Facts
Transfield Shipping was a charterer. It hired use of Mercator's ship, The Achilleas. Transfield was meant to have the ship for five to seven months, and return it no later than midnight, May 2, 2004. Mercator contracted to let the ship to another charterer (Cargill International SA) on May 8, 2004 at £39,500 a day for four to six months. But Transfield did not return the ship until May 11. With two weeks to go they got a job to carry coals from Qingdao, China across the Yellow Sea to Tobata and Oita, Japan. Since it was returned late, the new charterer, Cargill, agreed to take the ship, but only at £31,500 a day, since the freight market had fallen sharply.
The question was how much Transfield should pay to Mercator for returning the ship late. Transfield argued they should only pay an amount reflecting the difference between the first contract rate and the market rate for daily hire during the delay, at the market rate prevailing then. This would make $158,301.17. Mercator argued Transfield should pay the amount they had lost on the new chartering contract because of the late return, which adding up the cost over the months would be $1,364,584.37.
Read more about this topic: Transfield Shipping Inc V Mercator Shipping Inc
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