BIMCO bulletin explains why it is important to pay attention to standard forms.
Dispute between contracting parties
Lawyers spend countless hours of working lives interpreting contractual terms. Sometimes the meaning, as far as a court or tribunal would see it, is crystal clear. Other times it is not.
In many instances where there is a dispute between contracting parties, both sides have absolutely fixed but completely opposing views as to what a contractual provision is intended to convey.
Not infrequently, the true construction of a contractual term will be determined by small grammatical points such as the choice of “and” over “or”, the placement of commas or even the order in which the words are placed.
These grammatical points, as small as they are, can have large and sometimes unintended commercial consequences.
BIMCO standard form
Finding the balance Matt Hannaford, Partner at Hannaford Turner Not infrequently, the true construction of a contractual term will be determined by small grammatical points. While these standard forms cover a diverse range of maritime subjects, their universal appeal comes down to one thing – trust.
A BIMCO standard form is trusted because, by and large, the global market to which it relates recognises that it is balanced.
This balance comes from the fact that each form is developed by a drafting committee that represents a broad spectrum of industry stakeholders.
Accordingly, when any BIMCO standard form is deemed ready for presentation to the Documentary Committee for approval, it will already be marked by two features.
First, its terms will reflect a long series of discussions between the drafting committee members (often with the benefit of input from a wider external sounding board); second, typically it will contain a number of BIMCO standard clauses that are familiar to the market at large.
Through this process, BIMCO’s aim – with each of its standard forms – is to enable contracting parties to negotiate the terms of their specific transaction in the knowledge that they are working from a base document that is market-tested, familiar to both sides and balanced (as far as a representative market group can make it so).
SmartCon
Visible amendments are key BIMCO standard forms are accessed through the document production and exchange system “SmartCon”, which was introduced in 2018 to replace “IDEA”.
SmartCon gives its users peace of mind that they will be working from the authentic base contract and assists the negotiating process by clearly – and literally – highlighting the changes that each party makes to a standard form as it progresses through its drafts.
As all deviations from the base document are plainly visible on each subsequent draft, the risk of unintended amendments or omissions is significantly reduced. This may not be the case when parties use a pirate copy of a BIMCO standard form.
Amendments brought up
Copyright infringement issues aside, anyone receiving an unauthorized form from its counter party will be faced with the risk of working from a flawed base document from the outset.
While this situation can arise where the initiating party is fully aware that the document is not precisely in line with the BIMCO terms, more often than not it will be unintentional and be down to simple human error.
Even where the first draft is an exact copy of a BIMCO form, without the full visibility of amendments offered by SmartCon, a contracting party runs an increased risk of simply not spotting deviations from the standard terms when revised versions are exchanged.
In either case, whether such deviations comprise substantive changes to the text, or simply a missing word or phrase, it may have a significant and detrimental impact on a party’s rights should the contract become disputed.
Risk of oversight
Of course, using SmartCon does not completely eliminate risk of oversight and error but it does give parties comfort that they are starting off with the genuine BIMCO product and that they will be afforded every opportunity to spot and rectify provisions that do not reflect their commercial position.
Everyone involved in the business of shipping will be aware that one of BIMCO’s principal functions is the provision of a suite of standard form contracts for the maritime sector.
Currently, BIMCO has some 200 different standard forms on its books; and this number continues to grow, as BIMCO responds to the requests of its members to revise existing forms and branch out into new areas.
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Source: BIMCO
