Haugen Consulting LLC

Description

Tanker vessel demurrage, an ancillary cost that represents liquidated damages for delays, occurs when the vessel is prevented from the loading or discharging of cargo within the stipulated laytime. Demurrage constitutes an extension of freight that lies unconditionally with the Charterer. As stated in M/T "Raphael", SMA No. 3739, " this rule of absolute liability for payments of demurrage is subject to three exceptions: 1) specific exonerating clauses in the charter party; 2) delay attributable to owners' fault; and, 3) a vis major (a sudden or unforeseen interruption or prevention of the act of loading not occurring through the connivance or fault of the charterers)." Under a voyage charter, time counting is assessed per the charter party terms and conditions of the governing boilerplate and rider clauses. Examples of popular tanker voyage boilerplates include ASBATANKVOY, SHELLVOY 6, EXXONMOBILVOY 2005, and BPVOY 4. Conversely, under commodity contracts of sale, demurrage is assessed basis the agreed delivery terms (very often demurrage terms are either not included in the Sales Contract or they are not clearly defined leading to disputes as to the allocation of liability between the commercial trading partners).

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