Both the owner and the charterer may each instruct a chartering shipbroker, who will have the best knowledge of the current chartering market. Shipbrokers will often specialise in different types of ships such as oil tankers or general cargo ships. This is both because the owners and charterers of these ships are different and because the standard form contracts which usually form the basis of the negotiations and tailor- made clauses vary according to which type of ship is involved. There are numerous standard form charterparties, both time and voyage, and in each case, for different types of cargo.
Both the NYPE form 1946 and the Asbatankvoy charterparties are now old forms. Although they are both still widely used, they are often extensively amended and numerous additional typed clauses will probably be appended to the standard form. The broker will advise its principal on how to tailor the standard form to the individual transaction.
Once the charterparty has been concluded its terms will usually be recorded in a fixture recap, that is an email or other written form recording the terms of the charter party and referring to any standard form or pro forma charterparty in relation to another vessel agreed.
Sometimes there may be an issue as to whether the amendments recorded in the fixture recap and the standard form contract or pro forma contract incorporated into the fixture can be reconciled. It will be a question of construction as to whether there is an inconsistency between the negotiated terms and the incorporated standard terms or pro forma, in which case the former may prevail, or whether the latter terms qualify the former, in which case they must be read together.
It is important to determine whether the broker has contracted as agent for its principal or in its personal capacity as principal. If the broker acts as an agent for its principal, there will be an agency contract between the broker and the party on whose behalf it is acting. That contract will impose obligations on the broker to act, for example, with reasonable skill and care. If the broker fails to comply with those obligations, it may be liable to its principal in either contract for breach of the agency contract or in tort for breach of its tortious duty of care. The principal can choose whether to sue in contract or in tort depending on which cause of action is most favourable because, for example, the damages may be assessed differently, the time limit is different in contract and tort and jurisdiction may be different. Where the claim in contract and in tort is concurrent and both the contractual and tortious duty are coextensive, as they are both to exercise reasonable skill and care, the broker could rely on the defence of contributory negligence.
Provided that the broker has actual or ostensible authority to act on behalf of its principal, when the charterparty is concluded, its principal is bound to the other party to the charterparty. The broker has no obligations under the charterparty as it has acted merely as agent. Were the broker not to have authority to contract on behalf of its principal, it could not bind its principal to the charterparty and would be liable to the other party in tort for breach of warranty of authority. The broker can also incur liability to the other party to the transaction if it makes a misrepresentation in its personal capacity rather than on behalf of its principal, for example, as to the creditworthiness of its principal.
The broker is paid commission and the charterparty will usually contain a clause providing who will pay what commission to which broker. The broker is not a party to the charterparty contract. If the party obliged to pay the commission fails to do so, then if that party is the broker’s own principal, the broker can sue its own principal in contract under its agency agreement.
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