Management Fee

The other clauses in the agreement relate to the way in which the management contract itself will be carried out.  For example Clause 6.3 is most important as it provides that all insurance policies will be in the names of both owners and managers, this means that both parties have the benefit of the protection, insurance it will become clear how important this is. Clause 7 provides for the separation of the ship owners money from that of the Manager. The manager is paid for its services by way of a Management Fee (Clause 8.) Clause 9 describes how the management of the vessels shall be budgeted and how the Manager will report to the owner on financial performance. Clause 11 contains some very important responsibility clauses. These should be studied but in brief, they provide that the managers are not liable for any loss etc. unless they were negligent, that the owners will indemnify them against such losses.  The ‘Himalaya’ clause (11.4) provides that the manager is acting as the agent of the shipowner and has the same protection as the owner in respect of any applicable avoidance or limitation of liability. The remaining clauses relate to administration, termination, law and jurisdiction and are self explanatory.  There is provision for a series of Appendices A to D which are not reproduced but which provide space for recording the vessels’ details, crew details, budget information etc. A number of the issues dealt with in this introductory lesson will be dealt with later in the course in much greater depth.  The purpose at this stage is to give a general overview of all those matters that fall within the overall responsibility of the ship manager. At the top of any ship owning or operating corporate structure will be a Board of Directors headed by a Chairman or President and a Managing Director. It is their task to determine the overall policy of the business and future direction that the company will take.