International shipping and project-logistics transactions are often concluded at speed. Commercial terms may be negotiated through emails and messaging platforms, operational instructions may be given before a formal contract is signed, and different companies within the same corporate group may participate in performance.
While this flexibility facilitates trade, it can create significant difficulties when payment becomes overdue. A counterparty that previously accepted services, issued instructions or made part-payments may later deny that a binding contract existed, argue that the person who negotiated the agreement lacked authority, or contend that another company was responsible.
Drawing on my experience in a substantial cross-border dispute involving an international logistics provider and an overseas counterparty, several practical lessons emerge for shipping, freight-forwarding and project-cargo businesses.
The dispute often begins long before payment stops
By the time an invoice becomes seriously overdue, the foundations of the eventual dispute may already have been laid.
The parties may have used inconsistent company names. Purchase orders may have been issued by one entity while payments came from another. The contractual documents may not identify the governing law or jurisdiction. Amendments may have been agreed informally without being consolidated into the main contract.
These issues do not necessarily prevent recovery. They can, however, give a defaulting counterparty room to construct arguments that would have been much harder to advance if the documentation had been clearer.
The most effective credit-control strategy therefore begins at contract formation, not after default.
Businesses should identify the precise legal entity assuming the payment obligation, verify its registered details, specify the governing law and dispute-resolution forum, and retain a complete record of negotiations, instructions and performance.
“The person who signed had no authority”
One defence that frequently arises in commercial disputes is that the individual who negotiated or signed the agreement lacked authority to bind the company.
This allegation can be particularly disruptive where a transaction was conducted through a senior manager, commercial representative or local agent who appeared to speak for the business but was not formally listed as a director.
Under English law, authority is not limited to a board resolution or written power of attorney. Section 43 of the Companies Act 2006 recognises that a contract may be made on behalf of a company by a person acting under its express or implied authority.
English law also distinguishes between actual and apparent—or ostensible—authority. Actual authority concerns the authority given by the company to its representative, whether expressly or through the role and responsibilities entrusted to that person.
Apparent authority concerns the position presented to the outside contracting party. It may arise where the company, through its words or conduct, represents that an individual is authorised to act on its behalf and the other party reasonably relies on that representation. The Supreme Court has confirmed that apparent authority can prevent a principal from denying that it is bound, although reliance must be reasonable and a contracting party cannot ignore circumstances that should have prompted further enquiries.
The factual questions can therefore be more important than the individual’s job title:
- Who introduced the individual as the company’s representative?
- Did the individual use the company’s email address and documentation?
- Were senior management copied into the correspondence?
- Did the company perform the agreement or accept its benefits?
- Were invoices received without objection?
- Did the company make payments or propose a repayment schedule?
- Did anyone suggest that further internal approval was required?
A company cannot necessarily avoid a transaction simply by asserting, after the event, that its own representative exceeded an undisclosed internal limitation.
Nevertheless, counterparties should not rely blindly on appearances. For high-value transactions, authority should be confirmed expressly. Where a document is intended to be executed as a deed, additional statutory formalities may apply under section 44 of the Companies Act 2006.
Subsequent conduct may be decisive
Commercial disputes are not determined solely by the document signed on the first day. The parties’ subsequent conduct may provide important evidence about what they understood and accepted.
Part-payments are particularly significant. Although their precise legal effect depends on the circumstances, they may be difficult to reconcile with a later assertion that no obligation existed at all.
The same applies to requests for additional time, promises that payment is being arranged, proposed instalment plans and written acknowledgements of the outstanding balance.
A carefully drafted payment agreement can strengthen the creditor’s position, but it must be approached strategically. It should identify the existing debt, record any admissions, preserve the creditor’s rights under the original transaction and explain what happens if an instalment is missed.
Creditors should be cautious about inadvertently replacing a strong accrued claim with a weaker or more conditional obligation. Any waiver, variation, release or settlement language must be scrutinised before signature.
Identify the correct defendant—and the available assets
In cross-border trade, the company negotiating the transaction may not be the company holding the assets.
A claimant must therefore investigate the corporate structure at an early stage. This includes identifying the contracting entity, payment recipient, operating company, parent company, relevant directors and the location of bank accounts or other assets.
The fact that several connected companies participated in a transaction does not automatically make all of them liable. Conversely, the use of multiple entities does not necessarily prevent claims against parties that assumed obligations or became personally involved in actionable wrongdoing.
Depending on the facts, a dispute may involve more than a straightforward debt claim. Where goods, funds or contractual rights have allegedly been diverted or interfered with, potential causes of action may include claims in tort or claims against additional participants. Such allegations require careful legal and evidential analysis and should not be used merely as pressure tactics.
Jurisdiction and service should not be an afterthought
A favourable English jurisdiction clause is valuable only if proceedings can be served effectively and any resulting judgment can be enforced against assets.
The Civil Procedure Rules contain specific provisions governing service on defendants outside England and Wales. Depending on the contractual terms and the applicable jurisdictional framework, service may be possible without permission or may require an application demonstrating an appropriate jurisdictional gateway, a reasonable prospect of success and that England and Wales is the proper forum.
Before commencing proceedings, a claimant should therefore consider:
- the contractual jurisdiction or arbitration clause;
- the defendant’s correct address and place of incorporation;
- the permissible method of service;
- whether interim asset-protection measures may be justified; and
- where a judgment or award will ultimately need to be enforced.
A successful claim that cannot be enforced may have limited commercial value.
Evidence must be secured early
Shipping and logistics disputes frequently involve large volumes of emails, messaging-platform communications, invoices, operational documents and payment records.
The most useful evidence is often created before lawyers become involved. Businesses should preserve complete message threads rather than isolated screenshots, retain original attachments and record who attended relevant calls or meetings.
A clear chronology should connect the contract, performance, invoices, acknowledgements, part-payments and subsequent defaults. This can expose inconsistencies in a counterparty’s position and make it more difficult for it to recast the transaction after relations have deteriorated.
Protecting the business before the next dispute
The strongest recovery strategy combines legal analysis with commercial preparation. Shipping and project-logistics companies should:
- identify the correct contracting entity;
- verify the authority of the person committing that entity;
- use clear English law and jurisdiction or arbitration provisions;
- document changes to price, scope and payment dates;
- preserve evidence of performance and acceptance;
- treat repayment proposals as legal documents, not informal courtesies; and
- assess enforcement prospects before commencing proceedings.
Cross-border claims are rarely just about proving that an invoice remains unpaid. The real task is to establish who assumed the obligation, whether the company was validly bound, what subsequent conduct confirms the debt, where proceedings should be brought and how the resulting decision will be enforced.
Addressing those questions early can substantially improve a claimant’s negotiating position—and may prevent a defaulting counterparty from turning a straightforward commercial obligation into a prolonged jurisdictional and corporate-authority dispute.
This article provides general information only and does not constitute legal advice.
