What is limited liability?

In the freight industry, freight forwarders and carriers all limit their liability in the event of a claim, this limitation can either be contractually enforced or enforced by law through an international convention. The limitation as stated by the applicable conditions is the maximum legal amount that can be recovered from the company in the event that goods are lost, damaged or stolen while in transit. As a company operating from the UK the most common conditions to come across for transit are those provided by BIFA, RHA or applicable by law under the CMR Convention. These conditions are there to protect the freight forwarder and to ensure that any claim is settled on a fair basis, liability is usually limited by the weight of the goods and the limitation is either a monetary value or Special Drawing Right (SDR) per Kilogram of goods affected. An SDR is an International reserve asset created by the International Monetary Fund (IMF) and the exchange rate to standard currencies can be found on the IMF website, currently 1 SDR has a value of around GBP £1.05.


The British International Freight Association is a member association for freight forwarding companies based in the UK. The association allows members to contract business using their tried and tested industry conditions while also providing training and advice to assist their members in their operations. As standard under the BIFA terms and conditions any claim against a freight forwarder must be notified within 14 days from the date of the loss and then completed within 9 months from the date of the loss. The liability of the freight forwarder is limited by the weight of the goods to 2 SDR's per Kilogram of goods subject to the claim.


The Road Haulage Association is a member association for haulage companies based in the UK. Much like BIFA, members have access to tried and tested industry conditions as well as training and advice. Under RHA any claim must be notifed within 7 days from the termination of transit and the claim must be completed within 12 months from the termination of transit. Liability as per the terms and conditions would be limited to £1,300 per tonne of goods subject to the claim.


The CMR Convention, otherwise known as the Convention on the Contract for the International Carriage of Goods by Road, is an International convention that applies to all road transit movements between 2 member nations. It is an international convention agreed by the United Nations and it applies by law to any transits that fall under the scope of the convention, this would supercede any standard trading conditions that a company generally trades under. The convention outlines a number of articles that form the rules of the transit and much like the previous 2, there is a time limit of 7 days from termination of transit to notify a claim and a time limit of 12 months from termination of transit in which to complete the claim. The CMR Convention also provides a limiation to the liability of a carrier at 8.33 SDR's per Kilogram of goods subject to the claim.

The above details are only a small snippet of these specific conditions, there are many more associations and international conventions that supply conditions and many more clauses and articles that will apply, the full versions are easily accessible online and it is reccommended that they are read and understood prior to transit to avoid any issues.

The Insurance Broker can provide further advice and assistance should it be required.