TT Talk - German Commercial Code contains no liability limit for loss or damage to goods during warehousing

A Singapore based transport operator undertook to provide logistics services for a large German manufacturer. The agreement incorporated the German manufacturer's model contract, expressly excluded application of the operator's trading conditions and was subject to German law and jurisdiction.

Readers may know that the German Commercial Code (HGB) deals with carriage, forwarding and warehousing contracts in three consecutives chapters. Under carriage and forwarding contracts, the operator's liability is limited to 8.33 SDR per kilogram unless the parties agree to digress from that limit within the range of 2 SDR to 40 SDR (provided they comply with the requirements listed in section 449 HGB or section 466 HGB).

In contrast, the chapter on the warehousing contract (sections 467-475h HGB) contains no financial limits for loss or damage to goods. The parties are free to agree their own liability regime (subject to rules on unfair contract terms), and many warehouse operators can routinely incorporate favourable warehousing or general industry conditions.

Not so the Singapore based operator whose trading conditions were expressly excluded. The TT Club, in its contract review service, made this operator aware that he would face unlimited liability for his warehousing operations, with goods worth several million USD at one location. Fortunately, the logistics operator was able to limit his exposure in further negotiations with his client.