Who is the agent's principal?
An English port agent was nominated by a charterer with whom they did significant amounts of business. The agent was instructed by the charterer to release a steel cargo without production of the original bill of lading. The charterer, who was also the receiver of the steel, had on-sold it to the ultimate consignee without paying the shipper and without retrieving the original bill of lading. The charterer then went into liquidation. Subsequently the shipper of the steel arrested the ship and commenced proceedings against the shipowner. The shipowner paid US$ 95,000 in settlement of the shipper's claim and commenced proceedings against the port agent. As the port agent had relied on the particular charterer for business, he had mistakenly believed that the charterer was his principal and entitled to authorize him to release cargo. In fact, although nominated by the charterers, the appointment was to act as the owner’s agent. The agent could only release cargo on receipt of authority from the owner. The port agent eventually reimbursed the shipowner.