International Transport Intermediaries Club (ITIC) has launched an e-learning seminar to help ship managers successfully negotiate the pitfalls they may encounter when asked to sign letters of undertaking.
Particularly in today’s difficult financial markets, ITIC is frequently asked to comment on letters of undertaking which ship managers are asked to sign. The e-learning seminar, conducted by ITIC legal adviser Mark Brattman, highlights some general points which ship managers should be aware of.
Letters of undertaking are traditionally documents provided by a bank or other lender or financial institution, and typically state that the ship manager will observe a number of undertakings relating mainly to claims priorities and the right to obtain security.
Mark Brattman says, “Ship managers must take care when asked to sign these documents. The original ship management agreement is with the owner, who remains the manager’s principal. The ship manager must not agree to any letter of undertaking unless the manager has the owner’s full permission to do so, because some of the terms can be contrary to the interests of the owner.