Ask the legal team

Does a commission agreement improve your chances of getting paid?

Yes. Having a formal commission agreement can significantly improve a broker’s chance of getting paid. For brokers, securing payment can sometimes be as challenging as closing the deal itself.

A formal commission agreement can clearly define the terms of payment, including when commission is earned, how much is due, and under what conditions payment must be made. By setting expectations upfront, they reduce ambiguity and help prevent disputes later on.

In the event of non-payment, a written commission agreement also strengthens your legal position. It provides a documented basis for pursuing payment through formal channels, whether via negotiation, mediation, or legal action. It may also set out a law that governs the contract and a jurisdiction and dispute resolution forum. In short, a commission agreement isn’t just a formality, it can be a vital tool for protecting your income and ensuring transparency in brokerage relationships. However, in the real world it is unlikely that a formal commission agreement will exist. Therefore, the next best thing is to have your own terms and conditions apply. ITIC has written terms and conditions for shipbrokers which are available on the ITIC website. Failing that, the minimum should be recording the right to commission in the Charterparty or Memorandum of Agreement (MOA).