Courier Terms and Conditions

So you’ve got your Goods In Transit Insurance (up to say £15,000), you’ve got your Public Liability Insurance (up to say £1 MILLION) and you think you’re pretty much covered for everything, right? Wrong.

Unless you only ever carry goods under your own ‘Terms and Conditions’ or ‘Conditions of Carriage’, which you make available to your customers before you carry out any work for them then you could be wide open to a claim for unlimited damages from your customer or even from your customer’s customer.

Your Goods In Transit insurance might well cover you for £15,000, but what if the goods you’ve collected are worth far more than that? A consignment of computer chips or a pharmaceutical sample can be worth many times that and if it was lost, stolen or damaged while under your control you would be liable for the full value unless your Conditions limit your liability.

That’s not the worst of it though. Most couriers’ Conditions quite rightly disclaim any liability for consequential loss. Without this essential restriction to your liability your losses are potentially unlimited should a late, lost or damaged consignment cause your customer any financial loss due to your ‘negligent act’. A ‘negligent act’ could be as simple as you leaving goods in your vehicle overnight and them being stolen, being late for a delivery because your cambelt broke due to being overdue for replacement, subcontracting your delivery to a muppet or just sending a document by overnight delivery and it being misrouted.

In the absence of suitable Conditions the only defence that you may have against a claim is to be able to prove that your customer’s loss occurred through no negligence whatsoever on the part of you, your employees or your subcontractors. In practice this may mean a delay or loss caused by an ‘act of God’ (exceptionally severe and unexpected bad weather for example) or a catastrophic and entirely unpredictable delay on the motorway system  – for example if you collect something the day before for 0900 delivery to London then a 1 hour delay on the motorway at Luton would not excuse a late delivery because it should be anticipated. If the motorway was closed for 4 hours because of an accident then it may be a delay that you could show that you were not able to anticipate.

What does ‘consequential loss’ mean and isn’t it already covered by your Goods in Transit Policy? Consequential loss applies not to the value of the goods that you’re carrying but to the financial loss that may be suffered should they not be delivered according to the customer’s requirements. By way of example, imagine a simple job where you collect an envelope from your customer for delivery across town within 2 hours. You leave the envelope on your dashboard and it blows out of the window without you noticing and it’s lost forever.

With proper Conditions you may be liable for around £15 for the loss of the paper and the envelope and you probably won’t be able to charge your customer for the delivery. Without any Conditions your moment of inattention could mean that the multi-million pound property deal that your client was about to seal with the contract that you were carrying doesn’t go ahead and YOU are legally liable for their entire financial loss. You’re a sole trader – so if they claim their losses you lose everything, all your savings and all your possessions.

Maybe that scenario seems a bit far-fetched, so how about that custom-made machine part that you’ve just collected from a freight forwarder for delivery to a manufacturer? The production line’s been down for 3 days at a cost of £20,000 per hour. You ‘thought’ that you’d strapped the pallet down properly but you take a corner too fast, the pallet slides and damages the goods. That’s say £40,000 for the damage to the machine part (only £15,000 covered on your insurance) and a further 3 days at £20,000 per hour (a further £1.44 MILLION in costs) for the stopped line while a new part is manufactured and delivered.

Without proper Conditions you are liable for losses like these. The good news is that it’s very simple to avoid the risk of being held liable for this type of claim. If you’re a CX member you have the benefit of being able to use their “Model Terms and Conditions”. If you’re not a CX member then the FTA allows use of their “Model Conditions of Carriage” by non-members as long as their copyright is acknowledged.

In my (non legally trained) opinion, neither sets of Conditions are entirely appropriate to the same day courier industry, but as a stop-gap measure they are better than no conditions at all. I hope to be able to point you towards some more appropriate Conditions in the near future.

In the meantime your main challenge may be to ensure that you can show that your customers have had the opportunity to view whatever conditions you may have before entering into a contract with you. If there’s a clear link on every page of your website and you’ve confirmed that your new customer has visited your website then you should be on fairly firm ground. If you’ve already carried out a job for someone without giving them the opportunity of viewing your Conditions then you can protect yourself in the future by simply adding a notice to the first invoice that all future work carried out will be subject to your Conditions. It doesn’t protect you from liabilities incurred during the first job but if you draw their attention to your Conditions at every available opportunity then you should hopefully be protected against future claims.

Posted under Courier Basics, Courier Business, Courier Financial Issues, Insurance for Couriers, Legal Issues

Posted by Alec at 8:25 pm, July 9, 2008

9 Comments so far

  1. Brian added on  November 28th, 2009 at 22:29

    I am thinking of starting up as self-employed owner courier driver and am researching the subject.

    Every set of courier terms and conditions I have seen contains the following two clauses.

    Since the Company is unable to assess the cost to a Customer of the loss or damage of any goods, in no case whatsoever shall any liability of the Company, however arising, and notwithstanding any lack of explanation, exceed the relevant value of the goods or £1000 whichever is less. If the relevant goods have any extra intrinsic value to the Customer, or the Customer would suffer consequential losses in the event of their loss or damage, then the Customer is advised to insure against such risks and losses since the Company is unable to warrant that its own insurance cover will be applicable to such loss or damage (if applicable) will extend to cover any sums claimed.

    The maximum amount payable per consignment is £25,000 unless agreed in advance for a higher amount, and the appropriate premium paid.

    I assume the second clause refers to how much GIT insurance the courier has i.e. in this case £25000. However can somebody explain the meaning of the first clause, which seems to contradict the second. I have tried to get a straight answer to this question but I just can’t seem to get one.

    I would be really grateful if somebody could help me with this.

  2. The first clause is better written and excludes liability to a greater degree – the second is tacked on as an afterthought.

    It looks to me as if all these terms and conditions have been ‘borrowed’ from a company which has itself ‘borrowed’ them from the company which originally paid to have them drawn up. The original borrower has made its own changes to the conditions without having fully understood them and their changes have been copied (and in some cases subsequently altered again) by the other borrowers.

    Most of the versions of these conditions which I can find seem to have the second attempt at limiting liability omitted anyway – which presumably means they were borrowed from the original source rather than from a company which had already altered them.

  3. A bit of further digging shows that these Conditions are included in one of the ‘How to be a courier’ type manuals with the second clause added (amount left blank) and with instructions: “We have enclosed some simple terms and conditions for you to copy all you have to do it state the amount of cover you have.”

    So it looks to me as if whichever prat wrote the “How to be a courier” manual may also have added the extra and unnecessary second clause without having read/understood the clause which already existed – which really says all you need to know about about “How to be a courier” manuals and their authors.

  4. Brian Ginnity added on  December 2nd, 2009 at 16:21

    Thank you for your reply Alec. After reading it and asking questions elsewhere, I think I know what whoever put the two clauses together is trying to say:

    The first clause limits the liability of the courier to £1000 for the loss of an individual item or package and states that he has no liability whatever for any consequential loss, for example the non-delivery of a contract leading to the loss of a contract worth millions.

    If the consignment consists of several packages, the second clause limits the courier’s total liability to £25,000 no matter how large the total loss to the customer.

    So if the consignment consists of 25 packages each worth £2000, or the consignment consists of 50 packages, each worth £1000, the total loss to the customer could be £50,000, but the courier’s liability stops at £25,000.

    This is why this particular courier would have G.I.T. insurance of £25000 and is why this figure is inserted in the second clause.

    Alec, do you think this is what the two clauses are trying to say?

    I plead guilty to buying a “How to be a Courier” manual which included these T & Cs. Their FAQ website wouldn’t or couldn’t give me a straight answer to my question about these two clauses which made me think they didn’t understand how the two clauses related to each other. I wasn’t the only person confused about this matter either.

    But their manual and the FAQ site did say the courier should insert the value of his G.I.T. insurance into the second clause.

    A quick search of the net found an amazing number of courier companies which had almost identical T & Cs, including these two clauses.

    I suppose it’s best to get your T & Cs drawn up by a solicitor who can explain their meaning to you. Or am I being too fussy?

  5. Alec added on  December 2nd, 2009 at 16:38

    “Goods” is the entire consignment or any individual part of it – so no matter how many packages are in the consignment the liability is limited by that clause to £1000. The second clause is irelevant and, being tacked on to the end, potentially misleading to any customer reading the conditions.

    The guide that these conditions appears in is sold through a website operated by Shaun Smith. Try putting Shaun Smith Scam into Google and you may learn something about the man and what he sells.

    Yes, the correct thing to do is to get your own conditions drawn up. Expect it to cost you a few hundred pounds though.

  6. Brian Ginnity added on  December 2nd, 2009 at 17:10

    I bought the guide, which contained these T & Cs, off this site

    which according to this site

    was set up by somebody called Andy Stephens.

    Is £1000 a reasonable insurance limit though? Would this be enough for a customer? When I made brief enquiries to a specialist insurance company, their policy offered G.I.T insurance of £20,000.

    (as well as £1349 for courier insurance (including £2 million public liability insurance).

  7. Alec added on  December 2nd, 2009 at 17:31

    Different website, different person – probably the same guide though.

    Choose your own liability level – most customers don’t care anyway, most of the stuff we move is worthless but it depends on who your customers are. If you’re planning on carrying out subcontract work you just have to match your customer’s level of liability as quoted in their conditions. In common with most other couriers our liability is limited to £15 per kilo.

    There’s nothing wrong with having £20K all risks GIT even if your expected liability is only £15 per kilo and subject to very tight conditions. Sometimes it’s better to be safe than sorry.

    Remember though that we’re in the same day courier business – the chances of anybody ever succesfully claiming against you for loss or damage are fairly slim to start with.

  8. John Harper added on  April 19th, 2011 at 20:08

    Know this thread dried up a while back (2009) but I really would LOVE Alec to elaborate and explain his view expressed in the last five lines. What do you know that we need to Alec???

  9. Alec added on  April 20th, 2011 at 07:00

    I’m not sure what it is you want me to elaborate on?

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