Suspending performance under BARGEHIRE – a useful right for owners?
Overview
Under a conventional cargo time charter party, the right to suspend performance for non-payment of hire provides owners with a powerful commercial tool to leverage late hire payments. However, based on industry feedback, applying the same sanction under BARGEHIRE is impractical.
A barge fixed on BARGEHIRE operates outside the direct control and operation of the owners, who may not know the location of the barge or its current activity on a day-to-day basis. These simple facts essentially hinder any attempts by owners to “suspend” performance pending the payment of hire.
So, what can owners do when hire is not paid for a barge? The answer is termination. This may seem drastic, but it makes perfect sense from a practical and commercial point of view. A right to suspend performance provides no benefit to owners, as they are unable to exercise such a right over a chartered barge.
“BARGEHIRE is by nature a bareboat contract where charterers take total control over the barge and owners are not performing any services which can be practically suspended to force charterers to pay,” says Dirk Kwantes (LKL Oceantrade B.V.), chairman of the subcommittee revising BARGEHIRE 2008.
“We want the revised BARGEHIRE 2008 to have a clear and effective procedure to deal with non-payment of hire. If charterers do not pay hire in accordance with the agreed terms, owners can terminate the contract provided the five-day grace period has expired,” Kwantes says.
The new edition of BARGEHIRE is being developed by representatives from LKL Oceantrade B.V., Cashman Equipment Corporation, Ugland, Heerema Marine Contractors, Subsea 7 and Shipowners’ Club.
Feedback or a question about this information?
Posted:
29 May 2020
VPS Bunker Alerts
Veritas Petroleum Services (VPS) publish regular Bunker Alerts based entirely on fuel samples and have kindly permitted BIMCO’s Members to access this information.
The Bunker Alerts are not intended to be an evaluation of overall bunker quality in the port or area concerned, but usually highlight a specific parameter within the fuel which has raised a quality issue.
Latest ice reports for members
Latest piracy reports
Latest industry releasable threats
Related publication
Ship Management Contracts
The handy guide contains explanatory notes to all of BIMCO’s current standard ship management contracts.
Related training
Charter Party Workshop Online
- Online, Online
- 27 January, 2025
The Charter Party Workshop (Masterclass) Online is a series of 10 online sessions and combines a range of lecturers on voyage and time chartering with sessions ...
ELSEWHERE ON BIMCO
Contracts & Clauses
All of BIMCO's most widely used contracts and clauses as well as advice on managing charters and business partners.
Learn about your cargo
For general guidance and information on cargo-related queries.
BIMCO Publications
Want to buy or download a BIMCO publication? Use the link to get access to the ballast water management guide, the ship master’s security manual and many other publications.
About a new business partner
We can help members check new business partners. We also help to recover millions of USD (undisputed) funds every year.
