Goods in transit – the legal position

/ April 15th, 2012 / No Comments »

Goods in transit, in legal and insurance context, is a term used to refer to carriage of goods by road, sea, air or rail. Goods in transit face a number of risks including damage, loss or in certain cases seizure by local authorities. Whether you are importer or exporter, it is important to fully understand legal implications and insurances policies available as the above mentioned incidents could significantly impact on your business cash-flow and ability to fulfil contractual obligations in relation to the goods in question. The law in this area is governed by a number of international conventions and national standard codes of practice.

Goods in transit by road or rail

  • CMR note

The Carriage of Goods by Road Act 1965, has brought into the UK law the Convention on the Contract for the International Carriage of Goods by Road recommended by the United Nations Economic Commission for Europe. The CMR note is essentially a standard template of terms and conditions that apply to goods in transit by road. The note applies to international transportation of goods between two separate legal entities based in two different contracting countries. At the moment most of the EU and some non-EU countries are signatories to the convention. Some of the non-EU members that are a party to the CMR include: Switzerland, Ukraine, Bosnia and Herzegovina and Kazakhstan.

The CMR note is an important document that proves that the road courier has received the goods and that a valid ‘goods in transit by road’ contract exists between you and the courier. Importantly, however you are still responsible for the goods in transit.

The current liability limit under CMR is £8.03 per kilo, but this can be subject to change as limits are set in accordance with fluctuating Standard Drawing Rights.

  • Completing CMR Note

Although, you freight forwarder can fill the form in for you it is a good practice to do it yourself as you remain liable for its accuracy. Every CMR note has to include the following basic details:

  • The date and location at which the CMR note has been filled in.
  • Details of the sender, the courier and the addressee (also known as the consignee).
  • Clear information about the goods and their packaging. The information has to be satisfactory both to you and the ultimate recipient. It does not need to obvious and does not need to clearly identify the goods, as in fact this may be insecure.
  • The overall weight of the cargo.
  • Any relevant charges associated with the goods in transit, including any customs liabilities or carrier fees.
  • All relevant forms for customs officers.
  • If the goods are dangerous that should also be clearly stated.

International Transit of Goods – The TIR

  • The system is extremely useful as it allows for the transporting vehicle to cross borders of many countries without repeated checks by local custom authorities. The goods are only checked and sealed once at the outset and their final destination. The TIR system does not apply within the European Union as goods in transit within the European Union do not require multiple checks anyway.

Goods in transit by rail, sea and air

  • CIM – Goods in Transit by Rail

CIM is an equivalent of CMR for goods in transit by rail. Similarly, CIM note contains the basic details and regulated the relationship between you and your carrier. In accordance with the standard CIM terms, carriers accept responsibility only for loss or damage while the goods are in their possession. Any additional cover must be purchased separately from a transit insurance broker.

  • Hague Visby Rules – Goods in Transit by Sea

The Hague Visby Rules are standard set of rules governing transport of goods by sea between most European countries. Notable exception is the US where stricter Hague Rules apply. Standard Hague Visby Rules state that the carrier must issue a bill of lading clearly displaying information about the goods including condition, overall weight and quantity. The sender himself is responsible for provision of accurate information about the goods, providing appropriate packaging and making claims within set limits. The carrier must exercise skill and care when loading, handling, carrying and finally discharging the goods at the destination port. Compensation levels are fixed and agreed per package or kilograms at the destination port. Carriers can however deny their liability for events such as fire or dangers of the sea such as storms etc.

  • Warsaw and Montreal Conventions – Goods in Transit by Air

Vast majority of transported goods is carried by passenger airplanes. The Warsaw and Montreal Conventions cover contractual rights, liabilities and obligations of the sender and the carrier.

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