Defence Guide 22 Feb, 2022 Defence Guide - Cancellation in a nutshell Eugene Cheng Senior Claims Manager Exercising a right to cancel a charterparty terminates the charterparty along with all contractual obligations resulting in parties no longer being bound to one another. The right to cancel may also be exercised even when there is no breach on the part of owners (see The Democritos [1976] 2 Lloyd’s Rep 149). Download PDF a) Cancelling dates – Fixed, laycan and narrowing clauses The right to cancel usually arises when owners fail to deliver the ship by the cancelling date or if the ship is not ready to load by the cancelling date. The cancelling date can either be a fixed date or a laycan period to which the right to cancel is only exercisable after the laycan period. The length of the laycan period is a matter for both parties to agree on.  Charterers would be interested in a fixed date of arrival so that they can make firm arrangements for the loading of cargo. On the other hand, it would be in owners’ interest to have a flexible date for arrival to take into account delays in delivering the ship.  Parties may also agree on a narrowing of the laycan prior to the ship’s delivery. Again, the choice of who should narrow the laycan is a matter for both parties to agree on. If the onus is on charterers to narrow the laycan, a failure to serve a valid laycan narrowing notice would not change the laycan period. On the other hand, if the onus is on owners to narrow the laycan, a failure to serve a laycan narrowing notice may open owners to claim for damages by charterers. If the charterparty does not have a stipulated time of delivery or a cancelling date, owners would be under an implied duty to deliver the ship with reasonable despatch (see The Democritos [1976] 2 Lloyd’s Rep 149). b) Readiness as a pre-requisite to cancellation Certain charterparties like the Gencon 76, Gencon 94 and Asbatankvoy state that the right to cancel accrues when the ship is not re