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Know your BIFA Standard Trading Conditions – Clause 8A, Part 1
For reasons of space we are covering Clause 8 in three editions of BIFAlink . Next month we will expand on points to be considered when applying a lien and the following month we will cover clause 8b. All three articles should be read together. Clause 8(A) 8(A) Subject to sub-clause (B) below, the Company: (i) Has a general lien on all Goods and documents relating to Goods in its possession, custody or control for all sums due at any time to the Company from the Customer and/or Owner on any account whatsoever, whether relating to Goods belonging to, or services provided by or on behalf of the Company to the Customer or Owner. Storage charges shall continue to accrue on any Goods detained under lien; (ii) Shall be entitled, on at least 21 days’ notice in writing to the Customer, to sell or dispose of or deal with such Goods or documents as agent for, and at the expense of, the Customer and apply the proceeds in or towards the payment of such sums; (iii) Shall, upon accounting to the Customer for any balance remaining after payment of This month we come to liens and the clause in the BIFA Standard Trading Conditions (STC) that generates the largest number of enquiries to the Secretariat. This is a difficult topic to cover in a magazine article as there can be a plethora of variations in the circumstances of each potential lien
any sum due to the Company, and for the cost of sale and/or disposal and/or dealing, be discharged of any liability whatsoever in respect of the Goods or documents. Comment on Clause 8(A) A LIEN is a legal right, exercisable under certain conditions, to retain custody or control of goods or documents until charges are paid in full. A PARTICULAR LIEN is a right to retain the particular goods or documents that are the subject of the unpaid charges. A GENERAL LIEN is a right to retain goods or documents until all outstanding charges are paid in full – that is not just charges on the goods or documents detained but also overdue charges arising on other goods. An ACTIVE LIEN is one that gives the right to sell or dispose of goods or documents and not merely a right to retain them. Under Clause 8(A), a BIFA Member has an ACTIVE GENERAL LIEN. At English common law, a freight forwarder (whether acting as Agent or Principal) has only a particular lien. It was held in the case Langley Beldon & Gaunt v. Morley [1965] 1 Lloyd’s Rep 297 that a forwarding agent does not have a common law right to a general lien by custom of the trade. It is only when the BIFA STC (or trading conditions with a similar clause) are
incorporated into a contract that the BIFA Member has an active general lien. A common law lien confers no right of sale – it is passive. Clauses 8(A) and 8(B) of the BIFA STC give the BIFA Member the contractual right to sell goods or to dispose of them or to deal with them subject to giving sufficient notice of the intention to do so. The BIFA Member cannot make a profit from such sale but must only cover overdue charges and expenses incurred and must account to the owner for any balance received in the proceeds. The BIFA Member must get the best price in the circumstances and not recklessly sell goods cheaply. A lien is a very useful weapon to use against a defaulting customer, but great care must be exercised otherwise the BIFA Member may face a claim for conversion. This article will be continued next month with some points that must be considered. It is often prudent to engage the services of a solicitor when applying a lien. Liens are also covered in the BIFA Good Practice Guide, A Guide to Exercising a Lien Using the BIFA Standard Trading Conditions (BIFA STC) . This is one of many good practice guides that can be found on the BIFA website www.bifa.org > INFORMATION > GOOD PRACTICE TOOLBOX
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November 2022
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