Page 24: of Maritime Reporter Magazine (April 2020)

Back to the Drawing Board © Vittaya_25/AdobeStock

Contracts are Overrated in Maritime y company has been around since 1875, and Sometimes they know and sometimes they don’t, but my answer today we actually still do things that were be- is effectively the same: “We are located in New Jersey, there- ing done in 1875. We still get calls from un- fore there is no need for a written contract. We always get paid.”

M derwriters to attend on disasters all over the Whether the new client is from Oman, or Virginia, that response place, and we are still asked to provide values always invokes images of the Sopranos, and they chuckle and on ships on a moment’s notice. they send the email and we are on our way.

Moreover, some of the companies that ask us to attend to those To the rest of the world this lack of contract may seem scary issues, in some form or another, also have been around since as hell, and sometimes people ask me if we lose a lot of money 1875. to people who do not pay. Weirdly, we rarely encounter a client

That results in a very smooth operational routine, where we get who does not pay. It is truly rare and those who do not pay end a call from one of those clients in the middle of the night, we pull up in a special category within our company. Remember, we are our pants on, step into the car and go out to see what is going on. based in New Jersey.

There is no discussion about compensation, there is no discus- Regardless, many years ago, after a number of those exchang- sion about contracts, and there is no discussion about retainers. es, I started to ponder the weirdness of the lack of contracts in

We simply go out. my company’s operations.

We do this not with one or two or three trusted clients; we It turns out there is something about contracts that led me to do this with dozens, if not hundreds, of clients, some of whom develop this little graph. To me it provided some personal clarity, may only call once every decade or so. We have no contractual but it actually has very wide implication and application.

arrangements with any of them. We do the job, send the bill and The little graph is shown in fgure 1 to the right.

get paid. In effect there are four quadrants.

Occasionally somebody calls for the frst time and wants us to Quadrant 1 is a project that has predictability, but you do not go on a job and timidly asks if we need a purchase order, or a know the client. This is where a standard contract may be of contract, or a retainer before we can start to move. Today we say: help. Hull and Machinery insurance and its associated contract “Send us a quick email that has the various contact info and that (the policy) is a good example of that. A client in this quadrant simply says you want us to go out to do this thing.” (We used to may be a midnight call for me, and I may pass on the contract, say send us a telex, and, for a decade or two, we used to tell them but our mention of New Jersey actually is a form of a contract. to send us a fax.) That email is very helpful because I generally Both parties know what to abstractly expect when the New Jer- cannot fnd a pen that works in the middle of the night, and to sey Soprano clause is invoked.

spell out a foreign sounding name on a bad telephone connection Quadrant 2 is a client you know and a project that has high is even more frustrating. predictability. It is the call in the night where the client knows

If there is a little more time, I sometimes ask the new client you will spend a certain number of days that will cost a certain a question frst. I ask them if they know where we are based. amount of money, but then there will be a communication that 24 Maritime Reporter & Engineering News • April 2020