Bunker Supply Contracts
The views and opinions expressed here are solely those of the original author or contributor. These views and opinions do not necessarily represent those of the UK P&I Club.
To bunker or not to bunker that is the question… if only that were an option! However, unless your ship is propelled by magical fairy dust (or LNG); bunkers will be a pretty integral part of your operation.
Enter stage right, the bunker trader. Although in some jurisdictions you may directly contract with a physical supplier, it is more likely that you will engage the services of a bunker trader. They will source the bunkers and you will contract directly with them… and there’s the rub - bunker supply contracts are tricky little things full of pitfalls that members need to be aware of, especially if a quality claim arises. The following is not an exhaustive list, but does pinpoint some of the key pitfalls:
- Express incorporation of the seller’s terms and conditions – this can often occur simply from the seller inserting a clause directing the buyer to their general terms and conditions. Beware; these can contain some nasty surprises!
- Law and jurisdiction. Dependent on the terms, buyers can find themselves in unfamiliar and expensive jurisdictions which are often more friendly towards the domestic sellers than the international buyers.
- Restrictive time limits for notification and commencement of proceedings. It’s not uncommon for claims notification to be required within 15 days - this is often barely enough time to get the results of any bunker samples. Similarly restrictive limits may be in force for commencement of proceedings – under English law time limits for commencement as short as 90 days are enforceable!
- Limitation and express exclusion of consequential loss – many contracts will limit damages to the price paid and exclude compensation for damage caused. There may also be an exclusion of liability if there has been any co-mingling of the bunkers!
- Samples. The golden rule in off-spec fuel claims is that the party with the best evidence will win, so ensure that there are adequate samples available.
When in doubt remember that the Club is on hand. We can comment on the terms of the contract and highlight any coverage issues.