TT Talk - Brief reprise on Standard Trading Conditions (STCs)
Most contracts entered into by transport and logistics operators are formed by a series of exchanges with their customers through emails, phone calls and so on. But the most effective risk management tool for companies is to make these subject to their standard terms and conditions. This does not happen automatically.
A signature provides indisputable evidence that someone has agreed to the terms of a contract, and is the safest way to incorporate STCs into the contract. Once a person has signed a contract, it generally becomes irrelevant whether or not the terms have been read. In practice of course it does not always happen this way. But there are moments, even if reliance is generally placed on emails and phone calls, where customers do have to sign a document, for example when applying for a credit account. This provides a perfect opportunity to get a customer to agree to the STCs. Credit agreements should therefore contain STCs.
However, a signature may not always be necessary. Another way is to give the customer formal notice of the STCs before or upon the contract formation, thereby 'incorporating the STCs by reference' into the contract. The safest way to do this is to include the actual STCs with the notice. It is also helpful if notices containing the STCs are displayed in warehouses and other premises. Furthermore, there should be reference to the STCs on all standard or template stationary, such as letters, faxes and invoices. It is worth considering similar references in any periodic or promotional communication to customers.
If a transport operator has been trading with the same customer for some time, and has drawn the attention of the customer in the past to the STCs, it is easier to prove in the future that the customer was aware of them and had agreed to them.
It seems obvious that the same notice requirements should apply for contracts concluded over the internet. The effectiveness of this will depend on the configuration of the site. A prominently signposted link from the website to the STCs is useful, but consideration should be given to 'forcing' the customer both to use the link to view the STCs and to tick a box agreeing to the STCs in the course of placing an order.
Companies should review their procedures relating to their STCs in the same way as they carry out a risk assessment at their warehouse or other premises. Some of the issues to look at are:
- There should be up to date STCs
- Stationery and electronic templates should consistently refer to the STCs
- Any applications for credit should require the customer to sign up to the STCs
- STCs should be easy to find on the company’s website, and placing an order should be dependent on agreement to them.
The Club has for many years had available a variety of trading conditions for Members' use. In addition, other organisations, such as FIATA, national forwarding associations and similar warehousing or haulage associations, usually have trading condition forms. In any event, it will generally be prudent to consult a shipping and transport lawyer to ensure that any adopted conditions are aligned to your specific operational and legal requirements.
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Incorporation of Standard Trading Conditions is an 'old chestnut', but remains critically important in supply chain operations. Don't let the 'big picture' deal blind you to such protective 'detail'.
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