Broker

Alternatively, let us assume that the SHIPOWNER offers his ship to BROKER A at US$ 25 per tonne, but on this occasion BROKER A mistakenly passes on the offer to BROKER B at US$ 24 per tonne, who in turn passes the offer at US$ 24 to the CHARTERER. Again the CHARTERER accepts. There is still no contract between the SHIPOWNER and the CHARTERER, and BROKER B is still liable for breach of warranty of authority, but this time without negligence. BROKER B may have the right to proceed legally against BROKER A for passing an erroneous offer, but may face problems in gaining appropriate recompense for the reasons detailed above. The two principals could insist on the contract being fulfilled in which case the broker’s liability would be for the difference between the authority given by the Owner and the acceptance given by the Charterer. The breach of warranty could be on an item far less easily apparent than a dollar difference in the rate and may, therefore, not come to light until the ship’s voyage is well advanced. The principle, however, remains the same in that the broker from whom the injured party received the erroneous offer is responsible for the damages the principal suffers. This may seem very harsh in the case of ‘without negligence’ as the broker being held responsible will have acted at all times in good faith and meticulously passed on such offers as he or she received from the errant broker. How very much more unfair, however, it would be to the injured party if action against the nearest broker was not the accepted legal route particularly as the broker who initiated the breach may be in another country. The injured principal was completely innocent and what the law is really saying is that a broker has to satisfy himself of the bona fides of those with whom he or she is dealing.