Surveyors Signing Indemnities

Sometimes the Club’s surveying members will be asked by the ship owner to sign indemnities, disclaimers, waivers or releases before they perform a job for their principal by the ship owner before the surveyor will be granted access to the vessel. This is obviously a very different situation to when the surveyor is agreeing terms between themselves and their own principal.

A surveyor may be asked to sign an indemnity / waiver when appointed to perform a pre-purchase survey or when appointed by cargo insurers to inspect a vessel following an accident resulting in cargo damage.

What must you consider?

It should be remembered that the surveyor will be acting on behalf of their principal (who instructed him to perform the job). Therefore, it is likely that there will already be terms and conditions between the surveyor and their principal containing various waivers and indemnities. The indemnity/waiver required by the owner will be a completely separate agreement between the surveyor and the owner.

The surveyor could be asked by a vessel owner to sign:

(a) a disclaimer or waiver of all the surveyor’s rights to claim or sue against the ship owner of the vessel and their servants and agents should he have any cause to do so; and

(b) an indemnity to the ship owner of the vessel and their servants and agents for any loss or damage they suffer howsoever caused;

Obviously the surveyor’s principal will be waiting for the survey to be conducted and, consequently the surveyor will be keen to board the vessel.

As far as Part (a) is concerned you should bear in mind the following:

• Under English law (The Unfair Contract Terms Act 1977), a party cannot exclude or limit their liability for death or personal injury. Therefore, if a surveyor is injured or killed whilst on board, the owners will be liable irrespective of whether the surveyor signed the release.
• For all non-personal injury claims– ie damage to tools or loss of income, the surveyor should only waive his rights to claim for such losses if the loss or damage suffered was caused by his own negligence or wilful misconduct.

Therefore, if the owner (or their servant or agent) breaks the surveyor’s laptop, the surveyor should not be barred from issuing a claim for the loss he has suffered. However, if the surveyor places his laptop on a surface known to be hot and the laptop melts, this loss would have resulted from his own negligence and, therefore, it would be unfair to hold the owner responsible.

For Part (b) please bear in mind that you should:

• only agree to indemnify the owner for losses suffered as a result of your negligence or wilful misconduct. Therefore, as in the example above, if you left your laptop on a hot part of the engine and it melted, causing damage to the engine, it is reasonable for the owner to be entitled to claim back the loss suffered (ie repairs, loss of use of the vessel etc) from the surveyor. However, if the owner or their employee or agent placed the laptop on the engine themselves, it would be unreasonable for them to be able to claim any losses from the surveyor. Similarly, if the surveyor places his laptop on a surface which ordinarily should not be hot, but which is hot due to a “technical malfunction”, it would be unreasonable for the surveyor to have to indemnify the owner for any damage caused as a result. In fact, in that situation, the surveyor should be able to claim his loss from the owner.
• ensure that you are insured for the amount specified by the owners.

ITIC Suggested Wording

If you are asked to sign any indemnity/ waiver prior to boarding a vessel, we would suggest that (a) nothing at all be signed; and if this proves impossible (b) the following wording be used:

“In consideration of your allowing [the Surveyor], its agents and/or servants (“the Company”) to board the above vessel for the purposes of carrying out a survey on behalf of the Company’s principal/s, the Company hereby undertakes not to make any claim against the Owner, their servants or agents (“the Owners”) for any losses suffered by the Company (other than those for which the Owner cannot exclude their liability by provision of statute) provided such losses occurred solely due to the Company’s negligent acts and omissions or wilful misconduct.

Further, the Company hereby agrees to indemnify the Owners against any claims brought by any third party arising from the Company’s negligent acts and omissions or wilful misconduct whilst onboard your vessel.

This Agreement shall be governed by and construed in accordance with English law. Any disagreement or dispute arising from this Agreement is subject to the exclusive jurisdiction of the English High Court or, if agreed in writing between the parties, arbitration in London, subject to the provisions of the Arbitration Act 1996, or any statutory modification or re-enactment thereof for the time being in force any, and the current rules of the LMAA from time to time in force.”

From Intermediary 2006

Copyright ITIC