The problem of limitation of liability is a complex one for most intermediaries offering services to other commercial interests and examples of the resultant problems are appearing before the Courts with increasing regularity. In particular, the carrier by road and the freight forwarder have had considerable difficulty over the past few decades in achieving a balance in their standard conditions of contract which will be reasonable for all concerned.1 Increasingly the Courts are being faced with situations where a forwarder is employed by a shipper to handle goods for him and in turn the forwarder employs a road carrier to effect part of the operation for him. The contract between the shipper and the forwarder will normally be subject to the Standard Trading Conditions of the Institute of Freight Forwarders, and that between the forwarder and the carrier will be subject to the terms of the Road Haulage Association Conditions of Carriage. These conditions differ considerably, the former offering the forwarder considerably more protection against the shipper than the latter offers to the carrier on the grounds that the essential function of the forwarder is to act as an intermediary between the shipper and the actual provider of services. There is therefore little litigation between shipper and forwarder where the Institute Standard Trading Conditions are employed, as there will be little chance of the forwarder being liable for any aspect of his operations or those of a subcontractor or other third party given the severe limitations of liability therein.

The R.H.A. Conditions, on the other hand, offer a reasonable balance whereby the carrier accepts liability for shipments of up to £800 per ton with only limited protection for the carrier. Above that level he will not accept liability. However, where a shipper is moving shipments of a high value and low weight the amount recoverable will be quite inadequate. Generally the shipper will have adequate insurance cover, but underwriters may attempt to indemnify themselves against the carrier by way of subrogation.

The big problem of trade association conditions of carriage is that the only sanction for their application is contractual. They have no statutory sanctions to back them unlike international carriage provisions which are mandatory under the various conventions. Such a situation does not cause much trouble in practice where a carrier is in direct contractual relationship with the shipper, but where a forwarder acts as an intermediary between them the doctrine of privity of contract can cause serious complications. As mentioned above, the forwarder enters into two separate contracts, one with the shipper, and one with the carrier, each under different conditions. The carrier is therefore faced with the problem of ensuring that the shipper will be subject to the limitations of liability under R.H.A. Conditions as well as the forwarder.