P&I Club denies authorising correspondent to settle

A marine surveyor and occasional P&I correspondent was requested by a P&I Club to attend on board a ship to survey a cargo of 2,000 metric tonnes bulk fertiliser, which had been contaminated by residues from a previous cargo.  The correspondent and the cargo interests reached agreement on a depreciation allowance of US$ 22 per tonne.  The correspondent, after several telephone conversations with the P&I Club, obtained verbal agreement to the compromise, and made a written offer of settlement to the cargo interests, which was accepted. 

When the cargo interests submitted their claim for US$ 44,000 to the Club, the Club refused to pay alleging that the correspondent had no authority to make the offer of settlement.  Not unnaturally, the consignees sued the P&I Club; they also sued the shipowner and the correspondent.  In spite of strenuous efforts to get the Club to see sense, the case went to court. 

ITIC appointed lawyers to defend the correspondent and, aided by the submission of the correspondent's contemporaneous notes, the court found that the correspondent had authority.

This was very much one man's word against another's and if the court had found otherwise, the correspondent would have had to pay the cargo claim, plus interest, plus the costs of some of the other parties involved (an estimated total in excess of US$ 100,000).  This is a good example (with hindsight of course) of how important it is for Members to obtain WRITTEN authority.