Logistics service providers are crucial in ensuring that local supermarkets are stocked, and agricultural and mining exports reach our global trading partners. Imagine the complex customs procedures at an Agadir seaport or a Riad airstrip. Or picture Angus cattle travelling from remote stations ten hours from the nearest town to Jakarta or Proserpine sugar cane travelling five hours to Rockhampton for processing. A logistics service provider can encounter problems, so you must have comprehensive contract terms to protect your business and minimise risk when you fly, drive or rail goods around Australia and the world. This article will explore four essential tips and clauses for your trading terms.
1. What Should Your Trading Terms Apply To?
Your trading terms form a contract between your business and your client. Your contract terms must cover all aspects of interest. For example, this may include:
- transport of goods;
- loading;
- unloading;
- handling; and
- storage.
Suppose the service provider delivers damaged goods. Your client will approach you as the distributor to fix the issue. This is why you must clearly outline both;
- your liabilities within the contract; and
- ways the client can seek a remedy.
Where possible, the terms should exclude liability when mandatory legislation allows this. However, remember that a court can determine a liability exclusion clause is unfair under the Australian Consumer Law (ACL), particularly for small business clients.
If your business uses standard form contracts, be sure to have these reviewed to ensure they comply with the Australian Consumer Law.
2. Keep Records
Most logistics service providers issue a consignment note to their clients. The note should include a clear description of the following:
- the customer;
- the goods;
- the place of receipt;
- relevant dates; and
- a clear statement that goods are transported subject to the service provider’s trading terms.
You should keep records by issuing a consignment note (keeping a copy for yourself) in case issues arise later. Then, if something goes wrong, you can see what goods are involved and other relevant details.
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3. Transporting Dangerous Items
Logistics service providers’ terms should refer to the Australian Code for the Transport of Dangerous Goods by Road and Rail (ADG), currently in edition 7.8. Your service provider must comply with any requirements by 1 April 2024.
The States and Territories heavily regulate the transport of dangerous goods in Australia. Furthermore, your clients will have greater confidence in your business if you comply with the relevant rules and regulations.
4. Penalty Clauses and General Lien
Your trading terms should include clauses that help you get paid. Clearly outline your payment terms, such as:
- whether you receive payment before or after shipping goods;
- how long clients have to pay; and
- what you can do if clients fail to pay or delay paying.
5. International Arrangements
International distribution arrangements usually require the parties involved to comply with ICC International commercial terms (otherwise known as ‘Incoterms’). These terms will set out which party is responsible for the following:
- the delivery of the goods,
- any liability for loss or damage to the goods during transit;
- delivery costs.
Key Takeaways
In short, shipping goods around Australia and the globe involves significant risk exposure. This highlights the need for well-drafted trading terms. Ensure your terms cover all aspects of the services you provide. This includes clauses relating to the transport of dangerous goods and penalty clauses such as the right to possess goods for non-payment.
If you need help with your contract, our experienced contract lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 1300 544 755 or visit our membership page.
Frequently Asked Questions
Where possible, exclude liability when mandatory legislation allows this. However, remember that a court can determine a liability exclusion clause is unfair under the Australian Consumer Law (ACL), particularly for small business clients.
Ensure that your contract terms cover all aspects of the service you provide, keep records, include clauses relating to the transport of dangerous goods and include penalty clauses such as the right to possess goods for non-payment.
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