The United Kingdom Warehousing Association (UKWA) has published the latest incarnation of its trading conditions for use by its members (the 2014 edition). The purpose of this article is not to set out, in detail, the content, but rather to highlight some important legal principles, to identify two key changes to the 2006 edition of the UKWA conditions (although there are other changes) and to remind the reader of certain important clauses that remain untouched.
Background legal principles
The UKWA conditions, like any other, do not have mandatory legal effect under English law. For a UKWA member to be able to rely upon the conditions (or for any commercial party to do likewise in respect of its own conditions) it has the burden of ensuring that the conditions are “incorporated” into the contract beforethe contract has been formed.
Even if incorporated, a customer might be able to challenge the validity of the UKWA conditions (or indeed any other) in one of two ways. First, if the language of any particular provision is ambiguous, it will be read against the UKWA member and second, if any particular clause is found to offend the requirement of “reasonableness” under the Unfair Contract Terms Act 1977 (UCTA), it will be struck out. It is not the purpose of this article to consider such questions in relation to the UKWA conditions, but it is useful to remind oneself of the potential hurdles that face any commercial party seeking to rely upon standard trading conditions.
The first important change appears in clause 3.1. Readers may recall the 2006 edition of the UKWA conditions included a provision requiring the customer to procure its own cargo insurance and to ensure that the relevant cargo policy contained a waiver of subrogation in favour of the UKWA member. The purpose was to prevent subrogated cargo claims against the UKWA member. The requirement to procure cargo insurance or self insure has been preserved, but the waiver of subrogation requirement has been removed. Accordingly, subrogated cargo insurers will have the opportunity to bring recovery claims (although in accordance with the terms set out in the conditions, subject always to what we have said above regarding incorporation, potentially ambiguous language and the “reasonableness” test under UCTA).
The second important change is at clause 6.5. This seeks to clarify and extend the rights of lien to situations where monies are owed to the UKWA member (whether strictly due or not) and where they may only be payable on the happening of some future event. In addition, the right to exercise a lien is now expressed to continue even if ownership in the goods is transferred.
UKWA has not changed the time limit to commence and serve legal proceedings (including any counterclaim), which remains at nine months from the date of the event giving rise to the claim per clause 7.7.2.
The limitation of liability figure, at £100 sterling per tonne, also remains per clause 3.5.2, as does the ability of the customer to specify a higher limit per clause 3.5.1 (which is intended to demonstrate “reasonableness” on any analysis under UCTA).
The conditions are robust and as long as the member takes care to ensure they are incorporated into their contracts then, as a starting point, the conditions will remain a shield (and in some cases a sword) for use by its members. In cases of conflict, customers will doubtless seek to attack the conditions and where this is on the question of “reasonableness” under UCTA, the outcome of such an assault will depend always on the individual circumstances of the case.