Freight Forwarder's Lien in Malaysia: FMFF Clause 28, the 7 Day Sale Notice, and Why Most Liens Fail

Start with the fact that reframes everything else on this page.

Section 124 of the Contracts Act 1950 sets out a general lien for five classes of person: bankers, factors, wharfingers, advocates and policy brokers. Read that list again and notice who is not on it. Freight forwarders are not.

Warehouse operators are not. Repairers are not.

So the broad lien you think you have, the one that lets you hold this consignment against an unrelated older invoice, is not something section 124 gives you. It is something your contract gives you.

The Act does provide a narrower right elsewhere. Section 123 gives a bailee a particular lien, tied to the specific goods on which the bailee has done work. That is a much smaller remedy than the one most forwarders believe they are exercising.

Which means the wide remedy stands or falls on whether your trading conditions actually formed part of the contract, and that is where most liens fail.

Where your lien actually comes from

Malaysian freight forwarders commonly trade on the FMFF Standard Trading Conditions, published by the Federation of Malaysian Freight Forwarders. The current edition is dated 01/05/2021 (REV-0). An earlier General Standard Trading Conditions Version 3 of 2010 is still in circulation on forwarders' own websites.

Check which version you are on before you do anything else in this article. The clause numbers below are the 2021 edition's. If your customer signed up to the 2010 version, or to a set of conditions your own company wrote, the numbering will not match and some of the substance will not either.

That is not a technicality. A demand letter citing the wrong clause of the wrong edition is the first thing a defendant's solicitor will notice.

Clause 28, read properly

Clause 28 has exactly two sub-clauses, and the power of sale lives inside the first one rather than standing on its own.

Clause 28(a) gives a general lien and right of detention over all goods and documents in the possession, custody and control of the Company or its agents, which may reach cargo held at a subcontracted warehouse or container freight station, depending on whether that operator holds as the company's agent, for all sums due to you "at any time and from time to time whether in respect of Services provided or in respect of such Goods or other goods or otherwise".

Read that last phrase carefully, because it is the commercially valuable part. As against your customer, this is a general lien, not a particular one.

You can hold this consignment against an invoice for a completely different consignment shipped months ago. A particular lien would only let you hold goods against charges relating to those goods. Whether it binds a third party who owns the goods is a separate question, dealt with below.

Then the power of sale. If the sums are not satisfied "within 7 days of a notice in writing" from you to the customer, you become entitled to sell or dispose of the goods or documents "whether by public auction, private treaty or otherwise".

Two operative requirements sit in that sentence and both get skipped. The notice must be in writing, and the seven days runs from the notice, not from the invoice due date, not from the day you decided to hold the cargo.

Clause 28(b) deals with perishables. Where the goods are liable to perish or deteriorate, the right to sell arises immediately once any sum becomes due, "subject only to the Company taking reasonable steps to bring to the Customer's attention its intention of selling or disposing of the Goods before doing so".

That is not a right of immediate sale with no notice, which is how it is usually described in practice. The seven day period disappears. The obligation to tell the customer what you are about to do does not.

The payment clauses that decide whether you are owed anything at all

A lien secures a debt. If the debt is arguable, the lien is arguable, so the payment clauses matter as much as clause 28 does.

Clause	What it does	Why it matters to a lien
22(a)	All sums payable immediately when due, without deduction or deferment on account of any claim, counterclaim or set-off. The customer agrees to waive the right of set-off	The commonest defence to a lien is "we do not owe you, because you damaged our last shipment". This clause is the answer to it
22(c)	Interest on overdue amounts at two per cent per month, running from the date the amount falls overdue until payment	Sets what the secured sum actually is. Most forwarders never claim it
22(d)	On failure to pay within 5 days, written notice may cancel all credit terms and declare all sums immediately due and payable	The acceleration limb is the one that matters. It creates the debt the lien secures, and most forwarders never use it
22(e)	Any dispute as to the amount or accuracy of an invoice must be raised within 30 days of the invoice date, failing which the customer is deemed to have conclusively accepted that it is complete and accurate	The most useful clause on this page. It is what turns an arguable debt into an unarguable one
22(f)	Unless otherwise expressly agreed in writing, all invoices payable immediately on sight, without reduction or deferment	Fixes when a sum becomes due where no credit terms were agreed. If you granted 30 or 60 day terms in writing, you have agreed otherwise and this clause does not apply

The set-off waiver in 22(a) is doing a great deal of quiet work. Without it, a customer with a live cargo claim can argue the account is not in fact overdue, and if the account is not overdue there is nothing for the lien to secure.

Clause 22(e) does the other half of the job. Most forwarders never enforce the 30 day window, then find themselves arguing about an eighteen month old invoice at the exact moment they need the debt to be beyond dispute.

The clocks that catch people out

These run against you, not for you, and they are short.

Clause 37(a)(i) requires written notice of any claim within 7 days, and describes that notice as "a condition precedent to any liability on the part of the Company". A condition precedent is not a formality you can cure with a good explanation. Miss it and the liability never arises.

The seven days runs from a date defined in clause 37(b), which sets three different starting points: the date of delivery where goods are damaged, the date the goods should have been delivered where they are lost, delayed or not delivered, and the date of the event giving rise to the claim in any other case. Identify which one applies before you count.

Clause 35 requires suit to be brought within 9 months, unless otherwise expressly agreed, measured from delivery, from the date the goods should have been delivered, or from the date a failure to deliver would entitle the consignee to treat them as lost.

Clause 37(a)(ii) imposes the same 9 month bar with no such qualification. Do not assume a side agreement on time limits reaches both clauses.

Nine months is far shorter than the general limitation period people assume applies. Cargo claims are routinely lost on this clause by claimants who were still negotiating in good faith when the window closed.

The liability caps, so you know what your exposure actually is

Clause 32 sets different caps depending on how the goods moved.

On the multimodal limb the clause is expressly framed as the lesser of the value of the goods and the per kilogram figure, and that limb is the one most summaries drop. The drafting of the remaining limbs is less clear on the point, so read your own copy.

The special categories of goods listed in clause 42 sit outside this entirely. Clause 42 carries those goods at the customer's risk with no liability on the company, so there is no cap to look for.

Situation	Cap	Overall maximum
Multimodal transport including a sea, air or inland water leg	SDR 2.00 per gross kilogram, not exceeding SDR 666.67 per package	SDR 30,000
Multimodal transport that does not include carriage by air, sea or internal waters	SDR 8.33 per kilogram of the gross weight lost or damaged	SDR 30,000
Local logistics services and transportation, expressly including cross border road or rail movement to an immediately neighbouring country	RM2,800.00 per shipping unit, or RM5.00 per gross kilogram	RM100,000.00
Container delivered to the customer's premises and lost or damaged at the importer's premises, under clause 30(d)	Up to RM100,000.00, expressly by reference to clause 32(a)(iv)	Read with clause 32(a)(iv)
Delay, under clause 32(b)	Limited to the Company's charges for the delayed goods	As above

SDR is the IMF's Special Drawing Right, and it floats against the ringgit, so the ringgit value of an SDR cap moves. Do not carry a converted figure in your head.

There is a point here that most forwarders miss when they read their own conditions. These caps are your protection, and they are also the measure of what you have failed to protect if the conditions were never incorporated. An unincorporated set of trading conditions loses you the caps at the same moment it loses you the lien.

The haulier equivalent

Hauliers operating under the Association of Malaysian Hauliers conditions of carriage have a structure that broadly mirrors the forwarders': a general lien with a power of sale, charges payable in advance, interest on overdue amounts, a short window in which the customer must dispute an invoice before it is treated as accepted, short claim notification deadlines, and a liability cap expressed both per kilogram and as an overall figure.

Two differences are worth knowing. The haulier lien is generally understood to be exercisable after a reasonable time rather than after a defined notice period, which sounds more flexible and is in fact less certain. The time bar for bringing suit is generally understood to be longer than the forwarders' nine months.

There is also a second claim deadline behind the first. The copies in circulation describe a short period in which loss or damage must be advised in writing, followed by a further short period in which the claim itself must be made in writing. People meet the first and miss the second.

Here is the practical warning, and it is a real one. The copies of the AMH conditions circulating on member hauliers' websites are not consistent with each other. Different copies carry different version labels and different liability figures, and the association does not publish the document publicly.

Do not rely on a figure you found on another haulier's website. Get the version your own customer signed, or ask the association directly.

The same caution applies across the border. A Singapore counterparty will be trading on a different set of conditions, and those should not be assumed to match FMFF's on any point that matters to you.

The mistake that kills the lien

Standard trading conditions generally bind the other party only where they were brought to that party's attention before the contract was concluded. Notice given afterwards is usually too late.

There are recognised exceptions, the most important being a consistent course of dealing over a long enough run of transactions. That is an argument rather than a shortcut, and it is expensive to run.

Now think about where your conditions actually appear.

If they are printed on the back of your invoice, they arrive after the job. The customer instructed you, you performed, then you invoiced.

The contract was concluded at the first step. A term delivered at the third step was not part of it.

The same problem afflicts conditions that appear only in an email footer, only on a website nobody was directed to, or only in a rate sheet issued after the first shipment moved.

What actually works

Where the conditions appear	Position
Signed trading agreement or credit application referring to them by name	Strongest. This is the answer
On the quotation, before the customer instructs	Strong, if the quotation is what was accepted
On the booking confirmation issued before the job starts	Usually workable
A consistent, documented course of dealing over many shipments	Arguable, and expensive to argue
On the invoice only	Weakest. The invoice comes after performance

If you take one action from this article, make it this one. Pull your last ten customer files and check, for each, where the trading conditions first appeared in the sequence. That exercise takes an afternoon and it tells you which of your customers you can actually exercise a lien against.

A practical sequence

What follows describes how the published conditions operate in general terms. It is not legal advice on your situation, and exercising a lien wrongly exposes you to a conversion claim, so take advice on anything of size before you act.

When a customer stops paying and you are holding their cargo:

0. Establish who owns the goods

This is the step that most often turns a lien into a claim against the forwarder. Your contractual lien binds your Customer. It does not automatically bind a consignee, a buyer or a financing bank who never agreed to your conditions.

FMFF clause 7 has the Customer warrant that it is the Owner or the Owner's authorised agent, and that it accepts the conditions on the Owner's behalf as well as its own. That is a warranty, not a guarantee of the fact. If it turns out to be false, you have a claim against your Customer for breach of it, and the true owner still has a claim against you for detaining their goods.

So before you detain anything that may not belong to the party that owes you, find out who owns it.

1. Confirm incorporation

Find the document that put your conditions in front of that customer before the first job. If you cannot find one, everything below is on weaker ground and you should take advice before detaining anything.

2. Confirm the sum is actually due

Invoices raised, payment terms, any live cargo claim, and whether the set-off waiver applies on your version of the conditions.

3. Serve written notice

Identify the goods, state the sums due, state that you are exercising the general lien under the relevant clause, and state that you intend to sell after seven days if the sums remain unpaid. Send it in a way you can prove was received.

4. Hold the goods properly

Detained cargo is still cargo you are responsible for. Storage conditions, security and insurance all still matter, and a deterioration claim during the detention period will be set against you.

5. Sell only after the period has run

Public auction or private treaty are both available. Keep evidence that the sale was at a proper value.

6. Apply the proceeds in the order the clause sets

Clause 28(a) applies the proceeds firstly to the costs and expenses of the sale, and secondly to the sums due to the Company. That order is the opposite of the one most people assume, and it matters when the sale barely covers the debt.

The clause also gives you a right most forwarders never exercise: if the proceeds fall short, you remain entitled to recover the outstanding balance from the customer. Selling the cargo does not settle the account, it reduces it.

The clause disclaims liability to the customer in respect of that application. Whether you owe a duty to account for any surplus is a separate question at general law, and one to take advice on rather than assume either way.

FAQ

Can I hold this shipment against an old unpaid invoice for a different shipment?

As against your Customer, yes. Clause 28(a) is expressed as a general lien covering sums due at any time, whether or not related to the goods you are holding, and that is the main practical advantage of trading on the FMFF conditions.

As against a third party who owns the goods and never agreed to your conditions, that is a different question and the answer is often no. Establish ownership before you rely on the clause.

Do I have a lien if I never issued trading conditions?

Probably not the wide one. Freight forwarders and warehouse operators are not among the five classes named in section 124, so a general lien over unrelated goods would have to come from your contract.

A bailee's particular lien under section 123 may still be available for charges relating to the specific goods themselves, which is narrower and depends on the facts. Take advice before detaining anything in that situation.

How long do I have to wait before selling?

Seven days from your written notice, under clause 28(a). For goods liable to perish or deteriorate, clause 28(b) removes the waiting period but still requires reasonable steps to tell the customer you intend to sell.

My customer says they are withholding payment because of a damaged shipment. Can they?

Clause 22(a) has the customer waive any right of set-off and requires payment without deduction on account of any claim or counterclaim. Their cargo claim, if valid, is a separate matter subject to its own notice and time bar requirements, and clause 37(a)(i) makes written notice within seven days a condition precedent.

Is cargo I am holding under lien still insured?

Do not assume so. The goods may now be in a location, a duration or a purpose your policy did not contemplate, and detention is not always treated the same way as storage in the ordinary course.

Check the schedule, and confirm the position with your insurer before the goods sit for weeks. Cover is subject to policy terms and conditions.

Why does this matter more now?

Transportation and communication ranks fourth of nine sectors on Malaysia's cumulative compulsory winding up figures since 2018. Jabatan Insolvensi Malaysia's own August 2026 liquidation brief note records 1,056 companies in that sector as at August 2026, behind wholesale and retail trade, construction, and financial and property services. When a customer in this sector stops paying, the question of whether you can hold their cargo tends to arrive with very little warning.

Foundation Conclusion

Your general lien over a customer's cargo comes from your trading conditions, not from the statute, so it is only as good as the moment those conditions reached the customer.

And while you hold the goods, you are responsible for them. An operator detaining cargo needs to know that the fire, stock and liability cover behind the warehouse still answers for it.

Foundation is a specialist property and engineering insurance intermediary. We help operators insure the risks that compliance is designed to manage.

Talk to our risk specialists about warehouse and cargo liability cover

A lien is a recovery tool. The prior question is whether you should have been carrying that exposure at all, and the parallel question is whether your own operation is properly covered while you hold somebody else's property.

Before extending credit, our guide to goods in transit and stock throughput cover for warehouses covers the cargo side, and letters of guarantee covers the security you can ask for instead of relying on a remedy after the fact. Where you are the party being asked to prove your own standing, see what bond underwriters check.

On the insurance side, warehouse and logistics operations sit across Industrial All Risks, public liability and, where you handle refrigerated goods, cold storage and stock deterioration cover. The gaps between those three are where an operator holding somebody else's property usually discovers it is carrying more than it thought.

Disclaimer: This article provides general guidance based on the Contracts Act 1950, the FMFF Standard Trading Conditions 2021 and insurance coverage available in the Malaysian market as of September 2026. Regulations may be amended and policy terms vary by insurer. Always verify requirements with the issuing association or qualified legal advisers, or consult qualified professionals, before making decisions.