‘Forwarding industry should analyse implications of new Acts’

The recent Business Law & Tax Review supplement to Business Day made interesting reading. *The Consumer Protection Act is covered. There has been quite some debate on the impact it will have on the forwarding business and there is an anticipation that the act will not apply to transactions between a forwarder and a client above a certain threshold which, I gather, has yet to be established. But forwarders operate within supply chains and the statement in the article – Therefore no transactional nexus is required for a consumer to make a claim against any entity in the supply chain – puts another slant on the position. *The new Companies Act is the subject of another article on reckless trading. “….. a company must not carry on its business recklessly with gross negligence, … or trade in insolvent circumstances.” “ Directors … will be held liable …” There are some clearing agents who do not insure their debtors – and over the years, bad debts have brought a number of agents to their knees. Extending unsecured credit has also put agents under extreme financial strain. Unkept promises made by friends have damaged the best of balance sheets. Unlike banks and trade finance houses, clearing agents generally offer unsecured credit without any sight of the client’s financial statements. Whether or not this behaviour would be considered reckless remains to be seen, but it would be advisable for directors to know where they stand.