WATERTIGHT TERMS for Contract Haulage
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Expert Advice for Hauliers Entering into Agreements with Customers : Contracts Should Cover Any Contingency Likely to Arise and Settle Points of Difficulty : Contractor Not Liable for Moneys Handled by Driver-Salesmen on Customer's Delivery Rounds
WAULIERS arc finding it increasingly difficult to their enterprises, for the simple reason that ordinary A or even B licences are hard to get. The situation which often arises is as follows. A haulier has a small fleet of vehicles, amongst which are one or two which arc in the service of a regular customer. The remainder of the vehicles are otherwise engaged. This customer is having no difficulty in expanding his business and in consequence of expansion has more goods to be carried. Naturally, he offers the additional traffic to the man who has been doing his work for some time.
The haulage contractor wants the work, but cannot obtain a licence to add another vehicle to his fleet. The idea of engaging another haulier to take on this new traffic as asub-contractor does occur to him but is as quickly discarded, for several reasons. First, and perhaps not least, is his fear that the man he engages may not do the job as well as both he and his customer like it to be done. If that happens the customer may take away all his traffic. Second, the sub-contractor may take all the traffic from him at a cut rate. The sub-contractor may, after a time, be proved to be unreliable and irresponsible. For these and several more reasons the haulier turns down the suggestion that a sub-contractor be employed.
There is thus almost a deadlock. Then the solution is found: he will ask the customer to agree to a contract of hire in respect of a new vehicle. That appears to be the way out of the difficulty. It is, of course, subject to the need for co-operation by the customer and, arising out of that, agreement between himself and the customer on the problem of rates to he charged for the hire. Then arises the question of the attitude of the Licensing Authority, in particular his attitude towards that part of the agreement in which the rate is specified. The Licensing Authority may refuse the grant of a contract-A licence if he is not satisfied that thc agreed rate is an economic one.
Above all, the haulier must not forget that it is a condition of the grant of a contract-A licence that the applicant haulier must lodge, with his application, a copy of the agreement entered into between him and his customer.
Job for Lawyer
It is with the form of such a contract that I am concerned.
dealt in my article in The Commercial Motor dated June 24 with the major points, giving a description of a talk I had recently with a haulier who wanted me to draft such an agreement for him. I refused to do so, for the reason that I am of opinion that the making of an agreement is a job for a lawyer. I did, however, tell him thc points to watch and which he should present to the lawyer.
I have already dealt with the most important matters of what the haulier is to supply, how much he is to be paid for his services and when that payment should be made. My friend the haulier thought that the foregoing points were all that were needed in an agreement of this kind. On that head I quickly disabused him, telling him that there were many others, of minor importance perhaps, but by no means to he neglected or omitted.
1;74 " There arc the precautions which you must take, both for your own sake and on behalf of the customer, concerning the possibility of an accident occurring. Provision for the payment of compensation comes in." I told him.
"I presume that you have properly arranged for insurance to cover yourself against payment of any claim by your driver under the Workmen's Compensation Act. If you haven't, you ought to do so at once."
"Is there provision anywhere in the figures you have given me for cost of operation?" he asked.
Customer Indemnified "Certainly there is. It is included in the item *wages.' You should recall that I told you that there was provision in that item for, first, the net wages for a 44-hour week as provided for by law, then an amount to cover National Insurance, insurance under Workmen's Compensation Act, also for holidays with pay. Assuming, as I have said, that you have insured your driver, it is still necessary for something to be inserted into the agreement stipulating that you indemnify your customer against all claims by the driver under the Workmen's Compensation Act, the Employers' Liability Act and at Common Law, as well as against claims by third parties in respect of injury or damage, where that may be caused by the negligence of your driver.
" Tell your solicitor, too, that you must be protected against liability to persons who ride on your vehicle without your permission, as well as against those who ride thereon just to suit the convenience of your customer. Next you must make it quite clear that you take no responsibility for the loss of any of the goods which are carried in the vehicle under this contract. It does not matter how that loss came about, whether it was while the vehicle was on the road or while it was garaged. You are not to be held responsible for any moneys entrusted to the driver. This clause is particularly important when the driver is also a salesman.
"It should be made a condition of the contract that the goods acid any money paid in connection with the work on which the vehicle is engaged are entirely under the control of the customer.
"The usual clauses about strikes, lock-outs, wars and other abnormal conditions will probably be suggested by your solicitor without any prompting from you, but you might find it advisable to remind him that a commercial vehicle is in a somewhat unique position in the event of an outbreak of war, in that it is likely to be commandeered. Reference to this probability should provide that, in the event of any such commandeering, the customer may not claim compensation from you.
" Here are some further clauses, dealing mainly with minor matters. One is that the terms of the contract are not to be considered to be varied excepting in writing."
"But isn't that making it a little too stiff and formal? "
"Not really. The object is to prevent you from being bound to promises that your driver might -make without reference to you. Arrange for a clause to be inserted providing against overloading and the carriage of dangerous goods.
" Here is another useful clause. its purpose is to guard against tinnicky alterations being demanded by the customer soon after the vehicle is painted and ready for the road. The clause should be worded so that the cost of any alterations made at the request of the customer after the commencement of the contract will be borne by the customer."
"Is such a clause really necessary? Surely, if the customer wants some little thing, such as a small addition to the lettering as originally agreed, I can let him have it free of charge!"
"Of course you can, but you don't seem to grasp the idea behind this agreement. it is for the mutual protection of yourself and your customer and its chief purpose, in the end, is to prevent you disagreeing about anything. If the customer wants something which is not quite according to contract, there is nothing to prevent you from doing that for him except that it may later be cited as justification, by way of being a precedent, for further requests for liberties to be taken with the agreement. Remember what I have already told you; every alteration should be set down in writing.
"There is another precaution which must be included. I will give you this one in formal language, because it is rather difficult to put it over otherwise. If you cannot quite see it I will try to explain it to you. It is really a saving clause in connection with that one by which you provide for being allowed the vehicle for a day a month for maintenance work. The haulier agrees to supply a customer with a similar vehicle to take the place of one hired. This saving clause reads: Notwithstanding the provisions of this clause, it is hereby agreed that the customer shall have no right to claim damages in respect of delay or detention of the vehicle for the purpose of overhaul or repair provided the haulier shall have used all reasonable diligence and dispatch in the execution of any work which may have been necessary nor shall the haulier be responsible to the customer for any consequential damages whatever arising from act of God, act of war, enemy action, strikes, lock-outs, fire, labour disputes or other abnormal conditions over which the haulier has no control.' Do you understand that all right?"
"Yes, I do, but haven't we already discussed the point about war, strikes and lock-outs!"
"Yes, but only in a casual way. The matter happens to come up in this particular clause and I thought I might as well give you the paragraph in full.
"There is a clause, which I am lifting straight from a form of agreement recommended by the Road Haulage Association. It applies more particularly in cases where, as sometimes happens, the customer supplies the driver, who must he a salesman too. It reads: 'The vehicle shall be driven only by the driver (duly licensed and qualified to drive the vehicle of the description hired) supplied and paid by the customer or haulier. Where the driver is supplied and paid by the customer, such driver shall: (a) Be approved and authorized by the haulier to drive the hired vehicle. (b) Comply with the rules and regulations for the time being in use by the haulier in relation to and governing the conduct of the haulier's drivers. (c) If required by the haulier to do so, pass the haulier's standard driving test for the time being in force by the haulier in relation to the driving of his own drivers.
"' In the event of a driver being unable by reason of a customer's business to return to the usual garage on the same day upon which he was dispatched therefrom the customer shall pay all recognized out-of-pocket expenses for each night spent away including cost of garage and additional cost of petrol (or oil fuel) but the customer is not to be in any way responsible for any expenses of the driver wising from breakdown or accident to the vehicle.
Nothing in this agreement shall bind the haulier to supply more than one driver per vehicle per day.' Another clause which should be inserted provides agreement that the customer shall not by instructions to the servant of the haulier or otherwise do anything which may cause contravention of an Act of Parliament or Statutory Rules or Orders which may for the time being be in force.
" In the event of the customer giving instructions, which if carried out would cause a breach of this clause, the haulier's servant or agent shall have the right to refuse to carry out such instructions and the haulier shall have the right to terminate the agreement immediately without prejudice to any rights which may have accrued to him and the customer shall be responsible for all losses, damages and fines which the haulier may incur through breach of this clause.'
"Finally, a very important clause, having in mind that the haulier must have the agreement drawn up to present to the Licensing Authority when applying for the .licence. 'It is agreed that the fulfilment of this agreement by the haulier is contingent upon his obtaining and retaining the necessary carrier's licence from the appropriate Licensing Authority.'
"Finally, get your solicitor to complete the agreement by a customary bankruptcy clause. If you arrange to have all the above points provided for, you are not likely to come adrift." S.T.R.