Well-drafted contracts can go a long way to preventing problems and disputes over the course of running your business. Working to make sure your contracts are thorough and contain clear language can save you time and trouble in the future.
This is especially true when it comes to maritime contracts. There are many unique components to the maritime industry, which means that there are some specific things you should consider when drafting your maritime contracts.
Choice of law clause
One common clause in all contracts is a choice of law clause, stating which law applies. This is relatively simple if your business is in one state. Your contracts will likely state that the law of your state applies.
The situation is much more complicated when it comes to maritime contracts. The General Maritime Law of the United States (“GML”) governs many maritime disputes in the United States.
However, the GML is based on federal rules and decisions, and if the Supreme Court of the United States has not issued a decision on your specific issue, the law that applies under the GML could depend on which federal jurisdiction you are in.
To make matters more complicated, if the GML does not address the issue, state law can be used. Therefore, it is vital to include a choice of law clause in your maritime contracts so that everyone is on the same page regarding which law applies in a dispute.
Pay close attention to your contract language regarding damage limitations. Make sure the language is specific and intended to override any existing law that would otherwise automatically apply.
You should not use standard contract forms with boilerplate language, or you might discover that your contract language is insufficient. If not, you could end up having the default, existing law applying to your situation.
Maritime contracts, like all contracts, contain certain clauses that are more important than others. Often, these important clauses involve complex details and fine print.
One of these clauses in a maritime contract is usually an indemnity clause. This is language stating that you and the other party agree to indemnify each other in specific situations.
The law states that an indemnity clause must be specific and conspicuous. It should not be buried somewhere in the contract where it is easy to miss during a read through of the contract.
You can make your indemnity clause stand up to judicial scrutiny by changing the font and bolding or underlining the wording. This makes the language specific and conspicuous, reducing the chance that important terms will be overlooked.
Dispute resolution methods
Finally, a maritime contract should address how disputes will be resolved. Arbitration is a popular method of dispute resolution, particularly in international maritime contracts. If you do not want to arbitrate, but go straight to litigation, your contract should specify in which court you will litigate.
Drafting a maritime contract takes a lot of time and attention to detail, but the effort is worth it. Whether you are drafting a contract or already embroiled in a contract dispute, professional guidance helps.