Legal Asset Boundaries

1. Trade and Transport

Transport is almost always a consequence of trade. In the delivery conditions of a purchase agreement, the seller and buyer agree, among other things, who must take care of the transport of the shipment.

In international trade, seller and buyer can use the Incoterms 2020. These are standardized agreements about who arranges what (for example transport, but also insurance and/or customs formalities), the payment regulations and guarantees, and the moment at which responsibility is transferred (for example when a container is lifted over the rail of a ship). Incoterms 2020 are mainly focused on the agreements between buyer and seller.

2. Transport agreement

Under the purchase agreement, one party issues one or more orders to arrange transportation. In a more complex chain, forwarders often arrange the details on behalf of the client, but in the case of a relatively simple order this is usually done directly.

2.1 Digital transfer of accountability and liability

For centuries, the standard in the professional transport of goods have been paper documents. They serve as a basis for business agreements as a mean to coordinate activities, and as a basis for declarations to and inspections by governments. Many laws, work processes and customs are based on this paper backbone.

The new standard is digital. Mutual agreements, planning, transactions, transfers and notifications are handled as much as possible by the IT systems of the involved companies and governments. This new standard is automated, with less and less human intervention, in order to facilitate the following:

• Demonstrability: being able to show the origin of goods and the environmental effects of a supply chain.

• Managing scarcity. Scarcity is visible in scarce infrastructure, labor shortages, limited environmental space and shortages of raw materials, energy or products. Managing this scarcity is possible by providing more information and insight.

• Resilience: absorbing the consequences of disruptions and shocks in the global economy.

• Preventing undermining: both cutting off opportunities for crime and fraud, preventing and detecting tax evasion.

2.2 Legal asset boundary management

Details determine the legal strength of a digitally recorded transaction. The requirements for these digital transactions can be set by the involved parties — such as clients, transporters and recipients.

Digital transactions exist in many different variants.

Many different variants of digital transactions exist, and all of them have specific properties, advantages and disadvantages. The legal status of variants (other than high quality "digital signatures" for valuable transactions) is diffuse.

As there is no global accepted standard or legal framework for "fit-for-use" recordings of digital transactions, the BDI supports commercial agreements between parties, called Edge Agreements.

Standardized protocols with corresponding liability definitions can be referenced in general conditions of agreements, creating the legal basis for "fit-for-use" Legal Asset Boundary Management.