ITIC warns brokers to be wary of 'first-class charters'

The International Transport Intermediaries Club (ITIC) has advised shipbrokers against using the term ‘first-class charterers’ when conducting fixture negotiations, following a claim made by shipowners against one of its broker members in respect of the failure of charterers to perform a contracted fixture.

Writing in the latest issue of its Claims Review, ITIC explains, “Norwegian shipbrokers were involved in negotiations for a voyage charter. When entering the market, they described the charterers as ‘first-class’. It was also alleged that, during the negotiations, they made positive representations that the charterers had the money to perform the fixture. Ultimately, however, after the voyage had been fixed, the charterers did not perform the contract. The owners obtained an arbitration award but the charterers had no assets to satisfy it.

“The owners subsequently sued the shipbrokers, stating that they had been induced into the charter party because of misrepresentations made regarding the financial standing of the charterers. The claim totalled approximately $3m.”

ITIC discourages the use of the expression ‘first-class charterers’. It says, “If, as is often the case, brokers do not wish to identify the charterers, it is better to use the more neutral term ‘private clients’ than anything that could imply a financial reference. In this case, although many of the representations were oral, lawyers advised that there was a real possibility that the broker could be held liable. Accordingly, a settlement was agreed at $650,000.”

ITIC is managed by Thomas Miller. More details about the club and the services it offers can be found on ITIC’s website at www.itic-insure.com.

5th January 2009
ITIC Press Release PR0109