Patec v. Translink
Clause 27 of the SFFA Conditions limits the forwarder’s liability to the least of the value of the goods, or S$5 per kilogram, or S$100,000. Clause 30 stipulates that suits for damage must be brought in a proper forum within 9 month from the date of delivery of the goods.
The machine was damaged in November 2000 while in Translink’s custody in Bangkok. On 29 October 2001, after expiry of the 9 month period under clause 30, Patec brought a suit for US$ 178,091.75, being the value of the machine less its salvage value. In its defence, Translink denied negligence, but the main issues were whether Trans-Link could rely on clauses 27 and 30 of the SFFA Conditions.
The Unfair Contract Terms Act (Cap 396) provides in section 3 that, where one contracting party deals on the other’s written standard terms of business, the other party cannot exclude or restrict his liability for breach of the contract as against that party by reference to any contract term except insofar as that term satisfies the requirement of reasonableness.
2. The SFFA Conditions were expressly incorporated into the contract between Patec and Trans-Link by an incorporating clause in the Confirmation of Acceptance. This was a document sent by Trans-Link to Patec, which Patec had signed. The legal authorities that established that onerous or unusual conditions could not be incorporated into contracts unless specific attention had been drawn to them, did not apply where there was, as here, a signed contract with an explicit incorporating clause. Therefore, all the SFFA Conditions, including clauses 27 and 30, were incorporated into the contract.
3. The question whether a contractual term satisfied the reasonableness requirement under the Unfair Contract Terms Act (Cap 396) depended on the facts of each case. In principle, a term which had been found to satisfy the reasonableness requirement in one case might not satisfy it in another.
4. Internationally, it was the practice of freight forwarders to trade on standard terms which included time bar periods and limitation of liability clauses. Further, in Singapore, it was the practice of freight forwarders generally, who were members of the Singapore Logistics Association ("SLA"), to trade on either the SLA Conditions or their predecessor, the SFFA Conditions.
5. Translink had not shown that, as between itself and Patec, it was necessary for Translink to put a 9 month time bar in place to protect its right of recourse against the third party actual carrier, should the loss or damage have occurred whilst the goods were in the custody of the third party. The only evidence that any part of the carriage was subject to a time bar period of less than six years related to the carriage from Singapore to Bangkok. Had the damage occurred during that leg, which was covered by the Hague Visby Rules, Translink would have been able to rely on Article III Rule 6bis which extended the time for bringing the recourse action beyond the one year time limit under Article III Rule 6. Article III Rule 6bis provided for a minimum of 3 months, commencing from the day when the person seeking an indemnity had settled the claim against himself or was served with process in the action against himself. Rule 6bis was available to a transport company, which was not itself a shipowner or sea carrier, such as Translink, and applied not only in the traditional transshipment situation but also in other circumstances, as here.
6. Translink had also not shown that, in 2000, it needed the protection of a 9 month time bar in its contractual conditions in order to be able to insure itself, at reasonable rates, for its liabilities incurred as a freight forwarder/bailee.
7. In the circumstances, Translink had not discharged the onus of showing that clause 30 (which shortened to 9 months the standard 6 year limitation period provided by statute) was reasonable in relation to the contract with Patec. As a result, Patec’s claim was not time-barred.
8. As regards clause 27, the Limitation of Liability clause, such clauses were widespread in the transport industry. The limits varied widely but as far as freight forwarders were concerned, the limit in clause 27 appeared to be at the higher end of the scale. The judge also considered it important that clause 27 was capable of adjustment, in that the customer could pay an increase in the freight rate in return for the forwarder accepting an increase in its liability. Patec had not availed itself of this possibility. Furthermore, Patec did have bargaining power and it had chosen Translink only after carefully considering its other options. In the circumstances, clause 27 was reasonable and Translink was entitled to limit its liability to S$100,000.
Judgment was accordingly given in favour of Patec in the sum of S$100,000.
2. Singapore practitioners should note that, in order to prove the negligence of Translink, Patec had relied on a report written by the managing director of a firm of surveyors which it had instructed. This report was based on the findings of the investigating surveyor, which had been conveyed to the MD orally, since the surveyor did not speak English. The investigating surveyor could not be found, and did not therefore give evidence. The judge found that the report was admissible under section 32(b) of the Singapore Evidence Act, since it represented an oral statement made in the ordinary course of business by a person who could not be found. Furthermore, Translink’s agreement to the inclusion of the report in the agreed Bundle of Documents was held to be a waiver of any objection it might have had to its admissibility.
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