Complacency can cost warns ITIC

Nov 04 2021

ITIC (International Transport Intermediaries Club) warns brokers and agents that allowing complacency to creep into their daily activities has the potential to cost them dearly.

A recent example concerned a shipbroker negotiating a short-term charter on behalf of their owner principal for whom the broker had worked for several years. As was usual, the broker used the rider terms of the owner’s head charter agreement to fix the sub-charter. This meant that the rider terms of the head charter would be identical to those in the sub-charter.


Under the rider terms of the head charter, the charterer was responsible for paying for the vessel’s hull to be cleaned if required and also for paying hire on any days the vessel was idle. 


Unfortunately, the broker had sent the charterers a copy of the rider terms from a different head charter agreement and not the terms applicable to this particular owner. Therefore, the terms in the sub-charter and those in the original owner’s head charter were different. 


Towards the end of the charter, the vessel was left idle for several days but the charterer refused to pay hire on those idle days claiming it was not required under the terms of the charter. Although the hull did not require cleaning, the vessel had lost 10 days ballasting to a port where cleaning could be carried out. 


The charterer agreed to pay for a hull inspection but would not cover the $75,000 the owner was demanding for lost hire citing it had not been agreed under the terms of the charter. Once it was discovered that the broker had given the charterer the wrong rider terms, the owner turned to the broker for recovery. As the broker had sent terms to the charterer that had not been agreed by the owner, there was very little defence. A final figure of $65,000 was agreed and paid in full by ITIC.


ITIC reminds intermediaries to remain fully aware of their actions and obligations and not to become complacent when making routine arrangements for long-standing principals. 


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