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Supreme Court: safe-berth clause establishes safety warranty
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Supreme Court: safe-berth clause establishes safety warranty

The US Supreme Court on Monday affirmed a Third Circuit court opinion, holding that the plain language of the safe-berth clause in the parties’ sub-charter agreement establishes a warranty of safety.

In the final stretch of a tanker’s journey from Venezuela to New Jersey, an abandoned ship anchor punctured the tanker’s hull, causing 264,000 gallons of heavy crude oil to spill into the Delaware River. After compensation, Frescati Shipping Company, the vessel’s owner, and the US sued CARCO, the sub-charter, to recover their respective portions of the cleanup costs.

It was alleged that CARCO had breached a contractual “safe-berth clause” in the sub-charter agreement between CARCO and Star Tankers, the tanker operator that chartered the tanker from Frescati. The clause obligated CARCO to select a “safe” berth that would allow the vessel to come and go “always safely afloat.”

The Court looked at the textual language of the clause, holding that it imposed an absolute duty that amounts to a warranty of safety, even though the term “warranty” is not expressly invoked. In addition, tort concepts like due diligence have no place in contract analysis.