Ports are pivotal nodes in international supply chains. However, within each setting, there will be a broad range of responsibilities and relationships, some statutory or regulatory, some commercial or operational. As a result, there will be an array of terms and conditions to be considered sources TT Club.
Setting Standards
However, drafting a set of standard trading conditions to protect your business is just the start of the process. So that you may rely on them it will be necessary that the terms are sufficiently incorporated into all relationships where something more specific has not been agreed. Such incorporation plays a pivotal role in ensuring smooth and predictable business transactions.
Recognizing that the requirements will differ depending on the nature of your relationships and according to your jurisdiction, there are a selection of practical considerations included below aimed at assisting in drafting and incorporation.
- Your standard trading conditions should be a separate and distinct document from your other business documents. This makes it easier for you and your counterparties to locate and reference the terms.
- Where practicable, limit the legal jargon that may be difficult for non-experts or those less familiar with your jurisdiction to understand. Clearly define key terms and concepts relevant to your industry.
- Integrate the terms into every business interaction and agreement. This can be achieved by reference to the specific terms, including version and date, together with appropriate linkage.
- Ensure that the standard trading conditions are easily accessible to clients, customers, and others. You can do this by publishing them on your company website and embedding references and/or links in email correspondence, and on quotes and invoices. Printed versions should be available on request.
- Consider highlighting key clauses that are especially important. This may include payment terms, delivery conditions, or dispute resolution mechanisms, but should also be clear on responsibilities liabilities, and financial limitations, as well as applicable law and jurisdiction.
- Recognize that, while having standard trading conditions is essential, your business might need to negotiate specific terms for certain contracts. The standard conditions may not be appropriate and flexibility can help in building positive relationships.
Mitigating Risks
Ports typically interface between the maritime and multiple shore-based interests in facilitating trade. Since the shipping industry is inherently exposed to various risks, ranging from unpredictable weather conditions to geopolitical uncertainties, standard trading conditions can offer a comprehensive set of terms that address all such risks. For example, they may outline the responsibilities of the port operator in the event of unforeseen circumstances, such as natural disasters or political unrest, thereby reducing ambiguity and potential disputes.
Consistency and Clarity
Ports are often governed by a complex web of international, national, and local regulations. Standard conditions help harmonize these legal frameworks by providing a common language and set of rules. Such consistency minimizes the risk of legal disputes and enhances the enforceability of provisions. Moreover, it facilitates compliance with regulatory requirements, ensuring that all parties are aligned regarding their obligations and responsibilities and outlining any dispute resolution processes.
Equality and Fairness
Standard trading conditions establish a baseline of rights and obligations for all parties. This is particularly important in the maritime industry, where power dynamics can vary significantly between shippers, carriers, and port operators. Conditions setting out standardised terms for issues such as payment terms and dispute resolution mechanisms, ensure that no party is unfairly advantaged or disadvantaged. By promoting fairness, standard trading conditions contribute to the creation of a more stable and sustainable trading environment. A good reference guide in the EU could be the Unfair Contract Terms Directive (93/13/EEC).
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Source: TT Club
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