A double booking

A chartering broker arranged a Contract of Affreightment (COA) between a Japanese owner and an American charterer (the first charterer). Under the terms of COA the owner had to offer one ship per month to the first charterer, who had a minimum obligation to make 8 shipments in a year.

The broker received a nomination from the owner. By this time the first charterer had already met the minimum requirement under the COA, had no obligation to accept the new nomination and said he did not require the ship. The first charterer did have a cargo but it had been purchased from another trading house (the second charterer) on CIF terms. The second charterer also had a contract with the same owner through the same broker. The second charterer had nominated the cargo under their own contract with the owner.

Unfortunately, the broker’s operations department made a mistake and thought the cargo had been nominated under the first charterer’s COA. In effect the same cargo was booked twice on the same ship.

The owner was unsuccessful in obtaining an alternative cargo to fill the extra space on board and claimed the full freight they had not received on the booking from the broker, less the broker’s commission. ITIC argued out that the claim for freight did not take into account saved expenses, such as the time and cost involved in cargo working; these costs were deducted. A settlement of USD 70,000 was finally agreed.