Protective clause. In any contract, the parties to the contract have obligations to perform.
Should one party not carry out his obligations, he may become liable to compensate the other party. Some failure to carry out obligations may be beyond a party’s control. Accordingly, “protective” clauses are contained in contracts, such as in charterparties, to exempt one or both parties from becoming liable or which reduce liability. Protective clauses could operate to affect both parties. An example of such a “general protective clause” is the “Exceptions clause” in the time charterparty ASBATIME:
“The act of God, enemies, fire, restraint of princes, rulers and people, and all dangers and accidents of the seas, rivers, machinery, boilers and steam navigation, and errors of navigation throughout this Charter, always mutually excepted.”
Protective clauses can also operate to affect only one of the parries, usually the shipowner. For example, in GENCON it is stated:
“ . . . the Owners are responsible for no loss or damage or delay arising from any cause whatsoever, even from the neglect or default of the Captain or crew or some other person employed by the Owners on board or ashore . . .”
Protective clauses can also be called Exceptions clauses” because they exclude liability. Such exceptions or protective clauses become crucial when disputes arise between the parties and each party will attempt either to rely on or to prevent reliance on such clauses. One way in which a Protective clause may not operate may be if one party breaches the contract so severely that he loses the right to protection under the contract.
There is less chance of obtaining protection from Protective clauses if there has been negligence on the part of the party seeking to use the Protective clause.