In time charterparties, disputes may usually arise as to
deductions made from charter hire in relation to an alleged
underperformance of the vessel. As a matter of law, if a deduction
is being made from hire, such deduction must be the result of good
faith or be made on reasonable grounds.
As established in the case The Kostas Melas [1981] 1
Lloyd's Rep 18, in the instance of a deduction for an
underperformance of the vessel, the charterer may be required to
show that its deductions were made in good faith and its
calculations were made on reasonable grounds. In the case that such
deductions were not made in good faith or reasonable grounds then
the charterer may be liable for breach of contract.
