Uninsured subcontractor error exposes limits of marine survey contracts

An architect supplied incorrect information to the marine surveyor.

A wrong data point from an uninsured subcontractor has led to a $70,000 settlement and prompted the International Transport Intermediaries Club (ITIC) to warn ship surveyors about the financial risks of relying on third-party information without proper contractual safeguards.

The case involved a marine surveyor hired by a prospective buyer to confirm whether a commercial fishing vessel complied with requirements set by the maritime safety authority. 

The surveyor asked a third-party naval architect to provide technical data needed to calculate the vessel’s freeboard. 

The architect supplied incorrect information, leading the surveyor to conclude that the lightweight recorded in the ship’s stability book was wrong.

Based on this, the surveyor told the buyer that the vessel needed a full re-survey before entering service. 

In fact, the original stability documentation was accurate. The buyer paid for an unnecessary second survey and missed three fishing trips whilst waiting for approval, leading to claims for the survey cost and lost income.

ITIC reviewed whether lost earnings could be included in the claim and considered how a court might judge the surveyor’s exposure. 
The situation was complicated by the fact that the naval architect had no insurance and no contract with the surveyor, making recovery unlikely.

Mark Brattman, Claims Director at ITIC, said surveyors should ensure their contracts include limits on liability, exclusions for consequential losses such as loss of profits, and wording stating they are not responsible for errors in third-party data they reasonably rely on.

He also advised surveyors to check the insurance position of subcontractors and to be cautious when advising buyers on additional surveys that may delay operations.