Most charter parties use Bills of Lading because the advantage to international trading under this feature is that those charterers who act as carriers will be responsible under the law as carriers and will, therefore, exercise care and caution in the transport of cargo, as a result of which there will be fewer claims for damages. Since most charter parties use Bills of Lading, it is important that the parties clearly and specifically spell out whether or not the Hague Visby rules will apply, because non-responsibility clauses, notice of suit clauses, etc which are valid in a charter party and regulate the relations between the two parties, will be overruled when the Rules apply, especially Article 3(8) of the rules.
As a result, if a Bill of Lading incorporates the terms and conditions of a charter party in its entirety, then any of the terms and conditions which are in contravention of the rules will be invalid against a Bill of Lading holder who is not one of the parties to the charter party contract. A charter party which does not incorporate the Hague Visby rules will then be governed purely by the contractual terms of the charter party.
One of the areas where legal problems have arisen with charter parties is in the case of repudiation of charters where a breach of contractual provisions takes place. The generally accepted principle where repudiation of charters is concerned is that if one party brings forward a repudiation which is accepted by the other which is the injured party, it releases both parties from their primary obligations under the contract and entitles the injured party to recover damages against the repudiating party to compensate for any financial losses that may have been suffered.
An injured party may not, however, recover losses against the repudiator for losses that he could have avoided by taking reasonable commercial steps to mitigate losses, for example by obtaining alternative employment for the vessel.
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