Harbour Authorities (“HAs”) who have the power to grant mooring licences need to ensure that the licences they are granting are fit for purpose, and that any licences granted are not contrary to various statutory provisions that govern the terms included in the licence. Usually a mooring licence is made between a commercial entity (the HA) and a third party consumer. Even where it is not (i.e. from an HA to a commercial mooring provider) it is preferable to comply with the requirements below (particularly as they are likely to be onward licensing to third party consumers).
One common pitfall of mooring licences is the exclusion clauses either not being fit for purpose or not being as effective as they could be for the purposes of protecting the licensor (the HA).
An exclusion clause is a provision in a contract that aims to limit or exclude the legal liability of one party. These clauses are often used to manage risk, particularly in situations where negligence may lead to claims for damages.
Exclusion clauses must comply with specific legal standards to be enforceable. The Unfair Contract Terms Act 1977 and the Consumer Rights Act 2015 set out the requirements for the validity of such clauses. Under the Unfair Contract Terms Act, it is not possible to exclude liability for death or personal injury resulting from negligence. The Consumer Rights Act applies when a trader/commercial entity is dealing with a consumer and ensures that any clause that looks to exclude liability is fair and reasonable.
Specific clauses of the Consumer Rights Act that need to be considered are:
- Section 49(1): states that every contract to supply a service is to be treated as including a term that the trader must perform the service with reasonable care and skill. This will be inferred if not included in the express provisions.
- Section 62: provides that an unfair term of a consumer contract is not binding on a consumer. A term will be considered to be unfair if it causes a significant imbalance in the parties rights and obligations under a contract to the detriment of the consumer.
When considering whether a term is fair, a court would take into account:
- The nature of the subject matter of the contract;
- The circumstances existing when the terms were agreed; and
- All other terms of the contract or of any other contract on which it depends.
It is important to draft exclusion clauses carefully to ensure they are clear and unambiguous. Vague or overly broad clauses may be deemed unenforceable by courts. The clause should explicitly state the limitations of liability and be incorporated in the contract effectively.
Practical points to protect the mooring licensor
When assessing a HA’s liability under a mooring licence agreement there are various factors that can be considered which will provide the HA with the most protection possible should it find itself in a position where the HA has to show that liability sits with the licensee rather than itself.
- All year moorings: if a HA markets a mooring for “all year” use it must be capable of withstanding winter storms. The frequency of intense weather events is increasing and HAs are unlikely to be protected if a mooring fails that has been marketed as “all year” and does not have a requirement to remove vessels from it for certain months of the year. Unless a mooring is definitely suitable for year round use it should not be marketed as such. Consideration should also be given to whether any vessels wishing to use ‘year round’ moorings can actually obtain insurance to do so.
- Who installs the equipment: generally, if the mooring equipment is installed by the HA, it will have the liability for ensuring the equipment is serviceable. Section 49(1) of the Consumer Rights Act 2015 stipulates that the HA has performed the service with reasonable care and skill. Where the chains and buoys are provided by the licensor (HA) and the mooring strops etc. are provided by the licensee, the HA must make sure that this is made clear on the face of the agreement. If equipment provided by the HA fails, it is likely the HA will be liable. The HA will also need to ensure that the equipment it provides is inspected and maintained to a suitable standard.
- Unambiguous drafting: when deciding whether a term is fair, the court will start with the normal meaning of the words in the licence (taking into account all of the circumstances of the agreement). As such, it is really important to make sure there are no grey areas in mooring licences. Any terms that refer to the liability of the parties in respect of the installation of the moorings, repair or removal of moorings must be made very clear. It is less important who is responsible for each action, than ensuring the agreed obligations for each party are clearly and expressly recorded.
- Keeping records of maintenance: Having entered into a mooring licence, it is imperative that HAs keep detailed records of any repair, maintenance and servicing that is carried out. This will become important if a mooring fails because it shows that the HA has acted with reasonable care and skill, and may provide the HA with protection against any claim that is brought against them.
- Written records regarding the standard of installation at start of licence: it would be best practice for HAs to also consider having a written agreement with the licensee in respect of the standard of the installation at the outset of the mooring licence. While this does not guarantee that liability can be avoided, it will go some way to providing evidence that the HA has acted with reasonable skill and care.
For more information or advice, please contact Emily Woof or Vanessa Kibble.
