Do you know what I mean when I refer to prima paint? Hint: it doesn’t come in a can.
If you are using a salvage contract, whether it is a BOAT/US Open form, a MARSALV form, or some other contract, it likely has an arbitration clause. Arbitration clauses are very useful, as they can greatly reduce your costs, and the time involved with fighting for a salvage award in Federal Court.
So, what has paint got to do with all that?
Prima Paint is legal short hand that refers to a famous US Supreme Court case brought by the Prima Paint Corp. against the Flood & Conklin Mfg. Co. in 1967. What they were fighting about isn’t so interesting, but how they were fighting is very important to arbitration clauses. Prima Paint and F&C Co had a contract that went sour, and that contract very specifically stated that
“[a]ny controversy . . . arising out of this agreement, or the breach thereof, shall be settled by arbitration in the City of New York in accordance with the rules . . . of the American Arbitration Association.”
F&CM Co. had acted so badly (and they really did) that Prima Paint attempted to avoid arbitration and sued to have the entire contract tossed by the Second Circuit Court. Their claim was that F&CM had entered into the entire contract fraudulently from the get-go, so that even the arbitration clause wasn’t enforceable. The argument goes like this: if the contract was entered into due to fraud, [click to continue…]
