“An hypothetical test with a practical application”1

If the textbooks are a reliable guide, there exists a general belief that, where a vessel is subject to a charterparty or contract for sale, and the owner abandons it to the insurers, this will without more frustrate the charter or sale contract and/ or result in its automatic termination. There is also a theory that, if the owner should decline so to abandon the vessel, the contract is bound to survive. This article seeks to show that such assumptions are misleading and inconsistent with authority.

“It is suggested that a time charter will also be frustrated or terminated by the constructive total loss of the chartered ship if she is abandoned by her owners to their underwriters. In this case, the frustration will take place when the owners give notice of abandonment to underwriters … Where the ship is a constructive total loss but is not abandoned, it is tentatively suggested that the charter is not, without more, frustrated or terminated. So if, during a lucrative charter, the ship is badly enough damaged to be a constructive total loss under her hull insurance, but she is capable of repair and the owners choose to repair her, the owners may put her back into the charter service upon completion of repairs, unless the time under repair frustrates the charter by delay.”