A solid FOB contract, a vessel that arrived on time, a master who tendered NOR. Everything appeared to be in order. The arbitrators had a different view.
Another story about how smoothly things looked on paper — and how badly the details were forgotten.
A seller and a buyer put together a solid FOB contract. Everything properly drafted, all parties pleased with how the deal looked on paper.
When the vessel arrived at the loading port, the master tendered NOR. Then ordinary port life took over: delays, queue not moving, time ticking — and the buyer was perfectly confident that demurrage was accruing in his favour.
The problem surfaced later, when the dispute reached arbitration and the parties started looking not at customary practice, but at the contract itself — and specifically at how exactly the NOR was supposed to be tendered.
The contract didn't just specify how NOR should be tendered — it spelled it out in painful detail. It required: during business hours; not before the start of the delivery period; from within the port of loading; to the seller and the agent simultaneously.
The master tendered NOR: at midnight; three days before the start of the delivery period; from open sea, outside the 12-mile limit; to the agent only.
Not one of the four conditions had been met.
The buyer argued that the master was following charter party instructions, the port was congested, and this was standard practice.
What works under the charter party does not necessarily work under the sale contract.
At that point the whole structure collapsed. The NOR was found invalid. Laytime had never started at all.
The master followed the shipowner's instructions. The shipowner followed the charter party. Formally, everyone in the chain did everything right. The problem was that the master operated the way he was used to under the charter party — while the sale contract was saying something entirely different.
The freight team would do well to know not only the charter party terms, but also the terms on which the cargo was bought or sold — so they can align the two before loading, not explain the pain afterwards.
If you are the buyer and you did not check this in advance, you will be genuinely convinced that NOR was tendered, laytime is running and demurrage is accruing — until you start running around trying to figure out what went wrong and who is to blame. What actually went wrong: you have no valid NOR, no demurrage recovery, and nothing but frustration and a very long night ahead.
The charter party and the sale contract are two different documents with two different sets of rules. What the master does by habit under the charter party may be exactly wrong under the sale contract. Check both before the vessel arrives — not after.