Maritime Contracts regulate maritime operations and services. Maritime Contracts formation, procedures and interpretation are subject to maritime law instead of state law. Maritime contracts are subject to federal maritime jurisdictions, federal maritime rules and remedies. Moreover, if a contract is a maritime contract, that contract is subject to maritime law irrespective of whether the contract parties have chosen a different law in a choice of law clause on maritime contract.
An action to enforce a Maritime Contract can be brought in United States federal court under the court’s admiralty jurisdiction, without regard to the amount in dispute or the variety of nationality of the contract parties. Contrarily, non-maritime contracts are generally subject to state law, unless:
- contract parties are from different states
- one contract party is a foreign citizen and the entire claim is more than $75,000.
If a contract is Maritime Contract and subject to federal maritime law, this has a substantial effect on the formalities required to make the contract enforceable, the limitation period available to file a action on the contract, damages available for a breach of the contract and the availability of pre-judgment interest.
If a contract is Maritime Contract, it will also give the claimant the right to use special maritime remedies. Moreover, maritime contracts are unequivocally covered by Federal Arbitration Act in United States and Arbitration Act in England. Arbitration clauses in maritime contracts can be enforced under the federal standards in federal courts, rather than under state arbitration provisions. Traditionally, maritime contract jurisdiction has been outlined by reference on maritime contract for particular issues, rather than a legal formula. In 2004, United States Supreme Court expressed that a contract is a maritime contract if contract has reference to maritime service or transactions. Here below contracts has been considered to be Maritime Contracts:
- Ship Charters (Voyage Charterparty – Time Charterparty)
- Shipment of Goods by Sea Contracts
- Ship Repair Contracts
- Salvation and Towage Contracts
- Ship Pilotage Contracts
- Third Parties Ship Service Contracts
- Crew Employment Contracts
- Ship Insurance and Marine Insurance Contracts
- Ship Provisions Contracts
- Ship Container Lease Contracts
- Dredging Contracts
Even tough, some contracts may deal with ship or maritime matters, these contracts are not been considered as maritime contracts due to lack of a direct connection to actually operating or navigating ship for the movement of goods by sea or maritime services. Here below contracts has NOT been considered to be Maritime Contracts:
- Ship Sale and Purchase Contracts
- General Agency Contracts
- Ship Construction Contracts
- Ship Financing Contracts
- Ship Mortgage Contracts
- Flood Control Dredging Contracts
- Beach Replenishment Contracts
Mixed Contract is a contract that deals with both maritime and non-maritime matters, services and transactions. Some types of Mixed Contracts:
- Contracts for inter-modal shipping, with terms for ocean shipment, land or air transportation; certain services agreements, with terms for services both on or to ships and also for onshore services
- Contracts for sale and purchase of goods and ocean transportation of the goods
- Contracts for terminal services with terms for both stevedore services and warehousing services.
Generally, courts reject to exercise maritime jurisdiction over a mixed contract i.e. contract that was not wholly maritime. Even though contract execute maritime matters, incorporation of non-maritime matters in the contract would mean that contract would be subject to state law, not maritime law. Hence, that contract would not be subject to the federal maritime jurisdiction. Courts allow maritime jurisdiction over mixed contracts in two circumstances:
- Contract is primarily maritime. Contract will be treated as a maritime contract, even though contract may have some non-maritime provisions
- Contract’s maritime liabilities can be tried individually from the non-maritime ones
In order to distinguish if a contract is wholly Maritime Contract or a mixed contract, court check how the contract parties viewed the transaction and importance of the maritime aspects. If the parties treated the maritime aspects as incidental, then the court is likely to treat the contract as inherently non-maritime. If contract parties want to preserve maritime jurisdiction, maritime remedies, and maritime law, parties can state their intent in the contract by providing maritime aspects.
Maritime contracts do not require any specific formalities. Contrarily, non-maritime contracts require some formalities. Certain non-maritime contracts must be in written in order to be legally binding contracts. For instance, state law may obligate a contract for the sale of goods over $500 to be in written and signed by the party against whom enforcement is sought. Notwithstanding, a maritime contract for the purchase of supplies does not need to be in written at all, as long as the party seeking enforcement can prove the existence of the contract.