Datec Electronic Holdings Ltd & Anor. v United Parcels Service Ltd & Anor.

Under the CMR, a carrier which accepts goods for carriage cannot rely on contractual provisions that derogate from the Convention. A restriction stating that goods above a specified value are not offered for carriage does not prevent a contract arising when the carrier accepts them. Nor does presenting non-compliant goods necessarily constitute an implied warranty, representation or wrongful act causing the loss. The carrier remains liable under the CMR, subject to the Convention’s limits, unless the claimant proves a relevant exception such as wilful misconduct. Alleged employee theft must be established on the balance of probabilities by properly rigorous evidence. Where the evidence supports accidental loss equally or more strongly, the Article 29 exception does not apply.

Datec Electronic Holdings Ltd and Incoparts BV claimed the value of computer processors allegedly lost while carried by United Parcels Service Ltd and another defendant from the United Kingdom to the Netherlands. The parties accepted that the carriage from Cologne to Amsterdam was subject to the CMR. UPS disputed delivery, alleged that the goods might have been stolen by an employee, and relied on contractual terms restricting carriage of packages worth more than US$50,000.

The principal issues were whether the goods were delivered, whether any loss resulted from wilful misconduct by UPS employees so as to engage Article 29, whether the UPS terms were incorporated and effective, and whether the contractual restriction defeated liability under the CMR.

1. Delivery. The absence of proof of delivery, together with the evidence concerning the consignee’s procedures and the tracking records, established that the three packages were not delivered to L&A Freight BV. The issue of the legal burden was unnecessary to resolve because the evidence created a strong prima facie case which UPS had not displaced.
2. Wilful misconduct. The claimants had not proved on the balance of probabilities that the goods were stolen by, or with the assistance of, a UPS employee. Although employee theft was possible and the loss of several packages supported the theory, the evidence also supported accidental loss, misdelivery or placement in UPS’s overgoods area. The court adopted the properly rigorous approach required when findings of wilful misconduct are based on limited evidence, as stated in Laceys Footwear (Wholesale) Ltd v Bowler International Freight Ltd, [1997] 2 Ll L R 369. Article 29 therefore did not apply.
3. Contract and incorporation. The umbrella contract incorporated the UPS terms, including the US$50,000 restriction. The restriction governed the consequences of presenting non-compliant packages. It did not provide that no contract arose when UPS accepted them; rather, UPS had contractual rights to refuse or suspend carriage.
4. Effect of the restriction. The restriction did not create an implied warranty or representation that the packages complied with it. Any contractual term purporting to exclude or transfer liability for goods accepted under a CMR contract derogated from the Convention and was void under Article 41. The excess value did not prevent the CMR contract from arising.
5. Article 17 defences and result. Presenting packages worth more than US$50,000 was not a wrongful act causing the loss within Article 17.2. The necessary causal connection was absent. No relevant special risk under Article 17.4 was established. The claim therefore succeeded, but recovery was limited by Article 23 to £657.73.