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Know your BIFA Standard Trading Conditions – Clause 8 (A), Part 2
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 When applying a lien the following points must be considered: 1. A general lien can be applied only to the true owner of the goods. It is important to establish ownership of the goods – see Crawshay & Others v Homfrey & Others, All ER Reprints [1814-1823] 591, and Chelleram & Son (London) Ltd v Butlers Warehousing and Distribution Ltd [1978], 1 Lloyd’s Rep 412 . A BIFA Member cannot hold goods under a lien when it is a third party such as another freight forwarder that is in default and not the true owner of the goods. Care must be taken that there is not a retention of title clause in the contract between seller and buyer. If the true owner of the goods does not owe any sum to the BIFA Member, there is a risk that the BIFA Member will be sued for conversion or unlawful interference of the goods. 2. The goods or documents must come into the possession of the BIFA Member in the normal course of business when exercising a lien – they cannot be seized. 3. A lien can be exercised only with possession of the goods or of the documents. Such possession need not be physical possession but can be constructive possession or control, so long as the goods or documents are at the disposal of the BIFA Member exercising the lien (the ‘lienee’). This can arise when goods are in transit, when they are not suitable for warehousing, for example by way of size or This article should be read in conjunction with Clause 8(A) Part 1, which was published in the last edition of BIFAlink and covers the operation of a lien
weight, or when the lienee does not have his own warehousing premises. Definite instructions restricting the release of the goods must be given to whoever has custody of the goods (the ‘bailee’). However, a lien is not lost if the BIFA Member is fraudulently induced to part with the goods. 4. Where carriage charges are involved, a lien is normally exercisable only when the carriage has been performed. 5. At common law, the person exercising a lien has to bear the costs of retaining such goods such as rent or storage costs (Somes & Others v British Empire Shipping Co, All ER Reprints [1843-1860] 844) but Clause 8 (A) (i) seeks to make storage costs payable by the owner of the goods held under a lien. 6. There can be no lien without an immediate right to the debt (Raitt v Mitchell & Another, All ER Reprints [1814-1823] 129) . The need to exercise a general lien will probably not arise unless deferred payment terms (‘credit terms’) were granted. However, if the agreed payment terms have been exceeded the contract is breached and they no longer apply, so the charges become immediately due.
defaulter written notice that a lien is being exercised – a letter will suffice. The notice must state the amount owed.
8. In exercising a lien, the lienee must take reasonable care to protect the goods in his possession. A BIFA Member should expect his liability insurance cover to extend to legal liability for loss or damage when the BIFA Member exercises a legally enforceable lien. 9. Clause 8 (A) refers to documents as well as goods because documents of title can represent the goods. As they are needed in order to take possession of goods, exercising a lien on documents of title can be as effective as exercising a lien on goods. 10. Clause 8 (A) gives the Company the right to exercise a general lien without permission of the Court for goods owned by an insolvent Customer that has gone into administration, provided that the debt and the exercising of the lien arose before the administrators were appointed – Uniserve Ltd and Others v Joint Administrators of La Senza Ltd (in Administration) [2012] EWHC 190 Ch. This article will be continued next month and it is often prudent to engage the services of a solicitor when applying a lien.
7. A lien must be activated by giving the
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December 2022
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