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Web alert: Standard Service Contract for Liner Trade – SERVICECON

30 April 2015

The SERVICECON is a new standard contract which has been launched by BIMCO and the Global Shippers’ Forum, an organisation representing shippers across the industry. It is meant to be used by carriers and shippers in the liner trade as a basis for their negotiations in respect of the volume carried and services offered, with the terms adjusted according to the parties’ needs. It can also be used for shipments subject to US jurisdiction.
 
It is common for shippers to undertake to transport a minimum number of containers within an agreed period of time, in return for a favourable freight rate. Because of this, the key term of the SERVICECON is the Minimum Quantity Commitment (MQC) clause. A failure to declare this will render the contract null and void.
 
The shipper will be liable to the carrier for the agreed liquidated damages if it is unable to meet the MQC. If the carrier fails to carry the MQC, it will be liable to pay the shipper proven damages directly arising from such failure, which for each container shall not exceed the agreed rate per TEU. The shipper will also have the option to reduce the MQC quantity or terminate the contract in the event of repeated breaches by the carrier.
 
Under the SERVICECON there is also a requirement for the carrier to maintain, at his own expense, adequate insurance cover by a P&I Club or liability underwriter for loss of or damage to the cargo and to provide evidence of such insurance on request.
 
Moreover, the carrier has to perform his duties with due care at the generally accepted industry standards and must ensure that its personnel are adequately trained in this respect.
 
Finally, the terms of the carrier’s standard bill of lading are incorporated in the SERVICECON and, in the event of inconsistency between the two, the terms of the SERVICECON will prevail.


 
This article intends to provide general guidance only. It is not intended to provide legal advice in relation to any specific query. Members requiring further information on this topic should direct their enquiries to either the author of this article, or their usual club contact.