Cancellations, force majeure and frustration in Yacht Charter Agreements

In a previous article, we looked at force majeure (FM) in superyacht construction contracts: Force majeure and superyacht construction contracts | Hill Dickinson. This article looks at FM and frustration in yacht charter agreements.

A superyacht charter is intended to provide a luxury and stress free holiday. In practice, however, cancellations, delays and last minute disruptions remain among the most common sources of dispute between Owners and Charterers.

The 2025 MYBA Charter Agreement (Agreement) provides a well established framework for allocating risk when the unexpected occurs. Disputes nonetheless arise, and we regularly advise both owners and charterers on cancellations, disruptions and force majeure (FM) claims, helping clients navigate these situations with a clear and commercially focused approach.

Force Majeure

Clause 18(g) of the Agreement defines FM events for the purpose of this contract. Clause 18(g) defines the events that qualify, including (but not limited to) severe weather, governmental action, war, pandemics and major mechanical or electrical breakdowns, provided that the event is beyond the reasonable control of the parties.

In relation to mechanical or electrical breakdowns, it is important that the failure was not caused by a lack of maintenance or negligence, matters which fall within the owner and crew’s control.

In practice, even a well maintained yacht can suffer a sudden and unforeseen failure shortly before delivery. Where the evidence supports this, and the breakdown is not attributable to negligence, such an event may properly fall within Clause 18(g).

The real issue in disputes is rarely whether something has gone wrong, but whether the circumstances genuinely qualify as FM under the MYBA wording. The burden of proof rests squarely with the owner.

The financial consequences of an owner cancellation differ significantly depending on whether FM is validly invoked. Under Clause 9, a FM cancellation entitles the charterer to a refund of sums paid. If the cancellation arises from any other cause, the charterer is entitled to repayment plus liquidated damages, calculated by reference to the proximity of the charter start date.

Where redelivery is delayed due to FM, the charter continues without penalty to the charterer under Clause 10(a), ensuring the charterer is not disadvantaged by events outside its control.

Finally, and often overlooked, brokers’ commission is deemed earned upon signature of the Agreement and payment of the first instalment (Clause 24) and remains payable by the owner irrespective of the reason for cancellation.

Frustration

Under English law, the doctrine of frustration applies only in rare circumstances where an unforeseen event arises after contract formation, rendering performance impossible, illegal or radically different from what was agreed. The classic case remains Krell -v- Henry [1903] 2 KB 740 where a room hired specifically to watch the King’s coronation procession lost its commercial purpose when the procession was cancelled.

In the context of superyacht charters, frustration will rarely apply. Even where a charter is booked around a specific event, the cancellation of that event does not generally frustrate the core purpose of the MYBA Charter, which is the let and hire of the crewed yacht for the agreed dates.

Where a charter cannot proceed due to inadequate KYC or breaches of AML or sanctions legislation, the Agreement itself provides for automatic cancellation and termination. In those circumstances, therefore, it is unnecessary to rely on frustration.