New year’s resolution: Update your contracts

from B.C. Tugboat 2020

MS Regatta: Refreshed and ready to go

By David Jarrett, a Vancouver lawyer with Bernard LLP

Although many people have abandoned their new year’s resolutions hours or even minutes into a new year, there is no better time to resolve to review your organization’s contracts and terms and conditions. Periodic reviews can ensure they are effective and properly protect your best interests. David Jarrett

Depending on the nature of your work, your contracts may include bills of lading, contracts of affreightment, towing contracts, ship-handling contracts and other carriage documents. You may also have terms and conditions that you say apply to all of your business dealings. In addition, you may use purchase orders in the course of your business. All of these should be periodically reviewed to ensure that they contain clear terms and reflect the current state of Canadian law and are consistent as a whole.

Ideally, contracts clearly set out each contracting party’s obligations for simple things such as payment terms and interest rates, as well as division of responsibilities for risk and insurance. If your contracts have not been reviewed in a very long time, they may contain antiquated language, references to statutes that have been repealed or replaced on unenforceable interest rates on

If your contracts have not been reviewed in a very long time, they may contain antiquated language, references to statutes that have been repealed or replaced on unenforceable interest rates on unpaid amounts owing.

unpaid amounts owing. Unfortunately, without proper periodic reviews, issues with contracts are usually only discovered after an incident or when they are otherwise found wanting in trying to secure payment or deny responsibility for a loss.

Periodic contractual review is part of a healthy risk management strategy and beats the alternative of uncovering issues after an incident or when trying to collect on an unpaid account.

Properly written contracts refer to the current state of the law and are more likely to be seen as unambiguous and enforceable by a court. Clear contractual terms can also serve to limit liability or otherwise modify or eliminate common law duties. They can also assist your insurance broker in obtaining cover at the best available rates.

As courts often narrowly interpret contracts against the party seeking to rely on them, it is important to make sure that the terms are clear, consistent and unambiguous. It is also important to make sure that the parties have actually agreed to the contractual terms. Standard terms and conditions can form part of a contract by express agreement, prior course of dealings between the parties or by custom of the trade. As such, it is important to ensure that your standard terms and conditions that may be referred to in other contractual documents are also reviewed from time to time.

We strongly suggest that you add a periodic review of your contractual documents and terms and conditions to your list of 2020 resolutions and contact your counsel to assist.