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From the Brig

Agreeing on

agreements

ISSA’s legal representative, Bruce Hailey, discusses

the merits of written agreements

M
y irm has recently been is much reduced and the opportunity supplier acting as a sub-contractor

asked by several clients to for one party or another to take to the originating supplier? This is
draft agreements for useadvantage of or fall foul of any important, because it determines who

within the ship supply sector, which we ambiguity is lessened.has the obligation of payment to the
gladly prepared. However, when those Very often problems arise due to an physical supplier – the ship owner or

agreements have been presented to the incomplete understanding of what is to the originating supplier.
intended counter-parties the common be done, quite often due to language If the relationship is one of agency,

response has been that “we don’t usually issues. English may be the language of then it should be clearly explained how
shipping, but that does not mean that the commission is calculated and when
sign such agreements”. This is not
because the terms of the agreements everyone who uses it does so well. For it is due. Equally, if the relationship

themselves were objectionable, but example, it would not be surprising ifis not one of agency it should be
simply because the idea of a written a buyer in Korea and a seller in China understood that the physical supplier

contract was itself objectionable.might not have the same idea about will be paid irrespective of whether
This response is often dificultwhat they think they have agreed. the owners have paid the originating

for a lawyer to understand, since an More so when some of the dealings supplier.
agreement that relects the interestswere undertaken by telephone.The distinction is important

of all parties must be preferable to the Pro-forma agreements writtenbecause without a clear understanding
confusion and uncertainty that can exist in plain English can certainly assistit is impossible to undertake the

in the absence of a written agreement. in minimising errors in translation/ equally important risk assessment. Is
Of course, any written agreement must comprehension, and ensure thatthe physical supplier relying on the

be balanced and fair, and it is the duty all relevant elements of a useful inancial worthiness of the owner or the

ofanyoneaskedtosignanagreement agreementareincorporated. Insome originatingsupplier?
to be sure that they understand and cases it may be appropriate to draftOnce the fundamental nature of

accept the terms and to negotiate for a speciic agreement for a large or the relationship is understood and
the necessary changes.unusual transaction. More usually it agreed the remaining terms can also be

There is no doubt that clear would be suficient to use a standard discussed and agreed. It may be wise
agreements limit the scope for dispute template, which incorporates the 2015 to seek professional assistance in the

and ensure that where disputes do arise ISSA Conditions of Sale.drafting and review of such agreements,
they can be resolved in the most eficient It is becoming increasingly common at least until you have familiarity with

manner possible. In the absence of a for ISSA members to undertake the issues that arise when considering
clear written agreement any disputes business between themselves, insuch things.

may take longer to resolve, at greater order to fulfil orders away from their Written agreements are a good

cost and with increased acrimony.home ports. However, the true nature thing and should be embraced by
If the parties to a contract have of that relationship between ISSA the industry. It is, however, essential

clearly deined their respective members is often very unclear. Isthat before they are signed they
obligations then the potential for the originator acting as agent for the are carefully considered and where

dispute arising from misunderstandingsphysical supplier, or is the physicalnecessary revisions are negotiated. u

26 The SHIP Supplier Issue 66 2015