29/10/2024
Incorporation of terms: An introduction for hauliers
For haulage firms, the phrase ‘incorporation of terms’ refers to the contractual basis that set out a haulier’s level of responsibility in the event of goods being lost or damaged during transit. Incorporation of terms is vital because it protects hauliers and their customers from a variety of issues.
Many customers assume that hauliers fully insure goods during transportation, but that’s not the case. Instead, hauliers insure their contractual liability for damage to or loss of those goods. Common contract forms such as the RHA offers a low standard limit per tonne of goods. If a customer requires greater compensation and this is not agreed in advance or the contractual basis is simply not made clear, expensive losses may not be covered.
The risks of not setting terms
Problems often arise for hauliers when their terms aren’t clear. If they fail to clearly communicate their liability limits upfront, customers might expect higher compensation if an incident occurs.
In addition, if a haulier passes work to another company without ensuring that the subcontractor’s liability matches their own, claims may be partially paid.
Moreover, the haulage industry is known for being fast paced. If a customer's delivery is urgent, discussions about insurance and liability may be overlooked, leading to a risk of disputes and financial losses if something goes wrong.
What are the RHA Conditions of Carriage?
The Road Haulage Association (RHA) Conditions of Carriage 2024 provides a standard contract that sets out responsibilities for hauliers and their customers. The goal is to protect both parties from disputes and ensure clarity around a range of issues, notably insurance and compensation. It’s important to note that only RHA members are entitled to use these terms for their contractual arrangements with clients.
The 2024 Conditions specify that customers, not hauliers, are responsible for liabilities and limits for the transportation of goods. In addition, customers are primarily responsible for loading and unloading goods, ensuring that the equipment used is suitable, well-maintained, and operated by qualified personnel. If anything goes wrong during loading, customers must indemnify the haulier for any losses incurred. Therefore, hauliers are granted the right to inspect loads before transport.
Customers must also provide accurate information about the consignment’s weight and contents and are now required to provide hauliers’ drivers with access to welfare facilities at delivery points.
Importantly, the Conditions now state that proof of delivery (POD) no longer requires a signature. As a result, customers cannot withhold payment based on its absence.
When making claims for loss, damage or mis-delivery, customers are also obligated to supply evidence showing the haulier’s responsibility.
Finally, under the Conditions, haulier liability is capped at standard limits. This is typically £1,300 per tonne unless higher coverage is agreed in advance.
Getting your terms right
You should always ensure your customers fully understand your “standard” contractual basis. Be sure to share them through emails, contracts, invoices, and your website. You should also make sure that your team is familiar with these terms so they can act accordingly.
If you work with subcontractors, ensure they have insurance that matches your terms, especially for high-value goods. This “back-to-back” cover helps avoid gaps in liability.
In addition, you should consult with your insurance broker, especially when transporting valuable items. They can help you arrange the right Haulage Insurance cover and confirm any additional premiums that might be necessary.
Failure to incorporate terms or secure sufficient insurance could lead to disputes, loss of business or legal action. Being proactive in communicating and agreeing on terms helps avoid these costly issues.
For further guidance on incorporating terms or Haulage Insurance, speak with Ian Limeburner, Head of Transport & Logistics, who can help you secure the right cover for your business
Related Articles
