Liability Kits for Customs Brokers, Freight Forwarders and NVOCCs

We always encourage our customs broker, freight forwarder, NVOCC or warehouseman clients (we will refer to these people as “logistics providers”) to have terms and conditions that limit their liability for the services they provided. We routinely review or design liability kits for our clients. Two of our recent experiences prove that it works.  In one case, we helped one of our warehouse operator clients collect its storage charges by enforcing the warehouse lien (a warehouse lien is statutory, meaning you don’t need anyone’s agreement to get it.  However, in order to have a valid lien on charges due on a previous shipment, the terms and conditions should specifically provide so.)  In the other, we helped one of our customs broker/NVOCC clients to collect freight charges, customs brokerage fees, storage and our legal fees, as well, by enforcing the contractual lien provided for in its Terms and Conditions of Service.

A liability kit is a collection of documents that provide for the same limitation of liabilities and lien opportunity for a logistics provider and that are signed and returned to the logistics provider by an authorized employee of its customer. The goal of a liability kit is to get a written document from the customer agreeing to the logistics provider’s terms and conditions that limit its liability, and at the same time obtain a lien on the merchandise for charges due from the customer to the logistics provider. Depending on the types of services the logistics provider performs, the kit can include Terms and Conditions of Service, Bill of Lading Terms and Conditions, Credit Application Terms and Conditions, Warehouse Terms and Conditions. Other documents such Customs Power of Attorney, Credit Application, Shipper’s Letter of Instruction, Invoices, and Booking Confirmations should also refer to the Terms and Conditions so as to put the customer undeniably on notice of the Terms and Conditions the logistics provider is operating under.

Terms and Conditions are routinely upheld by courts across the country. The following is just a small list of cases among those where the Federal Courts upheld the Terms & Conditions of Service:

  • Insurance Company of North America, v. NNR Aircargo Service (USA), Inc., 201 F.3d 1111 (9th Cir. 2000);
  • Calvin v. Trylon, 892 F.2d 191 (2nd Cir. 1989);
  • Independent Machinery v. Kuehne & Nagel, 867 F. Supp 752 (N.D. Ill. 1994);
  • Capitol Converting Equip., Inc. v. LEP Transp., Inc., 965 F.2d 391 (7th Cir. 1992)
  • Government of UK v. Panalpina, 1 F. Supp. 2d 521 (D. Md. 1985);
  • Expeditors v. Wang Lab., 1995 WL 791935 (D. Mass. 1995);
  • Byrton Dairy Prod., Inc. v. Harborside Refrigerated Servs., Inc., 991 F. Supp. 977 (N.D. Ill. 1997)
  • K.D. Imports, Inc. v. Karl Heinz Dietrich GmbH & Co. Int’l Spedition, 36 F. Supp. 2d 200, 204 (S.D.N.Y. 1999)
  • Elec. Co. v. Harper Robinson & Co., 818 F. Supp. 31 (E.D.N.Y. 1993)
  • Prima U.S. Inc. v. Panalpina, Inc., 223 F.3d 126, 130 (2d Cir. 2000)
  • Hoogwegt U.S., Inc. v. Schenker Int’l, Inc., 121 F. Supp. 2d 1228 (N.D. Ill. 2000)

 

If you are seeking to limit your company’s liabilities, we suggest you review the documents listed above to ensure they all have or refer to the same/consistent terms and conditions and provide for the same lien right. You should make sure that these documents are duly signed by your customer’s appropriate representative. If you would like us to review your documents in order to minimize your liabilities, do not hesitate to reach out to us.

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