Trade Clause, Shipper’s Best Bet & All You Never Knew!

FACTS BEHIND “TRADE CLAUSE”, SHIPPER’S ESSENTIAL TOOL AND ALL YOU NEVER KNEW ABOUT THIS PHRASE

Trade, in all aspects as we know, comes with risk and responsibilities irrespective of the value attached, as such, lay down conditions which entail all parties adherence over freight contracted by merchants to shippers or carriers is based on agreed terms and conditions, however, the subject phrase – trade clause is stipulated conditions by shippers (you) or carriers for the purpose of trade transparency and adherence.

Freight contracted to shippers or carriers by merchants are usually bound with conditions of service delivery as a result of the payable tariff, legal requirements, and sensitivity of trade, knowing that the aforementioned remains the icing on the cake. Before inking a trade deal, it is expected of a shipper or carrier to note the shipment type, while ensuring that the subject cargo contracted to a carrier at the place or port of origin is understood to be at the merchant’s risk, expense, and responsibility which meant legal implications.

• This begs the question – ‘How do you aim to shape your clause, and for what professional purpose do you intend to deploy this for your trade goal’!

Ordinarily, there’s often this risk involved as soon as shipments are contracted by merchants to shippers or carriers, which, in turn, leads to legal binding subject to shippers or carriers’ provision. Since trade is complex in its nature, significantly cross-border and seaborne trade, issues could evolve either as a result of incorrect and wrong declaration of freight’s Form M number or weight, or payable tariff at destination by merchants such as THC (terminal handling charges). Hence, the need for clauses that meant shippers or carriers compliant tools per trade is rather inevitable noting that claims and actions could arise from a merchant in relation with trade agreement.    

Going forward, while we lift this context off the ground, it should be borne in mind that clauses are deployed in trade mainly by shippers or carriers contracted by merchants (consignees) over a specific trade irrespective of its category, which cuts across a number of areas. These notable areas confirm merchants’ express acceptance of stipulated terms and conditions on a shipment bill of lading, noting that the equipment (container for instance) used to ship merchants’ goods, for FCL shipment, are returned clean, free from any dangerous goods placards and without labels precisely within carrier’s stipulated days following the date of delivery, otherwise, the merchant shall be liable of loss or whatsoever.  

Meanwhile, a clause on trade could mean a shipping clause, a clause that’s dependent on cargo release, and conditions at which the subject freight should be delivered to the merchant, thus, a delivery clause.

At this juncture, it will be fair to take this from the shipping clause. While we nail this submit from this angle, it’s clear the subject clause is often deployed by shippers or carriers in vast areas of shipping space, which is used primarily on the basis of transportation. As such, ensuring the merchant confirms his express acceptance of shipping terms and conditions stated on the carriers Bill of Lading which meant ‘contract of carriage’ that the carrier shall transport goods as FCL or Loose goods on the deck of any vessel, which is conveyed to the shipper or carrier’s agent at destination for logistics purpose.

This is essential for cross-border trade, more significantly seaborne freight, however, clause at this point guides shipping companies over shipments logistics and deliveries. This is because, stipulated terms and conditions ensure merchants adhere to carriers’ tariff per trade type coupled with equipment responsibility for FCL, which exempts carriers from any mistake or wrong declaration of Form M number on a shipment’s Bill of Lading. As a result, the shipper or carrier is protected from any claims or actions that could be filed by any merchant based on the above, while ensuring that the shipment is released against delivery by the carrier or shipper’s agent at the destination as stated and agreed.

For instance, all shippers or carriers with this tool that is legally backed by foreign trade policy ensure that their tariff is paid by each merchant as agreed and shipment equipment empties are returned within a specific period in good shape, otherwise, the merchant will face the penalty of demurrage or equipment loss.

But the primary goal of the shipping clause for every trade deal meant the shipper’s or your priority is the company’s interest notably in financial space, growth, and protection, thus, the icing on the cake of every business. It’s evident, that a shipper or carrier that presents himself as an expert in this sphere of global trade will be poised to protect his or her company’s interest with the aid of such a legal tool. Further on this, is financial in-flow into the company’s treasury and shipping equipment protection with the aid of trade clause, this in no doubt ensures merchants strict adherence per trade agreement.

In view of this, the subject shipping tool is used by shippers or carriers against shipments release, which meant meeting the requirement before delivery. However, clauses placed over shipments release by shipping companies are deployed in various ways as highlighted earlier. For instance, trade originating from Rotterdam to Nigeria, or from the U.S. to China based on agreed terms between the shipper or carrier and a merchant should be delivered to the actual consignee at the destination except the agreed tariff is paid coupled with the presentation of a specific Bill of Lading regarding that trade. However, should the consignee decline from these terms and conditions, the clause will mean – do not release the subject shipment to the consignee or his agent at destination except authorized by the shipper or carrier.

At we wrap this up, it will be fair to note that trade without delivery is as good as shooting oneself in the foot. Owing to the fact that an order has been placed and shipped, and, in turn, service is expected to be rendered based on agreed terms by the shipper (you) or carrier. To ensure the shipment is delivered to the consignee according to trade terms, the consignee is required to take delivery of the shipment with the actual Bill of Lading subject to that shipment based on agreed terms. A clause is therefore, a trade tool that ensures and protects the interest of shippers and carriers, but if misused, trade could become a joke.

Lastly, it will really be a nice thing to deploy this tool in a professional way since it’s a healthy act of trade, even as we urge, noting that it’s designed to help keep your trade on track and flourishing.  

• So, how do you aim to shape respective trade clauses? Leave your comment!