GENCON is a standard voyage charter party. It is a general purpose agreement for the services of a ship in exchange for freight and can be used in a variety of trades. It is accompanied by its own bill of lading, CONGENBILL 2016. The latest edition of this contract is GENCON 1994.
Copyright in GENCON 1994 is held by BIMCO.
Sample copy of GENCON 1994Download now
The below explanatory notes for GENCON 1994 are also available as an e-book from Witherbys.
The explanatory notes for GENCON 1994 are available as an e-book from Witherbys.
For instance, it will be seen that reference is now made to GT/NT instead of the old GRT/NRT to correspond with the requirement of the International Convention on Tonnage Measurement of Ships, 1969 which became effective for existing vessels as of 18 July, 1994.
It appears that under English law when the charter party contains an ETA or cancelling date, there is a strict obligation on the part of the owners to ensure that the vessel sets out on the ballast voyage in time to reach the loading port within ETA or before the cancelling date.
Whilst the exception clauses in a charter party may protect the owners for delays which occurs after the vessel sets out for the ballast voyage, they may not offer similar protection for delays which may result from the previous voyage(s) and against which the owners may have had no influence whatsoever. Therefore, in order to rectify this position the words “as soon as her prior commitments have been completed” have been incorporated immediately after “vessel” (line 7).
If shipment of deck cargo has been agreed between the owners and the charterers, liability for loss of or damage to such cargo should always rest with the charterers.
However, to emphasize this position it has been deemed appropriate to insert the words “and responsibility” after “Charterers’ risk” (lines 10/11)
As will be seen, the reference previously made to “delivery of cargo on being paid freight on delivered or intaken quantity” is now more appropriately covered in Clause 4 (Payment of freight).
Clearly, changing the responsibilities of owners and charterers as embodied in Clause 2 and which have been tested by a vast number of legal decisions would almost per se change the basic concept of the Charter.
The changes made to Clause 2 were therefore confined to the deletion of the earlier reference to “the improper or negligent stowage of the goods (unless stowage performed by the shippers/Charterers or their stevedores or servants) or”, which is a logical consequence of the fact that the revised GENCON now applies f.i.o. terms only (for further comments see below under Clause 5 (Loading/Discharging)).
If freight to be paid on delivery the charterers are given the option of paying the freight on the basis of delivered weight notwithstanding the provisions of sub-clause (a) i.e. that freight shall be calculated and paid on the basis of intaken quantity. Such option is only available, however, if the charterers advise the owners thereof before breaking bulk and the weight/quantity can be ascertained by official weighing machines, joint draft survey or tally.
In addition, the Clause has been clarified to specify when freight shall be deemed earned; prepaid, cargo lost or not lost and when freight is payable.
Sub-clause (a) (Cost/Risks), is similar to the previous alternative (b) providing for f.i.o. and free stowed/trimmed provisions. However, as will be seen, this sub-clause now also contains provisions relating to dunnage, previously part of Preamble.
Sub-clause (b) (Cargo Handling Gear) has been elaborated to contain more specific provisions relating to the operation of the vessel’s cargo handling gear as this is traditionally an area causing disputes.
Time lost as a result of breakdown of the vessel’s cargo handling gear or motive power is for the owners’ own account and shall therefore not count as laytime or time on demurrage. An exception to this rule is if the breakdown is caused by negligence of the stevedores who are deemed the servants of the charterers, or if the breakdown is caused by the charterers not following the master’s instructions on how to handle such gear.
To avoid ongoing disputes about who should bear loss or damage caused by cranemen or winchmen, it is explicitly stated in the last paragraph that cranemen or winchmen shall be the charterers’ responsibility and, as stevedores, be deemed their servants.
Stevedore damage is another area repeatedly generating arguments and disputes and a new sub-clause (c) (Stevedore Damage) has therefore been inserted to deal with the problem. The stevedore damage provisions place upon the master an obligation to endeavour to obtain the stevedores’ written acknowledgement of liability once such damage has been discovered. However, the fact that the master may be unsuccessful in getting such acknowledgement from the stevedores does not exonerate the charterers from liability for stevedore damage.
Whilst sub-clauses (a) and (b) remain almost the same, sub-clause (c) (Commencement of laytime (loading and discharging)) has been subject to some amendment. First of all, in order to pre-empt discussions about when laytime starts to count if notice of readiness has been given at noon it is more clearly specified by stating that if notice of readiness is given up to and including 12.00 hours laytime shall commence at 13.00 hours and that if the notice is given after 12.00 hours then laytime shall commence at 06.00 hours the next working day.
Realising that on the date of signing the charter party the name of the shippers may not be known, it has been deemed appropriate to specify that notice of readiness in the loading port shall be given to the charterers or their agents when the shippers are not named.
Whilst the previous edition of the GENCON charter contained no provision for the party to whom notice of readiness should be given in the discharge port, it is now provided that notice hall be given to the charterers or their agent, if the receivers are not named.
Occasionally a problem arises when the vessel arrives at the loading port and is required to wait at the anchorage because the loading berth is not available. If the vessel tenders notice and it later appears upon arrival at the berth that the vessel is not clean, then the notice may be invalid because the vessel was not ready at the time of tendering its notice of readiness and laytime will not start to count until the vessel has been passed and a new notice of readiness given.It is realised that the last sentence of sub-clause (c) in the previous version of the GENCON and reading “Time lost in waiting for berth to count as laytime or time on demurrage” may already cover this unacceptable position. However, for the sake of clarity and in line with the various other standard charter parties issued or recommended by BIMCO, sub-clause (c) now specifically takes care of the problem.
However, in the absence of a specific provision allowing the charterers to keep the vessel on demurrage for a limited period of time it is important for the owners to have in the charter party an express right to cancel the charter party in the event of outstanding payments of demurrage, as otherwise they may find themselves in the position where they would have to keep the vessel waiting for cargo loading operations to start for a considerable time without being able to terminate the charter party. This would, in particular, appear to be a problem under English law when the owners are not able to cancel until there is a repudiation of the charter party.
Another problem which owners should be aware of under English law is that the timely payment of money is not always accepted as an essential part of the contract. Therefore, if demurrage is not paid after proper notices have been given, the owners run the risk that they may have no claim for damages.
Accordingly, to give the owners a legal remedy when these unfortunate situations occur, it is now expressly provided that if demurrage is not paid on the expiration of the time limit provided, i.e. 96 hours, the owners shall have a right to terminate the charter and claim damages for any loss incurred thereby.
It is to be noted, however, that the right to terminate the charter party applies to the loading port only and, for all practical purposes, depends on no cargoes or part cargoes having been loaded and no bill of lading issued transferring the rights to the cargo to a third party.
The interpellation provisions found in the prior version of the GENCON Charter served little purpose, in particular in the deep sea trade, as the owners could well find themselves in a position whereby they would have to commence and almost complete a long ballast voyage before it would be known whether or not the charterers would cancel the charter.
This new Clause strikes a balance in as much as the owners may avoid setting out on a long ballast voyage to no avail whereas the charterers are at the same time given a reasonable time to declare whether or not they wish to cancel the charter party.
Secondly, the clause now provides that the owners’ agents can sign bills of lading on the condition that a written authority has been given by the owners for the agent to do so, a copy of which is to be furnished to the charterers.
It will also be noticed that a provision has been included giving the owners an express right of indemnity from the charterers for issuing bills of lading at the charterers’ request and as a result of which the owners may assume greater liabilities than under the charter party. It is realised that in some cases the courts would probably deem such right of indemnity to be implied.
However, it appears that in cases where a specific form of bill of lading may be contemplated by the charter party, courts have been inclined to deny the owners such right of indemnity. Given the fact that the GENCON Charter now expressly prescribes the use of the CONGENBILL, edition 1994, and to avoid the situation that the owners will have to absorb liabilities in excess of those contemplated under the Charter Party is has been found advisable to incorporate an express right of indemnity in favour of the Owners.
Realising that it may, in some instances, be the charterers who are responsible for the non-execution of the charter party, it is now provided that 1/3 rather than the ambiguous “at least” 1/3 commission on the estimated amount of freight shall be paid by the party responsible for the non-execution of the charter. It is deemed reasonable that it is the party who is responsible for the non-execution who also pays the brokerage, although it is realised that it can have the negative effect for the brokers that they may have to await the outcome of a possible dispute between the owners and the charterers regarding who is the responsible party before the commission is furnished.
In particular the introductory paragraph of the Clause according to which neither the owners nor the charterers shall be responsible for the consequences of strikes or lock-outs preventing or delaying the fulfilment of any obligations under the charter has time and again given rise to disputes.
Despite the fact that this provision is for the potential benefit of both the owners and the charterers it is wide in its terms and the apparent danger is that any strike which prevents or delays the fulfilment of any obligation under the charter party may fall within the scope of the Clause. For instance strikes which take place inland at the production plants far away from the loading port as well as strikes of the crew, or of pilots or tugmen may be covered by the provisions of the first paragraph.
It was therefore considered appropriate to confine the application of the entire Clause to those strike situations which take place in the loading or discharging ports actually affecting the loading or discharging operations. Accordingly, the sequence of the paragraphs has been changed by moving the old introductory paragraph to the end of the Clause and by specifying clearly that the strikes concerned are those preventing or delaying the actual loading and discharging of the cargo.
As may be known the Onisilos case changed the general understanding that according to the third paragraph of the original version of the General Strike Clause half demurrage should be payable in respect of the period after the expiration of the laytime when the vessel is waiting for the strike to end, but that thereafter full demurrage should be payable until completion of the discharge.
Accordingly, to avoid any conflicting opinions in the future on this matter, it is now expressly provided in sub-clause (b) of the General Strike Clause that half demurrage shall be payable after the expiration of the time provided for discharging until the termination of the strike or lock-out and that full demurrage shall be payable thereafter until completion of discharging.
Apart from the amendments mentioned above only a few technical changes have been made to this clause.
As follows from sub-clause 19 (d) and the guide text of Box 25, if the Box is not filled in, sub-clause 19 (a) (i.e. English law and arbitration in London) will automatically apply.
Whilst some completely new clauses have been incorporated into the revised GENCON Charter, only one existing clause has been deleted, i.e. Clause 12 (Indemnity).
Therefore, the main reason for revising the CONGENBILL in conjunction with the GENCON Charter was to ensure, by means of a specific reference in the incorporation clause in the Bill of Lading, that the Standard Law and Arbitration Clause which now forms part of the GENCON also applies for the purpose of the Bill of Lading. Courts in England have held that unless there is a specific reference in a bill of lading to the law and arbitration clause in the governing charter party it may not necessarily be deemed part of the terms and conditions of the bill of lading even though the law and arbitration clause itself stipulates that it shall apply in any bill of lading issued under the charter party.
Accordingly, to avoid any uncertainty in this respect the GENCON Charter prescribes the use of CONGENBILL, Edition 1994. In addition, it will be seen that the revised CONGENBILL makes no reference to the Netherlands Commercial Code, Art. 700 which has been withdrawn.
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