Liability Warning – Signing Purchase Orders

Wednesday, December 17, 2008

The International Transport Intermediaries Club (ITIC) says suppliers of goods and services in the marine industries are increasingly turning to shipmanagers for settlement of their bills when shipowners fail to pay. Accordingly, ITIC has advised its shipmanager members to state clearly when signing purchase orders that they are acting only as agent for the owner.

ITIC says, “Shipmanagers need to be cautious when signing purchase orders. In the current shipping market, we are seeing an increase in the number of claims being made by suppliers against managers when owners do not settle their bills. The supplier pursues the manager on the basis that the purchase order creates a contract directly between the supplier and the manager. It is therefore crucial that the manager ensures that the purchase order clearly states that it is acting as agent for the owner when ordering supplies.

“Managers should not state that supplies are 'for the account of XYZ Ship Management Company'. If this wording is used in purchase orders, it should be changed immediately, as it indicates that the manager is ordering supplies in its own name and, therefore, it assumes the credit risk.”
 
ITIC recommends that, at the top of the purchase order, managers include the notation, 'Please invoice this order to (name of owner or bareboat charterer etc) c/o XYZ Ship Management Company Limited'. It also warns managers that they should sign off the purchase order, ‘For XYZ Ship Management Company Limited as agents only for and on behalf of (name of owner/bareboat charterer)'.

ITIC Director Stuart Munro says, “The use of the word ‘agent’ alone may not be sufficient. In order to avoid liability, shipmanagers should alter the printed words to provide 'as agents only', always followed by the identity of their principal. It is important for managers to state in which capacity they are acting, not only in connection with purchase orders but in all communications with their clients and suppliers, whether that is by letter, fax or email. They should sign off automatically as agent for their principal.

“If shipmanagers make their agency status clear in this way, they should avoid problems if the shipowner does not pay its bills. Although it will not prevent suppliers trying to sue them, it will make it very difficult for those suppliers to prove that they did not know with whom they were contracting, and it will make it clear that they must look to the shipowner, and not to the manager, for payment. Any agent members who are in doubt about their position should get their purchase orders checked by ITIC.”

( www.itic-insure.com)

Maritime Reporter August 2015 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

Legal

Migrant Boat Sinks off Libya; 200 Feared Dead

A boat packed with mainly African migrants bound for Italy sank off the Libyan coast on Thursday and officials said up to 200 might have died. A security official in the western town of Zuwara,

Wärtsilä Scrubbers for Finnlines Vessels

Finnlines, a Ro-Ro and passenger vessel operator with services in the North and Baltic Seas, has contracted Wärtsilä to supply three vessels with exhaust cleaning scrubber systems.

North Korean Black-listed Ships in Russia

North Korean vessels owned by Ocean Maritime Management (OMM) have been seen using Russian ports, says the NK News vessel tracker.   OMM was sanctioned for its

 
 
Maritime Careers / Shipboard Positions Maritime Contracts Maritime Standards Navigation Pipelines Port Authority Salvage Ship Electronics Ship Repair Shipbuilding / Vessel Construction
rss | archive | history | articles | privacy | contributors | top maritime news | about us | copyright | maritime magazines
maritime security news | shipbuilding news | maritime industry | shipping news | maritime reporting | workboats news | ship design | maritime business

Time taken: 0.1397 sec (7 req/sec)