Ship brokers fixed a charter party that contained an option for a second voyage. They failed to pass on the charterer’s message declaring the second leg option which had to be declared upon completion of loading of the first voyage.
Owners refused to perform the second leg (the market having since risen) as the option had not been declared in time. On being informed of the broker’s mistake the charterer’s position was that if owners did not perform the charterers would claim US$500,000 in damages from the brokers. The charterers claimed that the sum was the additional cost of fixing a ship in the prevailing market.
The broker, with ITIC’s support, negotiated with owners who agreed to perform the second leg for an additional US$275,000. This figure more accurately reflected what could have been achieved in the spot market. ITIC reimbursed the broker for the additional freight.