Application of the word "about" – When does under-consumption start?


The Gaz Energy No.2

On 21 June 2012, the High Court handed down its decision on a time charter performance case where the issue was whether, in circumstances where the vessel has performed within the consumption warranty of "about 'X' metric tons IFO", i.e. a daily consumption of IFO between "X –5%" and "X +5%" metric tons (applying the 5% tolerance for the word “about”), the saving is to be calculated by reference to the lower figure of "X –5%" metric tons or the higher figure of "X +5%" metric tons.

Insofar as a claim by the Charterers for underperformance (i.e. over-consumption) is concerned, the issue has been well and long settled; the ruling of The Al Bida is to the effect that when the word "about" is incorporated the upper limit of the range is to be used for the calculation. For example, when the daily consumption is warranted to be "about 40 m.t.", the figure of 42 m.t. will be used for calculating the over-consumption. This benefits the Owners as the calculation is on the basis of their minimum legal obligation, that is to say the method least onerous to Owners and the least beneficial to Charterers.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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