & Co [1917] 1 K.B. 31; [1917] 2 K.B. 193

Voyage charterparty – agreed demurrage rate applicable for entire period of loading

The facts

The vessel was ordered to proceed to New Orleans and Galveston to load a grain cargo for a safe port on the Mediterranean.

The demurrage clause read as follows:

“Steamer to be loaded according to berth terms, with customary berth despatch and if detained longer than 5 days, Sundays and holidays excepted, charterers to pay demurrage at the rate of 4 pence British Sterling, or its equivalent, per nett registered tonne per day or pro rata, payable day by day, provided such detention shall occur by default of charterers or the agents.”

Galveston was damaged by a tidal wave and the vessel was ordered to load a Newport News.

After 17 days on demurrage, the owners gave notice that the vessel was no longer to be on demurrage and that the damages for detention would be claimed at a higher rate.

Loading was completed 12 days later.

The charterers tendered demurrage at the charterparty rate which was refused by the master on the owners’ orders.

Findings

Sankey J in the King’s Bench Division found that the effect of the agreement was that the parties were bound to the agreed rate for the entire period of delay. His finding was confirmed by the Court of Appeal (Scrutton and Warrington LJJ and Cozens –Hardy MR).

Commentary

Sankey J pointed out three possible types of agreement:

1. For a fixed period of demurrage;
2. For a reasonable period of demurrage;
3. No qualification as to the period.

In the first two instances, damages for detention would be competent on expiry of the relevant periods. The facts of this case fell within the third category.

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