Liability Insurance

Property Insurance

Control of Well Insurance

Coverage Disputes

Onshore and Offshore Construction Contracts drafting reviewing and updating the full suite of operators' standard contract terms.

• Front end engineering and design
• Services (feed)
• Supply/procurement (purchase order)
• Engineering/construction, installation and commissioning (epic)

As lawyers we have been involved in the offshore oil and gas industry for over 25 years. Much of the standard wording now in use originated from pen. We have developed (together with oil companies) a series of tried and tested wordings, which we continually update.  Our philosophy accords with the tenets of iso 9000 in that the negligent party pays for their own negligence.

We have particular experience of the following contracts:

• Seismic surveys & drilling contracts
• Pipeline construction, trenching & laying
• Anchor handling, supply & standby vessels

The typical situations we are looking at are:

Contracts for the design/construction/installation of a component, to be delivered onshore where following installation the component is found to be damaged.  Where damage results from:

Error in design

Faulty workmanship

Unsound materials

All contracts contain general provisions describing the quality of the work to be performed.  In law these will be considered to amount to general warranties.  These general warranties can be useful as they are generally unlimited both in extent and duration.   For instance the contractor will ensure that the work shall meet the specifications and the company’s requirements/in every respect be fit for the purpose/all materials shall be sound and of good quality/contractor warrants it's an expert, that the work shall be of good quality completed diligently and expeditiously/company places full reliance on contractor/contractor has a full understanding and knowledge of the design criteria.

Defects discovered outside the warranty period can usually be based upon the contractors failure to comply with the above undertakings.

The guarantee provision provides a guarantee against certain defects. 

The guarantee is limited in extent to the cost of “making good” and limited in duration to 12 or 24 months. The effectiveness of this provision will depend upon whether the guarantee differentiates between pre and post (on-shore) delivery and how defects are defined (which affects the survivability of the general warranties).

Offshore recovery costs provision normally appears within the guarantee clause and is expressed as being applicable to all defects discovered in the guarantee period. 

This provision specifies that the oil company will bear the full costs of retrieving the defective component from the offshore installation and returning it to the onshore point of delivery for the purpose of the contractor “making good”.  Likewise the cost of returning the repaired component offshore and reinstallation is to be borne by the company.

The consequential loss provision was intended to exclude recovery of those losses that fall within the second limb of Hadley v Baxendale, however over the years this has become bastardised.

The financial cap on liability.  This is the contractors catch-all safety net, usually expressed in terms that notwithstanding any other provision in the contract the contractors liability in aggregate under this contract shall not exceed [so many multiples of the] total contract price.

The consequential loss exclusion acts as a mutual undertaking that neither party shall be liable to the other for any consequential losses.  These vary enormously from the strict - where they exclude all remedies other than the cost of “making good”, to the more restricted - where they exclude big-ticket losses such as loss of production, business, business opportunity, trading revenue and loss of profit.