BIFAlink


Policy & Compliance


www.bifa.org


To be, or not to be, an agent?


With growing numbers of forwarders in the firing line for unexpected demands for quay rent, John Habergham, shipping and transport specialist at Myton Law, looks at how to how to protect your company


The proliferation of cases where forwarders find themselves facing unexpected and large demands for quay rent, and such like, is focusing minds again on the infamous ‘Merchant Clause’, which is squirrelled away in the small print of bills of lading. Forwarders may be forgiven for thinking “But I am not liable


for these costs as I am only an agent, not a principal, and I am not named on the bill of lading”. Unfortunately, it is not as simple as that. The Merchant


Clause is based on joint and several liability and may mean you are in the firing line if your client does not pay charges incurred. The last year or so has been particularly challenging due to


John Habergham, shipping and transport specialist at Myton Law


the breakdown of seller/buyer agreements, as a result of recent developments including the pandemic and changing attitudes to the trade in plastics recycling, which have left goods idle at ports where they rack up considerable costs for container detention and demurrage.


The cost for removal Where the parties to the sales/purchase contract were ‘men of straw’ and where the ‘goods’ hold little or no value, so that a lien does not offer a remedy, who bears the cost for removal? Sadly, some forwarders find themselves drawn into these disputes. It is fair to say that the ocean carriers are first in line for


removal costs, but they cast around for another remedy and fall back on terms in their bill of lading and/or waybill. These terms include a scheme of liability with a wide definition of a ‘merchant’ extending to the shipper or consignee, or anybody with an interest in the goods, and agents of such parties.


10


BIFA Members are likely to have contracted on BIFA


Standard Trading Conditions, which bolster their agency status and contain an English law and jurisdiction clause. However, English law takes the approach that the applicable law is that of the putative contract, which the forwarder has procured on behalf of its principal. So, if the bill of lading or waybill has a French or a German law and jurisdiction clause, for example, then the forwarder may find liability governed by those systems of law. It is possible that, by reference to those legal systems,


forwarders would still be found to be an agent without liability, but it has taken forwarders by surprise to find that, even where they have been diligent in ensuring they incorporate their own terms and conditions these do not necessarily govern their liability.


April 2021


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20