SubscribeR W Freight Services operates International Forwarding services and undertakes all business subject to the current BIFA STCs.
Ron Willis, founder of R W Freight Services and acknowledged expert on the subject gives a brief exposition.
You may have been made aware of the fact that BIFA STCs will apply to work undertaken by your freight operator - either by an announcement that they are available upon request, or by you receiving a copy.
They may be sent separately by recorded delivery, or included with a credit application form, where you are asked to tick a box to show you have read and agree to the company's trading conditions.
Halfway through reading them you may already have crossed your boredom threshold, and be turning round to look for another door. PLEASE DON'T - this article is about the very important issue of the contractual relationship between the supplier and the customer in the commercial world, and in international trade in particular.
The BIFA STCs are designed to protect both parties in that relationship. All business relationships (contracts) are subject to Contract Law, but STCs incorporated into the contract modify the two parties' rights and responsibilities under the law. They are called Standard Trading Conditions because they are in general use for all business undertaken, and not conceived for a particular contract.
Their purpose is to limit or exclude liability, to exclude certain types of work, to specify time limits and to specify the applicable law and jurisdiction.
Development of the current form of STCs began in 1989. This article will not give a detailed explanation of the 26 closely written clauses. Its intention is to emphasise the importance of three facets in the application of STCs;
I - Incorporate
C - Comprehend
E - Exercise
Incorporate
For trading conditions to be effective they need to be incorporated into the contract. They cannot be assumed or taken for granted. This is in contrast to the international transport conventions which are imposed by law.
To 'incorporate' the conditions, the client must be made aware of their existence before, or at the time of making the contract. (They cannot be retroactively notified.)
This can be done in several ways:
- Formal notification by letter to the client's Company Secretary - ideally an acknowledgement of receipt should be obtained
- Reference to the use of the trading conditions in specific contracts with the customer
- Reference to the use of the trading conditions on letter heading preferably with the full text on the reverse
- Reference to the use of the trading conditions on transport documents, preferably with the full text on the reverse
- Reference to the use of the trading conditions on quotations or oral reference to them when quotations are not in writing
- Automatic reference to the use of the trading conditions on faxes or emails
- STCs accompanying a credit application where receipt of the STCs is noted and their terms accepted
It is of no consequence if the customer has not bothered to read the trading conditions - but they must have had the opportunity of reading them. When the full text of the STCs is not shown, it is important for the freight forwarder to announce that they trade under BIFA STCs and further state that a 'Copy is available upon request' because that invitation has legal significance.
Freight forwarders who fail to notify the presence of restrictive trading conditions may lose the protection of their liability insurance policy, unless such failure can be proved to be an exceptional oversight. This should be sufficient incentive for them to ensure conditions are incorporated into the contract.
Comprehend
It would be optimistic to expect all Freight forwarders to fully understand every clause of the conditions.
But it is vital that everyone involved in the business knows where to find the conditions covering relevant issues, and understands their implications. For example, maximum liability to the customer is covered in Clause 26; Clause 21 details some conditions governing payments; for conditions regarding shipments despatched on COD terms go to Clause 12.
Comprehension of the scope of the conditions is as important as understanding the individual clauses - any potential problem in the client/customer relationship should prompt the questions 'What does it say in our STCs? '
'How do the STCs affect the rights and responsibilities of the parties to the contract?'
Matters of comprehension of individual clauses can be referred to BIFA - but only if the freight forwarder understands in which situations the clauses can be applied.
Exercise
The STCs are powerful and well-tested in the courts - they should be used!
Shippers and forwarders should be aware of their scope and power, and seek to apply them, particularly when unusual or troublesome situations arise.
To summarise some of their functions:
- Clauses 4 to 16 define the responsibilities, rights and defences of the Company together with notification of the times when prior notice is required before certain cargo or tasks can be accepted.Clauses 17 to 22 relate to the duties and undertakings of the customer. They advise the customer of the freight forwarders responsibilities, which enables him to protect himself against the risks inherent in international trade e.g. the need to insure goods in transit, the need to pack the goods sufficiently for international transport.
- They incorporate national and international legislation into the contract.- Clause 2(B).
- They set out limits of liability - Clause 26 (i) (ii) (iii).
- They protect the forwarder against inaccurate or false declarations - Clause 17(A)(i).
- They give the forwarder right of a General Lien over goods following unpaid accounts - Clause 8(A)(i).
- They give the forwarder certain rights to make decisions on behalf of the customer - Clauses 4(B) and 5.
- They establish which countries' law will apply - Clause 28.
The BIFA STCs have been accepted as fair and reasonable by the Office of Fair Trading and have stood the test of time in the UK Courts. They are used unabridged in Ireland, as a model in Canada, South Africa, and in many other countries where Common Law presides. They protect both customer and forwarder.
However in the UK, their use is restricted to Registered Members of BIFA - a very good reason for clients to check their freight forwarders credentials!
Ron Willis receiving an award to honour his contribution to the Association over the past twenty years from BIFA President The Rt. Hon. The Earl of Caithness (left) and Director General Colin Beaumont (right) at the 2005 annual awards ceremony.
