INTRODUCTION

1.1 Historical background

In the early days of sea trade, ship owners operating small vessels canvassed for
merchandise and loaded their cargo for export to various destinations in the world.
They traveled on board their ships from port to port, where they sold their goods and
purchased more commodities for discharge at their next destination. As trade became
larger in scale and more frequent in occurrence, ship owners increased their fleets
and began to employ trustworthy captains to undertake the voyages while they took
care of their interests ashore. (Latarche, 1998). Further developments between the
th th
late 19 century and mid 20 centuries in world trade saw the discovery of new larger
markets and ports. This led to the birth of liner shipping which was designed to offer
regular services to designated ports carrying whatever cargoes were ready on the
sailing dates (Encyclopaedia Britannica Online, 2000).

In order to increase their market share and improve the efficiency of their ship
operations in foreign ports, ship owners began to appoint independent agents to
represent their interests at the regular ports of call. Their duties included finding
markets for the master’s goods, cargo for export and providing crew in exchange for
commissions. (Latarche, 1998). History reveals that agreements entered between the
ship owners and agents comprised of simple letters and sometimes, verbal
agreements without the need for elaborate clauses, terms or conditions. With time
however, increased transactions conducted at long distances saw the need for legally
binding contracts spelling out the duties and responsibilities of both principal and
agent, as w e l l as the terms and conditions of the agency agreement. These came to
be known as Liner Agency Agreements.