Off-Hire: Meaning in Time Charter
In a time charter the charterer pays hire for every day the ship is at its disposal. Off-hire is the time when the ship is not, and the hire stops.
What off-hire is
A time charter pays hire by the day. If the ship cannot give the service that was agreed, for a reason named in the charter party, the time is off-hire and the charterer does not pay for it. The off-hire clause lists the events that stop the hire. It does not cover every delay: only the events the clause names.
Typical causes
A breakdown of the engine or of the cargo gear, a deficiency of crew, a strike of the ship's crew, a dry-docking, a collision or a grounding, a detention by authorities because of the ship, or a loss of time to fix a damage. Many clauses use wording such as "any other cause preventing the full working of the ship". Courts read this wording strictly, so the exact words in the contract matter.
How the time is counted
The hire stops from the moment the ship is off-hire and starts again when the ship is back in the same or an equivalent position, ready to work. Part of a day is paid or deducted pro rata. If the ship has deviated, the time lost on the way back also counts. Any fuel used in off-hire time is for the ship operator's account.
What it does not cover
Bad weather, delays at a port that are caused by the charterer's own orders, and time lost because of the cargo are normally not off-hire. They stay on hire and the charterer pays. This is the main difference to a voyage charter, where the ship operator carries the risk of a slow voyage.
Why both sides care
For the charterer the clause limits the cost of a ship that cannot work. For the ship operator it sets when income stops. Before you agree, ask what the clause says about breakdown, how the lost time is shown and what the charterer can claim. See also the guide time charter vs voyage charter.
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More in glossary
- Voyage Charter
- Contract of Affreightment (COA)
- Laycan
- Laytime
- Demurrage and Despatch
- Notice of Readiness
- Shipowner, ship operator, disponent owner
- Ship broker
- Ship fixing and fixture
- Bulk carrier
- Deadweight tonnage (DWT)
- Bill of lading
- Freight
- Baltic Dry Index
- Lien
- Bunkers
- FIO and FIOS
- Cancelling date
- Ton-mile
- Statement of facts
- Letter of indemnity
- Ballast voyage
- Dead freight
- Lighterage
- Stem
- Subjects
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