Long Beach Maritime, Transportation And Business Law Blog

Choosing an entity for a new maritime or transportation business

Starting a new business requires taking numerous steps prior to opening your doors. One potentially critical decision you will need to make is choosing an entity structure. This is just one of many considerations you will need to address when starting a new maritime or transportation business here in California or elsewhere.

The entity structure you choose should provide you with protection from personal liability for the debts and other obligations of the company. Under ordinary circumstances, you should not have to worry about whether your personal assets are at risk. If you have partners, they would also more than likely appreciate an entity structure that protects them from liability.

California ports are struggling to remain competitive

The price of everything is going up, and it affects nearly every business, including the state's maritime industry. Even California ports are struggling to stay competitive when it comes to leasing space. One of the primary reasons is the Clean Air Action Plan.

Energy prices continue to rise, especially herein California. As of Oct. 2019, diesel fuel costs here in the state were around 37.8% more than anywhere else in the country. As of the end of August, prices for industrial electricity were up to 102.9% higher and commercial electricity was approximately 63.6% more. It is difficult to sell space for cargo in a port where tenants will pay more due to these costs.

Cybersecurity lapses in the maritime industry may cause injuries

Nearly every industry relies on technology in some fashion these days. The maritime industry is no exception, which makes it as vulnerable to cyberattacks as any other industry here in California or elsewhere. Those attacks could put workers in danger, cause damage to property, cause damage to the economy and potentially expose the environment and people to hazardous pollutants.

Lapses in cybersecurity can lead to lost cargo. Even ships could be lost depending on the nature of the problem. Any number of things could be smuggled into the country, such as weapons of mass destruction, people or other weapons. Of course, all of these potential issues could arise, but it is the harm to those who work on ships, on docks and in other supporting roles in the maritime industry that should matter the most to their employers.

What is the function of the Federal Maritime Commission?

The federal government closely regulates the movement of goods in and out of the nation's ports, including those here in California. One of the regulatory agencies anyone in the industry must deal with is the Federal Maritime Commission. Understanding its role in the import and export of goods may help companies to remain in compliance with its regulations. 

The FMC is responsible for the country's international ocean transportation system. Its goal is to keep the industry reliable and competitive. It also exists to help safeguard the public from deceptive and unfair practices. The agency reviews and monitors contracts to make sure there are no substantial, unfair or unnecessary decreases in transportation services or increases in costs.

Would working with a transportation law attorney help you?

If you run a business here in California that helps facilitate the delivery of goods traveling across the city, the state or the country, then you probably work with one or more companies on a regular basis. To maintain these relationships, you more than likely enter into contracts, have disputes on occasion and make sure your company remains in compliance with all of the state and federal laws that apply to your industry. All of these instances probably rely on a body of laws called transportation law.

Protecting the interests of your California business may feel like a full-time job in and of itself. At the same time, you want to expand as much as possible and work with as many other companies as possible. Documenting your relationship with those other parties requires entering into contracts. More than likely, you would not simply sign a contract given to you by the other party. Instead, you will probably want to examine it thoroughly and negotiate any terms you believe do not serve your company's best interests.

The potential impact of Jones Act waivers

As a maritime worker in Long Beach, you know full well that many of the same standards and practices that apply to most industries have no place in your line of work. That includes the many guidelines in place providing you with workplace protections (such as injury expense compensation through the Jones Act). Yet where you aware that your company can seek a Jones Act waiver? Many have come to us here at Russell Mirkovich & Morrow questioning whether seeking such a waiver would have any impact on individual employee protections.

The Jones Act was created to help revive the domestic shipping industry following World War I. A major provision of it was that it prohibited shipments to American ports to vessels that met the following requirements:

  • Built in the U.S.
  • Owned by American companies
  • Registered under the U.S. flag

Are you liable as a freight forwarder for abandoned cargo?

It's a maddening scenario. You file all the paperwork, the product gets loaded up in the shipping containers, onto the vessels, and arrives safely to its destination. Once it's there...the consignee won't sign for it. Could you be held liable for the expenses?

It may all depend on how you booked with the shipping line and the issued bill of lading.

What legal recourse is available for breach of contract?

The issue of terminating contracts for convenience has been detailed on this blog in the past. Yet as has been explained in said details, this is a benefit that is not automatically afforded to every organization or individual. Indeed, unless your contracted partner is a government agency, they can only terminate a contractual agreement with you if they have legitimate cause to do so (unless the right to terminate it for their convenience is afforded to them per the terms of your contract).

This then prompts the question of what legal recourse is available to you if they end your agreement without cause. In such a scenario, you may be entitled to damages due to breach of contract. According to the Judicial Education Center, there may be two types of damages available to you in such an action. The most common is compensatory damages. These are meant to cover the costs (both monetary and in man-hours) that you and your organization incurred up to the point of the contract’s termination. Compensatory damages are also designed to pay you for any expense that accumulates from you having to discontinue your services, which can include the cost of any resources purchased for the execution of the contractual services yet not yet used.

Oregon and California nurseries battle over berries

Business owners and executives in California routinely enter into contracts with other companies and individuals. It seems almost impossible to avoid these types of agreements in today's intertwined and complex marketplace, regardless of the industry in which a particular company operates. Whether a sales contract, a non-disclosure agreement or something else, the fact that these business contracts are so commonplace anymore does not by any means negate the importance of how they are structured.

One company in California that is in the agriculture business knows this quite well, or one would expect that to be the case. The company is a supplier of berries to other nurseries, some of which are located in other states. As explained by Capital Press, the California-based nursery has experienced a string of lawsuits filed against it by some of its customers. At least three different nurseries who agreed to purchase strawberries from the California company have initiated legal action against it.

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