U.S. Freight Forwarder & Customs Broker Trading Terms,, ocean cargo claims, ocean freight claims, ocean cargo damage limitations. freight forwarder claims, customs broker claims, customs claims, freight claims, U.S. Trading Conditions, shipper's-agent, agent-forwarder

Understanding & Using Standard

Freight Forwarder & Customs Broker

Standard Trading Conditions of The United States

"Terms & Conditions of Service"

Enacted by

The National Customs Brokers And Forwarders Association of The United States

Established 1898

 

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Approved By U.S. Circuit Court Opinions Throughout The United States

Index To Understanding & Using "Terms & Conditions of Service"

- Standard Trading Conditions of the Uninted States

1. The Shipper's Agent - why there is no liability

2. Documents Where "Terms & Conditions of Service" Are Used - documents & their use

3. U.S. Circuit Court Of Appeals Cases Upholding "Terms & Conditions of Service"

Study Guide >> U.S. Case Holds That Shipper's Agent Forwarder Is Not Liable For Cargo Damage Under U.S. Law - Prima Vs. Panalpina

Study Guide >> U.S. Case example of "Travel Agent" connection to cargo- a pictorial

4. Article Explains Purpose of "Terms & Conditions of Service" - from The Cargo Letter

5. The Text of "Terms & Conditions of Service."

1.The Shipper's Agent - why there is no carrier liability

It is factually undisputed that the activities of a freight forwarder which only makes arrangements -- but does not issue a bill of lading -- are at all times limited to those of a classic shipper's-agent (also known as a "Type #1 Forwarder) which makes arrangements for shipping contracts to be entered upon with the actual carriers whose responsibility it is to move the goods and the actual custom's broker whose responsibility is to arrange for the importation.
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2. Documents Where "Terms & Conditions of Service" Are Used - documents & their use

"Terms & Conditions of Service" are the standard contractural trading conditions for freight forwarders and customs brokers in the United States. Similar rules are followd by other major trading nations of the world. These Terms & Conditions of Service define a proper understanding of our industry and responsibility for use of selected carriers & handlers. These Terms & Conditions of Service encourage customer involvement and use of marine cargo insurance.

Terms & Conditions of Service define the contract with shippers, importers and other customers as has been valiated by numerous published opinions of the U.S. Circuit Courts of Appeals.

Shippers are required to take notice of Terms & Conditions of Service by various standard contract methods. Each method is valid.

Freight Forwarders & Customs Brokers and their customers should note the following approved methods of communicating the binding nature of Terms & Conditions of Service:

1. CREDIT APPLICATION

This traditional business form should be signed by all of your prospective clients. Sales persons should have no objection to getting a signed a credit application as part of the normal course of business. The following language should be included above the signature line.

"All services and transactions are subject to our Terms and Conditions of Service (NCBFAA 6/94) which are printed on the reverse side of this application and our invoices. Applicant expressly acknowledges receiving a written copy our Terms and Conditions of Service (NCBFAA 6/94). Our liability is limited to the extent provided by law our bills of lading, if issued, or $50.00, whichever is less."

Of course all credit applications should be printed with your Terms and Conditions of Service (NCBFAA 6/94) on the reverse and the reverse side should be sent to the applicant when faxing the application.

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2. CUSTOMS BROKER POWER OF ATTORNEY

U.S. Customs requires that a broker have a signed power of attorney prior to conducting customs business on behalf of an importer. 19 CFR §141.31-.32. The following language should be included above the signature line.

"All services and transactions are subject to our Terms and Conditions of Service (NCBFAA 6/94) which are printed on the reverse side of this power of attorney. Grantor expressly acknowledges receiving a written copy our Terms and Conditions of Service (NCBFAA 6/94). To the extent provided by law, our liability as a customs broker is limited to $50.00 pursuant to19 USC §1641 (f)."
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3. SHIPPERS LETTER OF INSTRUCTION - "SLI"

This traditional international forwarder form eines the contract with shippers, importers & other customers. It should be signed by all of your clients when tendering a shipment. The following language should be included above the signature line.

"All services and transactions are subject to our Terms and Conditions of Service (NCBFAA 6/94). Our liability is limited to the extent provided by law our bills of lading, if issued, or $50.00, whichever is less."

Of course all credit applications should be printed with your Terms & Conditions of Service (NCBFAA 6/94) on the reverse and the reverse side should be sent to the applicant when faxing the application.

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4. INVOICESOF THE FORWARDER-BROKER

Please make sure Terms and Conditions of Service are printed on the reverse side. Also make certain that the front of the invoice clearly states your limit on liability and directs the recipient to refer to the reverse Terms & Conditions of Service. This is best done in at least 10 point font and preferably in bold lettering. This use of Terms & Conditions of Service to define the contract with shippers, importers and other customers has been valiated by numerous published opinions of the U.S. Circuit Courts of Appeal.

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5. OTHER DOCUMENTS

In order to further reduce the risk of litigation, we suggest that you also incorporate the same Terms & Conditions language into footers of fax cover sheets, quotations and proposals sent to your customers. A discrete footer should not interfere with your sales efforts. Frankly, this language is no different than those of other carriers similarly situated.

3. U.S. Circuit Court Of Appeals Cases Upholding Terms & Conditions of Service

Insurance Company of North America, v. NNR Aircargo Service (USA), Inc., 201 F.3d 1111; 2000 U.S. App. LEXIS 1420;

Calvin v. Trylon, 892 F.2d 191 (1989);

Independent Machinery v. Kuehne & Nagel, 867 F. Supp 752 (1994);

Capital v. LEP 965 F.2d 391 (7th Cir 1992);

Government of UK v. Panalpina, 1 F. Supp. 2d 521 (Cir. 1985);

Expeditors v. Wang Lab., 1995 WL 791935 (Mass. 1995);

Byrton Dairy v. Harborside (Robbins Fleisig), 991 F. Supp 977 (7th 1997);

K.K.D. Imports v. Karl Hienz, 36 F.Supp.2d 200 (2nd 1999);

General Electric v. Harper Robinson, 818 F.Supp. 31 (2nd 1997);

Qualmetrics, Inc. v. LEP Profit International, Inc., 1996 U.S. Dist. LEXIS 15087;

Prima US Inc. vs. Panalpina, Inc. (<< Full Text) 2000 U.S. App. LEXIS 21434 (2000)

Hoogwent US, Inc. v. Schenker International Inc., 121 F. Supp. 2d 1228; 2000 U.S. Dist. LEXIS 18784,

Hurco Companies, Inc. vs. Kuenhne & Nagel, 2001 U.S. Dist. LEXIS 18168, ABM AMRO v. Geologisitics, 2003 U.S. Dist. Lexis 5007.

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Insurance Company of North America v. NNR Aircargo Service, LEXSEE 2000 U.S. App. LEXIS 1420.

The court stated that:

"Liability is a term inherent to shipping contracts. See In re CFLC, Inc., 166 F.3d 1012, 1018 (9th Cir. 1999). We have thus tacitly approved the use of a course of dealing analysis in interpreting such contracts where the agreement is silent with respect to liability. See id. Today we rule that invoice terms and conditions may supplement shipping agreements if there has been a sufficient course of dealing, and thereby find that INA is subject to the terms and conditions of the invoice for the stolen golf balls. In enforcing the $50.00 liability limit, we are in consonance with our sister circuits. See e.g. Capitol Converting Equip. Inc. v. LEP Trans., Inc., 965 F.2d 391, 395-96 (7th Cir. 1992) (upholding a liability limit contained in an invoice); Calvin Klein Ltd. v. Trylon Trucking Corp., 892 F.2d 191, 195-96 (2d Cir. 1989) (enforcing the liability terms of an invoice); Transamerica Oil Corp. v. Lynes, Inc., 723 F.2d 758, 764-65 (10th Cir. 1983) (ruling that invoice provisions are relevant in defining a contract); Alcoa Steamship Co. v. Charles Ferran & Co., 383 F.2d 46, 54-55 (5th Cir. 1967), cert. denied, 393 U. S. 836, 21 L. Ed. 2d 107, 89 S. Ct. 111 (1968) (upholding a limitation of liability clause in an invoice delivered upon completion of the contract)."

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From The Cargo Letter [355] of August 2000

Forwarder Not Responsible As Agent _________
**The Travel Agent Mode**

Los Angeles - 30 August -- A federal appeals court ruled on Aug. 24 2000 that just because a forwarder promises close door-to-door care & supervision of a shipment doesn't mean it's liable when the cargo is damaged en route. The 2nd U.S. Circuit Court of Appeals in New York reversed a lower-court ruling against forwarder Panalpina, which arranged a shipment of an electrical transformer from Italy to Iowa.

Study Guide >> U.S. Case Holds That Shipper's Agent Forwarder Is Not Liable For Cargo Damage Under U.S. Law - Prima Vs. Panalpina

The transformer broke loose from the flat rack on which it was stowed, & damaged other cargo belonging to Prima (U.S.A.) Inc. After Prima sued, the lower court said Panalpina was liable because it had stated to Westinghouse: "Rest assured your shipment will receive door to door our close care & supervision."

The appeals court quite properly said Panalpina was not liable, because it acted as a forwarder instead of a carrier (NVOCC), & because it exercised "reasonable care" in selection of the stevedore & carrier.

As to Panalpina's promise to provide door-to-door care & supervision, the appeals court said: "Because of the well-settled legal distinction between forwarders & carriers, that statement -- mere puffing -- cannot transform Panalpina into a carrier, & bestow liability upon it."

The case was defended by leading Int'l transport underwriter XL Specialty Insurance Company & argued to the high court by our dear friend -- the great transport lawyer Andrew Spector, Esq. of the MIA firm of Hyman & Kaplan.

This case reconfirms a 1949 proposition of the U.S. Supreme Court (See Chicago, Milwaukee, St. Paul & Pacific R.R. Co. v. Acme Fast Freight, Inc., 336 U.S. 465, 467-68, 93 L. Ed. 817, 69 S. Ct. 692 (1949) that a forwarder, not issuing a B/L, is just an agent, with no responsibility for the physical state of the cargo.

In it's opinion the high court quite properly defined a non-carrier freight forwarder as a "travel agent" for freight.

The public commonly accepts the imperative that a "travel agent" which books your passenger flight is not responsible for your lost luggage. The federal court now restates the old, but sometimes forgotten, rule that this same basic principle applies to cargo.

This same standard applies, as a matter of basic transport defenition to the acts of Customs Brokers in their arranging for cargo disposition after Entry. Once the Customs Broker knows when Entry will be granted, a Delviery Order ("D.O.") is issued. The D.O. notifies the next carrier as to cargo availability & location of the cargo from custody of the present carrier. The D.O. is just a notice, not a bill of lading. The Customs Broker has merly made arrangements as a "travel agent" for the next step in cargo movement. The staff of Cargo Law first coined the term "travel agent for freight" roughly 15 year ago. We're quite happy that a simple term now explains the reality of our industry.

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