Rajeev Philip Steamship Insurance Management Services Limited. “SUBJECTS” in Charterparty Negotiations - Is there a Contract???. “The concept of a duty to carry on negotiations in good faith is inherently repugnant to the adversarial position of the parties when involved in negotiations.”.
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Steamship Insurance Management Services Limited
“The concept of a duty to carry on negotiations in good faith is inherently repugnant to the adversarial position of the parties when involved in negotiations.”
Objective Observation/External Evidence
“equitably … by an amount to be mutually agreed between owners and charterers”
“even in the absence of express language, the Courts are prepared to imply an obligation in terms of what is reasonable…
A “Fixture” is arrived at by the exchange of “firm offers” between brokers acting on behalf of their principals, an owner and a charterer, and when concluded, that is all terms and details agreed and subjects (if any) lifted, it is an enforceable contract … It is important to note that no fixture has been concluded until all “subjects” have been lifted.” Baltic Code 2003
CONDITIONS TO CONTRACT
CONDITIONS TO PERFORMANCE
Thoresen v Fathom Marine  1 LLR 622
“Otherwise basis Saleform 93 sub details suitably amended also to reflect the above terms. Closing to take place in Piraeus ”
Mr. Kokkinis - “as per telcon this is the fixing. Pls do best to get it confirmed timely otherwise sellers may run away”
Mr. Straume - “thus we have full agreement on price/terms, will also forward recap shortly”.
“I would respectfully suggest that it is in the interests of the chartering business that the Courts should recognise the efficacy of the maritime variant of the well known ‘subject to contract’. The expression ‘subject to details’ enables owners and charterers to know where they are in negotiations and to regulate their business accordingly. It is a device which tends to avoid disputes and the assumption of those in the shipping trade that it is effective to make clear that there is no binding agreement at that stage ought to be respected.”
English Law -
we haven’t reached agreement, and neither of us is bound to do anything
New York (and Norway!)
we will discuss later other terms whose significance is so slight that agreement upon them now is unnecessary for the purposes of binding a contract between us
When a contract by telex or correspondence is alleged, the court will look at the correspondence as a whole and not merely at one or two documents picked out from connected sequence.
KKK v. Johnson: “Subject stem”
-Degrees of Control-
Oceanografia SA de CV v. DSND Subsea AS
 EWHC 1360 (Comm)
“Offer subject to the signing of mutually agreeable contract terms and conditions”
“Subject to FMA Approval vessel free for winter season, notice to be given by 01/10”
Contract terms were never signed.
No Binding Agreement
THE KANCHENJUNGA 1 Lloyd’s Rep. 391
Charterers unaware of FMA difficulty:
Charterers aware of FMA difficulty
- “Subject to weather permitting”
- THE MERAK  2 Lloyd’s Rep 250
- THE JOHN S DARBYSHIRE  2 Lloyd’s Rep 457