International Transport Intermediaries Club (ITIC) has launched an e-learning seminar to help ship managers successfully negotiate the pitfalls they may encounter when asked to sign letters of undertaking.
Particularly in today’s difficult financial markets, ITIC is frequently asked to comment on letters of undertaking which ship managers are asked to sign. The e-learning seminar, conducted by ITIC legal adviser Mark Brattman, highlights some general points which ship managers should be aware of.
Letters of undertaking are traditionally documents provided by a bank or other lender or financial institution, and typically state that the ship manager will observe a number of undertakings relating mainly to claims priorities and the right to obtain security.
Mr Brattman said: “Ship managers must take care when asked to sign these documents. The original shipmanagement agreement is with the owner, who remains the manager’s principal. The ship manager must not agree to any letter of undertaking unless the manager has the owner’s full permission to do so, because some of the terms can be contrary to the interests of the owner.
“If the letter of undertaking substantially alters the ship management agreement, the manager may need to consult with its professional indemnity insurer. It is important to remember that, in signing such an undertaking, the manager could be giving up its right to recover funds that it may be owed.”
The e-learning seminar guides ship managers through the purpose of a letter of undertaking, key issues to consider and how a letter of undertaking might affect cover with ITIC. A mock ship managers’ undertaking wording can be accessed and read in conjunction with the seminar.
For more details of the seminar, go to www.itic-insure.com/knowledge-zone/e-learning-seminars/ship-managers-undertakings/#seminar