Standard Trading Conditions – Incorporation

We had earlier written another article on Standard Trading Conditions and which can be viewed at https://nau.com.sg/standard-trading-conditions-and-its-importance-to-transport-operators/

1. It is invariably a requirement for Logistics Service Providers (“LSP”) that they contract with their clients on the basis of compulsorily applicable cargo conventions or by way of their Standard Trading Conditions (“STC”) which have been seen and approved by their Liability Insurersⁱ. Incorporation of a STC would entitle LSP’s to either exclude and/or limit liability invariably so as to capp their exposures to manageable levels.
2. The Singapore Court of Appeal held in Nambu PVD Pte Ltd v UBTS Pte Ltdⁱⁱ that for UBTS STC to apply, they must be incorporated into the contract. In this case, UBTS tried to rely that their terms were incorporated on the basis of course of dealingsⁱⁱⁱ and by reference to invoices and delivery orders which referred to UBTS STC’s. Both the High Court and the Court of Appeals judgment are illuminating, and which can be viewed by clicking the hyperlinks^iv shown below.
3. The effect of the non-incorporation is that UBTS is liable for the full value of the claim. This obviously should be a warning sign to LSP’s that failure to incorporate their STC’s properly may result in their STC’s being of no assistance and may also result in breach of their Insurance policy terms and conditions such that the LSP’s  liability insurers may reserve cover. The question therefore to be asked to how should a LSP incorporate their STC’s?
   1. Gold Standard: The best way would be to ensure that the STC’s are a part of the quotation, and expressly acknowledged, say by the client signing on the quotation. It would also be best for the LSP to expressly mention the specific clauses of the STC which entitle the LSP to exclude and limit liability and which cautions the LSP’s clients to consider appropriate risk management procedures to cover their risks. Ideally, a copy of the LSP’s STC should be provided together with the quotation.
   2. If it is not possible to seek an express confirmation from the LSP’s client, say by seeking a signature on the quotation as suggested in 3 a above, at the very least, the quotation for services being provided by the LSP should expressly refer to their STC’s and also drawing attention that it entitles the LSP to exclude or limit liability for all losses. It would be good practice for all communications/documents/emails to make reference to the LSP’s STC’s but this may not be enough to ensure that the STC is properly incorporated into the contract.
4. In conclusion, it is important for LSP’s to review their procedures to ensure that their STC’s are validly incorporated thus allowing them to either exclude or limit liability. Given that incorporation of STC’s is one of the basis of the LSP’s liability insurance, this becomes doubly important as failure to do so may result in the insurers denying cover.

^i. See Cl 3.1 of the TT Club Transport and Logistics Operators 2022 wordings.
^ii. See legal update of Drew & Napier on Standard Terms and Conditions referred to in Non-Contractual Documents Have no Contractual Force and which can be viewed at https://www.drewnapier.com/DrewNapier/media/DrewNapier/22Oct21_Standard-Terms-and-Conditions-referred-to-in-Non-contractual-Documents-Have-no-Contractual-Force.pdf
^iii. Regular trading between two persons over a period of time on the basis of consistent terms of trade which is sufficient for the same terms to be treated as incorporated in a new contract between those persons.
^iv. The Singapore High Court Judgment can be viewed at https://www.elitigation.sg/gd/s/2021_SGHC_20 and the Singapore Court of Appeal judgement can be viewed at https://www.elitigation.sg/gd/s/2021_SGCA_98