MERLIN CORPORATE COMMUNICATIONS

Monday, 4 June 2018

Shipbroker liable for fixture error leading to damages in rising market

International Transport Intermediaries Club (ITIC) recently helped a shipbroker reduce its level of exposure to claims from a charterer for damages and loss of profits in a rising market, following a failure to pass on fixture options correctly.

The charter agreement between the parties contained an option for a second voyage, but the broker failed to pass on the charterer’s message declaring the second-leg option, which had to be nominated upon completion of loading on the first voyage. The owner refused to perform the second leg as the option had not been declared in time, and the market had risen in the meantime.

The charterer maintained that, if the owner did not perform, it would claim from the broker damages of $500,000 representing the additional cost of fixing a ship in the prevailing market.

Following negotiations with ITIC and the broker, the owner agreed to perform the second leg for an additional $275,000, which more accurately reflected what could have been achieved on the spot market. ITIC reimbursed the broker for the additional freight.

ITIC is managed by Thomas Miller. More details about the club and the services it offers can be found on ITIC’s website at www.itic-insure.com

For more information:
Charlotte Kirk
ITIC
Tel. +44 (0)20 7338 0150
Fax. +44 (0)20 7338 0151
charlotte.kirk@thomasmiller.com

Labels: claim for damages, failure to pass on fixture options, fixing alternative ship, ITIC, rising market, shipbroker

Wednesday, 15 May 2013

Invoicing error sees shipbroker saddled with bill for bunker supply

ITIC has revealed how an invoicing error led to a shipbroker being asked to foot the bill for a bunker supply amounting to more than three-quarters of a million dollars.

In its latest Claims Review, ITIC cites the case of a chartering broker which arranged a fixture for a voyage from the Black Sea to Singapore. The recap showed the identity of both the registered owner and the disponent owner with whom the negotiations had been concluded.

The disponent owner asked the broker to arrange the purchase of bunkers, and an order was placed with a supplier. The cost of the bunkers was $777,278. But instead of ordering the bunkers on behalf of the disponent owner, the broker mistakenly ordered them on the registered owner’s behalf, taking the name from the recap.

The bunkers were duly supplied and the ship signed for them. The bunker supplier invoiced the registered owner, care of the broker, for the cost of the bunkers. The invoice was sent to the disponent owner but was not paid when due. When chased for payment, the disponent owner replied, “Regarding the payment for bunkers, I have passed to the financial side and they should be arranging payment, the delay is due to our company currently being audited and will be ending in the coming weeks’.

When further requests for payment met with a similar response, the bunker suppliers instructed lawyers to collect the amount owed. When lawyers approached the registered owner they were told that the registered owner had never given any instructions for the purchase of the bunkers and that the responsible party should have been the disponent owner. If the bunkers had been purchased in the name of the registered owner, this was a misrepresentation on the part of the party which had provided the information to the bunker supplier.

Lawyers therefore turned their attention to the broker, claiming that it was responsible for breach of warranty of authority. There was no prospect of going after the vessel and the brokers entered a settlement with the bunker suppliers.

Copies of the ITIC Claim Review can be requested from: chris@merlinco.com

ITIC is managed by Thomas Miller. More details about the club and the services it offers can be found on ITIC’s website at www.itic-insure.com

For more information:

Charlotte Kirk

ITIC

Tel. +44 (0)20 7338 0150

Fax. +44 (0)20 7338 0151

charlotte.kirk@thomasmiller.com

Labels: bunker supply, Insurance, ITIC, out-of-court settlement, shipbroker

Thursday, 18 April 2013

ITIC highlights value of diligent debt collection

ITIC has highlighted the value of diligently pursuing the collection of shipping industry debts in today’s difficult economic climate.

In its latest Claims Review, ITIC notes that a shipbroker acting for charterers was owed $25,000 in commission by an Indian voyage charterer under a charter party which provided that the charterer would deduct the commission. Having written to the charterer and not received a response, ITIC ascertained from local sources that the charterer was in serious financial trouble. It was also rumoured that the charterer was about to receive a large injection of finance from a foreign investor.

A local lawyer was appointed to pursue the debt, and a letter was sent to the charterer stating that, if it did not pay the outstanding commission, winding-up procedures would be started via an application to the local court. Again, the charterer did not respond with an offer of settlement.

ITIC, as promised, began the winding-up process, and this prompted an immediate payment to the shipbroker by the charterer.

The ITIC Claims Review also highlights a problem of a different nature faced by a ship agent in Canada, which was owed more than C$70,000 by a local company which had been declared bankrupt. ITIC instructed lawyers to have the ship agent properly listed as a creditor, and although there were other creditors, aspects of the agent’s debt took priority over many of the claimants and ITIC managed to recover C$42,998 on behalf of the ship agent.

ITIC says, “The case shows the importance of ensuring that claims are properly filed in liquidations.”