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Lloyd's Maritime and Commercial Law Quarterly

CHARTERPARTIES SUB DETAILS

The Junior K
It will doubtless come as a surprise to commercial lawyers not regularly involved with charterparty practice that their brethren in shipping departments or chambers still need to discuss the question as to exactly when a charterparty comes into being. Uncertainty on such a fundamental issue exists because of conflicting answers given, on the one hand, in judicial and arbitral tribunals in the United States and, on the other, in a string of somewhat subdued dicta uttered in a small number of cases in this country.1 Steyn, J.’s judgment in The Junior K 2 starts to redress the balance by giving quite firm judicial support to what had been assumed in the trade to be the position in English law.
The problem arises because of the practice among shipping brokers of exchanging telexes at a stage of the negotiations when the parties have agreed on some but not all of the terms of the charterparty. These telexes recapitulate the terms which have been agreed (hence the label “recap telex”) and are expressed to be “subject details”. The question is whether or not either of the parties may, subsequent to the exchange of such a telex, withdraw with impunity from the negotiations. This, in essence, was the question which arose before Steyn, J., in The Junior K. The crucial facts were that, after a short period of negotiations, a telex was sent by the shipowners’ brokers to those acting for the intended charterers, listing those terms upon which agreement had been reached: the telex was headed “RECAP FIXTURE SUB DETAILS” and concluded “SUB DETS GENCON CP” (or, dispensing with the shorthand, “subject to the details of the Gencon charterparty”). The next day, the intended charterers withdrew from the negotiations and the plaintiff shipowners treated this as a repudiatory breach of contract by the defendant charterers, for which the plaintiffs reserved their right to claim damages. The plaintiffs successfully sought leave to issue and serve proceedings outside the jurisdiction and the case came before Steyn, J., in the form of an application to set aside the order allowing such issue and service. For these purposes, all the plaintiffs had to prove for the order to survive the defendant’s application was that they had a realistic prospect of success on the question as to whether there was a binding contract. In Steyn, J.’s judgment, the plaintiffs did not satisfy this burden of proof and the

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