Tuesday, December 31, 2013

Abby v States Marine Corp case brief

Abby v States Marine Corp case brief summary
US court of appeals, 1950

Facts
  • The time charter party contained a typical off-hire clause: in the event of loss of time, the payment of hire shall cease for the time thereby lost. And if the speed is reduced, the time lost and the cost of extra fuel shall be deducted.
  • Delivery of the vessel was to take place no later than December 31 at 4 pm.
  • From December 15 to about 3 pm on December 31, the vessel was being repaired in Norway.
  • But delivery was tendered there at about 3:30 pm on December 31.
  • The charterer’s surveyor inspected the vessel and found no defects.
  • A certificate of delivery was signed.
  • The vessel sailed that day.
  • At about 4 pm, a steel shaft broke and the vessel stopped at about 4:20 pm.
  • They had to repair the vessel and the total delay on January 3 was of 2 ½ days.
  • On Jan 3, the charterer informed the owner’s agent that if refused to accept delivery and that they cancelled the charter party.

Procedural Posture
  • Appeal from an interlocutory decree for the Aabys, the owners of the Norwegian diesel Tento which was entered after the trial of alibel by them for damages from the appellant, States’ Marines’, repudiation of a twelve month time charter of the ship.

Issue
Was repudiation justified?
Was there a warranty of seaworthiness.

Holding
Repudiation was not justified, 2 ½ days’ delay in the course of a 12-months’ time charter is insubstantial as to frustrate the purpose of the charter.

Rule
Warranty of seaworthiness: The right to repudiate depends upon whether the object of the charter is substantially frustrated by the breach.


Rationale
  • From the fact that the shaft broke almost immediately after the delivery of the vessel it could properly be inferred that it was defective at the time of delivery.
  • The exercise of diligence to discover the defect is immaterial.
  • But this doesn’t mean that there was necessarily a breach of the undertaking expressed here as the “vessel on her delivery to be tight, staunch, strong and in every way fitted for the service”. Such an undertaking seems to be equivalent to a “warranty of seaworthiness” that is implied in all contracts concerning vessels in the absence of an express and unambiguous stipulation to the contrary.
  • Not every defect needing repair or causing damage amounts to a breach of undertaking.
  • Repudiation by a charterer is permissible only where the breach of the owner’s undertaking of seaworthiness is so substantial as to defeat or frustrate the commercial purpose of the charter.
  • Warranty of seaworthiness: an insubstantial breach of it, not going to defeat the object of the contract, will not justify repudiation.
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