ON THE HORIZON 2026 | The Pitfalls of Bespoke Amends to Standard Forms

Introduction

The shipping industry and, in particular, the English legal community, have invested significant resources and time in developing standard form charterparties. Whilst not always perfect, these have evolved over many years, with input from players across the industry and through multiple iterations to ensure that the forms reflect the realities of modern commercial shipping. As a result, there are numerous textbooks providing detailed commentary on the language and meaning of specific forms, derived from a wealth of case law on the precise language in question.

However, it is rare to see parties contract entirely on the basis of an unamended standard form. The commercial realities and practicalities of each individual fixture usually dictate at least some amendments, additions or deletions. Whether the terms have been amended by a recap, supplemented by a set of rider clauses, or altered through a series of strike-throughs and additions to a BIMCO form, changes to the standard form charterparties are common and indeed necessary in the industry.

A departure from the language of the standard forms, however, means a departure from the certainty and comfort of well-established wording that is often clearly explained in the case law and industry textbooks.
This article examines some of the common pitfalls that arise from such amendments and how parties might avoid them.

Conflicting clauses

The addition of bespoke amends to standard forms regularly leads to parties introducing their own terms which, it later transpires, conflict with a clause in the standard form.
This is easily done. By way of example, it is very common for charters for, say, bulk carriers or tankers, to be concluded by way of an email recap that refers to an industry standard form charter, specifies certain changes to that form and also incorporates a set of rider clauses.

This means that the terms of the charter are found in three different places: the recap, the standard form and the rider clauses. The risk is that it becomes easy for parties to overlook conflicting provisions, particularly when charters are concluded at speed. A clause tucked into the back of the riders, or introduced late in the day, may directly conflict with a clause in the standard form, and the parties may not have had enough time to read all of the terms together and check for inconsistencies.

What happens then? Which clause prevails? These are often difficult questions to answer and lead to a complex process of contractual interpretation. The starting point is that an effort should be made to give effect to every clause in a contract, and a court or tribunal will often be reluctant to reject a clause altogether. The parties must therefore consider whether it is possible to read the clauses together such that effect can be given to both — for example, by treating one clause as limiting or qualifying the other. If, however, the two provisions conflict so directly that effect cannot fairly be given to both, one must be rejected and if so, which one is to be rejected? Is one provision a carefully negotiated bespoke clause specifically agreed between the parties and the other a standard clause? Is there a clause which states an order of precedence in the event of a conflict?

These are the types of questions that arise when conflicting clauses are inadvertently introduced into the standard forms, and the answer will ultimately turn on the language of the particular contract. This inevitably leads to disputes, with each party offering a different interpretation of the relevant, seemingly conflicting, provisions.

Clear drafting – BIMCO ”Boxes”

Another common pitfall arises out of the particular language used in bespoke amendments or additions; sometimes, this language is not sufficiently clear or can be read it more than one way.

The most striking examples of this problem often arise in the context of the BIMCO ”Boxes”. Many of the BIMCO standard forms provide a helpful series of ”Boxes” in Part I of the charterparty, which set out the key terms that are likely to be bespoke to each fixture, including the names of the parties and the vessel, hire rates, and the governing law and jurisdiction clause.

These Boxes may appear to be a simple form to be completed, and indeed in some respects they are. However, crucially, the Boxes form a key part of the contractual matrix and are typically expressed to prevail over other parts of the form to the extent of any conflict.

Ideally, therefore, parties populate the Boxes with short, straightforward entries. However, the underlying commercial arrangement often requires greater detail. The Box for hire rates is an obvious example. In the context of, say, an offshore support vessel on a SUPPLYTIME 2017 form, the parties may wish to include more than one hire rate - an operational rate, a standby rate, a bad weather rate and so forth - which necessitates a significant amount of bespoke language to define precisely when each rate applies. It is here that difficulties arise: if the language does not state precisely when each rate applies, it leaves room for the parties to disagree about its meaning at a later stage.

In particular, it is often the case that parties treat drafting within the Boxes differently from how they would approach drafting a full contractual clause (despite the fact that the Boxes carry the same contractual weight as any long-form provision). It is therefore common to see Boxes populated with abbreviations, shorthand and bullet points.

This type of informal drafting is likely understood by those drafting the contract at the time of contracting but, in future, leaves room for ambiguity and confusion, and ultimately for the parties to take differing views on the meaning of the clause. This can leave parties in a very difficult position with few ways to resolve their dispute other than to litigate.

Potentially no authority or commentary on bespoke clauses

As a final point, it is important for parties to bear in mind that bespoke amendments or clauses are unlikely to attract the same degree of certainty as the established language of the standard forms.

The BIMCO forms are accompanied by explanatory notes, there are numerous textbooks covering a wide range of standard form charterparties, and the courts have given decisions on the meaning of all manner of clauses drawn from the various industry standard form charterparties. These authorities may not, however, extend to the particular bespoke amendments introduced by the parties (particularly those that use informal language as discussed above), which means that meaning will be given in accordance with the usual rules of English law contractual interpretation. Once again, this leaves room for the parties to take opposing views regarding the meaning of the language.

Parties should therefore think carefully about whether a particular amendment, addition or deletion is truly necessary, or whether it would be best to retain the language of the standard form.

Conclusion

Amendments and additions to standard forms are both inevitable and often a commercial necessity. Parties will often need to amend standard forms to ensure they accurately reflect the particular agreement at hand. However, the key points to bear in mind when amending standard forms are as follows:

1. Any changes, whether these are deletions, additions or amendments, must be considered within the context of the charterparty as a whole, with particular attention given to whether any bespoke clauses conflict with existing provisions in the standard form.
2. Parties should be very careful about the language used, drafting with as much certainty and clarity as possible and avoiding undefined abbreviations, shorthand or ambiguous summaries.
3. Any departure from the standard form will mean a departure from the certainty and clarity afforded by the established language of that form. Parties should think carefully about whether any proposed changes are truly necessary.

SANDS regularly advises on the drafting of bespoke clauses for standard form charterparties, as well as offers advice regarding disputes arising out of the issues discussed in this article. Please get in touch with Hayley Broome and Max Lemanski if you need advice on any of these points.