A Contract to Repair a Vessel Is a Maritime Contract, but a Contract to Sell a Vessel Is Not.

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In this case, an insurance company sued Mercury Marine and First Choice Marine after a boat dropped off for repairs was stolen from First Choice’s premises.  The insurance company brought a subrogation claim, standing in the shoes of the insured boat owner.

Claims against Mercury arose from plaintiff’s allegation that Mercury orally directed the owner to have First Choice repair the boat.  The insurer sought to hold Mercury liable for First Choice’s alleged negligence.  Claims against Mercury included breach of bailment and breach of contract for warranty repairs, implied duty to perform repairs, and the warranty of workmanlike performance.

In deciding which law applies, the court held, “A contract for the purchase of a vessel is not a maritime contract. . . . A contract for repair of a vessel is a maritime contract.”  The court recited the maritime rule, “When a vessel is placed at a wharf or dock for storage and/or repairs, a bailment results for the mutual benefit of the owner of the vessel and the operator of the wharf or dock.”  The court further held, however:  “Under general admiralty law, bailment does not arise unless delivery to the bailee is complete and he has exclusive possession of the bailed property, even as against the property owner.”  Based on this principle, the court dismissed the bailment claim because First Choice, not Mercury, had exclusive possession of the boat.

Regarding the warranty claims, the court noted: “Since a contract for warranty repairs is a maritime contract, the Court will address this issue under admiralty law.”  The court concluded that the insurer stated a warranty claim under the admiralty rule that “the warranty of workmanlike performance is an implied warranty imposed on a maritime service contractor which requires services to be performed with reasonable care, skill and safety.”  The court found that the complaint adequately alleged that Mercury entered into an oral contract that triggered this obligation, subject to a possible limitation of liability defense that was not at issue at the dismissal stage.

Ace American Insurance Co, v. First Choice Marine (M.D. Fla. 2010), available at:

http://scholar.google.com/scholar_case?case=3885827537491580651&q=%22Mercury%27s+sole+and+exclusive+obligation+under+this+warranty+is+limited%22&hl=en&as_sdt=40006

 

Topics:  Breach of Contract, Contract Formation, Shipyard Industry, Vessels

Published In: General Business Updates, Insurance Updates, Maritime Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Trenam Kemker | Attorney Advertising

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