Home' MHD Supply Chain Solutions : MHD Nov-Dec 2014 Contents 22
Standard conditions of carriage are vital to
It is industry practice for carriers of
goods to contract on the basis of standard con-
ditions of carriage that, among other matters,
seek to exclude liability on the part of the carrier
for negligence, breach of bailment, consequen-
tial loss and other causes of action, or losses
that may arise during the course of carriage.
Such conditions of carriage are important
not only to limit the risk to which a carrier of
goods is exposed in the event of loss or damage
to goods, but also from the perspective of
indemnity under carriers' goods in transit and
other similar policies of insurance.
Disputes following incidents during
transit involving damage to goods
Whilst it is commonly understood in the trans-
port industry that carriage is ordinarily conduct-
ed on such terms (with the risk of loss, damage
or delay in respect of the carriage of the goods
falling not on the carrier, but rather upon the
consignor, the consignee or their insurers),
disputes habitually arise following an incident
during transit involving damage to goods.
Often in such disputes, one of the central
areas of argument between the parties is
whether a carrier's standard conditions of
carriage have been properly incorporated
into and form part of the contract of carriage
between the parties and, consequently, whether
they are capable of providing a contractual
defence to the carrier.
It is therefore imperative that carriers who wish
to rely upon their standard conditions of carriage
have proper systems in place to ensure that their
conditions of carriage form part of the terms of the
contract of carriage, to minimise disputes regard-
ing their application in the event of an incident.
Sending standard conditions
to customers after carriage
of goods completed
It is not uncommon for carriers, to issue invoices
to customers which, although they refer to or
even annex or set out the carrier's standard con-
ditions of carriage, are issued after the carriage
of goods has already been completed.
In such circumstances, in the event of an
incident involving the goods, a properly advised
claimant is likely to argue that by the time the
carrier issues its invoice, the carriage was complete
and the terms of the contract were already agreed
and it is too late for the carrier to seek to incorpo-
rate further terms limiting the carrier's liability.
Need for strong evidence if relying
upon a prior course of dealing
While the courts recognise that terms and con-
ditions can be deemed to be incorporated by
virtue of a prior course of dealing between a
carrier and a regular customer, it can be difficult
to succeed in such an argument. The courts
require evidence of numerous transactions in
which there has been a proper incorporation of
the standard conditions of carriage between the
carrier and the customer.
In addition, evidence that the customer at any
point rejected or disputed the carrier's terms and
conditions can be fatal to the carrier's contrac-
tual defence. It can also be particularly difficult
to establish that the customer had actual knowl-
edge or was referred explicitly to or accepted the
carrier's standard terms and conditions at an
early stage of the business relationship.
that the customer accepts
carriers' standard conditions
Ideally, carriers should request their customers
to sign an acknowledgement that the standard
conditions apply to the carriage and attach
those conditions at the very outset, before any
goods are carried.
Such an acknowledgment can take the
form of a properly drafted commercial credit
application or consignment note that sets
out the terms and conditions, is evidence
of the contract of carriage, and sets out any
instructions given to the carrier.
Seek legal advice to ensure
your standard conditions will
exclude your liability for loss
Carriers should seek legal advice regarding the
procedures and documentation that they have
in place to ensure that the risk of a dispute
about the incorporation of their standard con-
ditions of carriage is minimised and that their
rights under any policies of goods in transit
insurance (or similar) are not prejudiced.
Finally (and obviously), care also needs to be
taken regarding the wording of the conditions
of carriage, as the courts have historically
viewed clauses that exclude liability for loss and
damage caused by the carrier, or the carrier's
agents, strictly. Carriers should obtain legal
advice to ensure that their standard conditions
of carriage will be effective to exclude liability for
loss resulting from faults by the carrier.
Marcus Saw is a senior associate in the
Melbourne office of CBP Lawyers.
THE LEGAL SIDE OF
CONDITIONS OF CARRIAGE
MHD SUPPLY CHAIN SOLUTIONS --- NOVEMBER / DECEMBER 2014
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