• THE INTERNATIONAL COMMERCE & LAW REVIEW
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• v.62
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• pp.113-132
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• 2014

Judicial decisions make it clear that in all CIF, CFR and FOB contracts, incorporation of charter party into sale contracts is the only effective way for recovery of demurrage in the context of sale contracts. The case law would appear to clarify a number of important issues: The words of incorporation in the sale contract play a vital role in determining the extent of the influence of the charter party principles over the sale contract. Hence, unless it is expressly provided otherwise, the courts tend to apply the charter party principles to the incorporated charter party provisions to the extent that they make sense in the context of sale contract, and that they do not undermine the underlying foundations of international trade law. In this respect the courts also take into account the factual background of the case with a view to objectively ascertaining the intention of the parties. The law is, however, less clear on the effects of the incorporated charter party provisions in sale contracts. There is still no straightforward answer to the question of to what extent the charter party law is applied to the incorporated charter party provisions in the context of sale contracts. The case law on this matter merely provides piecemeal solutions, and it is not possible to extract a general rule which will help interpretation of those charter party provisions which have not yet been subject to litigation or arbitration. Therefore, it should be noted that the parties would prepare Incorporation Clause in their sale contracts in reliance of the rules to achieve the desired results.