Shipbrokers must be aware of the necessary application of basic agency law. Shipbrokers must always work within their ‘warranty of authority’ as defined by their principal shipowner or charterer. Even if shipbrokers take on the mantle of an ‘agent of necessity’, they should always ensure that their principal ratifies their actions within time, otherwise the shipbrokers might find that they have become a principal, which will have several potentially devastating effects:
- Shipbrokers will almost certainly not be able to afford to become that principal by providing a vessel or a cargo
- Shipbrokers might be accused of misrepresentation
- Shipbrokers might not be able to defend their error
- Shipbrokers action might invite an expensive law suit
- the result of such action could ruin the shipbrokers financially
- irrespective of any legal action, the shipbrokers’ reputation would probably never recover.