The GENCOA is BIMCO’s standard contract of affreightment for dry bulk cargoes. A contract of affreightment is an agreement between an owner and a charterer for the carriage of a certain amount and type of goods between agreed ports over a given period of time. It is not limited to a particular ship, but operates as a series of voyage charter parties. GENCOA has been designed to be used with any dry cargo charter party, although BIMCO would recommend the use of GENCON, COAL-OREVOY or GRAINCON. The latest edition of this contract is GENCOA from 2004.
Copyright in GENCOA is held by BIMCO.
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GENCOA is designed using the well-known BIMCO box layout pattern with the form consisting of two main parts: a box layout in Part I and the main terms and conditions in Part II.
The boxes in Part I contain a brief description of the particular item of information to be added and a reference to the relevant clause in the printed body of Part II.
Sub-clause (a) is a “total quantity” option allowing the parties to state a minimum/maximum amount to be carried under the contract. The parties must state in Box 8 which of them has the option in respect of the total quantity and when such option is declarable.
In order to avoid recurring disputes, the provisions in Lines 22-24 clearly provide that in the context of Clause 2, the intaken quantity for each shipment shall apply when calculating the total quantity shipped.
Sub-clause (b) is a “number of shipments” option - which is probably the more widely used method today.
When Box 11 is filled in, Clause 5 (Final Shipment) - which is an exceptions clause - takes effect and will supersede the provisions of Clause 2(a) as regards total quantity and of Clause 4 as regards quantity per shipment.
If Box 11 is not filled in, the provisions of Clause 2(a) as regards total quantity will bind the owners in spite of Clause 4 (Quantity per Shipment) whatever is the quantity left for final shipment. This could expose the owners to having to ship a quantity of cargo that is substantially less than the agreed minimum quantity on a vessel that would still be required to fall within the description of performing vessels in Box 13.
The concept of “fairly evenly spread” in GENCOA is regulated by the provisions of Clause 6(b) which require the charterers to give the owners a programme of shipments in advance of each shipment period. The advance notification of shipments is intended to help with the smooth running of the contract and to avoid any unexpected “bunching together” of cargoes during one part of the period.
It should be noted that the use of the term “vessel or substitute” in the context of a COA does not infer any substitution rights, but is a phrase used to indicate that the owners agree to provide appropriate carrying capacity on the dates required by the charterers. The naming of a vessel at this stage is intended to be meaningful from a commercial rather than a legal point of view. The formal nomination of the actual performing vessel comes at a later stage of the procedure (Clause 7(c)).
The acceptance by the charterers of the owners’ nominated vessel is dealt with in Clause 7(d). The principle is that if the charterers fail to advise the owners whether or not the nominated vessel is accepted within 24 hours of the nomination, then the vessel will be deemed to be accepted.
It is also important to note that the owners’ failure to provide tonnage or the charterers’ failure to provide cargo must be due to reasons that fall within the exceptions clause of the underlying charter party. If the owners simply fail to provide a vessel or the charterers a cargo, they are in default of the contract and cannot avail themselves of this provision. The issue of whether the charterers may make a claim for damages resulting from the default or seek to cancel the contract in the event of a prolonged failure to provide tonnage is left to background law on repudiation and frustration. In any event, a lack of nomination should not give rise to a demand for an extra voyage at the end of the period, thus creating the basis for double compensation, i.e., damages and an extra voyage.
The second paragraph of Clause 4(a) recognises that settlement of demurrage claims may take more time than freight settlement; therefore interest on outstanding demurrage starts to run only after a delay of 15 days.
Parts (b) and (c) of this Clause deal with suspension and cancelling under the contract due to the failure on the part of the charterers to pay on time freight, dead-freight or demurrage. In many ways the provisions of Clauses 14(b) and 14(c) mirror the late payment and grace period provisions commonly found in modern time charter parties. The original VOLCOA late payment provision permitted the charterers to make a late payment after the grace period had ended, which meant that the owners lost their right to cancel the contract. The current position under English law in respect of late payments of hire under a time charter is that the owners maintain the right to withdraw the vessel and terminate the charter even if the charterers tender a late payment, as the late payment of hire does not rectify the breach of obligation to pay hire by the agreed date.
To be consistent with other recently developed BIMCO forms, Clause 14 provides that the owners should not lose their right to cancel the contract when a late payment is received (after the grace period). However, the decision by the owners whether to cancel or not should be made promptly with a clear and unambiguous notice sent to the charterers.
In the event of late payment the owners may, according to the cancelling provision of Clause 14(c), give the charterers 120 running hours notice in which to make the payment, failing which the owners will have the right to cancel the contract. On the expiry of the 120 running hours the owners must immediately notify the charterers in writing that the contract is cancelled with immediate effect - unless the owners decide not to exercise their right to cancel, in which case the contract remains in full force and effect and no notice need be given. For the avoidance of doubt, the provision prevents the receipt of a late payment from the charterers after the grace period being construed as a waiver by the owners of their right to cancel.
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