Laytime and demurrage comprise one aspect of English maritime law in relations to voyage charters. ‘Laytime’ refers to the period of time agreed between the parties during which the owner will make and keep the vessel available for loading or discharging without payment additional to the freight. ‘Demurrage’ refers to the agreed amount payable to the owner in respect of delay to the vessel beyond the laytime, for which the owner is not responsible.
Laytime and demurrage constitute a complicated field, both from a technical and a legal standpoint. Due to this complexity, laytime and demurrage give rise to many difficulties and frequent disputes. Before agreeing the terms of a particular laytime provision, the parties should carefully consider the methods by which the cargo can be provided to or removed from the proposed loading/discharging port or place.
One of the main responsibilities of a charterer under a voyage charterparty is to provide and load the cargo within the time specified for laytime. Once laytime for loading or discharging has been used, the charterer will have to pay the owners demurrage for the time it takes in excess of the agreed laytime to complete cargo operations. It is common practice in voyage charters to specify a demurrage rate, that is, an amount payable as agreed damages for each day or part of a day that a vessel is detained by the charterer.
Henceforth, an agreement to demurrage is therefore, the payment of the contractual price for the exercise of right to detain, it is no different in nature from any agreement providing for payment of liquidated damages.
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