In shipping business, basic principles of the law relating to agency are extremely. In shipping business, many of the tasks carried out involve the relationship between agent and principal. It is crucial to perceive the rights, duties and liabilities that are a consequence of agent and principal relationship.

There is a quite difference between legal and non-legal uses of the term agent:

  • In the legal sense an agent is someone who does not act on his own account, but only as a legal representative of another person
  • In non-legal sense (ordinary usage) the term agent may loosely be used to describe someone who buys and sells goods or services on his own account; such a person is a principal regardless of the term used to describe the situation

Agency is the legal device by which one person (agent) may act on behalf of another (principal). Agent is one who brings his principal into contractual relationships with third parties. Contractual parties to the contract as arranged by the agent will be the principal and the third party. Agent is not a party to the contract. Thus, agent have no contractual liability to the third party under the contract.

In some shipping books, shipbroker and agent are be taken as having the same meaning. However, in real shipping world, tendency is to use the word shipbroker when considering negotiations where the principal gives authority for a firm offer to be transmitted to representatives of the other party, whereas the word agent is more commonly used when a function such as port agency is involved.