Shipbrokers Breach of Authority

Shipbrokers Breach of Authority

During ship fixing negotiations, the shipbroker is deemed to be acting with the full authority of the shipowner or charterer.

It is therefore important that the shipbroker obtains this authority before making offers or counter-offers. Alternatively, the principal must ratify the broker’s action within a set time period.

If the shipbroker does NOT have the authority, shipbroker may be sued by the person receiving or accepting the worthless offer. Such an action would be on the basis of breach of authority, either with or without negligence:

  • Breach of Authority with Negligence
  • Breach of Authority without Negligence

In the case of a breach with Negligence, the shipbroker passes on or accepts/agrees an incorrect offer, either by mistake or deliberately.

Should the mistake be made by another party and passed on by the shipbroker, then it becomes a breach without Negligence.

In both cases, the shipbroker can be liable for damages but when it is without negligence, the broker has the chance of recovery from the party who passed the incorrect information to him.

Chartering is a fast moving business, it is always possible to make mistakes, so most shipbrokers will be covered by professional indemnity insurance against negligence.

Before a shipbroker can trade on London’s Baltic Exchange, shipbroker must demonstrate that he is covered by professional indemnity insurance.