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Freight Forwarders' Standard Trading Conditions
BIFA 2005
As from January 2005 the standard trading conditions of the British International Freight Association ("BIFA") have changed. The 2000 edition has given way to the 2005 edition, a copy of which is attached to this Bulletin by kind permission of BIFA.
The changes are not, in the main, significant and are principally matters of form rather than substance. (In particular, attempts have been made to tidy up the conditions in order that related subjects might be covered together.) They are summarized below.
The new conditions contain an explanatory note at the top which draws the reader's attention to those clauses which both exclude or limit liability and limit the time for bringing claims. Furthermore, a note is included to make it clear that if the forwarder offers insurance services, it must be authorized to do so by the Financial Services Authority.
As before, the conditions make it clear that the forwarder can either provide services to its customer as a principal or procure the provision of such services by others, acting as an agent of the customer in so doing.
Clause 4(B) has been amended to allow the forwarder "full liberty" (as opposed to the "reasonable liberty" referred to in clause 7 of the 2000 conditions) as to the means, route and procedure to be followed in performing the services. Clause 5, which deals with the forwarder's right to subcontract (acting as a principal), now expressly provides that it has full liberty to subcontract "on any terms whatsoever". Clause 6(A) similarly provides that, when acting as an agent of its customer, the forwarder shall be entitled to enter into contracts with third parties "whether such contracts are subject to the trading conditions of the parties with whom such contracts are made, or otherwise". The forwarder will not be absolved from exercising reasonable skill in performing such services by reason of these provisions. However, the new clauses are likely to make it easier for subcontractors and third party contractors to rely upon their own trading conditions.
Clause 8, dealing with the forwarder's general lien, now makes it clear that such lien applies to all monies owed by either its customer or the owner of the goods "on any account whatsoever".
Clause 14 extends the list of goods which require "prior agreement in writing" before they will be accepted by the forwarder. This now includes any goods which require "special handling regarding carriage, handling or security whether owing to their thief attractive nature or otherwise". Whilst some examples are given, it is expressly stated that they are not intended to constitute an exhaustive list. "Thief attractive" is a rather vague expression. No attempt has been made to define it - due, no doubt, to the wide-ranging nature of the goods carried by BIFA's members and often specifically targeted by thieves. It could apply to footwear, clothing, alcoholic beverages, cigarettes, mobile telephones, non-ferrous metals etc.. To the extent that the additional words increase uncertainty, it is possible that they may lead to litigation. Furthermore, the uncertainty may bring into question the reasonableness of the purported exclusion of all liability in connection with such goods, should they have been delivered to the forwarder without the necessary prior written agreement.
Clause 17(A) contains a new warranty by the customer that any equipment and/or transport unit supplied by the customer in relation to the performance of any requested service is fit for such purpose. ("Transport unit" is defined to include packing cases, pallets, containers, trailers or tankers.) Clause 17(C) contains a further warranty by the customer that, where the forwarder receives goods from its customer already stowed in or on a transport unit, such unit is in good condition and suitable for the carriage intended. However, it does not contain any warranty that the goods are properly stowed in or attached to the transport unit (although this may, to a degree, be covered by clause 17(B)).
Clause 26(A) largely reiterates the previous BIFA limits of liability. In the case of claims for loss or damage to goods the limit remains at 2 SDRs per kilo (calculated as at the date when any written claim is received by the forwarder) - unless, of course, the value of the loss or damage is less.
However, clause 26(A)(iii) provides a new limit of liability in respect of an error and/or omission or a series of errors and/or omissions "which are repetitions of or represent the continuation of an original error or omission". The limit is the lower of either the loss incurred or "75,000 SDRs in the aggregate of any one trading year commencing from the time of the making of the original error and/or omission". There is, however, no definition of "trading year" - and the identity of the party to whom it might relate is unspecified. The meaning of this particular provision is, therefore, unclear. It is also uncertain whether or not losses arising from the original error and/or omission are to be included within the aggregate limit.
Clause 26 continues to provide that the value of the goods "shall be their value when they were, or should have been, shipped". Disputes may well arise as to the meaning of the word "shipped". In many cases, forwarders will take over the goods prior to the actual shipment. They may, for example, take them over for consolidation or packing. The act of shipping the goods may occur some time afterwards. Other standard trading conditions refer to the taking over of the goods as being the time at which the value is to be determined, thereby providing more certainty.
Clause 27(A) repeats the requirement that, unless notified to the forwarder in writing within 14 days of the date upon which the customer became or ought reasonably have become aware of any event alleged to give rise to a claim, such claim shall be deemed to be waived and absolutely barred (except where the customer can show that it was impossible for him to comply with this time limit and that he has made the claim as soon as it was reasonably possible for him to do so).
Clause 27(B) retains the nine month time limit for the commencement and written notification of proceedings which appeared in the previous edition of the BIFA conditions. It still refers to the "cause of action" as being the event which triggers the commencement of time. If, as is quite possible, this is interpreted as being the date upon which the actual loss or damage occurs, this wording could give rise to uncertainty. This is particularly so in the case of containerized goods where loss or damage may not be discovered until delivery. Such uncertainty may have an impact upon the effectiveness of the time limit. Whilst the reasonableness of the nine month time limit has been upheld by the Court of Appeal (Granville Oil -v- Davies Turner (2003)), the possible uncertainty created by concealed loss or damage was not discussed in that case.
Clause 28 provides that, as before, English law governs the conditions and any act or contract to which they apply. All disputes remain subject to the exclusive jurisdiction of the English courts.
On the whole, therefore, the amendments to the conditions are not particularly dramatic. This was probably to be expected, given that such challenges as have been mounted to date against the 2000 edition of the BIFA conditions were unsuccessful.
If you require any further information concerning the issues raised above, please do not hesitate to contact Christopher Chatfield or Christopher Dunn.
![[PDF]](http://www.adobe.com/products/images/pdf_logo_trefoil.gif)
A copy of the 2005 edition trading conditions is attached.
(Requires Adobe Acrobat Reader).
January 2005
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