When some events take place preventing one party from fully carrying out his obligations under a charterparty and that event occurs without any human intervention, this person is relieved from any liability to compensate the other party to the contract. This exception to liability is generally implied in the law and practice of shipping but the exception can also be found as an express term in a charterparty. For example, in the New York Produce Exchange (NYPE) time charterparty, clause 16 states:
“16. Should the vessel be lost, money paid in advance and not earned . . . shall be returned to the Charterers at once.
The act of God, enemies, fire . . . always mutually excepted . . . .”
This means neither party is liable if loss or delay is caused by extraordinary circumstances, for example, accidents caused by force of weather beyond human power or other circumstances which could not possibly be foreseen or prevented.
It must be mentioned here that not every cause of loss, damage or delay can be considered an “act of God” thus relieving one person from liability. For example, unexpected cold weather is an act of God but if cargo is damaged because of pipes or tanks bursting because the water was negligently and carelessly allowed to stay in them, freezing and expanding, and the cargo was damaged by the water from the burst pipes or tanks, the damage would be caused more by the negligence of the shipowners servants (the crew) than by the very cold conditions.