NVOCC's Agent – A brief guideline

In common practice the relationship between an agent and its NVOCC principal would be governed by a set of agency agreement. Within the agreement there could be the standard stipulation on the respective liability of each party with regard to negligence, fault, error or omission. Where there is such an act of agent resulting in a claim against the principal by a third party (e.g. cargo interest), the principal will in most certainty take a recovery action against the agent. Even if the principal has chosen the route of recovering from its insurer, the agent is not likely able to avoid liability as the principal's insurer usually has the right of recovery against the defaulting agent under subrogation upon paying the claim. The principal does not usually have the right to deny its insurer of this recourse.

The right of principal against the agent may not be confined to the agent's own default. It could extend to include the default of any sub-contractor appointed by the agent. Hence the agent bears a certain vicarious liability towards the principal and it should be in the interest of the agent to ensure its sub-contractor carries the necessary liability insurance as well.

Common examples of agent's failures resulting in claims against principals and subsequent recoveries against agent are delivery without bill of lading, error in the issue of bill of lading for principal, mishandling of the cargoes, etc.

For the good order of the agent/principal relationship, a set of guideline put into practice would certainly help in alleviating the unpleasant atmosphere on the occurrence of a principal claiming against its agent.

The various aspects of an agent's functions could perhaps be categorized in attaching the suggested guidelines. This article will consider one aspect below with the other to be followed in subsequent issue. The guideline may appear common knowledge, however, putting this on records as a constant reminder or as a part of new staff training, is encouraged.

The issue on NVOCC bills of lading by an agent .

Where there is an agency agreement, all terms therein and appending guideline (if any) affecting this role must be duly observed. The bill of lading should contain and reflect all details of the voyage, ensuring any transshipment port is correctly stated. An error in this respect may give rise to a claim for deviation.When the principal does not want to carry certain cargoes (e.g. personal effects, project cargoes, high value electronic goods), the agent should likewise observe this avoidance. Where dangerous goods are permitted, the issuing agent should ensure proper identity, classification code etc as required under the carriage of DG.

Signature on the bill of lading should be from the duly authorized person and it is recommended such authorized signature be registered with the principal.If there is a need for “shipped on board” clause in the bill of lading, such bill of lading should only be released after receipt of a similar “shipped on board” ocean bill of lading from the master carrier.

Guaranteed delivery time should never be agreed upon or stated (in most liability policies this aspect may need extension).Cargo value should not be stated (if ad valorem shipment is intended, prior approval from principal is necessary. Insurance extension would also be required, in view of the greater exposure.) Bill of lading should reflect the correct conditions of the goods, that is, exceptions be stated therein whenever appropriate.

Apart from the bill of lading terms, the standard trading conditions of agent should be made applicable since there could be situation in which the agent is directly exposed to a claim when the terms of bill of lading are not activated. Other aspects of an agent's function will be considered in the next issue.

Disclaimer: No professional advice or recommendation is intended in this article. Operators should consult respective professional practitioners to put in place appropriate operating procedures .