Legal Doubts on Contract Hire
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by the B.T.0 By Our Legal Adviser A Reply to "Detector" and Advice to Tenderers for Contract Units : Renewal of Contracts by Commission After May 6, 1953, of Uncertain Legality IN his article last week, " Detector " asked some pointed questions arising out of the disposal of transport units under the Transport Act, 1953. In examining his arguments to see whether there is legal force behind them,, inaddition to common sense,. I am driven to the conclusion that in many respects there undoubtedly is.
In Section 1 of the Act it is clearly laid down that the overriding consideration is the quick disposal of that property by the British Transport Commission which constituted the Road Haulage Executive. The words used are "subject to the provisions of this Act "—in other words, disposal is to be carried out in accordance with the policy and details laid down later in the Act" to dispose, as quickly as is reasonably practicable."
• Moreover, the fact that time is "of the essence" of the whole business is again positively emphasized in sub-section (2), for there it is declared to be the Commission's duty to carry on with business as usual, so that the property may be disposed of "without delay and on the be'st terms available, and without avoidable disturbance of the transport system of the country."
If there is evidence of a widespread renewal by the Commission of contracts—or even fresh ones entered into—subsequent to May 6, 1953, which was the date when the Act became law, I think it clear that the Commission are in breach of their duty under the statute. It is true that in Section 1 (2) the loophole, "without avoidable disturbance of the transport system of the country," is provided. That, however, was never intended to cover wholesale renewal of contracts so as to slew down the major duty of disposing of their property.
Contracts Should Not Be Renewed The fact that by Section 3 (1) express provision is made for the purchaser of a transport unit to take over rights and obligations of the Commission, "whether under contract or otherwise," lends further weight to this argument, because it is clearly intended by these words that not merely ought contracts not to be renewed before disposal, but that it is unnecessary for the Commission to be allowed to work out their existing contracts to the end.
Arising from the necessity of a successful tenderer having to seek the consent of the other party to the benefit of a contract already in existence and being handed over with the vehicles in the transport unit, even more serious allegations have been rife among operators.
The suggestion is made--and I am not concerned whether there is any foundation for it—that in some such cases the Commission have, with no small degree of commercial acumen, encouraged customers not to transfer their business to the proposed purchaser of the transport unit which formerly was the subject of a contract with those customers. An offer of more favourable terms or of better vehicles will doubtless work wonders if it is made at the psychologically right moment!
Whether this goes on or not, it is as well that persons who have tendered successfully for a unit with the benefit of such a contract should know where they stand. Obviously, if the other party refuses to transfer the contract outright, there is no remedy, for the latter has ev-XY right to refuse. What is the position, however, where the other party agrees to the novation of the contract taking place and then changes his mind— whether of his own accord or after "persuasion" from another source?
An agreement to permit the novation of the contract, freely entered into between the other party and the proposed purchaser, is a fully enforceable contract for the breach of which the latter would be fully entitled to claim damages. The only difficulty with which one is always faced in such cases is proof.
Agreements Easily Repudiated It is of little use asserting the existence of such an agreement if the other person is going to., deny categorically that any such event took place, and the only "proof" of its existence is one's own unsupported word. As probably most of such transactions take place on the telephone, they are easily repudiated.
The answer is for a tenderer always to make such arrangements by letter, or if they have been made orally, to follow up immediately with a letter Co the other party confirming his version of what was said. This is a poor second best, for if the other party has changed his mind overnight, there is nothing to prevent him at once sending a written denial that such an agreement was reached. However, if he does not acknowledge or deny the contents of the letter, or alternatively changes his mind after a fair interval and then denies the contract, obviously the follow-up letter will provide some corroboration. • I think the point made by " Detector " about this practice of hiring out vehicles without drivers by the Commission is well founded. Section 125(2) of the Transport Act, 1947, provides that except where the context otherwise requires, expressions in Part III Of the Act are to have the same meaning as in the Road and Rail Traffic Act, 1933.
However wide the powers given to the Commission under Section 2 of the 1947 Act, "carriage of goods" must be construed in accordance with the 1933 Act. As the provisions of Section 1 (3) of that Act make clear, the -person whose agent or servant the driver is, is deemed to be the "user" of the vehicle. • If that vehicle is being " used " for the carriage of goods, it follows that the " user " is also the carrier of those goods. " Detector " asks, whether there is any legal basis for a contrary view and I am bound to submit that if there is, it is difficult to see from what provision of what statute the Commission would trace their authority.