Use of E-mail by Agents - Risk Management

Approximately 80% of all business communications are electronic. Agents (which terms includes ship agents, shipbrokers, ship managers and forwarding agents) will send many important documents by e-mail, including manifests, bills of lading, charter parties, recaps, tenders, pro formas, NORs, notices to master, demurrage statements and MOAs.

With the greater speed, convenience and informality of e-mail communication comes greater risks of errors. This article attempts to highlight the most common areas where mistakes can be made, and what can be done to avoid them.

INCORRECTLY SIGNING OFF

Agents must make it clear when communicating with others that they are not contracting on their own behalf, but on behalf of a principal (whether the principal is named or not). As a Club, we have seen that, while agents have no difficulty in remembering to sign off other communications “as agents for XYZ Company”, the informal nature of e-mail seems to inhibit agents from signing off properly. If you do not sign off as “agent only” and the third party has genuine reason to believe they are contracting directly with you (because the principal is undisclosed) you could be held liable for any losses that party incurs as a result of entering into the contract. Ship managers, who order numerous goods and services for ships under their management, and are often more substantial entities than the owners of the ships they manage, are particularly vulnerable.

Members who are usually careful to draw attention to the existence of their standard trading conditions by means of footnotes on their headed paper, faxes and invoices, do not always take the same precaution when sending e-mails. As more contracts are now completed by e-mail, ITIC is often faced with situations where it is difficult to prove that the Member’s standard trading conditions were incorporated at the time the contract was made. The incorporation of standard trading conditions can make the difference between enjoying a limit of liability or facing unlimited liability.

Incorporate an automatic sign-off making agency status clear and incorporating standard trading conditions in every e-mail sent, although legally, the fact your terms and conditions are referred to may not in itself actually guarantee their incorporation into the contract.

NON RECEIPT (OR ALLEGED NON-RECEIPT)

Apart from reliance on unknown ISPs, the internal system at either the sending or receiving end of the message could be down because of maintenance, repair or infection by a virus. This will not always produce a “fail” report.

An example of this occurred when a ship broker was instructed by his principal, the charterer, to confirm re-delivery of a ship to its owner. He sent the NOR to the owner’s broker by e-mail, and requested an automatic “confirmation of receipt”. The owner’s broker received the message from the charterer’s broker but, when he viewed it, it was blank. He assumed that it had been sent by mistake before it was ready. Meanwhile, the system had confirmed receipt to the charterer’s broker, who assumed that the re-delivery notice had been received and accepted. The owner refused to accept re-delivery and a claim was made against the broker concerned.

Another problem occurs when a party denies having received an important e-mail. Unfortunately, there are occasions where the recipient of an e-mail denies its receipt because it is to his advantage to do so.

Send all important messages by both e-mail and fax. Have a crisis management plan in place for when your e-mail system fails and a plan ahead for when you know there will be “down time”.

E-MAILS TO WRONG PARTY

It is very easy to make a mistake when addressing a message. ITIC received a claim involving the broker for a charterer who had invited tenders for a long-term time charter. The broker involved accidentally addressed his principal’s bid to the entire mailing list. The principal’s bid, therefore, became known to the competing owners. The principal did not secure the business and claimed his bid was undercut as a result of its publication round the market.

In another case of mis-addressing, the agent for a liner company quoted a “special” rate to a potential customer of the line who would bring a large amount of business. Unfortunately the special rate was mistakenly sent to an existing shipper, who then demanded the same preferential rate in order to keep his business with the liner company.

Check the address very carefully and make sure there are no erroneous ccs or bccs. Attach an automatic “confidentiality” notice to the foot of all e-mails, stating that the message is only intended for the named recipient and that the unintended recipient is prohibited from using or relying on the information contained in it.

CORRUPTION

E-mails, when received, sometimes look very different from when sent, particularly where figures are concerned. This error has resulted in a large customs fine when the details of a cargo transferred from an e-mail to a bill of lading were found to be incorrect. The number of packages had been shown as the weight. The number of packages was 1,200, the weight was 18,000 kgs and the fine was US$35,000.

Insert a table into the e-mail when dealing with figures.

A shipbroker was negotiating the details of a fixture directly with two principals. The final clause on an offer ended in two separate paragraphs, each of two lines. When the broker forwarded the message, the system ignored the blank line between the paragraphs and forwarded it as a single paragraph of four lines. The recipient counter-offered on the basis that the last paragraph should be deleted. The counter-offer was accepted, but on the understanding that the “last paragraph” only referred to the last two lines.

Use numbered paragraphs.

LATE OPENING

In order to meet a shipment deadline on a feeder service, cargo had to be booked by twelve noon. The agent to the feeder operator, however, went out to lunch without checking his e-mail messages until his return at 2 p.m. The booking had been received in time, but it was too late to make arrangements for the sailing. The deadline for providing details of cargo intended for US ports of 24 hours before it is loaded on the ship imposed by the US Customs in 2002 makes it even more important that e-mail bookings are regularly checked.

An e-mail from a shipper for a cargo covered by a sea waybill was forwarded by the loadport agent to the personal e-mail address of the import clerk in the discharge port agent’s office. The shipper had not been paid as promised, and was exercising his right to stop delivery of the cargo. Unfortunately the import clerk had left the office through sudden illness, and by the time she returned to her desk the cargo had been delivered.

Have more than one person monitor all incoming e-mails, either by routing all messages to a central mailbox or by having a system in place where personal e-mail boxes are automatically monitored during planned and unplanned absences. Do not leave personal e-mail boxes on the system for people who are no longer employed. You will be held liable if a deadline is missed.

RE-USE OF PREVIOUS E-MAILS

It is common, when producing charter parties to use previous clauses or even entire charter parties “with logical amendments”. However, by using “old” e-mails there is a risk that mistakes can occur.

An example of this occurred when a fixture was made incorporating special terms for the “South bound” journey only. The charterer’s broker used a previous clause which included the special terms for the “North bound” journey as well. When the owner claimed the additional hire, the charterer declined to pay until the terms of the charter party were brought to their attention. A claim was then made against the charterer’s broker.

It is vital to ensure that all databases, templates and other documents or clauses you may wish to re-use are continually updated and checked thoroughly before being sent.

LIBEL

Some of the biggest names in British business have been found guilty of libel as a result of comments made by their staff in internal and external e-mails. Both British Gas and Norwich Union Life Insurance have had to pay substantial damages to competitors because of defamatory remarks made by employees in e-mails.

Companies are vicariously liable for statements made by their employees. Therefore it is important that the employer has an e-mail policy which all the employees are made aware of and abide by. An exclusion clause stating that the views expressed in the e-mail are those of the individual sender and not the company’s may assist in some cases.

CONCLUSION

We must all strive to manage e-mail in a responsible and businesslike manner. Most of the problems set out in this article could have been avoided by putting in fairly simple safety systems. Above all, despite their informality, it is of the utmost importance to always think of emails as proper business communications.