Sectors in Shipping Business

Question 1

What are the six key diciplines included by the ICSB? What else may be included?

Answer 1

The basic six disciplines that fall under the term ‘shipbroking’ are;
* Dry cargo chartering
* Tanker chartering
* Ship sale and purchase
* Ship operations and management
* Port agency
* Liner agency
Freight forwarders (agents, contractors and NVOCs) are sometimes also included

Question 2

What was UNCTAD? What term did it coin as an alternative to shipbroker and why?

Answer 2

• ‘Shipbroker’ can mean different things in different countries/industries, and in often a clear distinction between broker and agent is made
• UNCTAD (United Nations Conference on Trade and Development) carried out a survey into the duties of all intermediaries in the shipping business and adopted the term ‘shipping agent’ to cover them all (this includes freight forwarders and forwarding agents)

Question 3

What are the key components of a commission/brokerage agreement? Briefly define them (and commision/brokerage agreements)

Answer 3

Key components;
* Scope of services; outlining the specific tasks/responsibilities of the broker, such as marketing the vessel, identifying potential buyers/sellers, negotiating terms, submitting paperwork
* Commission structure; specifying how the broker will be paid (usually commission, 1-2.5% depending on sector)
* Term and termination; defining the duration of the agreement and conditions under which either party can terminate it
* Confidentiality; establishing the confidentially of any sensitive information shared during the relationship
* Representation and warranties; clarifying the representation and warranties made by both parties, such as the ship owner’s rights and the broker’s authority to act on behalf of the owner
* Dispute resolution; outlining the procedure for resolving any disputes that arise between the principle and broker

These agreements are legally binding contracts that govern the relationship between the principle and broker, ensuring clarity and protection for both parties

Question 4

Define the law of agency, principle and agent

Answer 4

• The law of agency is a legal concept that governs the relationship between two parties; the principle and the agent
• The law of agency is fundamental in various legal contexts, including business relationships, employment arrangements, real estate transactions, and more. It provides a framework for defining rights, duties, and responsibilities between principals and agents, helping to facilitate transactions and protect the interests of all parties involved
• Principle; the person or entity who authorises the agent to act on their behalf. The principle may delegate certain tasks or responsibilities to the agent, giving the agent authority to act in the principle’s name
• Agent; the person authorised by the principle to act on their behalf. They may have the authority to perform specific tasks, make decisions, or enter into contracts on behalf of the principle. Agents can be individuals or organisations

Question 5

What are the key aspects of the law of agency? Define them

Answer 5

Key aspects of the law of agency include:
* Authority; either actual or apparent
Actual – explicitly granted by the principle
Apparent – when the principle leads a third party to believe that the agent has authority to act on their behalf (when not explicitly granted)
* Fiduciary duty; agents owe fiduciary duty to their principle, meaning that they must act in the principle’s best interests, avoid conflicts of interest and maintain confidentiality
* Agency relationships; these can be created by agreement (express or implied), by operation of law, or by ratification (when a principle accepts or approves an agent’s unauthorised actions after the fact)
* Liability; principles may be liable for the actions of their agents if they were within the scope of the agent’s authority – similarly, agents may be liable to third parties for breaching their duties or exceeding their authority