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Contractual risks during COVID-19

During the unprecedented time of COVID-19 there are many unanswered questions. To help you and your business come out the other side of this worldwide pandemic we’ve recruited Gillian Bristow, Legal Practitioner Director of Bristow Legal, to provide you with useful information.

Until the COVID-19 pandemic, working in the transport industry involved lots of personal contact with customers and a fair bit of paperwork, either actual ‘paper’ or electronic transactions and sign on glass technology. With the strict requirements around ‘social distancing’, methods of doing business have had to change.

There are good reasons for getting written customer/consignee acknowledgement at various points during the transport process including:

  • having customers acknowledge and agree to your standard terms and conditions; and

 

  • proving that you delivered the goods on time and in good order and condition.

 

However, at the moment, handing over paper, pens or devices to your customer is fraught with risks and is discouraged by health and safety authorities.

There are also other less obvious contractual risks that may arise because of COVID-19. These include having unoccupied business premises, and associated insurance and compliance risks.

So how can you best manage these issues?

Your terms and conditions

Most transport operators use consignment notes with associated terms and conditions – customers are asked to acknowledge/agree to the conditions before any goods are transported. The conditions will deal with issues like the contractual liability of the transport operator if the goods are lost or damaged, liens, compliance with laws and dangerous goods.

Although having the signature of your customer confirming that they agree to the terms is desirable, there are other ways of getting your customer’s agreement. Some of these include:

  • asking for the name of your customer’s representative before you pick up goods, and asking for their authority to record their name on the consignment note as agreeing to the conditions;

 

  • emailing your terms and conditions to your customers and asking them to sign the conditions and then email the signed conditions back to you;

 

  • making sure your terms and conditions are on your website and that your quotations refer to, or hyperlink to the website conditions.

 

Some transit insurance policies require you, as the transport operator, to obtain the customer’s agreement to your standard terms and conditions. You should check with your insurance broker that whatever process you put in place during the pandemic will be enough to fulfil any insurance policy requirements.

Proof of delivery

Consignment notes are also useful as receipts – you can prove that you delivered the goods to the correct destination because someone has signed to say the goods were received.

One way of proving delivery, without handing over paper or devices, is for your driver to take a date stamped photograph of the delivery site and the goods and to record the name of the person that he or she handed the goods over to. Ideally any photograph should be taken using a work (not private) device or phone. Taking a photograph of the person themselves is not a good idea as this may create privacy compliance issues.

If you use photographic records, you will need to make sure those records are collated and stored somewhere safe.

Your transport contracts – check what paperwork is required

A lot of formal contracts that are prepared by customers have clauses that make the transport operator strictly liable for the value of any goods that are transported if the operator cannot produce a signed Proof of Delivery on demand.

If you have a contract with a clause like this, it is important that you talk to your customer and explain why an alternative procedure should be put in place for the duration of the COVID-19 pandemic. If your customer agrees to allow an alternative process (e.g. a photograph of the delivery), make sure you send an email to your customer confirming that they have agreed to this and asking them to acknowledge the new process.

Other issues – unoccupied business premises

If you are no longer operating from a particular business site (e.g. all your staff are working from home), make sure you notify your insurance broker. Some insurance policies require you to tell your insurer if premises are vacant for any length of time.

If your registered office (for ASIC purposes) is at your business premises or the premises of your accountant, and those premises are not open for business because of COVID-19, you should arrange to nominate an alternative registered office. Otherwise, important statutory notices could undeliverable or delivered to an empty building without your knowledge.

 

 

Gillian has provided advice to the road transport industry for more than 25 years. She regularly presents to industry conferences and seminars, and writes a column for the magazine ‘Power Torque’. Gillian has previously worked with NTI to provide guidance material on chain of responsibility obligations and with the Australian Trucking Association to prepare a checklist for reviewing transport contracts.

Prepared 3 April 2020. Please note that this publication is for information only and is not legal advice. You should consider obtaining advice that is specific to your circumstances and should not rely upon this publication as legal advice.