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I will advise Red that he can terminate the time-charter party contract (the "contract") with Blue and at the same time claim for damages against Blue as compensation for any past and future losses. The issues in the problem are - (1) whether Blue has breached the contract vesting upon Red the right to terminate the performance of such contract and claim compensation for past and future losses; and (2) whether such terms violated is a condition or a warranty entitling Red the dual right to terminate the performance of the contract and to claim compensation for past and future losses.
Blue is guilty of breach of contract because the barge was only actually ready-to-load on the 3rd of January 2006 in violation of the owner's promise (Clause 8) that the barge will be ready-to-load from the start of the charter, i.e. the 1st of January. Moreover, Blue is guilty of breach of contract because the barge had to be towed sometime January 2008 (when the contract is still effective) from Oslo to Liverpool due to serious engine failure in violation of Clause 4. Having failed to perform its obligations under the contract, Blue is therefore in breach of contract.
In regard to the issue of whether Red may exercise the right both to terminate the contract and to claim compensation for past and future losses, the answer depends on whether the terms of the contract violated by Blue is a condition or a warranty. This is because not all contract terms are of equal significance. Some are more important than others. ...
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