Contract disputes are a substantial part of maritime law. A marine contract or
maritime contract arises when two or more parties agree to sell goods or perform
services in exchange for something else of value. Maritime contracts are
distinguished from general contracts in that they generally stem from an agreement
pertaining to the operation, navigation, maintenance, repair or provisioning of a vessel.

PERFORM means they have to deliver a superyacht from Hong Kong to Miami…they
have to pay a supplier for delivering ten fire extinguishers…they have to apply anti-
fouling coating to a drydocked barge, etc. The duty of one party becomes the
expectation, or right for the other party. And when a party doesn’t perform, a breach of
contract occurs.

That breach of contract, or failure to perform, gives rise to a legal remedy for the
aggrieved party. The remedy can be monetary damages, specific performance,
punitive damages, or other damages… all depending upon whether a court saw the
offending party’s breach as being deceitful, fraudulent, malicious, or a result of
unforeseeable circumstances. A court would assess the loss incurred by the
aggrieved party, considering factors such as its reliance upon the anticipated
performance, unjust enrichment enjoyed by the party who didn’t perform, and if the
breaching party had reason to know of the consequences of not performing.

If there are things to be learned from the expense of litigating lawsuits for breach of
contract, one thing is clear. It pays to keep copies of all contracts, agreements, and
modifications. It pays to document things. For vessel construction and repairs, request
written work scopes that identify work to be performed with adequate detail. Where a
job becomes more technically involved, use engineering specs identifying parts and
equipment…if a particular grade of stainless steel is required, if Mil-Specs will be
applied, if a measurable reduction in vibration or noise is required, etc.

Maintaining records is important if a dispute becomes a matter of “he said, she said”.
There are sometimes two sides to every story. What might appear to be a breach of
contract by a crew member aboard a yacht could really be a matter unacceptable
work conditions aboard the vessel. And on the flip side, what might be claimed as a
wrongful termination under an employment contract might stem from the accuser’s
misrepresenting the grade of license they held. The party that documents things has
more evidence to assert or dispute whether something is a breach of contract,
whether there was never a contract in the first place, or whether there were
compelling factors that excused a failure to perform under the contract.

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Back to Maritime Law
Illustration of How a Contract

Jane, the owner of a
megayacht, asks Jim, “I offer
you employment as captain on
my megayacht for a period of
one month at $2,800 per week.”

Jim replies, “Yes, I accept your
offer to work as captain aboard
your megayacht.”

There is mutual assent here.
There is also consideration….
the parties agree to exchange a
month of captain services
aboard a yacht for a $2,800 per
week, both being something of
value. The parties will naturally
put everything in writing to
minimize chances for a contract
dispute. They will add details.
They can include a start date
and end date for the
employment period,
responsibilities and duties of
the captain’s position, duties in
supervising the mate, engineer,
deckhands, stewards, and
other personnel, conditions or
causes for which the captain
may be terminated or
suspended, authority to
purchase fuel and other
necessaries for the yacht,
identification of maintenance
duties for which the vessel crew
is responsible and
maintenance duties which he
has authority to delegate to a
shipyard, responsibilities for
maintaining uniforms and work
clothes, living quarters,
reimbursement for travel
expenses, reimbursement of
other expenses, waivers,
releases, stipulations and other
clauses. In the end, such a
contract can be several pages
long. Provided there isn’t
anything to prevent carrying out
the contract (defenses), the
arrangement between Sally and
Jim will be legally binding. If it
turned out that Jim didn’t hold a
valid Coast Guard license, that
would be a defense to
formation of the contract. If it
turned out that Sally had
intentions of unlawfully
operating the megayacht as a
casino, that would be a defense.
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Maritime Contracts - Breach of Marine Contracts
What is a Contract - What is Breach of Contract - Maritime Services Contract - Marine Goods Contracts
A contract arises when a several key
elements are satisfied. These go to the
core of many a dispute in the marine
industry. The first element is
between parties. This is a fancier
term for an offer and an acceptance. The
next element is
consideration, which
essentially means something of value. The
last element is that there are
no defenses
to the formation of the contract.

A contract can govern virtually every
transaction with commercial and
recreational vessels. And disputes in
maritime contracts can arise for any
number of reasons. When parties enter
into a contract, they assume rights and
duties. Someone has to perform.