A freight forwarder contract is not required for giving legal effect; express or implicit agreement both suffice unless the parties had agreed on a specific method (Taiwan)

Ankwei Chen

The Taiwan High Court rendered the 106-Hai-Shang-Shang-9 February 26, 2019 (the “Decision”), holding that a freight forwarders contract is  not required in law for giving effect to a shipment agreement; express or implicit agreement may both suffice in giving legal effect unless the parties had agreed on a specific method beforehand.

The appellee in this case purchased several batches of waste cooking oil under its non-party Malaysian affiliate, in September 2015.   Appellee and the seller agreed to contract the appellant to ship the goods FOB.  In addition, to ensure Appellee could pay for the goods, the parties had further agreed that seller would only provide an affidavit to Appellant consenting for it to issue the electronic bill of lading to Appellee after Appellee had provided payment.    However, Appellee argued that Appellant refused to issue the original of the bill of lading, which caused Appellee to be unable to provide the bill of lading to the receiver to take delivery of the goods, and the goods were then taken by another person after arriving at the port of destination, thereby injuring Appellee.  Appellee filed a complaint in accordance with Article 53 of the Maritime Law and Article 638, Paragraphs 1 and 3 of the Civil Code to claim damages for the loss of the goods.  The original trial court ruled in favor of Appellee and Appellant appealed.

The court first stated in the Decision that the law does not require a freight forwarder contract to give legal effect to an agreement; any express or implicit agreement reached between the parties may suffice unless the parties had agreed on a specific method beforehand.  The goods at issue were ordered by Appellee’s legal representative, then Appellee retained Appellant to ship the goods, and Appellant collected the freight charge from Appellee.  This is sufficient to conclude that the parties had formed a freight forwarder contract for the goods at issue, thus Appellee’s assertion on this issue is persuasive.

However, the Decision pointed out that under FOB terms, it is the buyer who is responsible for the payment of the cargo, the charter arrangement, the payment of the marine transport, as well as informing the seller information about the chartered vessel and the loading port.  Therefore, unless the parties had clearly changed the shipment terms, the characteristics of FOB terms along with other facts may thus be used to discern the parties of a shipping or freight forwarding contract.  Accordingly, although Article 53 of the Maritime Law requires the carrier or ship captain to issue the bill of lading upon the shipper’s request after loading the cargo, it is still possible under FOB for the parties to contract to turn the bill of lading to the seller instead.     Given that the aforementioned agreement between Appellee and seller regarding the issuance of the bill of lading was entered into willingly by the parties and did not violate public order, good social morals or fairness, the agreement is effective and, the parties should be bound by it.  As a result, before Appellant has received the affidavit from the seller, Appellant has the right to refuse to issue the bill of lading to Appellee despite the existence of a freight forwarder contract between Appellee and Appellant.

In conclusion, although the goods at issue were resold to another person after it arrived at the port of destination, this was obviously not attributable to Appellant, and Appellant did not intentionally or negligently infringe on any of the rights of Appellee.  Therefore, Appellant’s complaint to seek compensation from Appellant was groundless, and Appellee’s complaint should be rejected.