Calculation of demurrage under the Sales Agreement on agricultural produces under FOB terms

Interlegal continues to consult clients upon the issues of laytime calculation and demurrage accrual.

Analysis of the relevant terms, incorporated into sales agreements on export of agricultural products, needs a special approach. In some cases, when assessing correctness of calculation, provisions of the Charter Party shall be also taken into account.

Thus, having supported the recent request of the Client, foreign trader, Interlegal lawyers performed a complex analysis of correctness demurrage calculation and lawfulness of the Buyers’ claim regarding its payment.

The goods were supplied under FOB terms Mariupol/Ukraine. Parties to the Sales Agreement agreed special terms of serving pre advice notice, special procedure of accepting NOR tendered by the nominated vessel and special conditions of commencement of laytime. Provisions of the Charter Party were partially incorporated into the Sales Agreement.

Lasting loading process resulted in the vessel’s demurrage. The Buyers appealed to the Sellers for demurrage payment.

From their side, the Sellers did not deny the fact of the prolongation of the loading operations but disagreed with the claimed demurrage amount, which exceeded significantly their preliminary calculation.

The Sellers applied to Interlegal to defend their legal interests.

While processing the request, Interlegal experts complexly analyzed the calculations submitted by the Buyers. It was revealed that laytime was calculated solely under provisions of the Charter Party without taking into consideration the aforesaid special provisions of the Sales Agreement.

Interlegal experts made substantial corrections, relying on provisions both of the Agreement and the Charter Party, which resulted in significant decrease of the demurrage amount. In addition, on the basis of the provisions of the Sales Agreement the lawyers developed the legal position, which was used by the Sellers in the negotiations with the Buyers.

As the result, demurrage claim was settled amicably on the grounds of Interlegal’s calculation with regards to the Sellers’ interests.

Interlegal expert Olena Ptashenchuk, under general supervision of the associated partner Natalia Myroshnychenko, supported the request and calculation.