So you’ve got your Goods In Transit Insurance (up to say £15,000), you’ve got your Public Liability Insurance (up to say £1 MILLION) and you think you’re pretty much covered for everything, right? Wrong.
Unless you only ever carry goods under your own ‘Terms and Conditions’ or ‘Conditions of Carriage’, which you make available to your customers before you carry out any work for them then you could be wide open to a claim for unlimited damages from your customer or even from your customer’s customer.
Your Goods In Transit insurance might well cover you for £15,000, but what if the goods you’ve collected are worth far more than that? A consignment of computer chips or a pharmaceutical sample can be worth many times that and if it was lost, stolen or damaged while under your control you would be liable for the full value unless your Conditions limit your liability.
That’s not the worst of it though. Most couriers’ Conditions quite rightly disclaim any liability for consequential loss. Without this essential restriction to your liability your losses are potentially unlimited should a late, lost or damaged consignment cause your customer any financial loss due to your ‘negligent act’. A ‘negligent act’ could be as simple as you leaving goods in your vehicle overnight and them being stolen, being late for a delivery because your cambelt broke due to being overdue for replacement, subcontracting your delivery to a muppet or just sending a document by overnight delivery and it being misrouted.
In the absence of suitable Conditions the only defence that you may have against a claim is to be able to prove that your customer’s loss occurred through no negligence whatsoever on the part of you, your employees or your subcontractors. In practice this may mean a delay or loss caused by an ‘act of God’ (exceptionally severe and unexpected bad weather for example) or a catastrophic and entirely unpredictable delay on the motorway system – for example if you collect something the day before for 0900 delivery to London then a 1 hour delay on the motorway at Luton would not excuse a late delivery because it should be anticipated. If the motorway was closed for 4 hours because of an accident then it may be a delay that you could show that you were not able to anticipate.
What does consequential loss mean and isn’t it already covered by your Goods in Transit Policy? Consequential loss applies not to the value of the goods that you’re carrying but to the financial loss that may be suffered should they not be delivered according to the customer’s requirements. By way of example, imagine a simple job where you collect an envelope from your customer for deliver across town within 2 hours. You leave the envelope on your dashboard and it blows out of the window without you noticing and is lost forever.
With proper Conditions you may be liable for around £15 for the loss of the paper and the envelope and you probably won’t be able to charge your customer for the delivery. Without any Conditions your moment of inattention could mean that the multi-million pound property deal that your client was about to seal with the contract that you were carrying doesn’t go ahead and YOU are legally liable for their entire financial loss. You’re a sole trader – so if they claim their losses you lose everything, all your savings and all your possessions.
Maybe that scenario seems a bit far-fetched, so how about that custom-made machine part that you’ve just collected from a freight forwarder for delivery to a manufacturer? The production line’s been down for 3 days at a cost of £20,000 per hour. You ‘thought’ that you’d strapped the pallet down properly but you take a corner too fast, the pallet slides and damages the goods. That’s say £40,000 for the damage to the machine part (only £15,000 covered on your insurance) and a further 3 days at £20,000 per hour (a further £1.44 MILLION in costs) for the stopped line while a new part is manufactured and delivered.
Without proper Conditions you are liable for losses like these. The good news is that it’s very simple to avoid the risk of being held liable for this type of claim. If you’re a CX member you have the benefit of being able to use their “Model Terms and Conditions”. If you’re not a CX member then the FTA allows use of their “Model Conditions of Carriage” by non-members as long as their copyright is acknowledged.
In my (non legally trained) opinion, neither sets of Conditions are entirely appropriate to the same day courier industry, but as a stop-gap measure they are better than no conditions at all. I hope to be able to point you towards some more appropriate Conditions in the near future.
In the meantime your main challenge may be to ensure that you can show that your customers have had the opportunity to view whatever conditions you may have before entering into a contract with you. If there’s a clear link on every page of your website and you’ve confirmed that your new customer has visited your website then you should be on fairly firm ground. If you’ve already carried out a job for someone without giving them the opportunity of viewing your Conditions then you can protect yourself in the future by simply adding a notice to the first invoice that all future work carried out will be subject to your Conditions. It doesn’t protect you from liabilities incurred during the first job but if you draw their attention to your Conditions at every available opportunity then you should hopefully be protected against future claims.