TT Talk - Revised Standard Trading Conditions for Freight Forwarders in Australia

TT Club has for many years made available various model conditions to support Members' activities. The range of available conditions has recently been supplemented with revised Standard Trading Conditions for Freight Forwarders for operators in Australia to take into account various legislative developments.

While TT Club will normally accept National Forwarding Association Conditions and happily write them into an operator's insurance policy, some operators have for decades preferred to base their standard trading conditions on terms drafted by the Club.

In Australasia separate trading conditions have been created for Australian and New Zealand business. The divergence in legislation in these neighbouring jurisdictions requires that different trading conditions be adopted when providing services in each country. As a result, TT Club has launched revisions to the Australian version of the Standard Trading Conditions for Freight Forwarders. These can be used for all services provided to customers, including air forwarding, sea forwarding, domestic movements, and customs broking. Some of the key provisions in these revised conditions are highlighted through the remainder of this article.

Review of some key provisions

The terms highlight that cargo insurance for the goods is the customer's responsibility. If an Australian freight forwarder wishes to arrange cargo insurance on the customer's behalf, it must hold a Financial Services Licence or use an Authorised Third Party. TT Club provides cargo insurance which allows freight forwarders to offer immediate insurance cover for their customer's cargo. Surprisingly, perhaps, it is understood that as little as 60% of freight moved globally has cargo insurance protection, which can lead to unfortunate commercial disputes where the contractual provisions exclude or limit payment to the customer.

As might be expected, these conditions permit the freight forwarder to on-charge fees for disbursements incurred, as well as add its own handling and administration fees. Furthermore, the freight forwarder is entitled to receive and retain any brokerages or commissions, in addition to the charges invoiced to the customer. With changing international regulations in mind, the freight forwarder may also re-weigh, re-measure or re-value the goods, charging additional fees accordingly.

The 'lien' clause, now entitled 'Security Interest' has been substantially redrafted to provide additional remedies and protection in view of the entry into force of the Australian Personal Property Securities Act (PPSA) in 2012. The PPSA is still in its infancy and the impact and enforceability of the Act's provisions are as yet relatively untested by the Courts. However, this clause essentially preserves the freight forwarder's rights to exercise a lien over goods to recover any unpaid charges. It provides that any sums owing are secured debts, and that any payment made to the freight forwarder to discharge the debt does not amount to a preference or priority. This will be particularly relevant in the event that a customer enters in to liquidation. In addition, the conditions provide that the freight forwarder will be deemed to be in possession of the goods even though they may be in the physical possession of a sub-contractor. Additionally, the clause operates to grant the freight forwarder a right to take physical possession of a customer's goods for an outstanding debt without being responsible for any damage caused in doing so.

The Limits of Liability clause, previously entitled 'Amount of Compensation' has been revised and expanded in order to address remedies should a freight forwarder breach consumer law guarantees, which are implied by virtue of the Commonwealth Competition and Consumer Act 2010 and equivalent state and territory legislation. If this legislation is breached, liability is limited to whichever is the lower of:

- supplying the services again,

- payment for the cost of having the services resupplied, or

- the value of the goods the subject of the services at the time they were received by the freight forwarder.

The standard weight limitation of USD2 per gross kilogram has been retained for all other loss or damage to the goods.

References to the Trade Practices Act 1974 have been replaced by the Commonwealth Competition and Consumer Act 2010. In addition, references to New Zealand legislation have been removed, since separate Standard Trading Conditions will be available for services provided in New Zealand.

Various other updates have been made to these conditions in order to match international and national legal developments or changes in practice. Any Member interested in evaluating - possibly with any lawyers that you regularly use - whether these revised conditions are suitable to be adopted in your specific operations should contact the TT Club.

We hope that you have found the above interesting. If you would like further information, or have any comments, please email us, or take this opportunity to forward to any colleagues who you may feel would be interested.

We look forward to hearing from you.

Peregrine Storrs-Fox

Risk Management Director, TT Club

Staff Author

TT Club