Cancellation of the order according to the German transport law. Why is “dead freight” beneficial for the carrier?
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For cabotage operations in Germany, German transport law applies. Due to language barriers, it is difficult to reach and understand German legislation. Starting the series of “German Transport Law”, in the first article, we will start by discussing one of the most interesting regulations contained in the German Commercial Code (HGB).
Pursuant to Article 415 of the HGB, the shipper may terminate the contract of carriage at any time. This means that the carrier can receive the cancellation of the order both before and during the execution of the order.
What is “dead freight”?
The first case concerns a situation where the carrier has not yet arrived for loading, is in the process of arriving or has already arrived for loading and the order has been cancelled. In such a case, the carrier shall be entitled to 1/3 of the agreed carriage charge (dead freight). For example, if the freight was €900 and the order was cancelled, the carrier is entitled to claim €300 pursuant to article 415 of the HGB.
Goods loaded – what can the carrier do?
The second situation is when the goods have already been loaded before the cancellation of the order. According to the German HGB, the carrier may, for example, unload the cargo and store it at the expense of a person authorised to dispose of the cargo, entrust it to a third party for safekeeping or drive it back.
If the carrier entrusts the shipment to a third party, he is only liable for making a careful choice. As a result of the measures taken, the carrier shall be entitled to reimbursement of the necessary expenses incurred and to dead freight (one-third of the freight).
The German institution of “dead freight” is undoubtedly very advantageous for the carrier. Thanks to it, he does not have to collect evidence that he suffered damage in connection with the cancellation of an order, which is usually very difficult to prove.
Soon we will delve into the next regulations of German transport law and reveal its secrets.