When a charterer exceeds the agreed time for loading or unloading cargo from a vessel, they are required to pay a fee known as contract demurrage to the shipowner. This fee is outlined in the contract between the two parties and serves as compensation for any losses incurred by the shipowner due to the delay. If the delay is not covered by the contract, the charterer may still be held responsible for non-contract demurrage, which is determined by a court. Furthermore, a fee may be charged for the tardy return of ocean containers or other equipment.
Contract demurrage is a form of liquidated damages that a charterer must pay to a shipowner if they fail to load or unload cargo within the agreed-upon time. This type of demurrage is specifically outlined in the charterer’s contract with the shipowner. For instance, if a charterer agrees to load a ship within three days but takes four days to do so, they may be obligated to pay contract demurrage to the shipowner. Contract demurrage can also be applicable when unloading cargo at the destination port. These examples demonstrate that contract demurrage serves as a penalty that a charterer must bear if they do not fulfil their contractual obligations to the shipowner. It serves as a means to compensate the shipowner for any losses or expenses incurred as a result of the delay in cargo loading or unloading.
Contract demurrage refers to a provision in a contract that allows one party to charge the other party for delays in performance or non-performance of contractual obligations.
The calculation of contract demurrage varies depending on the terms of the contract. It is typically calculated based on a predetermined rate per unit of time or as a percentage of the contract value.
Yes, contract demurrage can be waived or modified if both parties agree to such changes. It is important to document any modifications in writing to avoid future disputes.
If a party fails to pay contract demurrage as specified in the contract, the other party may have the right to pursue legal remedies, such as filing a lawsuit to recover the unpaid amount.
Contract demurrage is generally not considered a penalty if it is a reasonable estimate of the actual damages suffered by the non-breaching party due to the delay or non-performance.
If contract demurrage is deemed excessive or unconscionable by a court, it may be unenforceable. Courts will consider factors such as the actual damages suffered, industry standards, and the parties’ bargaining power.
The applicability of contract demurrage in cases of force majeure events depends on the specific language of the contract. Some contracts may exclude or limit the application of demurrage in such circumstances.
Contract demurrage is typically applied prospectively, meaning it applies to delays or non-performance occurring after the contract is in effect. Retroactive application may require specific contractual provisions.
Contract demurrage can be included in various types of contracts, such as shipping contracts, construction contracts, and supply agreements. Its inclusion depends on the parties’ negotiation and agreement.
Yes, contract demurrage can be negotiated or removed during contract negotiations if both parties agree to such changes. It is important to clearly communicate any modifications in writing to avoid future disputes.
This site contains general legal information but does not constitute professional legal advice for your particular situation. Persuing this glossary does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.
This glossary post was last updated: 17th April 2024.
To help you cite our definitions in your bibliography, here is the proper citation layout for the three major formatting styles, with all of the relevant information filled in.
- Page URL:https://dlssolicitors.com/define/contract-demurrage/
- Modern Language Association (MLA):Contract Demurrage. dlssolicitors.com. DLS Solicitors. May 09 2024 https://dlssolicitors.com/define/contract-demurrage/.
- Chicago Manual of Style (CMS):Contract Demurrage. dlssolicitors.com. DLS Solicitors. https://dlssolicitors.com/define/contract-demurrage/ (accessed: May 09 2024).
- American Psychological Association (APA):Contract Demurrage. dlssolicitors.com. Retrieved May 09 2024, from dlssolicitors.com website: https://dlssolicitors.com/define/contract-demurrage/
Our team of professionals are based in Alderley Edge, Cheshire. We offer clear, specialist legal advice in all matters relating to Family Law, Wills, Trusts, Probate, Lasting Power of Attorney and Court of Protection.
All author posts