International Transport Intermediaries Club (ITIC) recently helped a shipbroker reduce its level of exposure to claims from a charterer for damages and loss of profits in a rising market, following a failure to pass on fixture options correctly.
The charter agreement between the parties contained an option for a second voyage, but the broker failed to pass on the charterer’s message declaring the second-leg option, which had to be nominated upon completion of loading on the first voyage. The owner refused to perform the second leg as the option had not been declared in time, and the market had risen in the meantime.
The charterer maintained that, if the owner did not perform, it would claim from the broker damages of $500,000 representing the additional cost of fixing a ship in the prevailing market.
Following negotiations with ITIC and the broker, the owner agreed to perform the second leg for an additional $275,000, which more accurately reflected what could have been achieved on the spot market. ITIC reimbursed the broker for the additional freight.
Press Release: ITIC