As a haulier, one of the most basic legal concepts which will apply to all your trading practices is contract law. In agreeing to transport or store goods for another party – you have formed a contract. The question is – what does that contract say?
You may think that this is a straightforward question, particularly if you have standard terms and conditions which you use for all orders. However, it is a little more complicated than that and you may find (often when you have fallen out with someone) that the terms you thought had been agreed actually fall outside of the contractual arrangement and are not binding on the parties. This can be a particular problem when it comes to termination and loss provisions.
Making use of the RHA Conditions of Carriage
By way of example, you may be a registered member of the RHA. One of the reasons you may have joined is to take advantage of the RHA Conditions of Carriage (conditions), most recently published in 2006. It is easy to see why these terms are so attractive to a haulier as they dramatically limit your financial risk and liability for damaged or lost goods.
However, if they are not used in the right way, you face the very real danger that they will not form part of the contract with the customer and your liability could be much greater than first thought.
When is a contract created?
You must be aware of when a contract is formed. If you want to have certain terms incorporated into that contract, you must make sure that the other party accepts those terms before you do whatever it is you offered.
So for example, if you want the conditions to be incorporated into a contract with a customer, before you agree to carry out the work, you must bring the conditions to the customer’s attention and make sure that they accept them.
It is no good referring to the conditions after the work has been done (in an invoice for example). In those circumstances, the contract will have been formed at an earlier date when the customer asked you to do something and you agreed. There may have been terms agreed as to price and timing, but unless you have specifically referred to the conditions before agreeing to do the work, you run the very real risk that they will not be incorporated into the contract. If that happens and there is (for example) a subsequent dispute as to the condition of the goods transported, then, if you are at fault, you may not be protected by the limitations of liability set out in the Conditions and you could face very significant financial payouts.
The same principles apply to any terms and conditions. You may have your own bespoke terms which you use with your customers. No doubt you will have spent time and money to get them drafted to your specification and to suit your business needs so make sure you’re not throwing money down the drain and use them in the right way.
Tips for forming a contract
The commercial realities of running a business mean that you probably won’t get it right every time. But if you can take away a few key points regarding contract formation and pass them on to the people in your business who take customer orders, then you will minimise the risk to your company.
Here are some simple points you can easily implement. This is by no means an exhaustive list of measures you can take but just a few pointers to try to ensure that your business is trading on the terms it wants to.
- If you are agreeing terms on the phone with a customer, refer to the relevant terms and conditions (be they the RHA conditions or otherwise) and confirm to them that those terms will be incorporated into any agreement between you.
- Send a copy of the terms and conditions to the customer immediately after any such call by letter, fax, email or whatever is most appropriate and confirm that the agreement is subject to those terms together with any additional provisions agreed (eg price, timing).
- Send a copy of the terms and conditions with any written quote and confirm that, should the customer place an order, it will be subject to those terms and conditions.
- If your customer sends its own terms and conditions to you with their order, confirm to them in writing that you will not accept those terms and that any trading relationship must subject to your own terms and conditions (and supply a copy of the same).
- At the very least, display your terms and conditions on your website and/or in your brochure.
However, should you fall into difficulty in this area, please do not hesitate to contact a member of our Commercial Litigation team.