Contract check list for hydrographic surveyors

The trend over the last few years has been for Hydrographic Societies / Offices to change into privately owned companies from governmental bodies.  As this has happened it has become more likely that third parties and contractual partners will attempt to hold providers of hydrographic services liable for losses they have suffered whilst relying on the service provided.

As charts are now generally available to many members of the public, especially since the introduction of the Electronic Navigational Chart and the increase of new companies which market and distribute hydrographic information, the potential amount of people that rely on the information provided by the hydrographer and therefore to whom the hydrographic service provider owes a duty of care, will have significantly increased. 

The hydrographic surveyor may be instructed for a specific task or he may be producing charts for general purposes that will eventually be purchased/relied upon by a third party that you do not know the identity of.  In the first instance, it would be a good idea for the hydrographic surveyor to have specific terms and conditions applicable to his contract.  In the second instance, there may not be a chance to contract pursuant to specific terms and conditions as there may be no identifiable contractual counterparty.  In that case, the answer will have to be a well worded disclaimer on the chart itself.

Whenever you are appointed by a client, you must make sure that the terms of your appointment are recorded in your contract.  It is usual for such a contract to be in various parts.  For example, you should have your own general Terms & Conditions on which you will always contract.  General Terms & Conditions will be suitable for every contract you enter into as they will be very general by nature.  The more specific requirements of the contract, such as detailing the scope of the services you will provide will be recorded in a “Scope of Work”.  In such a document you should detail all the works you are prepared to undertake.  You should also pay special attention to any work which is not going to be undertaken by you, but which your client could reasonably assume would be. If it is reasonable for a lay client to assume you would be undertaking a task and they relied on that reasonable assumption, you could be held to have a liability for non- performance.

Once your contract is in place, a failure to meet the obligations contained in the contract may constitute a breach of contract.  If a breach occurs, dependant on the severity of the breach, you could be liable to pay damages to your counter party and/or they may be entitled to terminate the contract in its entirety. 

You will have a liability to your client if you agreed to perform but have not performed and also for work you have undertaken which is not of a sufficient standard.  The usual legal standard applied would be that of a “reasonable hydrographic surveyor”.  Insurance policies only respond to liabilities that arise from your legal standard of care.  It is therefore important that you should only agree to perform your services to this standard of care and not impose a higher standard of care on yourself by, for instance, agreeing to use “best endeavours”, “highest standard” or “utmost care” rather than just “reasonable” endeavours, standard or care. 

It is not always possible to avoid making errors.  Therefore, the following clauses should be incorporated into your Standard Terms and Conditions:

1) Exclusion clause  - This clause attempts to exclude your liability should you breach your contract.  There are certain liabilities (under English law) which cannot be excluded, such as causing death or bodily harm by negligence.  However, everything else can be excluded (in the right circumstances).  When the contract is between a business and a consumer, the law on exclusion clauses is quite tough.  However, when the contract is between two businesses, the clause would be subject to a test of reasonableness as defined in the Unfair Contract Terms Act 1977.  Generally, businesses are allowed to contract on whatever terms they agree.  However, you must remember that if the clause is deemed to be unreasonable (for whatever reason) it will be totally ineffective.  Therefore, it can be better to limit your liability to an amount which will be deemed reasonable, rather than unreasonably seek to exclude all liability and then have no protection at all when the clause is struck out. 

2) Limitation clause – This is simply a more generous form of exclusion clause, which seeks to limit liability to a set amount rather than to exclude it altogether.  Again, the reasonableness of the clause will be taken into account.  Therefore, if you are being paid say, GBP10,000 for your services, it may be reasonable to limit your liability to GBP100,000.  However, if you are earning GBP100,000 then a limit of GBP100,000 may be considered unreasonably low.  Ten times the fees paid is a standard figure but we cannot guarantee it would be upheld. 

3) Jurisdiction and Law – When you are dealing with international parties, especially if you have offices in many different countries, it is very helpful to agree both a jurisdiction for disputes to be heard in and a choice of law.  This may seem obvious, but we see many contracts which do not contain such a clause, or only one element of it.  The result of which is that thousands of pounds are spent on legal fees arguing over where the claim should be heard, before any substantive issue is even contemplated.  We recommend that the law and jurisdiction clause be the same.  We have seen USA jurisdiction with English law to apply.  Whilst this can work, it obviously creates difficulties and extra expense.  It is also helpful to agree a jurisdiction which allows the victorious party to claim back their costs from the unsuccessful party.  This avoids facing vexatious claims from litigious clients, because they will be mindful of the penalty of failure.  The USA is a good example of a jurisdiction to avoid in respect of costs because even if you are successful in defending a claim against you, you will not recover any costs. 

4) Time Bar  - Under English law, the usual time period in which a claimant has to claim against a party is six years.  However, when does the six year period start and end?  When it comes to designs, the time frame can be much longer as it may be unreasonable for someone to realise that there is a problem with the design until much later.  For example, if the client wants the paint on an offshore rig to last 20 years, a specific paint may be required.  If the designer uses a cheaper paint to save costs that only lasts 10 years, and nine years later it is noticed that the paint is starting to peel away causing damage to the rig, it is likely that the claimant could still commence a claim, despite the statutory six years having expired.  Therefore, it is helpful to have a contractual time bar of say one or two years.  Again, as this is a form of exclusion/limitation clause and therefore, could be subject to a reasonableness test.

5) Indemnity – This is a clause which will state that your contractual counterparty will indemnify you for any loss you suffer (of whatever nature) in performing the contract that does not arise from your own negligence or wilful misconduct. 

6) Force Majeure – This clause will list a series of events that, if they happen, and this leads to a party not being able to perform their contractual obligations, they will not be held liabile for such failure to perform.  Examples of a force majeure event could be “acts of god” ie hurricanes or floods.  They could also be war, strikes, civil unrest etc.  This is particularly if your contract requires you to be at sea where weather conditions will have a large effect on the performance of the contract.

7) Right to Sub-Contract  - You may wish to include a clause that allows you to sub-contract your obligations under the contract to another party. 
Finally, whenever you intend to enter a contract your Terms and Conditions should be made clearly available to your potential client before the contract is agreed (and preferably signed).  It is extremely difficult, if not impossible, to rely on contractual clauses which were not brought to a client’s attention before they agreed to enter into the contract.  The only time you may be able to rely on such clauses is if you have a previous course of dealing with that same client and have used such clauses in the past – so in effect, the client is aware of them.