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Policy & Compliance
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How to correctly incorporate the BIFA STC in commercial contracts
BIFA’s Standard Trading Conditions exist to protect Members. However, they and the protection provided by them can only be relied on when correctly incorporated.
One of the main reasons for companies to become BIFA Members is to benefit from the use of the BIFA Standard Trading Conditions (STC). The STC create a balanced contractual arrangement of responsibilities and rights between the Members and their customers. However, if something goes wrong, Members can only rely on the STC to limit their exposure if they have been correctly incorporated. From recent conversations with Members, whilst many do incorporate them satisfactorily, there are still some who do not, which is a cause for concern. We are under no illusion that in today’s fast- paced, computer-driven world, correct incorporation can be difficult, but it is nonetheless essential. Also, we are noting a trend where positive incorporation is required; in simple terms this requires the party to whom the contract is offered to agree that they have seen, read, understood and agreed to the terms incorporated in the STC.
Timing of incorporation Also, circumstances will dictate when and/or how these terms are incorporated. The general guidance is that this should be done on first contact with a customer or potential customer. It is still important that all letterheads, quotes, invoices, e-mails and websites state: “All business of the company is transacted under the current edition of the Standard Trading Conditions of the British International Freight Association (latest edition) which are available on request”. Some Members modify the wording to state that they are hosting copies of the STC on their own website or directing them to BIFA’s own site.
8 From speaking to Members, shipments for the
‘one-off’ client are more likely to lead to problems than those for the regular customer. Also, there are problems undertaking the correct ‘due diligence’ checks on such clients, resulting in some Members deciding not to undertake business for this type of customer. The important point is that the terms are incorporated before the first quotation is provided to the client. We are aware that some Members using automated quotation systems have a box that has to be completed stating that the customer has seen, read, understood and accepts the STC before a quote is generated. Where the relationship is based upon the customer having an account with the Member, the best place to incorporate the STC is as part of the credit application procedure. The credit application form (paper or electronic) should include a statement that the customer has seen, read, understood and accepts the STC, agreeing that they apply to all and any business undertaken. It is important to ensure that the customer agrees that the STC apply to all business undertaken on its behalf by a Member. If reference in the credit application is only made to the application of the STC, they may be taken to apply only to the credit application and not all business activities between the two parties. The credit application form should be completed
by a suitably senior person within the applicant’s organisation. It is difficult to be precise on this point because all companies are organised differently. As a general rule, there is usually an inverse relationship between size and job title; at small entities, a director is more likely to complete the credit application than at a large operation where a
line manager could have this responsibility. Whilst reference is made on all previously mentioned documents/communications to where the STC can be viewed, it is still prudent to send a copy of the BIFA STC to the company secretary/managing director, or similar, by postal recorded delivery or by e-mail requesting a receipt of sending for the latter. Any verbal quotations or bookings that are
provided to customers should include clear reference to the fact that all aspects of the contract are subject to the application of the BIFA STC – and this should be confirmed in writing.
Standard template With regard to quotations, it is important to have a standard template that should make clear reference to the application of the BIFA STC. Consideration should be given to referring to a period of validity and in what circumstances change might be necessary – for instance shipping lines increasing rates or surcharges. Whilst this document covers contracts with commercial entities, Members should be aware that the Unfair Terms in Consumer Contracts Regulations 1999 apply. The key point when dealing with private individuals is to ensure that Members make greater efforts to explain the BIFA STC to them.
The purpose of this article is to encourage
awareness that the STC are there for Members’ protection. However, they and the protection provided by them can only be relied on when correctly incorporated. In order to achieve this, Members need to have processes in place and to ensure that staff are properly trained in understanding and applying them correctly.
February 2020
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