Terms and Conditions for Shipbrokers

Many shipbroking companies, including most of the larger ones, have started using standard terms and conditions. ITIC has encouraged this development and has produced a sample wording - ITIC’s Terms and Conditions for Shipbrokers - which members can adapt to the needs of their individual businesses.

ITIC’s Terms and Conditions for Shipbrokers set out the services provided by the broker. They also cover the need to comply with sanctions, bribery, money laundering and other legislation. The broker’s obligation is to act with appropriate skill, speed and within the authority they are given. Other clauses deal with obligations of confidentiality and post fixture communications. Some of these obligations are, to some degree, implied by law but having them spelt out gives clarity and certainty.

Inevitably one reason to use terms and conditions is to limit the broker’s liability in the event something goes wrong. Without the protection of a contractual provision the broker can face wide and unlimited liabilities. The scale of liability is often disproportionate to the earnings of the broker. All other service providers in the maritime sector seek to limit their liability to a reasonable sum. Ship owners for example, enjoy the benefit of limitation of liability in relation to cargo and other claims. The industry standard Bimco Shipman 2009 contract limits ship manager’s liability to 10 times the annual management fee. There is no good reason for shipbrokers not to have similar protection if a negotiation goes wrong.

ITIC’s experience has been that the introduction of terms and conditions by brokers has worked well and urges those who have not done so to obtain the protection that standard trading terms can give. The ITIC Terms and Conditions for Shipbrokers are freely available to members at http://www.itic-insure.com/support/standard-trading-conditions/

Specimen Terms and Conditions for Surveyors, Consultants and Naval Architects produced by ITIC are also available to members free of charge at http://www.itic-insure.com/support/standard-trading-conditions/.