Policy & Compliance
How to ensure you are protected by BIFA Standard Trading Conditions Over the last 28 editions of BIFAlink a series of articles looking at individual Standard Trading Conditions (STC) clauses has been published. In this article we want to look into the question of incorporating the STC into the freight forwarding contracts between the BIFA Member and its customer.
A t the BIFA Secretariat we receive complaints against Members from their customers – the most frequent being about loss/damage to cargo where liability is limited by Clause 26 of the STC. Long experience has taught us that the fi rst questions that solicitors and insurers ask their client (the freight forwarder) are composed of two parts. The fi rst is: “What trading conditions do you trade under?” The second is: “Have you incorporated these into your contract with your client?” Once properly incorporated into the contract, the STC create an equitable trading relationship between the two parties, providing protection for freight forwarders and placing certain expectations (or responsibilities) on the customer. A key condition to the use of the BIFA STC is that suitable freight liability insurance is maintained by the Member to cover its obligations defined in the STC. A list of insurance brokers offering freight liability insurance is available on the BIFA website. There is more than one approach to concluding a contract – on occasion, specific contractual terms may be negotiated and agreed between the two contracting parties. At other times, international convention or local law may be applicable. In fact Clause 2 (B) clearly states: “If any legislation, to include regulations and directives, is compulsorily applicable to any business undertaken, these conditions shall as regards such business be read as subject to such legislation.” STC advantages There are some significant advantages to using the BIFA STC: • Ef fi ciency – using a standard set of STC for most, if not all, of the business undertaken keeps time spent on negotiation to a minimum. • Cost – It would cost individual traders significant financial sums to develop their own trading conditions and to keep them updated on a regular basis. • Standardisation – insurers are aware of the forwarder’s liabilities which makes it easier to write policies and provide accurate premiums. • Legal Precedent – There is significant UK case law regarding transport and freight forwarding disputes. In many cases the legal profession can advise clients as to the likely outcome of any dispute, which can assist in concluding disputes without the need to take them to court. However, it is important to note that Members must ensure proper incorporation of the STC. Failure to
incorporate them increases the risk that Members will not be able to rely on them if a dispute arises. In today’s business world, where compliance is becoming ever more important, BIFA has noted a stricter approach to incorporating the terms. Not so long ago, a simple exchange of messages and reference to the STC was sufficient to demonstrate that the STC had been incorporated. Nowadays, obtaining the express written agreement of the customer is used more frequently. One of the reasons for this, we believe, is Clause 7 covering Customs Representation and Establishment, which offers significant cover to the Member. Timing It is imperative to remind the reader that the Member must bring the STC to the attention of the customer before the contract is concluded between the two parties. That is before the customer has accepted the BIFA Member’s quote or offer to move a particular consignment. Notice given after the contract has been concluded increases the likelihood that any dispute would fall back on international convention or common law. In any dispute, the party relying on its STC has the legal burden to demonstrate proper incorporation. We have explained that the best way to incorporate the STC is to obtain the customer’s express written agreement; in many cases this can be part of the client onboarding process, which must include due diligence and credit checks. Also, Members should ensure that they fully understand and can meet their client’s freight forwarding, Customs and other service requirements. There are cases, particularly with one-off shipments, when the previously described process is not operationally feasible. Members have a variety of methods of dealing with this situation. At one end of the scale there are IT solutions where the client ticks a box confirming that it has seen, read and understood the STC. At the other end of the scale, Members may have a clause at the bottom of e-mails and shipping documents, etc, stating: “All business is carried out (conducted) subject to the current BIFA STC. A copy can be viewed at https://bifa.org/information-guidance/trading- conditions/bifa-standard-trading-conditions-2021/” Possible problems These and other methods are legally acceptable but there are certain issues that could arise. We would like to examine the likely main problems. Late noti fi cation: A contract is concluded when the
“ It is imperative to remind the reader that the Member must bring the STC to the attention of the customer before the contract is concluded between the two parties
12 | October 2024
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