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Demurrage
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A term of maritime law which refers to the damages payable by a ship charterer, to the ship owner, as compensation for lost time; where a chartered ship is not returned to the owner on a specified date.
Derived from the French word “demeurer”, which means to stay or remain somewhere although the legal definition refers to damages paid in respect of a delay in a charterparty contract.
The days specified by the ship to load or unload are called lay days. When a charterer exceeds that time, the damages are pre-specified, liquidated, and known as demurrage.
In Law of Demurrage, author Hugo Tieberg defined it as:
“(P)ayment provided by contract or by law for the use by the charterer of time beyond which is conceived to be normally necessary for loading or discharging of a ship of for the performance of certain functions relating thereto.”
Causes for the delay need not necessarily be related to the charterer’s action and include ice demurrage, or repairs occasioned by collision.
In English law, demurrage is taken as a per diem (daily) rate and always as a fixed sum, liquidated damages; damages contemplated upon in advance, “just in case”, by the contracting parties.
In Maritime Law, the authors wrote:
"Demurrage is usually typically quoted at a certain rate per day and pro rata for a part day. If no limit is set to the number of days on demurage, the shipowner is bound to keep the ship at the loading port as long as it is necessary for the charterer to load,or at lease until commercial frustration overtakes their contract, since the charterer is paying extra for the privilege of detaining the ship. Commonly, however, a fixed number of days on demurrage is stipulated in the charterparty (contract) so that holding over longer is a breach of contract."
Days beyond the specified date for the end of the charter, and during which demurrage accrues, are called demurrage days.
REFERENCES:
- Gold, E. and others, Maritime Law (Toronto: Irwin Law, 2003), pages 390-391.
- Moor Line Ltd. v Distillers Co Ltd 1912 SC 514
- Nielsen v Wait 16 QBD 67 (1885)
- Tiberg, Hugo, The Law of Demurrage (London: Sweet and Maxwell, 1995), pages 1-3.
CATEGORIES AND TOPICS:
This term applies to the following areas of law and categories;