/ BLOG – 

On/Off Hire Surveys: Preventing Chartering Disputes

Charterers and shipowners have clear obligations under charter party:

  • The shipowner must ensure the vessel is ready to receive cargo and fitted for the service when it’s delivered to the charterer
  • The charterer must redeliver the vessel in the same order and condition it was when it was first placed at their disposal, except ordinary wear and tear

Now, take a damage is discovered when the vessel is redelivered at the end of a time charter party. This will unavoidably lead to disputes between both parties.

So, if you are leasing or chartering a vessel, it’s in your interest to limit your liability by recording its condition and performance in respect of the charter party. And that’s what on/off hire surveys are for.

What’s an on/off hire survey?

On/off hire surveys are independent inspections that are performed either before the vessel is delivered into a charter or redelivered from a charter, respectively.

The result of the survey is an unbiased report on the vessel’s overall condition and seaworthiness.

What’s the purpose of an on/off hire survey?

The main goal of these surveys is to determine the extent of new damage that may have occurred between the dates of commencement and termination of the charter party.

But on/off hire surveys also serve other purposes, such as:

  • • Reviewing the vessel’s certificates
  • Identifying discrepancies in condition survey reports
  • Assessing the condition of the vessel before delivery
  • Checking hold suitability for the intended cargo
  • Establishing the cleanliness of cargo spaces
  • Recording the quantities of bunkers on board (remaining on board survey)

Which areas does an on/off hire survey cover?

The scope of this type of survey includes 3 areas:

1. Structure

This inspection includes the vessel’s hull and main deck areas, the hatch covers, cargo gear and cargo holds.

2. Documents

Paperwork with respect to the vessel’s certification (Statutory and Classification) is also verified to ensure it will remain valid throughout the intended charter period.

3. Bunkers

Complete on/off hire condition surveys tend to be performed in conjunction with a bunker survey.


What does a bunker survey imply?

The charterer provides the bunkers for the ship to use. In practical terms, they take over the bunkers that are on board on delivery, and then replenish them throughout the course of the charter period.
The redelivery bunkers may not be the exact quantity as what was recorded at the time of delivery, which may cause disputes when the vessel is redelivered.

That’s where the bunker survey comes into the picture. A professional surveyor will sound the bunker tanks and calculate the exact quantity of fuel available on board at the time of delivery and redelivery.

This information allows shipowners to be duly compensated by charterers, with the latter providing additional bunkers to make up the difference or by means of financial adjustment.

So, all in all, having accurate bunker surveys conducted dispels ambiguity and prevents controversy.

What does an on/off hire survey report include?

•  Delivery/redelivery certificate

It’s the first document that is issued after conducting the survey. It will include all relevant details regarding the vessel’s delivery into or redelivery from a charter, namely:

  • The parties’ names
  • The time and position of delivery into the charter
  • The quantity of bunkers remaining on board, where applicable
  • Time taken for the survey

This certificate is issued by the vessel’s Master and will be countersigned by the attending Agent for the charterer.

It comes to prove that the on/off hire survey took place and records when the change of responsibility takes place.

• Survey report

There’s no standard that would dictate best practice for reporting. However, a survey report will include the following information:

  • Delivery certificate
  • Bunker calculation
  • Ship’s certification
  • Vessel’s particulars
  • Summary on the general condition of the vessel
  • Record of specific damages and defects noted
  • Appendices, where needed to provide additional information
  • Annotated photographs to create an accurate visual profile of the vessel

How does an off-hire differ from an on-hire survey?

The purpose of performing both surveys is to be able to draw a comparison prior to and after leasing a vessel.

That’s why, when conducting the off-hire survey, surveyors are provided with any damage reports issued by the vessel’s Master during the course of the charter period.

If the reported damages haven’t been repaired by the charterer at the time of redelivery, shipowners will demand that they are noted in the off-hire survey report.

In turn, the surveyor will inspect these areas to assess whether the damages happened during the charter period. The on-hire survey report will play a crucial role in helping the surveyor identify any differences in condition.


What else should you take into account when requesting an on/off hire survey?

As you have seen, conducting an on/off hire survey clears up grey areas that may lead to disputes between shipowners and charterers.
However, as is the case with any other marine survey, on/off hire inspections are conducted to the extent requested by the client. It’s thus essential that you define at the outset the scope of the work to be conducted.

Make sure to send detailed instructions to the surveyor, defining the terms of the appointment (i.e., acting on behalf of the owner, charter or jointly on behalf of both).

Now, you may be struggling to engage a trustworthy surveyor who can issue an unbiased report. We have the answer. Just click here and we’ll help you find the right fit for your charter party.

We are Claimar, your Third Party Administration (TPA) management partner, skilled and expert in marine services.


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