Take these two sentences
"Thanks main terms recap, we are now fixed subject charts reconfirmation 24 hours. Please send executed proforma cp for review"
Now - to me this makes perfect sense because I am fluent in 'Shipping'. But the truth is to most people - even those with shipping knowledge like a seafarer, naval officer, maritime business student etc the above means gobbldyigook.
And the thing is that a 'shipbroker dictionary' wont really help either because to understand the words you need 'context'. Interestingly in that sentence not one word is wasted which is a throw back to the time when writing telex messages was super expensive. Virtually every word has huge legal significance.
Anyway - I just thought I would share a discussion I am having with my current students.
For me - teaching the VS Certificate has allowed me to gain amazing insight as to what people do and do not know. We can THINK we know what people NEED to learn but its not until you engage students in meaningful discourse that you have a more than a few revelations. All this amazing and evolving feedback that I receive helps me get better at teaching which in turn will help future students of the VS cert. Thats gotta be good for the industry!
Here is the sentence again
"Thanks main terms recap, we are now fixed subject charts reconfirmation 24 hours. Please send executed proforma cp for review"
Three cheers for anyone wanting to explain to readers the significance of the two sentences.
Go on give it a go...
VS
MAIN TERMS ARE AGREED, CHRTS HAVE 24 HRS TO CONFIRM FIXTURE, CP DETAILS STILL NEED TO BE AGREED
ReplyDeleteVessel is now fixed on subjects with charterers, with main terms mutually agreed. charterers have 24 hours to lift all subjects from shippers, receivers and port authorities if any. meanwhile charterers will review the fully excecuted CP sent by the owners and will come back with changes/comments of any. this can be done after 24 hours of slifting of subject deadline too considering the vessel to be delivered after a few days.
DeleteHello!
ReplyDeleteIm one of the blog's long time readers and always appreciate to see interesting posts like this!
What i would like to refer to is the use of "sub charts reconfirmation", instead of "sub shippers/receivers approval" in the above sentence.
Doesnt "sub charts reconfirmation" leave space for the charts to renegotiate the fixture (especially the money) and even not accept the vessel, should they hv found a cheaper one in the meantime??
I am of the opinion that the shippers & receivers of the cargo should be the ones to decide if the vessel is suitable for the carriage of the cargo and finally approve it. After all I think that was the initial purpose of subjects.
On the basis of "good faith" and "my word, my bond", which applies to shipbroking as a profession, a fixture must not be subject to reconfirmation or renegotiation of any terms already agreed. Dont u think ?!
I hope i am not jumping much further on the topic and i would be happy to know ur opinion regarding this matter.
Thks vm
rgds
a.m.
In layman's language it should be
ReplyDeletethanks for summarized main terms ,the deal is fixed in principle provided the charters confirm in 24 hours.
Please send full charter party agreement for inspection /assessment
yes - quite like the compulsive travellers 'laymans' explanation. But must say a layman may yet ask - what exactly are 'main terms', what is a charterparty, and why does one need to 'inspect' it?
ReplyDeleteNow AM also makes an interesting point re charterers subjects. I think what you say is morally and legally correct but you have missed one small fact based on reality - and that reality is that it doesnt really matter what wording the 'subjects' take - in 99 percent of cases if a charterer wants to get out of a deal (in that 24 hours) they will (and can).
Example - Lets just say we agree subject shippers approval 24 hours - who do you think has the relationship with the shippers? Not the shipowner but the charterer and If push comes to shove the charterer could just ring shippers and ask for a favour (and put something in writing) so that they can legally drop the said ship.
So in reality i would say that these days many people just accept 'sub charterers reconfirmation' because its easy and because we all know what we are getting into. One would hope that charterers have not gone through 3 days of negotiations just to waste everyones time.
The industry also has a nice inbuilt system that helps. If a charterers fails shipowners on subjects too often - they get a bad reputation. This means shipowners will ignore their orders or charge more for the effort. Thats a good thing!
++
Great responses, loving it! - any more comments welcome.
VS
Hi Vs
ReplyDelete" Subjects" are basically conditional acceptance of the terms agreed between the Owners & Charterers. Main terms normally include all the important points which both parties would like to reach an agreement on before discussing further details. Like Cargo, Quantity, Freight, Laycan, Demurrage, Despatch, Freight Payment etc etc. Depends of fixtures a recapitulation includes upto 20-30 main terms.
If terms are accepted basis subjects it can not be considered as a legally binding commitment till the subjects are lifted by the party. So normally a lime limit will be given by the other party to lift subjects. w/i 24 hours or 48 hours.
Subjects are basically used by the parties to safeguard themselves against possible delays, problems, risks etc
Normally Owner's will put Subject to approval of Charterers background by Owner's BOD. This will give Owners time to cross check Chrts reputation.
Subject to Stem is another interesting one. This will be used by Chrts normally to make sure the cargo availability in the port in
question.
At the same time Subjects can also be misused by those who intend to do so. As explained by VS the Charterers can get out of the deal easily citing so called reasons.
Some Owners will also negotiate firm subject to vessel Open or Unfixed. This will enable them to negotiate with two or more parties at the same time on a firm basis.
The best ways to deal with Subjects are to give minimum time limit to lift them. Also the parties can cross check the history of the other party through BIMCO or other resources etc
With Rgds
Varun
Many thanks Varun
ReplyDeleteQuick tip though - NEVER as a charterer (I was one of those too) would I ever except a shipowners subject. If a shipowner gets away with a shipowners subject on a spot cargo or TC then the charterer IMO has no idea what they are doing. I am being a tad harsh but the truth is the few time I have seen a charterer agree to 'shipowners subjects' on most occassions these charterers are very naive and have been given poor advice from brokers.
I can understand a shipowners subject on a COA or a period charter but only in extreme cases.
(there is plenty of time in a negotiation to check charterers background)
In my 20 years in the industry I can say this - Charterers subjects 24 hours is the usual (90 percent of times) and having a shipowners subject is highly unusual especially in the first class trades.
Cheers
VS
Also quite common in the lead up to the subs with regular clients: "rider clauses as per last done" .
ReplyDeletein the parcel tanker trade, it is quite common for same charterer to have different sub times for different parcels on the same ship...complex situation fr every one involved..
is it that bad to approach another charterer if your sub is ending in 10-15 min and you know you are failing?
ReplyDeleteWhat do u mean by 'subjects were lifted' ?
ReplyDeleteWhat do you mean by "all subjects lifted" and "70 per cent advance freight payable on the date of lifting of charter party"
ReplyDeleteThe last person - i never said anything about payment terms. Me thinks you are a student trying to get me to do your assessment!!
ReplyDelete