Notice of readiness, laytime and demurrage: how they connect

A notice of readiness (NOR) tells the charterer that the vessel has arrived and is ready to load or discharge. When it is valid, and any notice time in the charter party has run, laytime starts. When laytime has been used up, demurrage accrues. The surveyor's statement of facts is the record that puts times on each of those steps.

What a valid NOR needs

BIMCO's 2013 Laytime Definitions describe the NOR as the notice that the vessel has arrived at the port or berth, as the case may be, and is ready to load or discharge. Gard breaks a valid notice into three statements that have to be true when it is given:

1. Arrived. The vessel is at the place the charter party requires. Under a berth charter that is the berth; under a port charter it is a place within the port limits or a designated waiting area. Clauses such as WIBON (whether in berth or not) and WIPON (whether in port or not), as BIMCO defines them, allow the NOR to be given earlier, from a usual waiting place or from a recognised waiting place off the port.
2. Ready. The vessel is physically ready, with holds or tanks fit to receive the cargo and equipment ready, and legally ready, with port, customs and health formalities in order. The BIMCO definitions add free pratique, meaning compliance with port health requirements.
3. In the right form. The notice follows the charter party on form, timing and recipient.

If any statement is wrong, Gard explains, the notice is invalid and stays invalid. Without a waiver by the charterer, laytime does not start, even if the charterer knew the vessel was ready. Gard adds that the charterer may waive the defect, for example by ordering cargo operations without objection. The owner bears the burden of showing that laytime began despite an invalid notice.

Time and delivery matter too. Gard notes the distinction between tendering a notice and its receipt: a notice sent outside office hours may still be valid, depending on the wording. GENCON 2022, as West of England describes it, requires the NOR in writing and allows it to be served at any time, which shows how much the form itself decides the answer. Read the charter party first.

For the clauses that surround the NOR in a grain charter, see charter party basics for agri cargoes.

When laytime starts and how it is counted

Laytime is the period the parties agreed for loading or discharge, during which the owner keeps the vessel available without payment beyond the freight. The charter party sets when it starts, often after the NOR plus a notice period, and how it is calculated.

• Fixed rate. Laytime equals the quantity divided by the agreed daily rate. For a hypothetical 12,000 tonnes at 2,000 tonnes per weather working day, laytime is 6.0 days.
• Per hatch per day. BIMCO's definitions calculate laytime from the quantity, the daily rate per hatch and the number of hatches.
• Day types. A "working day" is a day on which work is normally carried out under local law or practice. A weather working day excludes weather interruption, and BIMCO distinguishes several variants: for a weather working day of 24 consecutive hours the interruption period is excluded from laytime.
• Sundays and holidays. SHINC means included, SHEX means excepted. BIMCO's definition of "excepted" is that such days do not count as laytime, even if work is done, unless the charter party says "unless used" or "unless sooner commenced".
• Waiting for a berth. If no berth is available and the vessel cannot tender a NOR at the waiting place, a clause may count the lost time as laytime or as time on demurrage. Read the clause.

Demurrage and despatch

Demurrage is the agreed amount payable to the owner for delay after laytime has expired, for which the owner is not responsible. BIMCO adds that the exceptions which apply to laytime do not apply to demurrage unless the charter party says so. Despatch is the agreed amount payable by the owner if the work finishes before laytime expires. Despatch can be paid on all laytime saved or on all time saved; the two give different results.

A short example, with invented figures. Laytime is 6.0 days on a weather working day of 24 consecutive hours basis. Rain stops work for 6 hours during laytime, so that period is excluded, and laytime extends to 6.25 days. Work ends 7 days 12 hours after laytime began. Demurrage accrues for 7.5 − 6.25 = 1.25 days, at the charter party's daily rate.

The statement of facts in a claim

The laytime calculation is built on times: NOR tendered, accepted, commenced, stopped, resumed, completed. Those times sit in the statement of facts. Steamship Mutual lists the statement of facts with the NOR, port log, timesheet, discharging log and the master's letter of protest among the documents that generally support a demurrage claim.

Time bars make this urgent. Steamship Mutual describes two: one for notifying the charterer that demurrage has been incurred and one for providing the documented claim. Steamship Mutual adds that failing to comply with a time bar clause can invalidate an otherwise valid claim. A missing or unsigned document is a claim problem, not an admin problem.

Practical rule

Write the time the NOR was handed over, and to whom, on the statement of facts itself, and record any remark the receiver made on it. A note such as "accepted", "accepted without prejudice" or "rejected" written at the time is worth more than a recollection weeks later.

From nomination to certificate

Times captured on board become the laytime calculation, and the calculation becomes the claim. FOSS (Field Operational Services System) covers the document flow from nomination to certificate: offline entry on board, built-in calculation methods as used in the sector, document generation and a client portal where the client sees nomination, progress and documents. See how FOSS supports the flow.