Threading through laws for 21st century freight forwarding

As freight forwarding has moved into the 21st century there has been much confusion as to legal roles and responsibilities, offering a vast range of value-added services to their customers that could hold them accountable as carrier. The typical role of a freight forwarder is that of an agent, arranging shipments of goods belonging to the shipper and co-ordinating its transit safely to the receiver. Now in the light of consolidation, a forwarder's liability expands beyond those of an agent when they undertake the carriage in their own name as principal contractor.

It is common practice in shipping to consolidate cargo belonging to different shippers in one container, a concept adopted to utilise cargo capacity, cater for small(er) consignments, while maximising profits.

Yet, while adopting this approach, the freight forwarder will remain responsible towards the shipper(s) as contractual carrier once they assume the carriage of their goods. Although this principle is cost effective for the forwarder, it bears huge legal implications should any loss or damage occur to the goods during transit. However, responsibility will shift in various stages of the journey depending on the nature and agreement of carriage.

A freight forwarder's main concern is how he can protect himself against potential cargo claims. From a legal standpoint, agents will try to limit their liability via the 'small print' contained under their trading terms and conditions and this is where confusion will start to emerge. It's of key importance that they minimise or even avoid liability as principal by ensuring that the wording contained in the house bill is consistent with what has been initially agreed and with the nature of the business undertaken.

In all practical sense, once damage/loss is apparent, a forwarder will have to put in a claim towards his own carrier under the master bill and any other contractors engaged in transport and handling. This is important to avoid any time bars, which would otherwise reimburse any loss arising out of a cargo claim.

In The Hyundai Federal, goods were misdelivered without the production of a bill of lading and the agents were trying to evade liability by relying on certain terms on the reverse side of the bill.

The agent assumed the carriage of the goods and issued clean bills of lading that goods were received in apparent good order and condition, and signed without qualification under their name, thus clearly indicating them as principal. The agent's defence was rejected as the use of the term 'forwarder/agent' offered no legal protection: it is in fact of no particular aid to the forwarder presenting himself as a straightforward agent while also affording the role of carrier.

The Starsin' emphasis a similar point, having decided that the contractual carrier will be evidenced by the named signatory on the front of the bill, notwithstanding any exclusion clauses on the reverse side of the document.

Here the forwarders were solely liable as the actual carrier delivered in accordance with its carriage contract, assigning control to the agents notwithstanding presentation of the waybill. Nonetheless, the freight forwarder breached the contract of carriage with the shipper by releasing the goods without production of the bill.

However, freight forwarders can be guarded against such menacing ordeals and various defences are available. They can limit their liability by simply inserting a condition stating they are acting as "agents only", but this will clearly depend on the facets of the bill. In the event where the bill has been issued by a freight-forwarding agent and signed under its own name without qualification, he will be presumed to be signing as principal extending liability to an entirely different plane.

In addition, a condition excluding liability for loss, damage or misdelivery can be inserted but has to be very clearly drafted to be accepted by the courts.