A forwarding contract is a commercial agreement by which the forwarder (freight forwarder) undertakes to organize the transportation of goods and perform related services on behalf of the principal, and the principal undertakes to pay a certain fee in return. The organization of transport and the performance of accompanying services imply the forwarder’s right to conclude, in their own name but on behalf of the principal, a transportation contract and other agreements necessary for carrying out the transportation, as well as to perform other customary operations and actions closely related to the transport of certain goods. This contract should be distinguished from a contract of carriage. In a contract of carriage, the carrier is obliged to perform the transport themselves, while in a forwarding contract, the forwarder does not necessarily perform the transport directly but organizes and coordinates the transportation process. This is a bilateral contract, which may stipulate various obligations for both contractual parties.
Obligations of the Forwarder
The primary activity of the forwarder is the organization of the transport of goods. Therefore, the law stipulates a specific obligation for the forwarder to act with increased diligence when receiving instructions from the principal and to inform the principal of any deficiencies in the instructions, especially those that could lead to greater damages or costs. Naturally, complying with the principal’s instructions is the forwarder’s core contractual obligation. In the absence of specific instructions, the forwarder is required to act in the best interest of the principal. Increased care must also be taken regarding the packaging of goods. If the goods are not properly packed, the forwarder is obliged to point out the packaging defects or correct them at the principal’s expense if there is a risk of delay. The forwarder must always act in the best interest of the principal and is thus obliged to regularly inform the principal about all events of significance and to take all necessary actions to protect the principal’s rights and interests. The forwarder is not required to carry out the transport themselves but may conclude a transport contract with a third party in the name and on behalf of the principal. In such cases, the forwarder is liable for the selection of the carrier and other parties with whom they entered into contracts in their own name and on behalf of the principal, but is not liable for the quality of their services unless such responsibility has been explicitly agreed upon. If the forwarder is instructed to ship goods outside national borders, they are also responsible for customs and other administrative formalities, unless otherwise agreed. The forwarder is only obligated to insure the goods if this has been specifically agreed. Finally, once their contractual obligations are fulfilled, the forwarder must provide an account to the principal.
Obligations of the Principal
The principal’s main obligation is to pay the agreed fee to the forwarder, which is done after the forwarder presents the account for the completed work. The principal must also reimburse the forwarder for any expenses incurred during the organization of the transport. Furthermore, the principal is obliged to inform the forwarder about the specific characteristics of the goods if the goods could pose a risk to the environment. When valuable items are to be transported, the principal must inform the forwarder of their value at the time of delivery. To secure the collection of claims arising from the forwarding contract, the forwarder has a right of lien on the goods submitted for forwarding and in relation to the forwarding process, as long as they hold the goods or documents that enable them to dispose of the goods.
Forwarding with a Fixed Fee
If a single total amount is stipulated in the forwarding contract for executing the forwarding order, this amount includes the forwarding fee, transport fee, and all other related expenses, unless otherwise agreed. In such cases, the forwarder is liable both for the selection and the performance of the carrier and other contracted parties.
Consolidated (Groupage) Forwarding
If the forwarder receives multiple shipping orders from the principal, they may organize consolidated forwarding. If, during such organization, the forwarder secures a freight rate difference in favor of the principal, the forwarder is entitled to a special additional fee.
In the case of consolidated forwarding, the forwarder is liable for loss or damage to the goods occurring during transport that would not have happened if the shipment had not been consolidated.