Legal
Know your BIFA Standard Trading Conditions 2021 – Clause 21A
This month we reach Clause 21 which has four sub-clauses, A to D. Due to the length of the commentary on the sub- clauses, the article will be continued next month and only clause 21A is dealt with here
or counterclaim was yet again upheld in the case Britannia Distribution Ltd v Factor Pace Ltd [1998] 2 Lloyd’s Rep 420 , where it was stated that this rule applies to the carriage of goods by sea, land or air and that the rule cannot be circumvented unless there was a total failure of consideration – that is to say that the carriage was not performed. Thus, at English common law there is no right to reduction or deferment of freight charges on account of a claim or counterclaim, but to go further than the common law rule regarding unpaid freight charges and to cover all charges and outlays, the BIFA STC – especially Clause 21(A) must be incorporated in the contract with the Customer. Another factor to consider in respect of Clause 21(A) is that at English common law, for a counterclaim or set-off to operate as a valid defence, it must be so inseparably connected with the claim that it would be unjust to litigate one without the other (claim and counterclaim) – now referred to in the courts as a transaction counterclaim or transaction set-off in contrast to an independent counterclaim or independent set-off which must be actioned separately from the claim. The cases Dole Dried Fruit & Nut Co v Trusten Kerwood Ltd, Lloyd’s Law Rep [1990] 2 309, Glencore Grain v Argos Trading [1999] 2 Lloyd’s Rep 410 and Benford Ltd and Another v Lopecan SL [2004] 2 Lloyd’s Rep 618 refer. Thus Clause 21 (A) prevents even a transaction counterclaim or a transaction set-off from being a valid defence to a claim for unpaid charges, etc, made by the BIFA Member (unless the parties agree otherwise). In respect of the sale of goods, Clause 21(A) may be overridden by S.53 (1)(a) of the Sale of Goods Act 1979, by which a buyer may set up against the seller a breach of warranty in diminution or extinction of the price.
I t is not uncommon for a customer to be unaware of insurance when shipping goods and to refuse to pay charges due to its forwarder if goods are damaged. This issue, known as ‘set off’, has been considered in the Court of Appeal in 1998 (Schenkers Limited v Overland Shoes) . It was considered again and upheld in 2011 (Rohlig v Rock Unique) . Clause 21(A) The punctual receipt in full of sums falling due from the Customer to the Company is critical to the operation of the Company’s business and its performance of its obligations to the Customer. Accordingly, the Customer shall pay to the Company in cash, or as otherwise agreed, all sums when due, immediately and without reduction or deferment on account of any claim, counterclaim or set- off. Time is of the essence of payment of all and any sums payable by the Customer to the Company. Comment on Clause 21(A) A SET-OFF is a setting of cross- claims against each other to produce a balance. A COUNTERCLAIM is any claim that could be the subject of an independent action that is made against a Claimant by a Defendant. A counterclaim is called a ‘Part 20 Claim’ in the Civil Procedure Rules. It not infrequently happens that a Customer will try to obtain an arbitrary settlement of a claim or counterclaim by making a set-off, by refusing to pay charges, by making a deduction in payment, or by deferring payment. The purpose of Clause 21(A) is to overcome such action on the part of the Customer so that the BIFA Member
is paid in full when payment is due and the claim or counterclaim is dealt with as a separate matter. As explained below, under English common law, a carrier is in a privileged situation regarding the payment of earned freight charges which cannot be deducted or set- extends this principle, whether the BIFA Member acts as an agent or a Principal, to all charges and outlays including ancillary freight forwarding charges, Customs duties, etc. The general rule at English common law is that when there is defective performance of a off in respect of a claim or counterclaim. Clause 21(A) contract, a deduction in payment of the contract price may be made by way of abatement – Mondel v Steel, All ER Reprints [1835-1842] 511. However, the common law regarding the payment of freight charges is the exception to this general rule and in that respect the carrier is in a privileged position. This common law rule was reported to be well established in 19th century shipping cases and was affirmed in respect of sea freight in the relatively recent cases of Henriksens Rederi A/S v PHZ Rolimpex, All ER [1973] 3 58 , and Aries Tanker Corporation v Total Transport Ltd, All ER [1977] 1 398. This common law rule regarding freight charges was extended to road carriage under the CMR Convention in the important case of RH&D International Ltd v IAS Animal Air Services Ltd, All ER [1984] 2 203. The rule was further extended to road carriage within the United Kingdom by the case United Carriers Ltd v Heritage Food Group (UK) Ltd, Lloyd’s Rep [1995] 2 269, in which the judge reviewed the history and the application of the rule. The common law rule regarding freight charges being payable without any set-off, claim
“ At English common law there is no right to reduction or deferment of freight charges on account of a claim or counterclaim, but to go further than the common law rule regarding unpaid freight charges and to cover all charges and outlays, the BIFA STC – especially Clause 21(A) must be incorporated in the contract with the Customer
12 | December 2023
www.bifa.org
Made with FlippingBook Annual report maker