Four words in a sale contract. A reference to the charter party. And no demurrage provision in that charter party at all. The buyer's claim was rejected in full.
A buyer purchased wheat FOB, Black Sea. Chartered a vessel. The ship waited longer than planned. The buyer calculated demurrage, a significant sum, and presented it to the seller.
The seller pushed back: there was despatch on our end, you owe us.
They could not agree. The matter went to arbitration.
Arbitrators looked carefully at the calculations. Then at the charter party the contract referred to.
It was a time charter.
A time charter is a hire arrangement. You pay a daily rate whether the vessel moves or sits idle. Demurrage, in the traditional sense, does not exist under a time charter: there is no laytime clock, no overrun to measure. There is only the hire rate, running continuously regardless.
If there is no demurrage provision in the charter party, there is nothing to calculate from.
The buyer's claim was rejected in full. The seller's despatch claim fared no better. Half of zero is still zero.
demurrage as per C/P
If your contract contains this reference, verify that the charter party actually contains a demurrage rate.
The buyer was confident the contract was solid. The word demurrage was there. The reference to the charter party was there. What was not there: an actual demurrage provision in the charter party itself.
No demurrage provision in the charter party means no demurrage claim under the sale contract, however clearly the words appear. Check what the charter party actually says before you rely on it.