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From the Brig

Risky Business?

ISSA’s legal expert Bruce Hailey discusses

the issues that matter to you

decision can have serious implications. the middle man that is important and
It is not only new business where this should be factored into a supplier’s

care should be taken. It is human decision making process when offering
nature to think the best of people, more credit. With such arrangements, the

so when we have worked with them for likelihood of delay is greater, as it takes
a long time. It is very easy to see credit time for money to flow through the
I
exposure to existing clients rise steadily, longer chain of parties.
unnoticed. It is therefore important to When supplying a vessel at the

undertake a regular review of existing request of a catering company or

n a global industry where most customers, to consider whether the
another supplier extra care should,
business is conducted by email it credit risk has altered.
therefore, be taken to establish whether

can be difficult for a supplier to There are some important
they personally are reputable as well as
really understand who they are dealing whether the vessel and her owners are questions that any supplier should be

with, and to appreciate the risks of reputable. Caterers working with asking themselves when a RFQ arrives.
doing business with, and offering credit owners who have poor payment habits Who is making the request to you; is it

to, a particular party. This is a subject will be under financial pressure, which the vessel’s owner, a third party
touched upon in the September 2013 will be likely to result in delays in manager, a catering company or, as we

article, but given the number of payment to the physical supplier.
are seeing more and more, another
enquiries made to Salvus Law on the supplier?
Where the supply is to be made to

subject it seems to merit more detailed the owner, whether directly or through The risk profile attached to each of
consideration.
a ship manager, then an assessment these is different. For example, when

needs to be made of that owner, the Suppliers will be all too familiar dealing with another supplier or a

vessel and the owner’s wider fleet, if with the situation - a RFQ arrives from catering company who is acting as a
there is one. Where the order comes a new prospective customer, seeking an “middle man” in many jurisdictions the

from a manager it is important to immediate response and urgent supply physical supplier would not have a
identify the owner behind. The to a vessel already in port. The supplier claim against the vessel they supplied as

manager relies on the owner to put him has only a short time to assess whether they had not contracted with its owners
in funds to settle bills, and even the to offer credit, or indeed respond to the or managers but an unrelated third

most professional managers will RFQ at all. There is an instinctive party. Many suppliers wrongly assume
encounter problems with vessels
reluctance to turn down the chance of that if they supply a ship and are not

that they manage for poorly
new business, and handing the chance paid that they could, if necessary, arrest
to a competitor. However, a poor
the ship. In such cases it is the credit of

36 The SHIP Supplier Issue 61 2014