The Customer-Forwarder Relationship:
Logistics Service Providers are customer-oriented. They place a high priority on satisfying the needs of the customers. Not to meet those needs means losing a customer, probably for ever!
These practical considerations lead managers in the forwarding industry to under-estimate sound legal practice as a condition of profitable operation. Yet legal considerations also indirectly contribute to customer expectations. A manager who does not have a reasonable relationship will not be able to control those risks to benefit the forwarder. Or how to deal with a customer whose expectations have been disappointed!
Common & civil law systems - a brief comparison:
The forwarder-customer relationship is subject to private law within two legal systems, known as the common law and the civil law.
The common law is a judge-made law which pays great attention to the facts of an individual case, so that relatively small differences in the facts may lead to a very different result.
The civil law is codified law. Laws that govern the forwarding activities are found in legislative codes that state rules that govern contracts such as mandate (or agency) and hire of services
The "Commissionnaire de transport", a well-known civil law institution, has provided a sound legal basis for forwarding operations. This institution adapts general principles of the law of commission, a collection of laws applicable to agents acting in a recognized trade, to the engagement of a forwarder. Some civil law countries have gone further and enacted a specific code applicable to forwarding activity.
Contract law simplified:
The rights & obligations arising from an engagement of a logistics service provider are subject to the law of contract.
Parties make a contract by agreeing on all essential matters that govern the services or benefits they are to provide or perform for each other.
A contract is formed when one party makes an offer that the other accepts. In practice, offer and acceptance are not rigidly structured, as an offer need to be in a single communication, and an acceptance can be partial or subject to the performance of a condition by the other party.
An offer & its acceptance can also occur through the conduct of the parties. As an example, by delivering goods to a terminal, a forwarder can provide an offer by arranging transport of the goods to the designated consignee. But what does happen if the goods were not adequately prepared for transportation with correct packaging? Is the delivery of the goods an offer to employ the forwarder's services as a packer ? Perhaps not, which shows that it is risky to treat conduct as an offer, and it is always prudent to check with the customers before providing any services.
Negotiations - the compromise of interest:
A forwarder wants to minimize the financial risk of its engagement. A customer needs a reliable service for transport & delivery of its goods. To a customer, reliability implies that its forwarder will make good any damages to the goods during transport. As the customer's expectation may conflict with the forwarder's objective of minimizing risk, parties must accommodate their objectives when negotiating a forwarding engagement.
Negotiations of terms - the price:
The most reliable ways to obtain agreement from customers on price are - submitting quotes to a customer for acceptance, or by publishing a tariff for movements that a forwarder is willing to arrange. Each way has pitfalls that must be avoided.
Quotes are something given without real expectations of immediate acceptance by a customer within a short time. In such circumstances, an employee giving the offer may not take the trouble to make a clear what activities it covers. When a customer later accepts the quote, there is often neither an incentive nor time to go back and review the make-up of the quote. The customer's goods may already be en route before a dispute as to the scope of the quotation arises. Another problem occurs where a customer ships the goods well after the quote when carriers have increased their freight charges. A forwarder does not wish to absorb these increases at the expense of its profit on the move. Yet the customer will be reluctant to pay more than the quoted price. A forwarder must be careful to make its customer appreciate that a quote is only good for a limited time.