An error in a chartering deal by shipbrokers led to an insurance payout of $45,000.
UK insurer International Transport Intermediaries Club (ITIC) revealed in its latest claims review that the wrong phrase had been used to describe a shipowner’s wishes.
The error highlights the need for clearer communication between brokers and owners, ITIC said.
An unnamed shipowner had requested “free despatch” in a message to its broker, implying no compensation for quick operations.
A “critical” communication error by the broker, however, meant the request was inaccurately recorded as “half despatch” in the recap document, ITIC added.
The shipbroker typically represented charterers in trades where half despatch agreements were common.
In these deals, the vessel owner compensates the charterer at half the demurrage rate for early completion of ship operations.
“Although the owners were quick to point out the mistake, a stand-in broker, who was substituting for the original broker, agreed that owners had asked for ‘free despatch’ terms,” the insurer said.
This broker did not update the charterer.
After the voyage, the charterer expected to be compensated, but the owner stuck to the free despatch terms.
Prudent to pay up
The charterer then sought compensation from the broker.
“In reality, the owner should have paid the despatch and then they should have sought a recovery from the broker,” ITIC explained.
“However, as it was obvious they would be successful in such a claim it was deemed prudent just to settle the matter directly with the charterer for $45,000 to avoid higher legal costs and potential litigation,” the insurer said.
The amount was reimbursed by ITIC.
Mark Brattman, claims director at ITIC, stressed the importance of accurate and clear communication in maritime contracts to prevent such costly disputes.
“This case serves as a critical reminder of the need for meticulous attention to detail during all phases of negotiation and agreement,” he said.
“It is critical to ensure that all parties — including temporary replacements — are fully aware of the terms the parties intend to agree, which is essential to avoid misunderstandings and expensive legal claims,” he said.
ITIC is recommending regular training for brokers on contract terms, as well as the use of checklists.
