A Friday afternoon failure

A ship was fixed for a trip timecharter for two voyages, with an option for a third. In accordance with the recap the option was to be declared by the charterers on completion of loading on the second voyage. The fixture had been negotiated via brokers in two different offices of the same broking company.

The third trip option was exercised by charterers on a Friday afternoon. The broker who received the message forwarded it to his colleague in the other office. Unfortunately, that broker did not immediately pass it on to the owners.

The ship completed the second voyage on the Sunday but it was not until Monday that the message declaring the option was passed on to the owners.

By Wednesday the owners stated, via the broking channel, that because they had not received the notice until the day after the loading had been completed the declaration was invalid and that they expected redelivery of the ship on completion of the second voyage.

The spot market at the time was extremely volatile but rising. Therefore the owners wanted the ship redelivered. The charterers clearly wanted to retain the ship to maximise the profit from the final voyage.

The market however changed again and after a week owners confirmed they would allow the third voyage. Both parties reserved their position. The business available to charterers was, by this stage, less profitable than at the time they had declared the option. They ultimately claimed the lost profits against both the owners and the brokers.

The brokers argued that the majority of the delay was caused by the unreasonable conduct of owners in refusing to agree to the third voyage. A settlement was ultimately agreed, with the broker’s contribution reflecting their delay in passing on the message but not the subsequent fall in the market.

Time sensitive messages should always be followed up with a telephone conversation to ensure they have been received and acted on.