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Know your BIFA Standard Trading Conditions 2021 – Clause 11, part 2
Clause 11(B) Insofar as the Company agrees to effect insurance, the Company acts solely as agent for the Customer, and the limits of liability under Clause 26(A) of these Conditions shall not apply to the Company’s obligations under Clause 11. Comment on Clause 11(B) This is a very important clause. In May 1999, it was held in the Court of Appeal in the case of Overseas Medical Supplies Ltd v Orient Transport Services Ltd [1999], 2 Lloyd’s Rep 273 that a clause in the BIFA STC (1999) limiting liability for a failure to carry out a promise to insure goods, was unreasonable and contrary to the Unfair Contract Terms Act 1977 and so such a clause was ineffective. Clause 11B of the BIFA STC (2000B) and subsequent editions have reflected the necessary revision. The reasoning was that insurance is a contract of indemnity and it is unreasonable to seek an indemnity for failing to keep a promise to provide an indemnity. Thus, when a BIFA Member is negligent in arranging insurance, there is no limitation of liability. If a promise to insure goods is given and that promise is not carried out, then there can be serious consequences. However, an oversight in failing to declare the goods when written instructions were received from the Customer and accepted by the Company can be rectified Due to space constraints Clause 11 has been split over two editions of the magazine. This month we cover Clause 11(B). (Clause 11(A) featured in the March 2023 issue of BIFAlink. ) Both articles should be read together and a Word document consolidating them can be obtained from Sharon Hammond (s.hammond@bifa.org).
by making a retroactive declaration on the open cover. One reason why BIFA Members must demand insurance instructions in writing is so that such instructions can be supplied as proof that there was an intention to insure the goods. Clause 11(B) also stresses that in arranging insurance, the BIFA Member has an agency role.
It sometimes happens that a Customer expects the BIFA Member to settle a cargo insurance claim because the BIFA Member was asked to insure the goods. As an agent, the BIFA Member has a duty only to assist the Customer if necessary in obtaining a settlement from the insurance company or underwriters.
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April 2023
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