Late Redelivery Clause An Unenforceable Penalty

In Lansat Shipping Co v. Glencore Grain BV (25 March 2009) the Commercial Court held that a liquidated damages clause relating to late redelivery in a time charter was penal and unenforceable. The decision highlights a creativity on the part of some owners in seeking to obtain from charterers more extensive damages than are typically recoverable under English common law.

Lansat chartered the bulk carrier "Paragon" to Glencore for a period of three to five months. The charter, which was on amended NYPE form, included a provision which stated, "If...the last voyage will exceed the maximum period, should the market rise above the Charter Party rate in the meantime, it is hereby agreed that the charter hire will be adjusted to reflect the prevailing market level from the thirtieth day prior to the maximum period...until actual redelivery of the vessel to the Owners".