Buyer beware

A shipbroker was asked to assist a buyer to place a bid in a judicial auction. Before proceeding the shipbroker was asked what their fee would be. The shipbroker said “typically our fee is 1% of the sale price at auction but are willing to discuss”. The buyer responded “if we buy the ship then 35% of your 1% is to be returned to us”. The shipbroker agreed. The buyer’s bid was successful in the auction. The shipbroker was entitled to commission of US$ 75,000.

Although the shipbroker had forwarded the auction’s “terms of sale” which stated that it was for buyers to pay commission, the buyer, who had not previously purchased a ship in a judicial auction, said they only agreed the commission on the basis that the shipbroker would be paid by the seller. Although they accepted thatthe shipbroker should be paid something for their work they offered a much smaller commission than what was truly owed. The shipbroker asked for ITIC’s assistance.

Ultimately, a settlement was reached with the owner making a payment very close to the original commission agreement.