Notice of Readiness

Notice of Readiness. ‘This is a β€œ . . . notice to the Charterer, shipper, receiver or other person as required by the charter that the ship has arrived at the port or berth as the case may be and is ready to load/discharge”.

(“Charterparty Laytime Definitions 1980”.) The master’s “Notice of Readiness”, for a vessel with dry bulk cargo, usually states:

“I, . . . . . . . . . the Master of the m.v. `. . . . . . .’, arrived at the port of . . . on . . . at … hours GMT local time, hereby declare that the above vessel under my command is ready in all respects to load/discharge a complete cargo of about . . . metric tons . . . in bulk, in accordance with all the terms, conditions and exceptions to the Charterparty entered into on . . . at . . .”

The giving and acceptance of the Notice of Readiness is important in voyage charters because it is one of the events that cause laytime to commence. The Notice of Readiness is also important because it serves to give information to the charterer or shipper in sufficient time to allow preparations to be made for loading. Normally, unless the charterparty states otherwise, a Notice of Readiness is not required at second or third loading ports or at the discharging port because the charterer or receiver is taken to know that the vessel has cargo on board that is to be discharged.

The document, which is to become a Notice of Readiness, must be given in the manner specified in the charterparty. For example, in MULTIFORM it is stated that:

“Notification of the vessel’s readiness to load/discharge at the first or sole loading/ discharging port shall be delivered in writing at the office of the shippers/receivers or their agents between 0900 hours and 1700 hours on any day except Sunday (or its local equivalent) and holidays, and between 0900 hours and 1200 hours on Saturday (or its local equivalent) . . .”

“In writing” means a notice “. . . visibly expressed. in any mode of reproducing words, and includes cable, telegram and telex”. (“Charterparty Laytime Definitions 1980”.) With modern modes of communication, other methods may be acceptable, for example, by facsimile transmission.

The status of a “Notice of Readiness” depends on whether it is “correct” and whether it is “valid” and this status would influence its effect. The “correctness” of a Notice of Readiness depends on “how” and “where” it is given and the time when it is given and accepted. An incorrect notice is one that may not have been given in the prescribed manner and thus have little effect.

The effect of a cabled Notice of Readiness may be doubtful, as it was in arbitration in London in 1985. In that case, the Notice of Readiness was sent by “cable”. Time-delay occurred between transmission and receipt of the message. It was decided by the majority of the pane of arbitrators that the use of the word “cable” implied that “landlines” were a so used, rather than wireless, radio methods. Therefore, a threehour delay between despatch of the message and its receipt was acceptable. The minority felt that “cable” was synonymous with radio and that the receipt should be considered as instantaneous with the transmission.

The time of giving the Notice of Readiness is important. In The Timna, 1970, it was said in the English High Court, that:

β€œ . . . it is a good working rule . . . to give Notice of Readiness and to go on giving such notices in order that, when later the lawyers are brought in, no one shall be able to say: `If only the master had given Notice of Readiness, laytime would have begun and the Owners would now be able to claim demurrage.’”

This requirement as to when the master should give a Notice of Readiness was confirmed in The Mexico .I, 1990, where it was said in the Court of Appeal:

β€œ . . . a master who is uncertain whether his ship is `arrived’ or whether it is `ready’ may find it prudent to give more than one notice…”

Therefore, not only must the Notice of Readiness be given during prescribed β€œoffice hours”, but also, if the original document is invalid as a “Notice of Readiness”, fresh documents may have to be given by the master at regular intervals.

“Office hours” may not include a period on Saturdays, if Saturdays are not working days in that port. “Office hours” probably includes only business-office working hours and not port or stevedore working hours. However, if the charterparty clearly permits notices to be given on Saturdays (fox example, from 09 00 to 12 00 hours), a “good” or “correct”) Notice of Readiness may be given by telex, even though the offices of the addressees of the messages are closed. If the charterparty requires the Notice of Readiness to be given in office hours and this is done outside such a period, the notice will be effective only at the start of office hours on the next working day that is not excepted from laytime.

The time when a Notice of Readiness can be given is also prescribed in the “Laydays and Cancelling” clause in which it may be stipulated that laytime should not commence before a certain day and if the vessel’s Notice of Readiness is not given before a certain time after the earliest day, the charterers have the option to cancel the charter. There is usually no prohibition on the master’s giving a correct Notice of Readiness before the laydays are agreed to begin. However, the laytime will not commence until the agreed earliest time. If the charterer wishes to load or discharge the vessel before laytime commences, the owner is not protected unless there is an appropriate clause in the charterparty.

The “validity” of the notice depends on whether the vessel has arrived at the contractual destination and whether it is then physically and legally ready to commence cargo operations. If the document is given but it is not valid as a “Notice of Readiness”, it is said to be a “nullity”.

An invalid notice may be the cause of laytime not commencing and if cargo operations are earned out, this could be to the advantage of the charterer. Indeed, if the cargo operations are completed before the laytime is meant to commence, the owner may become liable to pay despatch.

The validity of the Notice of Readiness depends on the type of voyage charter and the concept of the “arrived ship”.

“Before a vessel can be said to have `arrived’ at a port under a port charter-party, she must, if she cannot proceed immediately to a berth, have reached a position within the port where she is at the immediate and effective disposition of the Charterer. If she is at the place where waiting ships usually lie she will be in such a position …” (The Johanna Oldendorff, 1973.)

In a “berth charter” the contractual destination is the nominated berth itself. In The Johanna Oldendorff it was also said:

“Where a single berth was specified in the Charterparty as being the place of loading or of discharge, the loading voyage or the carrying voyage did not end until the vessel was at that very berth. Until then no obligation could lie upon the Charterer to load the cargo, or to receive it, as the case might be.”

Therefore one element of “validity” is the vessel’s “arrival”.

Another essential element is its “readiness” to load or to discharge. This may be referred to as being ready “in all respects”. This means that the vessel must be physically ready and also legally ready (permitted) to load or discharge the cargo. If it is not so ready the document given may be considered to be “premature” and can be rejected.

Physical readiness depends on a number of factors. For example, the vessel’s cargo spaces containing, or meant to contain the contractual cargo, must be accessible.

In The Mexico l, 1990, a “Notice of Readiness” was tendered by telex on the vessel’s arrival. At the time the notice was given, the contractual cargo was overstowed by other cargo. The owners agreed that the document was not a Notice of Readiness because it was defective or invalid when tendered. However, they argued that it automatically became valid when the vessel later became ready to discharge the contractual cargo. The Court of Appeal held that an invalid Notice of Readiness could not operate as a “delayed action device” to trigger laytime. A new Notice of Readiness had to be given.

Another reason for “unreadiness” relating to cargo could be where the vessel is able to discharge some but not all of its cargo. In The Virginia M, 1988, the vessel had been chartered for a voyage with bagged fertiliser from Constanza to Nigeria. The vessel required about 20 tons of Fresh water daily for its auxiliary machinery. When the vessel gave a Notice of Readiness on arrival at the discharging port, it had on board only 15 tons. Without fresh water, the boilers and other machinery could not operate and cargo discharge would be delayed after commencement of laytime. The English court held that although the vessel may have been “technically” ready, the Notice of Readiness was not a valid one because the vessel would not have been able to discharge the entire cargo without interruption. The vessel had to be ready in a business-like aid mercantile sense before the risk of delay could be put on the charterer.

The vessel’s cargo compartments must also be suitable to carry the contractual cargo. For example, in The Helle Skou, 1975, the vessel, which had previously carried a cargo of fishmeal, was chartered to carry cargo of skim milk powder. The master had been instructed by the owners that the vessel’s holds were to be clean and dry and free from odour. He was not told in advance of the cargo to be loaded. Before berthing the master gave Notice of Readiness to his owner’s agents who also gave a Notice of Readiness by telex to the charterers. The charterers made no attempt to inspect the vessel before commencement of loading. They reasonably expected the vessel’s cargo spaces to be clean and dry and free from smell.

Stevedores boarded soon after arrival and commenced loading the milk-powder cargo. Two hours after loading commenced the stevedore supervisor reported a smell of fishmeal. In fact, there were also traces of the previous cargo in the holds. When the charterers received the report, they rejected the Notice of Readiness given the day before. However, the stevedores were not instructed to cease loading. About 10 hours later, after investigation and survey, the loading was stopped. At night, the vessel’s crew attempted to disperse the smell of fishmeal. The next day, the charterers arranged to discharge the cargo of milk powder that had been loaded. The vessel then left the berth to continue cleaning of the holds. On the vessel’s reberthing after being passed by the surveyor, the contractual cargo was loaded.

It was held by the court that although the Notice of Readiness was “premature” the charterers had accepted the notice and their later attempt to reject it would fail. A Notice of Readiness, which is invalid and can be rejected, is a “nullity” unless, with the charterers’ agreement, it is left with them instead of being given again. It will then take effect when it truly represents the facts. In The Helle Skou, the charterers’ acceptance of the notice was evidenced by their commencing the loading of the cargo. Therefore, despite the physical “unreadiness” of the vessel’s holds, the Notice of Readiness was valid. The case indicated that there might be occasions when the Notice of Readiness will not be valid and can be a nullity.

A ship will be ready in all respects if the charterer or shipper or receiver has complete control of its cargo spaces, and also the equipment is suitable for cargo operations.

Readiness is not only “physical”; it must also be lawfully permitted for the vessel to enter, berth and commence cargo operations. Various port formalities become necessary when a vessel arrives at a port.

For example, a vessel may be required to report its arrival at the Custom House and also obtain “free pratique” from the Port Health authorities. It depends on the express words in the charterparty whether a Notice of Readiness can be given if the vessel has not been cleared by Customs or granted free pratique.  Another legal restriction has less to do with entry formalities arid more to do with legislation and regulations applying to the port. For example, regulations requiring certain certificates to be carried by the vessel before it loads grain or oil cargoes may restrict the “legal readiness” of the vessel and therefore the commencement of laytime.

For example, when vessels are to load grain, the Notice of Readiness should be accompanied by a grain certificate or document of authorisation permitting the grain to be loaded. It may also be required that a certificate is obtained from a surveyor that the cargo compartments are clean and suitable for the grain cargo. Another example would be where a ship carries an oil cargo. If the ship goes, for instance, to the U.S.A. it is required to obtain a certificate from the authorities stating that the ship complies with appropriate oil pollution prevention regulations. If this is not obtained any Notice of Readiness given will be ineffective and laytime will not commence until the certificate of compliance is obtained and the discharging commences.

Another example of such a situation occurred in a case referred to arbitration in London in 1989. It was decided that a Notice of Readiness was not valid because the vessel was not legally ready to load when it was given. The vessel was chartered to carry crude oil to the United States. The vessel was required to comply with all U.S. Coast Guard regulations and have on board all certificates required for U.S. waters. Under U.S. law, foreign tankers in U.S. waters must obtain a “certificate of compliance” (with U.S: law). The vessel arrived at the berth; Notice of Readiness was tendered immediately; the cargo receivers were not aware that the vessel did not have the “certificate of compliance”. The cargo was to be discharged into oil barges. The certificate was issued nearly 24 hours after the vessel arrival and tendering of the Notice of Readiness. The first barge was alongside the vessel 19 hours later.

The charterparty provided that laytime should commence six hours after receipt of Notice of Readiness or when the first barge was secured alongside the vessel, whichever happened first. The charterers’ argument was that laytime commenced when the barge was alongside. They based this claim on the fact that the vessel did not have a certificate of compliance and was therefore not legally ready. On the other hand, the owners argued that there was no requirement in the charterparty for the vessel to be physically and legally ready before Notice of Readiness was validly tendered. It was held by the Tribunal that the cargo receivers were entitled to assume that the vessel was ready in all respects to discharge when the document called a “Notice of Readiness” was- tendered. Because this document did not represent a true state of affairs, the document was not a Notice of Readiness. As a notice it was invalid and a “nullity”. A new, valid Notice of Readiness should have been given when the certificate was obtained and laytime would then have commenced six hours after that time.

In summary, laytime will commence after the vessel on a voyage charter arrives, becomes physically and legally ready to load or discharge cargo, and the Notice of Readiness is correctly given by the master or agent of the owner. The charterparty may prescribe that the laytime commences after an agreed period or from a certain time after the Notice of Readiness is tendered and accepted.

Notice of Readiness. This is defined in the “Charterparty Laytime Definitions 1980” as:

“… notice to the charterer, shipper, receiver or other person as required by the charter that the ship has arrived at the port or berth as the case may be and is ready to load/discharge.”

It was said by the judge in Christensen v. Hindustan Steel, 1971, that the “whole purpose of a notice of readiness is to inform the shippers or consignees that the vessel is presently ready to load or discharge and the period of time within which they have agreed to load or discharge the vessel is measured from that moment . . .”. This would seem to be clear in the case of the loading port but it can be argued that once the cargo is loaded the notice of readiness does not have to be given to the Charterer at the discharging port, unless the charterparty makes this a specific requirement. The reason is that the Charterer should know that the ship has cargo on board and is available to be discharged. Perhaps the notice that is to be given at the discharging port is a mere “notice of arrival”.

The Notice of Readiness clause should be quite precise because it triggers off the commencement of laytime. If the laytime is intended to commence on the happening of an event such as the notification of the vessel’s readiness the occurring of that event must be known with certainty or else disputes can arise as to the time that counts against the Charterer and therefore the demurrage or despatch that may become payable. The master’s “tendering” (offering) of a document which he names “Notice of Readiness” does not make the document a Notice of Readiness if the ship has not arrived at the agreed destination, especially if this is a berth (in a berth charter). It also does not become a Notice of Readiness if the ship is not physically and legally ready to load/discharge. 




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