Topics
1. Obligations and laws of agency and
contract
2. Negligence
3. Customs Act and broker licencing
requirements
4. Australian Consumer Law
5. Risk mitigation
To whom do you owe obligations
Client
• who is the client
• multi-nationals
• freight forwarder
Australian Customs
Some third parties who will rely on your advice
Agency
• When will an agency relationship arise?
• Where a principal authorises a person to act on behalf of the principal
and create legal relations between the principal and a third party or to
make representations on behalf of a principal
• Extent of authority
– Actual authority
» Express authority - orally or in writing (T&Cs)
» Implied authority - arising from expressly authorised conduct that is
necessary or which ordinarily follows when exercising that express
authority
– Apparent or ostensible authority
» Authority as it appears to others
– To avoid doubt – set scope of your authority in your T&Cs
Contract – Implied terms
• Terms of a contract between an agent and principal
– Implied terms
» Duty of agent to follow principal's instructions/act within authority
» Duty to exercise care, skill and diligence
» Duty to avoid conflict of interest and duty not to profit from position
» Duty to keep accounts and records
» Right of reimbursement and indemnity
» Confidentiality
» Any terms that give effect to the intention of the parties and those that
arising from custom or trade usage that are not expressly included
Contract – express terms
– Express terms ordinarily included
» Scope of authority
» Client’s acceptance of the T&Cs
» Liability and indemnities
» Client’s warranties
– Unfair terms
Liability
Consequences for breach of contract as an agent:
• Damages
Factors relevant to liability
• Contractual limitations and indemnities in your T&Cs
• Causation
• Remoteness
• Mitigation
• Misrepresentation
Hypothetical
You specialise in imports of chemicals.
• A new client engages your services and asks what concessions your
other clients (their competitors) use.
– How do you respond?
Negligence
Brokers owe a duty of care to a
client when providing specialist
advice and services to avoid
causing the client to suffer loss
Negligence
How may a broker be negligent?
• brokers owe a duty of care to a client when providing specialist advice
and services to avoid causing the client to suffer loss;
• the broker breaches that duty of care;
• the client suffers loss; and
• that loss was reasonably foreseeable by the broker
When is it breached?
• there is a special relationship of proximity (e.g. via a contract);
• the broker provides specialist advice or has special means to acquire
knowledge; and
• it was reasonable for the other person to rely or act on the information
given
To whom is it owed – the client and third parties
Liability
Consequences of acting negligently
• Claim in damages
Factors relevant to liability
• Contractual limitations and indemnities
• Acting in a manner widely accepted by brokers in Australia
• Lack of proximity
• Client or third party’s reliance on your advice was unreasonable
• Contributory negligence
• Voluntary assumption of risk
Hypothetical
You discover that you have been mistakenly claiming a TCO for a
client’s goods.
• Your client is required to pay back the outstanding duty and, as the
goods have been on sold, they are unable to pass on the expense to
their customers.
• Have you breached your duty of care?
– Is there a sufficient causal link between your duty to the client and
the loss? Is it too remote?
– What obligations under the Customs Act have you potentially
breached and what action do you need to take?
– What if the client does not wish to report the underpaid duty to
Customs
Hypothetical
You are processing an import of goods that are similar but not
identical to goods that are covered by a tariff precedent specifying
eligibility for a TCO.
• Do you
– advise your client to seek a TA?
– classify the goods according to the precedent without obtaining a
TA?
– other action?
• Does your answer depend on how much duty is payable
Customs Act
Broker’s liability overview
• deemed owner
• personally liable in some instances
• liability relates to role as broker/holder of a licence
Strict liability offences
• example of false or misleading statement (243T and 243U)
– not only the importer with full liability - whoever made or caused the
statement to be made
– be aware of ACN 2014/53 regarding identity theft
• failure to account for goods under Customs control (36(2))
• Maintaining documents (240AB)
Offences requiring intent
Offences that require intent
• Smuggling – 233
– smuggling
– prohibited imports and exports
• Customs offences - 234
– evading duty
– obtaining drawback, refund, rebate or remission which is not payable
– false statements
• Goods under customs control – 36(1)
• Aiding and abetting – 236
Hypotheticals
An “employee” of a client (with whom you have never dealt) calls
you instructing you to enter an upcoming shipment.
• Do you action their request?
• If no, how do you respond/what questions do you ask/documentation
you would require before you were to action their instructions?
Broker Licencing requirements
A breach of a licence condition is a strict liability offence (s183CGC)
• Mandatory disclosure
– Must disclose false, misleading or incomplete information provided to
Customs
– Applies to information provided by other brokers
– Applies where the impact is “material”
– Information must be disclosed as soon as practicable
– Disclosure can be by way of amending the entry
– Conflicts with the requirement to maintain confidentiality
Hypothetical
You obtain a new client who has transferred from another broker.
• You assess their first import and classify the goods to a heading that
attracts a rate of 5% duty.
• You discover that the former broker classified the goods to a heading
that has a duty rate of 0, which in your opinion was incorrect.
– What action do you take?
» To meet your duty to your client?
» To meet your Customs obligations?
– Would your answer change if your classification was different but
also attracted a duty rate of 0%?
Broker Licencing – other requirements
Must ensure “Consent to Obtain Personal Information” completed on
request
• Must not allow Customs' systems or information to be used for
unauthorised purposes or to assist aid, facilitate or participate in any
unlawful or illegal activity
• Must undertake CPD
– failure to complete points must be notify to Customs with an
explanation of why
– New CPD structure – see ACN 2014/48
• Must ensure that all persons who participate in the work of the broker
are fit and proper persons
• Must report within 30 days of certain events occurring
Consequences
• Warnings and education (considered in issuing infringement notices)
• Infringement notices
• Increased penalties and offences under the INS 1 February 2014
– See 2014 INS Guide
• Revocation of licence
• Prosecution
• Timeframes
Defences/how to protect yourself and your client
• Voluntary disclosure of false or misleading information given to Customs
• Mistake of fact:
– Individual – mistake must be reasonable
– Corporation – due diligence requirement
• Are the elements of the offence made out:
– Example – Refunds application outside of 4 year period
Australian Consumer Law - Guarantees
• Apply to all services under $40,000
• Guarantees for the supply of services:
– rendered with due care and skill
– reasonably fit for purpose
– reasonably expected to achieve a known result
– supplied in a reasonable time (where not agreed/fixed)
• Any term that restricts the above guarantee will be void
Australian consumer law - offences
It is an offence to:
• Make false or misleading representations about your services
• Engage in conduct which under all the circumstances is unconscionable
• Engage in misleading or deceptive conduct or conduct that is likely to
mislead or deceive
Unfair terms will be void
• relates to clients who are using your services predominantly for
personal, domestic or household use
• Soon to expand to small businesses
Risk mitigation
• Insurance
• Create clear and effective T&Cs to protect yourself and your business
– scope of authority
– limit liability
– indemnities
– allow disclosure of confidential information to Customs
• Rely on written instructions
• Internal due diligence
• Education – yourself and your employees
• External due diligence – use judgement and ask questions
Questions
30
CONTACT Russell Wiese
T: 03 8602 9231
Lynne Grant
T: 03 8602 9246