Last Voyage (Legitimate and Illegitimate)

What it does

The last-voyage rules address the charterer's final employment order under a time charter and whether it is one the charterer is entitled to give. A last voyage is legitimate if, when the order is given, it can reasonably be expected to allow the vessel to be redelivered at or about the end of the charter period, taking account of the agreed margin around the redelivery date.

If the order is for a voyage that cannot reasonably be expected to permit redelivery within the permitted limits, it is an illegitimate last voyage, and the owner is generally not obliged to perform it and may call for a different order. The doctrine therefore polices the boundary between the charterer using up its remaining time legitimately and over-running the charter, and it connects closely to the redelivery and early-redelivery provisions.

Commercial effect

The rules allocate the risk of the charter running past its intended end. A charterer naturally wants to extract the last profitable voyage from the ship, but the owner needs her back to meet its next commitment. The legitimate and illegitimate distinction decides whether the charterer can insist on a final voyage, and it determines who bears the consequences when the timing is tight against the redelivery date.

The market context gives the doctrine its edge. In a rising market the owner may be keen to get the ship back to re-fix at higher rates and resistant to a last voyage that delays redelivery, while in a falling market the incentives reverse. How the redelivery margin and any express last-voyage wording are drafted determines how much latitude the charterer has and what the owner can do if an order threatens a late redelivery.

Owner's perspective

The owner wants protection against being kept in the charter beyond its term by a final voyage that cannot realistically allow timely redelivery. It relies on the last-voyage doctrine to refuse an illegitimate order and to call for one that fits the remaining time, so that it can plan its next fixture with confidence that the ship will come back at or about the agreed date.

The owner also wants clarity on its remedies if the charterer insists on or performs an illegitimate last voyage, including the hire payable for any overrun, which may be at the market rate if that exceeds the charter rate. It negotiates the redelivery margin and any express last-voyage terms to limit its exposure to a charter that drags on past the point at which it expected the ship returned.

Charterer's perspective

The charterer wants enough latitude to perform a worthwhile final voyage, using the ship productively to the end of the charter rather than being forced to redeliver early with time unused. It values a fair redelivery margin and a sensible application of the legitimacy test, judged on a reasonable expectation at the time the order is given, not with hindsight.

The charterer is conscious that an illegitimate last-voyage order can be refused and can expose it to paying market rate for any overrun, so it plans its final employment to fall within the legitimate range. It negotiates the redelivery window and any last-voyage provisions to preserve its ability to trade the ship to the end while keeping clear of orders the owner can reject as over-running the charter.

Negotiation points

• How the legitimacy of the last voyage is judged and at what point in time.
• The redelivery margin that defines the acceptable end window for the final voyage.
• The owner's remedies and the hire payable if the charter overruns its term.
• The interaction with the redelivery and early-redelivery provisions.

Common variations

• Reliance on the general doctrine with no express last-voyage clause.
• An express clause confirming the charterer may order a legitimate last voyage only.
• A clause fixing the hire rate for any period the charter overruns redelivery.
• A defined redelivery margin within which the final voyage must be expected to complete.