Rajeev Philip

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• Rajeev Philip
• Steamship Insurance Management Services Limited

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SUBJECTS in Charterparty Negotiations - Is
there a Contract???

• The concept of a duty to carry on negotiations
  in good faith is inherently repugnant to the
  adversarial position of the parties when involved
  in negotiations.

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Subjects and Intentions

• Objective Observation/External Evidence
• v.
• Private Intentions

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Mutual Expectations

• Uncertainty and Enforceability
• Filling the Gaps
• THE DIDYMI
• equitably by an amount to be mutually agreed
  between owners and charterers
• MAMIDOIL-JETOIL v. OKTA
• even in the absence of express language, the
  Courts are prepared to imply an obligation in
  terms of what is reasonable

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SUBJECTS

• A Fixture is arrived at by the exchange of
  firm offers between brokers acting on behalf of
  their principals, an owner and a charterer, and
  when concluded, that is all terms and details
  agreed and subjects (if any) lifted, it is an
  enforceable contract It is important to note
  that no fixture has been concluded until all
  subjects have been lifted. Baltic Code 2003

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SUBJECTS

• CONDITIONS TO CONTRACT
• v.
• CONDITIONS TO PERFORMANCE

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SUBJECT DETAILS

• Thoresen v Fathom Marine 2004 1 LLR 622
• Otherwise basis Saleform 93 sub details suitably
  amended also to reflect the above terms. Closing
  to take place in Piraeus

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Thoresen v Fathom Marine

• Mr. Kokkinis - as per telcon this is the fixing.
  Pls do best to get it confirmed timely otherwise
  sellers may run away
• Mr. Straume - thus we have full agreement on
  price/terms, will also forward recap shortly.

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Thoresen v Fathom Marine

• I would respectfully suggest that it is in the
  interests of the chartering business that the
  Courts should recognise the efficacy of the
  maritime variant of the well known subject to
  contract. The expression subject to details
  enables owners and charterers to know where they
  are in negotiations and to regulate their
  business accordingly. It is a device which tends
  to avoid disputes and the assumption of those in
  the shipping trade that it is effective to make
  clear that there is no binding agreement at that
  stage ought to be respected.

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SUBJECT DETAILS.

• English Law -
• we havent reached agreement, and neither of us
  is bound to do anything
• New York (and Norway!)
• we will discuss later other terms whose
  significance is so slight that agreement upon
  them now is unnecessary for the purposes of
  binding a contract between us

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Losing the Thread

• When a contract by telex or correspondence is
  alleged, the court will look at the
  correspondence as a whole and not merely at one
  or two documents picked out from connected
  sequence.

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Conditions to Performance

• Subject to Oil Major Approval
• Subject to Passing an Inspection
• Subject to Board Approval

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UNILATERAL CONTRACTS

• Options
• Obligations on the party with the option
• KKK v. Johnson Subject stem
• The position of the party without the option
• Withdrawal of the offer

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CONDITIONAL CONTRACTS?

• Subject Board Approval
• Subject to drawing up the contract in writing
• -Degrees of Control-

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BOUND BY CONDUCT

• Waiver
• Estoppel
• Oceanografia SA de CV v. DSND Subsea AS
• 2006 EWHC 1360 (Comm)

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Oceanografia SA de CV v. DSND Subsea AS

• Offer subject to the signing of mutually
  agreeable contract terms and conditions
• Subject to FMA Approval vessel free for winter
  season, notice to be given by 01/10
• Contract terms were never signed.
• No Binding Agreement

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WAIVER

• a party has acted in a manner which is
  consistent only with his having chosen one of the
  two alternative and inconsistent courses of
  action then open to him
• by words or conduct the election must be
  communicated in clear and unequivocal terms
• the party making the election must be aware not
  only of the facts giving rise to his rights but
  also of the rights themselves
• THE KANCHENJUNGA 1990 1 Lloyds Rep. 391

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ESTOPPEL

• For estoppel
• party must either agree or conduct themselves in
  a such a manner that the other party believes
  that the other party will not insist on their
  strict legal rights.
• In addition the other party must rely on the
  representation made, such that it would be unjust
  to allow the representor to go back on the
  representation.
• -ESTOPPEL-

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Oceanografia SA de CV v. DSND Subsea AS

• Charterers unaware of FMA difficulty
• payment of the mobilisation fee
• signing the on-hire statement
• accepting the vessel for service
• Charterers aware of FMA difficulty
• extending the departure date, which was signed by
  the Charterers
• signing the off-hire statement
• agreement by the Charterers to pay the
  demobilization fee
• -WAIVER-

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CONDITIONAL CONTRACTS

• Entirely contingent conditions
• - Subject to weather permitting
• Subject Superficial Inspection
• - THE MERAK 1976 2 Lloyds Rep 250
• Subject to satisfactory completion of two trial
  voyages
• - THE JOHN S DARBYSHIRE 1977 2 Lloyds Rep 457

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PRATICE TIPS

• Private Intentions Irrelevant
• Awareness of Terms of Art
• Effect of Genuine Subjects v. Conditions to
  Performance
• Track progress on terms
• Unilateral Contracts and Withdrawal
• Conduct yourself in line with private intentions