Ship Broker Questions

Name two services provided by a chartering broker before a fixture, and two subsequent to that.

Before: find ships, provide recommendations, predict market After: prepare hire statements, assist in collection of hire, handle communication between parties, help facilitate amicable resolution of disputes. More info in Document 17: Shipbrokers

Are brokerage commissions customarily payable on: a) deadfreight? b) despatch? c) demurrage?

Brokerage commission payable on hire earned and paid. a. yes b. c. yes

Can you describe some differences between a charter party and a bill of lading?

Charter Party: contract for vessel service BOL: contract for carriage, document of title, receipt for goods

Name some major ship brokerage firms in the NY / CT. area?

Clarksons, Poten & Partners, Charles Webber, McQuilling, Odin Marine Group, Dome Chartering

How is the commission of the broker to be determined under the NYPE 93 c/p? What about the address commission, if any?

Commission on hire earned and paid.

Can a "firm offer" be modified by the person who made it, after it has been passed on to the recipient?

Legally yes, but ethically "it stinks." Altering because you received a better offer or market has changed is bad business. Exception: Extenuating circumstances; i.e. Ship breaks shorty after making offer and laycan cannot be made. Other party should understand.

Brokerage commissions payable to the charterer's broker are customarily paid by whom?

All brokerage paid by ship owner

A broker can be described as a special agent who negotiates contracts. What must a broker always have from his principal when negotiating? (Answer in one word)

Authority

In London, charter parties were historically negotiated on the floor of the Baltic Exchange. How are they usually negotiated in the U.S.A.?

Down at the bars, phone, or e-mail

While trading a ship on behalf of a charterer, having exchanged several offers and counteroffers by phone on the second day of the negotiations, your principal gives you an authority without a specific time limit, and then is tied up in a meeting. The vessel owner asks how long charterer's offer is "firm". Which of the following would you answer? -Reply by tomorrow. -Reply within a reasonable time. -Immediate reply. -For prompt reply

It depends. Very situational. Think about relationships. For imdeiate reply, puts pressure on other party. Reply by tonight on a Friday could ruin someones weekend.

A charter party is a maritime contract. In which court system in the U.S. is it enforceable?

Federal Courts Sect. 3, Art. 2 of Constitution, Maritime matters heard in federal court

If more than one broker is involved, what is the usual remuneration for each?

It is split

What is the usual consideration received by an owner under a charter party?

Hire under a time charter Freight under a voyage charter

Shipowner "Z" offers his vessel to a prospective Charterer in Japan overnight for reply by 10:00 A.M. the following day. Shortly after instructing his broker to make the offer, the Owner learns that his vessel has been delayed and will not be able to make the canceling date stipulated in the offer. The Owner telephones his broker who informs him that the offer has already been emailed to the prospective Charterer. The Owner instructs the broker to send a second email amending the canceling date. The broker does as he is told and the second email is received before the prospective Charterer has taken any action on the offer. The amended canceling date is not acceptable to the prospective Charterer, but the rest of the offer is. Is Owner's amendment of the offer valid, or is he bound by the original offer?

It is valid. An offer can be legally modified anytime before it is accepted.

One of the requirements of a contract is an agreement. When negotiating a charter what word or words express agreement to an offer?

I accept, I accept your firm offer, etc. Bonus: I accept, except = counter offer

Owner "O" has been trading his vessel with charterer "P" for several days without coming to an agreement. In the meantime charterer "R" comes into the market and "O" thinks he may be able to use this to force "P" into accepting his terms or maybe even get a better deal from "R". So, when asked to renew his offer to "P" he does so, but with the stipulation "subject open at 5:00 P.M." He then offers his vessel to "R" for reply by 5:00 P.M. Shortly thereafter "P's" broker calls and informs "O" that "P" has accepted his offer clean. At 5:00 P.M. "O" receives a counteroffer from "R". Can he continue to trade with "R" and what is his obligation to "P"?

Must fix with P, can't trade with R. Subject open/unfix: You can have vessel at time X if vessel still unfixed.

If a "full and complete" firm proposal (it even has a copy of charterers' pro forma c/p with it) from a prospective charterer is accepted by the shipowner with a minor exception (such as the owner stating that the vessel requires 100 tons more stores and water than stipulated in the offer), is there a valid contract? In arriving at your answer, you are to be guided by which of the following concepts (1) subject details, (2) agreement, (3) both of them, or (4) neither of them?

No agreement - shipowner has made a counter offer

Is the broker a party to the C/P he has negotiated? Can it use the arbitration clause in the c/p to collect a commission?

No he is not. Not in the US.

In the situation described in question 12 (Firm proposal accepted by owner w/ exception (counter offer on stores)), what obligation does the prospective charterer have on receiving the shipowner's reply?

No obligation

You have fixed the M/V FUTURE 32 on T/C delivery APS U.S. Gulf at $6000 per day plus a $70,000 ballast bonus. During the negotiations there was no discussion as to whether any commissions were payable on the ballast bonus, and the C/P commission clause reads merely, "2.5% commission for division payable on all hire earned under this C/P to ." Are you entitled to a commission on the ballast bonus?

No.

Owner "X" offers his vessel to charterer "Y" with laydays Sept. 15/30, stipulating that reply must be by email by 10:00 A.M. the next morning. At 9:00 A.M. charterer "Y" telephones "X" and makes the following reply "accept/except laydays Sept. 20/30." "X" declines. A little later "Y" learns that his cargo can be made available a little bit earlier and he emails "X" at 9:45 A.M. "Accept your offer with your laydays September 15/30." Is the owner bound by this acceptance?

No. Charterer made a counter. Counter takes original offer off the table.

Must a charter party of more then 1 year duration be in writing to be enforceable? What about over five years?

No. Time doesn't matter. In NY a a contract not capable of being enforced in 1 year must be in writing (does not apply to charter parties)

A broker receives an offer specifying a reply by email by 2:30 P.M. He is unable to reach his principal until 2:28 P.M. The principal authorizes him to accept the offer. At exactly 2:30 P.M., the broker reaches the other broker by telephone and tells him that an email confirming his principal's acceptance of the offer is on the way. The email actually arrives in the other broker's office at 2:45 P.M. Is there a valid fixture?

Not a valid fixture. The offer specified acceptance by e-mail. Offers typically have time limits and may specify method of acceptance.

List the essential elements of a contract that must exist if it is to be enforceable

Offer, acceptance, consideration, proper form, legality of purpose, and no mutual mistake as to fact

You have been trading all day trying to obtain $8,000 time charter on the 60,000 DWT bulk carrier "ALFA STAR". You are awaiting a reply to your latest counter at $8250 when your principal, the owner's Chartering Manager, phones to tell you that he is leaving the office. He tells you to do your best to get the $8,000, but that if it looks like you might lose the fixture, you have discretion to $7750. Shortly thereafter the charterers' broker counters you at $7750 for reply in 30 minutes. Your principal cannot be contacted. What should you do? Explain your reasoning.

Open question. You are working within your authority. Can accept the offer if you wish.

Which broker customarily prepares the written voyage C/P?

Owners

Please read the ASBA Code of Ethics one more time. Remember, some things are unethical and illegal. Some things are unethical but still legal. Just because something is legal, it does not mean it is ethical

Please read the ASBA Code of Ethics one more time. Remember, some things are unethical and illegal. Some things are unethical but still legal. Just because something is legal, it does not mean it is ethical

When the offer stipulates reply by noon tomorrow, whose time is meant?

Properly drafted offer should specify timezone. If left out, go by offerors timezone.

A bill of lading is also a receipt for the goods given by the carrier to the shipper. Why do you think it is important that the cargo's condition be accurately noted on the b/l upon receipt of the goods?

Protects carrier. If goods arrive dirty/damaged this can be stated and wont be held against ship.

How soon after conclusion of the fixture should the C/P be drawn up?

Quickly

When withdrawing or revoking an offer, at what point is revocation effective, when made by the offeror or when received by the offeree?

Revocation is effective when received by the offeree. Basic business law contract.

List five types of ship brokers.

Tanker, dry-cargo, competitive, sale & purchase, bunker

Assume that agreement has been reached on the main terms for the C/P referred to in the preceding question. The fixture is "subject details". The parties are unable to agree on the details. What is the position of the U.S. Courts? What would the position be in London?

US: A vessel is "fixed clean" even if fixed "sub. details" UK: Cannot fix if you identify any details as being outstanding Subject Details: main or essential terms are agreed to, but things like notice, captain, etc yet to be decided

Is a fixture confirmation letter (recap) necessary? Desirable?

Very necessary, prepare and review quickly. It is primarily an e-mail covering what was discussed over phone. Make sure all data/numbers/places accurate.

What is the usual remuneration received by a chartering broker?

Whatever is agreed to (brokerage commission)

You have received authority by fax from your principal, "CCC Corp". to sign a C/P on its behalf. Indicate below how you would sign this C/P. Explain how you should sign a contract as an agent so that you are sure to preserve your status as an agent (and not become a principal to the contract)?

YOUR NAME as agent for OWNERS NAME i.e. Zach OBrien for Maersk Zach O for Owners could leave you as principal

You negotiate a charter agreement entirely by telephone. Is it enforceable?

Yes - A maritime contract need not be in writing

Must a charter party with the U.S. Government be in writing?

Yes - Due to ruling by congress

You are broker for an owner who wishes to remain anonymous for tax reasons. You conclude a C/P for your principal and sign it "J. Doe, as Agent for Owners". Later on a dispute arises and the charterer asks you to reveal the name of the owner. Because you do not wish to lose his future business you refuse. Can you be held liable by the Charterer?

Yes.

If a broker has information which, if known to his principal, would be likely to cause the principal not to conclude a fixture, should the broker give this information to his principal even though it may cause him to lose a commission?

Yes. Put interest of your principle ahead of self.

May a broker be held liable for errors he makes in transmitting offers, etc.?

Yes. That is considered negligence. Bonus info: ASBA brokers required to have omissions insurance.

You have finally fixed the 60,000 DWT "NEVERSINK" for 24 months time charter at $3.50/DWT/month with 1-1/4% commission to you. a. How much total commission do you expect to earn? (Show your calculation) b. Exactly two months after delivery the vessel strands and is a total loss. How much commission does the owner actually have to pay you? c. What, if anything, should you or could you have done about your commission in this case?

a. 60,000 x 3.50 = $210K/month 210,000 x 24 = $5,040,000 total hire Hire x .01 = $50,400 Hire x .0125 = $63,000 b. 2 months 210,000 x 2 = $420,00 x .0125 = $5,250 c. Nothing (I think)

If a broker exceeds the authority given him by his principal, a) Is the principal bound by the broker's action? b) Can the broker be held liable? c) If so, by whom?

a. No, not bound by the result. b. Yes c. To the injured third party / that is - the broker becomes a principal.

14. A charterer has a cargo of 20,000 tons of soybeans he wishes to ship from Houston to Limassol. He has sold the cargo basis 5% more or less at seller's option and expects to make a profit of $25.00 per ton. Shipowner "X" offers to lift the cargo and represents his vessel as having a deadweight cargo capacity suitable to lift 20,000 tons. The offer is accepted and the vessel is fixed to load 20,000 tons 5% more or less at owner's option, but when the vessel arrives at loading port its deadweight for cargo is only sufficient for 18,700 tons. a) What options does the charterer have? May he rescind the charter? May he require the owner to load the smaller cargo? b) What options does the owner have? Must he proceed with the contract? c) The contract in these circumstances could best be described as which of the following: frustrated, invalid, void, voidable, enforceable?

a. The charterer can reject (rescind) the vessel. Can also load cargo and seek damages (extra costs shipping on different vessel). b. None. Yes. c. answer = voidable - One party can rescind but not the other. Also applicable to LAYCAN. void- both parties can canncel

You have been trying to interest a shipowner in a particular piece of business, and you finally get an indication of the vessel, which you pass on to a charterer's broker. Fifteen minutes later he phones you and says: "Thanks very much, you are confirmed. a) What is your reply to him? b) Would your answer be different if it had been called a "firm indication?"

a. This was an indication not an offer, cannot be accepted. b. No - answer its business

a) The reply "ACCEPT EXCEPT..." is called a b) The reply "I repeat my last offer" is called a c) The reply "I accept your offer" is called a

a. counter offer b. c.

Explain the difference between valid, void, and voidable contracts.

voidable - One party can rescind but not the other. void- both parties can canncel valid - contract is enforceable