Practice and Procedure


PUBLISHED April 15, 2003

The nine-month time limit for bringing proceedings in clause 30(B) of the British International Freight Association conditions satisfied the test of reasonableness in the Unfair Contract Terms Act 1977 and barred a claim against freight forwarders for damage to goods in transit and for failure to insure against all risks.Appeal from a decision of HH Judge John Behrens in the Leeds Mercantile Court that clause 30(B) of the British International Freight Association ('BIFA') standard trading conditions (1989 edition) as incorporated into the contract between the parties did not satisfy the test of reasonableness in the Unfair Contract Terms Act 1977. The appellant ('DT') was an international freight forwarder. The respondent ('GOC') manufactured and exported paint. In 1999 DT had agreed to carry a return consignment of paint from Kuwait to GOC's warehouse near Rotherham. The contract was subject to the BIFA conditions which by clause 30(A) required a claim to be made in writing within 14 days and by clause 30(B) required suit to be brought within nine months. DT agreed to arrange insurance of the consignment against all risks in transit under Institute Cargo Clauses (A). GOC claimed that the paint had been damaged in transit and made a claim against DT within 14 days. DT made a claim on the insurance on GOC's behalf. The underwriters told DT that there had been no cover on 31 March 2000 and again, for a different reason, on 27 June 2000. DT had not told GOC that the insurance claim had been rejected until 2 August 2000, the day before the nine-month period in clause 30(B) expired. GOC brought proceedings only in November 2001 alleging breach of contract by DT for damage to the goods and failure to insure against all risks. On a trial of preliminary issues the judge had held that the clause 30(B) time bar was ineffective to bar GOC's claim because it failed the test of reasonableness under the 1977 Act. DT appealed.HELD: (1) The clause would not bar a claim for fraud or a claim that had been fraudulently concealed by the conduct of the freight forwarder. The judge had erred in thinking that the clause applied to such a claim. (2) The term in question had been reasonable as between the parties to the contract at the time when the contract had been made. The parties were of equal bargaining strength. This was a commercial contract between commercial parties where GOC might have been able to contract other than on BIFA conditions or to make its own insurance arrangements had it wished. GOC ought reasonably to have known of the time bar. The judge held that the conditions had been sufficiently brought to GOC's attention. (3) Compliance with the nine-month time limit was practicable. A freight forwarder, who usually was not the carrier, needed a time limit of nine months to enable it to make a claim over against the responsible carrier before that claim became time-barred (frequently within one year). Nine months was a reasonable time limit for a claim for loss of or damage to goods in transit. The loss or damage could be ascertained on delivery. Nine months was ample time for the customer to decide whether to bring suit. (4) In this case DT also faced a claim for failure to insure. GOC would have had ample time to have made a claim against DT within the nine-month time limit for failure to insure if it had been told by DT when and why the underwriters declined liability. There had been no question of the information being deliberately withheld. DT had acted as GOC's agent in pursuing the insurance claim. DT had been in breach of duty in its failure to tell GOC until 22 August that it had no cover and GOC would have had nine months from that date to have made a claim based on breach of that duty. It had not done so. (5) It had been fair and reasonable to fix the same time limit for a claim based on failure to insure the goods as had been fixed for the claim for damage to those goods. The judge had been wrong and clause 30(B) of the BIFA conditions was effective to bar GOC's claims.Appeal allowed.

[2003] EWCA Civ 570