Equitable Set Off: Freight Vs Hire

There exists a peculiarity in shipping law in that the principle of equitable set off is more readily available for setting off of due Hire than Freight.

Of course, the existence of a counter claim forms one of the pre requisites for the equitable setting off remedy. However, an additional “special ingredient” or reason has to be present and that ingredient has to be so “inseparably connected” to the performance of charterparty such that the equitable setting off is allowed. For some reason, the special ingredient is not so readily found in cases involving payment of due Freight.

For Shipowners chartering out their vessels on voyage charter, this is good news. Voyage Charterers, fret not, there is always the option of not having to relying on this equitable remedy simply by incorporating contractually that a contractual deduction of freight (even for cargo damages!) is allowed.

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