Outstanding freight payments – what to consider now

02.04.2020

Carriers and freight forwarders have to consider certain factors in the current situation around the Covid-19 pandemic, including the fact that debtors of freight claims may have to cope with liquidity bottlenecks, which in turn may lead to delayed payments of due freights. Two specific issues that carriers should now address will be highlighted in detail below.

Minimize risks of non-payment

Doing business with reliable partners is important now more than ever. By law, carriers are facing the problem in logistics of having to completely arrange transport for the agreed freight payment to be due. This means that the goods must be delivered before payment of freight may be demanded. It is therefore necessary to only accept orders from reliable partners or, where possible, to negotiate possible collateral or advances with the business partners.

The new right to refuse performance in times of Corona – Attention: No suspension of the period of limitation

The German parliament endeavors to create stable conditions in times of crisis. It is for this reason that a special right to refuse performance was introduced, in particular to protect consumers and micro-enterprises.

The draft law provides that consumers and micro-enterprises (businesses with up to 9 employees and annual sales of less than EUR 2 million) are entitled to a temporary right of refusal of performance in continuing obligations until June 30, 2020. This provision is particularly relevant in the case of framework contracts. In some cases, Bundesgerichtshof (Germanys’ highest court for civil law matters) rulings already presumed continuing obligations in cases of logistics framework contracts, which would lead to potential applicability of the right to refuse performance. Generally, however, logistics framework agreements should not establish such a continuing obligation.

The relevant continuing obligation must, however, also be material for the consumer or the micro-enterprise. If a micro-enterprise’s business depends on the transport services under the framework contract, it must be expected to be material.

Both the assessment of whether a continuing obligation is involved and whether it is material within the meaning of the draft law remains reserved to individual examination of the case. This will also have different consequences for possible assertions in court.

It is important, though, not to lose sight of the statute of limitations in this context. The claims arising from a legal relationship under transport law are in most cases subject to a limitation period of one year from delivery of the transport goods. The new right to refuse performance, however, does not suspend the limitation period. It will therefore sometimes be necessary to take own measures to suspend the limitation period.

Status: April 2, 2020