Laytime and Demurrage of Voyage Chartering of Tankers

For those in the business of shipping, delays can be costly. It is common practice for shipowners to charter vessels in return for freight. When calculating freight, shipowners take into consideration the period of the charter. Therefore, where a shipowner has calculated freight based on the time for which the vessel will be in the charterer's possession and the charterer is then delayed, the owner will lose profit. However, the law provides the shipowner with a possible remedy.

'Laytime' and 'demurrage' are important terms in a charterparty and carry significant financial implications:

• 'laytime' refers to the time allowed in a voyage charter for cargo to be loaded on to or unloaded from a vessel; and
• 'demurrage' is incurred after the permitted laytime is spent.

Both terms involve the time allocated for a vessel to be loaded or unloaded and the penalty incurred where the vessel has been unjustly delayed. In order to protect the shipowner from suffering loss, charterparties usually provide for compensation if the charterer is delayed.