TT Talk - Are your standard trading conditions reasonable?

TT Talk - Are your standard trading conditions reasonable?

The TT Club has frequently advised companies, particularly in the freight forwarding and logistics sectors of the industry, to ensure that standard trading conditions are adequately incorporated into trading relationships.

The value of this was recently exemplified when the English courts made clear that two provisions in the UK forwarding association (BIFA) conditions can be regarded as reasonable and commercial.

In the case of Röhlig (UK) Ltd v Rock Unique Ltd (2011), a freight forwarder sued its customer for unpaid freight. The customer defended the claim and counterclaimed on the grounds that it had been overcharged and that it was off-setting freight against the forwarder’s failure to meet an oral obligation to act as agent.

The BIFA trading conditions include both a provision that the customer pay to the company all sums due immediately and without set off, and also a nine month time bar clause. The customer’s counterclaim was not served within nine months of the date on which the relevant liabilities arose and it, therefore, sought to rely on the UK Unfair Contract Terms Act 1977, arguing that both clauses were unreasonable and therefore unenforceable.

The English Court of Appeal upheld the set off clause, stating that its purpose was to ensure that business cash flow was not interrupted. The judge was apparently influenced by the fact that the customer was a commercially experienced company which understood its obligations under these conditions.

The Court of Appeal also upheld the time bar provision, as being framed in clear and broad terms. The judge referred with approval to the 2003 case Granville Oil & Chemicals v Davis Turner in which it was held that the time bar was reasonable, unless there was fraud.

In many instances, a local forwarding association will have standard trading conditions that should similarly be upheld in court. The TT Club also has drafted model conditions that are suitable and available to its Members via the ’My TT Club’ section on the TT Club website or their usual contact.

Through Transport Mutual Insurance Association Limited and TT Club Mutual Insurance Limited, trading as the TT Club. TT Club Mutual Insurance Limited, registered in the UK (Company number: 02657093) is authorised by the Prudential Regulation Authority and regulated in the UK by the Financial Conduct Authority and Prudential Regulation Authority. In Hong Kong, TT Club Mutual Insurance Limited is authorised and regulated by the Hong Kong Insurance Authority, in Singapore by the Monetary Authority of Singapore and in Australia by the Australian Prudential Regulation Authority. In the United States, TT Club Mutual Insurance Limited is approved as a surplus lines insurer in all states and is accessible through properly licensed surplus lines brokers. The registered offices are: 90 Fenchurch Street, London, EC3M 4ST.

Through Transport Mutual Insurance Association Limited, registered in Bermuda (Company number: 1750) is authorised and regulated in Bermuda by the Bermuda Monetary Authority. 

The UK VAT Identification number for Through Transport Mutual Insurance Association Limited is: GB 564 5244 35 and for TT Club Mutual Insurance Limited is: GB 564 3375 30. The Italian VAT Identification number for TT Club Mutual Ltd is: 03627210101.

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