Handling Goods for Other People. What Could Go Wrong?

When moving or storing goods for your customers, you should have clear terms and conditions and it is imperative customers are made aware of these. These terms protect your own interest and limit your liability to your customers. If they are not made clear to your customers (incorporated), you could end up with a hefty bill that may also not be covered by your insurance policy. Some real-life case studies of this have included:

   

• The operator who did not incorporate standard terms into the customer contract or even have a proper system in place for incorporation, putting them in breach of a term in their liability insurance. When a substantial claim arose, the operator was obliged to pay the customer in full, and was only able to recover from the insurers the (much lower) weight limitation which would have applied if the terms had been incorporated.

 

    Whatever conditions of carriage or storage you use, it is extremely important that your customer is aware of them. Failure to incorporate could end up with you paying the full claim and, as in the above scenario, only have a limited amount of cover to offset this. It could also lead to insurers avoiding the claim altogether, for breach of the policy terms and conditions.  

 

• The operator who subcontracted a CMR movement to a known and (at the time) trusted regular subcontractor, but without any specific terms agreed to restrict further subcontracting. When the regular subcontractor engaged some further subcontractors, without making any checks on their insurance, and a claim arose, the “trusted” subcontractor relied on CMR Article 37, arguing it was not “the carrier responsible” for the claim, and was able to avoid any liability, leaving the operator the unappealing task of trying to pursue the distant and unfamiliar actual carrier.

Keeping tabs on your subcontractors’ activities is important, so any terms you have agreed with your customer are also passed on to all subcontractors in the chain. CMR makes the first, last and actual carrier responsible. If your subcontractor further subcontracts the movement, they can effectively take themselves out of responsibility. This could lead to the above scenario, or you being held responsible for the claim if the final contractor fails to deal with it.

 

   

• The operator who was not actually a member of the trade association whose standard terms they were trying to trade under. As a result, the operator was not only found by a Court to be unable to rely upon any terms to limit liability at all; when a substantial claim arose, following a warehouse theft, the operator’s liability insurers were also able to decline coverage, leaving the operator to pay the whole claim themselves.

 

  Whether you trade under RHA, BIFA or UKWA, these are all well-known trading conditions in the business sector, but these conditions belong to the Association, and you should be a member to successfully use them. You could use your own or similar conditions, but these would need to be agreed with your insurers first.  

  At Ascend, we can advise on the correct insurance cover. We specialise in the Transport and Logistics industry and have an extensive knowledge of standard conditions, providing insurance solutions to protect your business.    

  Our services can include, in conjunction with TKTL solicitors, a health check of your conditions and processes to help safeguard your business from the above scenarios.    

Any questions? Please don’t hesitate to contact one of our team.

simon.horton@ascendbroking.co.uk  | Office: 01245 373626