Short circuit

This claim involved one cargo owner, two brokers working at different offices, and three shipowners.

The cargo owners and shipowner number one had a COA. Shipowner number one was unable to use his own tonnage so contacted broker number one. Via that broker an agreement was reached with shipowner number two to carry the cargo at a freight rate of US$ 24.50mt.

Shipowner number two was talking to broker number two, who worked for the same company but in a different office from broker number one. Via broker number two an agreement was reached with shipowner number three, who would carry the cargo at a freight rate of US$ 21.75mt.

Owner number three nominated a vessel which was accepted by the cargo owner.

At this point, shipowner number two considered that he would make a profit of US$ 2.75mt. The cargo owner then asked to change the discharge port which would reduce the voyage distance and asked what the discount in freight would be. Shipowner number one passed the request to broker number one. Broker number one then contacted shipowner number two, who said that it would be a matter for owner number three to decide what discount was to be given.

Broker number one was aware that broker number two was travelling and so contacted shipowner number three directly. Shipowner number three, said the freight rate would be US$ 20.75mt (a discount of US$ 1mt).

Unfortunately, rather than re-contact shipowner number two (who would presumably have applied the same discount and passed a freight rate of US$ 23.50mt up the chain). The broker passed the rate of US$ 20.75mt to shipowner number one. This rate was agreed with the cargo owner.

When shipowner number two found he would not receive his profit of US$ 2.75mt he brought a claim against the brokers who had clearly failed in their duty to him. The total claim was US$ 168,000.