Tuesday, December 31, 2013

Earn Lines v Sutherland (The Claveresk) case brief

Earn Lines v Sutherland (The Claveresk) case brief summary
US court of Appeals for the Second Circuit, 1920

Facts
  • Sutherland time-chartered Claveresk to Earn Line for about five years.
  • The charter party contained the usual breakdown and restraint princess clauses.
  • Sutherland received a formal requisitioning letter from the governemtn.
  • The substraction of the steamer from Earn Line’s service was treates as a refusal by Sutherland to perform the charter party and a repudiation thereof.

Rationale
  • Contracts of carriage, voyage charthers, and other short-term agreements may be terminated by “restraint of rulers”, as well as any other exception, if there is enough of it.
  • The charter party was terminated by frustration.
  • But there was no breach, therefore there can be no damages.


Note on Frustration of Charter Parties

  • Requisition is one form of frustration.
  • New York Produce Exchange Time Charter Party, see pg. 405.
    • If the vessel is requisitioned by the government during the charter party, the vessel shall be deemed to be off hire. This period shall count as part of the period provided for in this charter party.
    • If the requisition exceeds x time, the charter party may be cancel and no consequential claim may be made by either party.

  • War and civil insurrection also may frustrate a contract.
    • Wong Wing Fai v United States: Frustration of a charter party is a change of conditions so radical that accomplishment of the commercial object of the charter is made impossible. When a charter is frustrated, the charter is canceled and the parties are released from their respective obligations.
The charter party can be cancelled when the government of the shipowner has requisitioned the ship, when war between the government of the shipowner and the destination country becomes imminent while the ship is en route, and when the ship has been destroyed.

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