Last reviewed 22 June 2023
Conditions of carriage, the contract under which goods are carried for hire or reward, are vitally important as the cost of goods in transit insurance depends substantially on the conditions under which the goods are being carried. Although they do not legally have to be in writing the uncertainty of a verbal contract is clearly unsatisfactory and written conditions of carriage are essential and should always be used.
Written conditions of carriage are only effective if the customer is notified of them before the carriage commences. Consequently, conditions of carriage printed on the back of a document, for example an invoice, which will be sent out after the work has been completed will not have the effect of tying the customers to the written conditions. It is vital that the conditions are brought to the notice of every customer, and they should appear on all notepaper, invoices, etc used by the operator.
It is essential that hauliers know what conditions they are operating under. Many businesses of every sort have their own conditions of trading which may be displayed on a written order for transport. If a haulier accepts such an order, they may be bound by the customer’s conditions unless it is made clear that the contract is being undertaken on the haulier’s own written conditions. Hauliers should take steps to ensure that their conditions are the ones that apply.
It is necessary to take great care to ensure that there will be no oral variation of the conditions. Difficulties can arise when there is a requirement to alter the time or place of collection or delivery of the goods. Consequently, any variation must be confirmed in writing by letter or e-mail, as a written record will assist in avoiding any subsequent argument. The standard conditions of the Road Haulage Association (RHA) and the Freight Transport Association (FTA) which are available to members, normally state that they can only be varied in writing.
Insurance problems on sub-contracted work
Problems over conditions of carriage can arise when work is sub-contracted. If the customer makes a claim for loss or damage, that claim will be made against the haulier who actually undertook the work. In such circumstances the haulier would have to make a claim against the sub-contractor, but such a claim would depend upon the conditions of carriage that exist between the two. If they are different to the ones under which the customer is trading, the haulier who subcontracted the work might find that the customer has a valid claim against them which cannot be passed on to their subcontractor. Some customer’s contracts prohibit the subcontracting of their work and where the haulier has in fact subcontracted it they can be responsible for the whole claim without the protection of goods in transit insurance. It is essential that hauliers check the position of the conditions of carriage when they are using a subcontractor or working as a subcontractor. They should also ask for evidence of the subcontractor’s goods in transit policy if they are in any doubt or if there is the potential for a substantial claim if there should be loss or damage. If in any doubt as to the financial position of the subcontractor, it should be checked as it is not uncommon for a haulier faced with a claim from the customer to then find that the subcontractor cannot meet the claim.
From time to time a customer may ask for wider cover than that provided under the conditions of carriage, for example if the goods are of a higher value. Before agreeing, the haulier should obtain confirmation from the insurers that they will extend the goods in transit policy accordingly. Hauliers have been known to often forget to notify their goods in transit insurers if they are doing a particular job under the customer’s conditions, or if they are asked to do a job involving European transport under the CMR Convention (Convention on the Contract for the International Carriage of Goods by Road). When working under the customer’s conditions the haulier should obtain copies of those conditions, with one copy being sent to the haulier’s insurers. A failure to advise their insurers could lead to them refusing to indemnify the haulier against a claim resulting from loss, damage or delay. Consequently, it is a matter of critical importance that the insurance company be made aware of not only the haulier’s standard conditions of carriage but also of any variation to those conditions during a particular job.
Where goods are to be collected from, or delivered to, a European country, they are carried under the CMR Convention which sets out the conditions under which the carriage is undertaken. When undertaking hire or reward work in or into Europe hauliers should obtain and understand the effect of the CMR conditions. Additional conditions can be added to the contract but they must not detract from the laid down CMR conditions. The CMR conditions apply to successive carriers. If a haulier takes on work without realising that they are a successive carrier and that their normal conditions of carriage do not apply they could be liable if there is a claim.
CMR documentation should be carried on loads carried under the Convention. The required documentations can be obtained from the RHA and the FTA. Drivers undertaking such work should be trained to understand the importance of the Convention. For Convention purposes the definition of “vehicles” means motor vehicles, articulated vehicles, trailers and semi-trailers. This means that whilst the tractor unit may not be operating outside the UK, the collection and delivery of a loaded trailer or container which is in transit and has arrived from abroad will be subject to the CMR conditions. If it is arranged for a continental sub-contractor to take over trailers at a Continental port for onward transmission to the final destination, the haulier should obtain confirmation that the subcontractor has the necessary insurance cover and arrange for their own insurance policy to cover goods carried by such subcontractors.
Joining the RHA or FTA will take operators out of the hassle of drafting their own conditions of carriage. However, if they wish to draft their own they would be well advised to seek legal advice as such conditions are complex, as shown by the RHA’s conditions which run to nine pages in length.