Source: http://www.nobleshippinglaw.com/news/the-iifa-terms-and-incorporation-into-vontracts-under-irish-law
Timestamp: 2019-04-24 19:35:01+00:00

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The Irish economy is heavily dependent upon international trade, with over 90% of such trade moving by sea. Volumes of imports and exports continue to grow with exports of goods growing by 20.6% and imports growing by 8.7% in the 12 month period from February 2016.  The exporting sector has been a key driving force behind the recovery of the Irish economy and continues to drive the economy forward. Ireland is the location for nine of the world's top ten medical technology companies and eight of the top pharma/bio companies. Exports of medical and pharmaceutical products increased in volume by 37% from Janaury to February 2017 when compared with the first two months of 2016.
With this increasing volume in trade, Freight Forwarders have an ever increasing role within this transport sector. A reoccurring issue for the Irish freight forwarder is the successful incorporation of the Irish Freight Forwarder Association (the “IIFA”) terms and conditions into transatlantic and European shipments which afford considerable contractual protection to the forwarder if effectively incorporated. The following provides a review of the applicable law in Ireland on incorporation of terms and conditions into contracts and a guide for freight forwarders as to the steps they need to take if they want to successfully incorporate the IIFA terms into contracts for their services.
The IIFA is the sole representative body for freight forwarding in Ireland. Established in 1962, the IIFA has over 100 members and they handle more than 90% of Ireland’s international trade. IIFA members are entitled to trade under the IIFA Standard Trading Conditions (1989) and Warehousing Conditions (1996) (the “IIFA Terms and Conditions”).These Conditions inter alia include important clauses that both limit and exclude in certain circumstances the forwarder’s liability. By way of example, the conditions contain a clause providing for any claim arising in respect of any service provided to be deemed waived and absolutely barred unless the claim is made and notified within 14 days of the date upon which the customer became or should have become aware of any event or occurrence giving rise to such a claim unless it can be shown it was impossible to comply with this time limit. In addition, the forwarder is discharged of all liability unless suit is brought, and written notice given thereof, within nine months of the event or occurrence alleging to give rise to the claim.This nine month limitation is often overlooked against the background of an ocean shipment where there is the twelve month time limit for claims pursuant to the Hague or Hague-Visby Rules.
The Conditions also contain provisions for the forwarder to limit his liability to 2 Special Drawing Rights (SDR’s) per kilo of gross weight of any goods lost or damage for loss or damage of goods or in the case of any other claims the lessor of either (i) the value of the goods; (ii) a sum at the rate of 2 SDR’s per kilo of gross weight of the goods or (iii) 75,000 SDR’s of any one transaction. These limitations are of paramount importance when the value of goods being shipped is often very significant. From the forwarder’s perspective the ability to rely on limitation can be critical. From the shipper’s perspective the need to break this limitation is equally important.
Another important clause within the IIFA Terms and Conditions is a provision for a general lien on any goods for all sums due at any time from a Customer and/or Owner.This is an important right for the unpaid forwarder. A customer is widely defined as any person at whose request or on whose behalf the forwarder undertakes any business or provides advice, information and services to. Owner includes the owner of the goods and any other person who is or may become interested in them.
The IIFA Terms and Conditions therefore if properly incorporated provide comprehensive protection to the forwarder. Proper incorporation is however key if the forwarder is to be able to rely upon the same.
A typical scenario where the issue as to whether the IIFA Terms and Conditions have been effectively incorporated into a contract involve transatlantic shipments of key components of a product to or from Ireland for the manufacturing process. For example a pharma company with a plant based in the United States may ship a product to its sister plant in Ireland or vice versa. The United States plant may engage the freight forwarding services of an international freight forwarder locally in the United States who arranges the through shipment to Ireland. The Irish office of the freight forwarder arranges the import arrangements for the import of the product into Ireland and then ultimately invoice the Irish plant for the services globally provided to import the product. What happens when the product is damaged whilst en route to the port of shipment out of the United States but this is not discovered until import into Ireland and after intercompany payment for the goods and invoicing from the freight forwarder? Who is responsible for the loss and more importantly what terms and conditions govern the recovery of that loss?
Whilst at first glance, the position may appear straightforward to all as an issue primarily to be resolved in the United States between the entities in the United States, the position is often far more complicated and it is not unusual for the overseas entity to seek to rely upon the Irish trade association terms to effectively exclude or limit liability. The rationale for such reliance usually stems from the Irish freight forwarder having provided documentation that refers expressly to the applicability of the relevant trade conditions applying in Ireland. The critical issue for consideration is whether those Irish trade terms can be said to have been properly incorporated into the shipment contractual arrangements and can therefore be relied upon.
By a course of dealings.
With regard to the first method, as a matter of Irish law, contracts do not need to be in writing.Oral contracts, whilst inadvisable, are generally enforceable.By way of example in Hennigan v Roadstone Wood Ltd. the High Court recently awarded a Plaintiff damages for breach of contract and misrepresentation despite the fact that the contract was not recorded in writing.
If however there is a document that is signed that refers to terms and conditions, and therefore on the face of it purports to form part of or vary an existing contractual agreement, such signature is generally considered conclusive evidence of incorporation. In the leading UK case of L’Estrange v. Graucob, Scrutton LJ, overturning a decision in the High Court, found that the Plaintiff was bound by an exclusion clause by her signature. It was irrelevant that she had not read the clause.
Accordingly it was held that the Plaintiff was bound by the conditions on signing the contract note.
In Carroll v. An Post National Lottery, Costello J in the Irish High Court, adopting a slightly softer approach, stated where there is an unreasonable condition present in a contract and a person is unlikely to read the terms and conditions and it is known to the company that they will not, it is the responsibility of the party relying upon the clause to do more than simply present the document to the affected party. Although the case cited involved a lottery ticket as opposed to a signed document, it is understood that the principles enshrined in the case would apply to a signed document where the implications might be more severe.
The law of incorporation of terms and conditions into a contract was reviewed by the Irish High Court in the case of Noreside Construction Ltd v Irish Asphalt Ltd. The issue before the court was what were the terms of the contract between the Plaintiff construction company and the Defendant quarry operator. The facts of the case were that in early 2003 the Plaintiff was awarded a contract by Dublin City Council to build a development of 52 houses and 31 senior citizen units. The Plaintiff, through their director who was responsible for procurement, made enquiries with a number of parties, including the defendant, in relation to the supply of aggregate for the proposed development. Following exchanges between the Plaintiff and the Defendant, a Purchase Order was faxed to the defendant on 26 March 2003. The original of this Purchase Order was sent by post, and was stamped as received by the Defendant on 298 March 2003. The Plaintiff’s “Purchase Order Conditions” were printed on the reverse side of the original Purchase Order sent received by post by the Defendant on 28 March 2003. There was no reference to these conditions on the front side of the Purchase Order that was sent by fax of 26 March 2003.
Ultimately a dispute arose as to presence of Pyrite in the stone and its use for floor infill. Legal Proceedings of some notoriety in Ireland arose from the use of the stone containing Pyrite against the Plaintiff and the Plaintiff in turn sought indemnification from the Defendant pursuant to clause 17 of the Purchase Order conditions. It was denied by the Defendant that the Purchase Order conditions formed part of the agreement between the Plaintiff and the Defendant; the Defendant’s primary contention being that its standard terms and conditions, as referenced on the delivery dockets, were applicable.
Judge Finlay Geoghegan in the High Court had to consider therefore two documents that made reference to different terms and conditions. The first was the Purchase Order, which on the reverse side of the original document made reference to certain terms and conditions and secondly the delivery dockets which was stated at the bottom of the docket to be subject to terms and conditions available on request.
In her judgment Geoghegan J found that both of these documents delivered by the Plaintiff and Defendant respectively were sent after the contract for the supply of aggregate products had in fact been concluded between senior commercial representatives of the Plaintiff and Defendant companies.
The Defendant in legal submissions placed great emphasis on the incorporation of its terms and conditions by the signature for and on behalf of the Plaintiff on each delivery docket. It argued that each delivery docket represented a distinct and unique contract between the Plaintiff and the Defendant and that its terms and conditions were incorporated into each such contract , either by signature given for an on behalf of the Plaintiff, by reasonable notice of the prior delivery dockets or by a course of dealings.
Geoghegan J also made reference to the case of Grogan v Robin Meredith Plant Hire.In this case the first named defendant was a plant hire company. It approached Triact, a civil engineering contractor seeking work.It was orally agreed that Triact would hire from the defendant a driver and a machine for an all-in rate of £14.50 per hour from 27 January 1992.Neither party mentioned any further terms.At the end of the first and second week Triact’s site manager signed a time sheet recording the hours that had been worked by the defendant’s driver.Towards the bottom of the time sheet was printed “all hire undertaken under CPA conditions.Copies available on request”.
Under the CPA conditions, the contractor was bound to indemnify the defendant against any liability it incurred to third parties in the course of the hire.An accident occurred during the third week in which the plaintiff, Grogan, was injured.He ultimately obtained judgment for damages against the defendant and Triact.The defendant in turn claimed that the CPA conditions were incorporated into the contract on the signing of the driver’s time sheet and that therefore the contractor was liable to indemnify it against it’s liability to the plaintiff.The High Court held that the contract had been varied so as to incorporate the CPA conditions and that the first named defendant was entitled to succeed against the contractor.The contractor appealed.
Auld LJ., delivering the leading judgment, rejected the submission that the court should only look at the words of the signed document and discard its nature or function.Auld LJ. stated that the central question was whether the time sheet came within the class of document which the party receiving knew contained, or which a reasonable man would expect to contain, relevant contractual conditions.Auld LJ. went on to consider the different ways the document may have a contractual purpose either as a contract making document or in the execution of an existing contract.Documents such as a time sheet, an invoice or statement of account fell in his view within the latter category. They did not normally have contractual effect in the sense of making or varying a contract.The purpose of time sheets is not normally to contain or evidence the terms of a contract but to record a party’s performance of an existing obligation under a contract.Auld LJ. also pointed out that the mere signature of a document which contains, or incorporates by reference, contractual terms does not necessary have the effect of incorporating those terms into a contract.That proposition in his view was too mechanistic.
In Noreside in the Irish High Court, Geoghegan J concluded based on the cited English authorities, that delivery dockets whilst crucial documents for the construction and quarrying industry, their importance lay in the fact that they are an original record of the amount and type of aggregate to be delivered and the time, date and place of delivery.The delivery dockets did not however make any reference to price and she therefore concluded that the delivery documents, albeit that they had a contractual purpose in the sense that they were documents used in the execution of the contract which had come in to existence, they did not have contractual effect in the sense of making or varying a contract.
In relation to the Purchase Orders, Geoghegan J did not have to consider their contractual existence as it was explicitly accepted by the Plaintiff that the Purchase Order would have had to amount to a variation of the existing contract as it was sent after the contract was concluded. No such argument was made. The argument was simply as to the timing of the conclusion of the contract. The Plaintiff advanced arguments that the contract was not concluded until after the Purchase Order had been sent. Geoghegan J found as a matter of fact this was not the case.
In relation to the second method of incorporation: incorporation by actual or reasonable notice, the primary question to be addressed is whether reasonable steps have been taken to bring the clause to the attention of the affected parties. Notice must be given before the contract has been concluded and a higher degree of notice is required when the term is onerous or unusual.
Irish Asphalt, the Defendant/Appellant supplied the aggregate and James Elliott Construction Limited were the constructor on the project. The Supreme Court was effectively concerned with the question as to which of the parties was responsible for the costs of remediation. Part of this determination required consideration as to the law in relation to incorporation of terms and conditions and, the factual consideration as to whether Irish Asphalt's limitation of liability (limiting its liability to the cost of replacement) had been incorporated into its contract with James Elliott Construction by reference. Irish Asphalt argued that its terms and conditions, including this limitation clause, had been incorporated into the contract by (i) signature of delivery dockets (which referred to its terms and conditions) by James Elliott Construction foreman, (ii) by actual notice in three credit notes that had been sent to James Elliott Construction (iii) by reasonable notice to the site foreman of the terms and conditions (iv) by course of dealings and (v) by reference to trade custom.
This passage suggests that in the ordinary case it is sufficient to prove that a document containing terms was provided by one party to or sent to the other and was retained without demur. As with incorporation by signature, Mellish L.J. was emphatic that reading or familiarity with the terms was irrelevant.
‘It is in my judgment a logical development of the common law into modern conditions that it should be held . . . that, if one condition in a set of printed conditions is particularly onerous or unusual, the party seeking to enforce it must show that that particular condition was fairly brought to the attention of the other party.
Therefore, even though 1190 delivery dockets had been issued all containing the proviso that "the material is sold subject to the terms and conditions available on request" and these dockets were all signed by the sire foreman representing James Elliott Construction, the Supreme Court did not consider notice to the sire foreman as reasonable notice. It referred to the fact that senior personnel in both companies had negotiated the contract and therefore notice of any terms and conditions should have been given to the senior personnel. The Court also noted that the delivery dockets only made reference to the availability on request of the terms and conditions and did not actually set them out. There was therefore no reasonable notice.
“I quite agree that the more unreasonable a clause is, the greater notice which must be given of it. Some clauses which I have seen would need to be printed in red ink on the face of the document with a red hand pointing to it before the notice could be held to be sufficient."
In this case it was held that previous dealings were enough to incorporate an exemption clause whether the defendant could show that the Plaintiff had many opportunities to read the terms of the contract but had not.
The Irish courts have long since recognized that terms may be incorporated by course of dealing.Where a party exhibits its standard trading conditions on or on the reverse of documents such as quotations, purchase orders, acknowledgement of order forms, invoices, and the other party does not, the relationship will be treated as conducted on that basis.It does not depend upon proof of actual knowledge of the terms or instructed knowledge of terms by the other party. The course of dealings must however have been regular and consistent and based upon the same terms and conditions.
"Incorporation of terms by prior course of dealing is a question of fact and degree. It depends on the number of previous contracts, how recent they are, and their similarity in terms of subject matter and the manner in which they are concluded."
Accordingly the Supreme Court held that the 1190 delivery dockets could not be used to incorporate terms by reference because they did not provide notice of the terms. The Court went on to consider whether credit notes which contained terms and conditions on the back, including a limitation of liability, and which were furnished to prior to the contract at issue, established a course of dealing. These credit notes were also held insufficient to establish incorporation by course of dealings because there were not enough of them, and the credit notes found were different. Quantity of documentation and consistency of terms noted on the documents are therefore crucial to establishing a course of dealing.
Similarly in, Hollier v Rambler Motors (AMC) Ltd. the UK case relied upon by the Irish Supreme Court in the Elliott appeal, the Court of Appeal considered a car repair shop could enforce the limitation of liability on its invoice as part of an oral contract based on a prior course of dealing. The evidence of the prior course of dealing was that 3 or 4 times over the prior five years the Plaintiff brought the car in to the shop for repairs and signed an invoice with a limitation of liability printed below the signature line. Although the Plaintiff had purchased spare parts much more frequently, there was no limitation of liability on the invoices for spare parts.
The Court of Appeal found this was not an adequate prior course of dealings to incorporate the liability limitation. In reaching its decision, the Court distinguished Hardwick Game Farm v Suffolk Agriculture Poultry Producers Association In that case a farm had received chicken feed from the Association for 3 years, 3-4 times per month. Each time the parties made an oral arrangement for purchase and delivery and, following delivery, the supplier issued a "sold note" containing the term that the buyer assumed liability for any latent defects. Despite receiving these sold notes 3-4 per month for 3 years, the buyer had never objected or "said anything which would have led the sellers to assume that the buyers were doing anything other than accepting the terms of the contract which appeared on the seller's note." The Defendants reliance on the buyers silence, therefore, seems to have been key.
In Western Meats Ltd. v. National Ice and Cold Storage Ltd. v. Nordic Cold Storage Ltd., referred to by the Supreme Court in the Elliott appeal, the Plaintiff had stored meat in the defendant's cold storage facilities. When the meat was damaged, the Defendant claimed that a condition of the trade was that all goods were stored at owner's risk. However, there was no evidence that this condition had been brought to Plaintiff’s attention. During the first years that they did business together, the conditions nowhere appeared. Later on, they appeared on the back of Defendant's notepad and on the back of various storage documents. The Irish Supreme Court held that because the terms were never expressly brought to the attention of the Plaintiff, they were not incorporated into the cold storage agreement.
By contrast, in Sugar Distributors Ltd v. Monaghan Cash & Carry Ltd (in Liquidation), also considered by the Supreme Court in the Elliott appeal, a condition of sale noted on the front of the invoice provided that title of the sugar would only be transferred once the purchaser had paid the full amount. The managing director of the Defendant (the sugar purchaser) testified that his attention was not drawn to this 'retention of title" clause either by phone or letter, and that he had only checked the invoices for quantity and price. The court found that, even though the retention of title clause had been added after the parties had been doing business for two years and the Plaintiff had not drawn the Defendant's attention specifically to it, it had been contained on every invoice for the prior 15 months. This was adequate notice and the term would be valid and binding.
In Noreside Construction Ltd. v. Irish Asphalt Ltd, the supplier argued that, although the delivery dockets were non-contractual, the terms should apply because there existed a course of dealing between the parties. The Irish High Court rejected this argument because, absent a determination that each delivery docket constituted a "new and distinct contract," there was no prior course of dealing. In reaching this conclusion, Geoghegan J considered the English case of Circle Freight International Ltd. v. Medeast Gulf Exports Ltd.
In this case a question arose as to whether an invoice issued after goods had been received, which incorporated reference the standard trading conditions of the Institute of Freight Forwarders, including a limitation of liability, was binding. The English court held, "It is not necessary to the incorporation of trading terms into a contract that they should be specifically set out provided that they are conditions in common form or usual terms in the relevant business. It is sufficient if adequate notice is given identifying and relying upon the conditions and they are available on request. Other considerations apply if the conditions or any of them are particularly onerous."
The custom must have acquired such notoriety that the parties must be taken to have known of it and intended it should form part of the contract.
The custom must be certain.
The custom must be reasonable, and the more unreasonable it is the harder it will be to prove that it exists.
Until the Court takes judicial notice of a custom it must be proved by clear and convincing evidence.
The custom must not be inconsistent with the express contract.
In the Noreside case the evidence before the court was simply of a belief that it was custom and practice. There was no evidence that the practice of limiting liability was consistent within the industry and therefore the Supreme Court upheld the decision of the High Court that the terms and conditions that Irish Asphalt sought to rely upon were not incorporated by reference to custom and practice.
In order to assess whether reliance can be placed on terms and conditions under Irish law, the first step is to look at the particular document that makes reference to the Irish trade conditions. The key question to consider is whether this document is of type that you would expect to contain conditions and what is the document designed to do.
Assuming the document is a “contractual document”, the next issue to consider is whether the party receiving it understands its contents or part thereof are deemed to form a term of the contract.
Where there are a course of dealings between the respective parties, consideration must be given to what actual or reasonable notice of the terms the receiving party has had. Who is the receiving party of the notice is key. Has the notice been given to the correct person negotiating the contract? The extent of previous dealings will be relevant and will be a matter of fact and degree. The number of previous dealings, how recent they are and similarity in terms of subject matter and the manner in which they were concluded will be important factors to consider. Quantity and consistency will be crucial to establishing a course of dealings.
Finally, an argument as to the incorporation by custom and practice unless the conditions are "so notorious, well know and acquiesced in" is unlikely to suceeed.
It is important that the forwarder bears all of these elements in mind if he is to get the advantageous protection afforded by the relevant Irish trade terms in accordance with Irish law. The dicta in the Noreside appeal of Ms Justice Dunne suggests that, printing terms and conditions on the actual contractual documents for each and every shipment and ensuring these are provided in full to the relevant contracting party before the shipment is the safest method to ensure incorporation. This should be combined with highlighting clauses that are of harsher application such as relevant exclusions and limitations.

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