In brief – Clarity and simplicity are key in transport,
supply chain and logistics contracts
When drafting transport and logistics contracts, avoid
abbreviations, jargon, Latin, legalese, unrealistic audit
obligations and unfair allocation of risk.
Increasing emphasis on plain English in contract drafting
Most people have heard of the "KISS" principle -
"Keep It Simple, Stupid!" The same principle is now being
applied more frequently in the supply chain and logistics area.
For many years there has been an increasing emphasis in the law
on drafting contracts in plain English. But despite this, many
companies and those involved in the transport industry have
continued to produce lengthy supply chain and logistics contracts
with very detailed specifications and performance requirements.
These contracts often have little active monitoring or
enforcement of those performance requirements because of their
complexity and the need for extensive resources to be allocated to
monitoring and audit.
Simple mechanisms for monitoring and auditing performance
Contracts can be far more effective if they are kept simple, are
written in a style which can be easily followed and have simple
mechanisms for monitoring and auditing performance.
Ensure that what the contract stipulates is actually being
We have seen too many contracts where, for example, a party is
required to arrange insurance and provide evidence of those
arrangements, but nobody has ever followed up to require production
of the evidence of insurance. Alternatively, evidence of cover is
produced without anyone checking if the cover is for the risks
required to be insured or for an appropriate amount.
We also see contracts that require monthly service of records of
performance being enforced. If records are provided then someone
should be checking to see if they reveal any contract performance
Seven golden rules for transport contracts
With this in mind, we suggest that transport service providers
and their customers should review their current arrangements and
consider the following tips for drafting of future contracts.
Don't use abbreviations or jargon that are
not understood by the man in the street.
Don't overdo the definition of terms as
this then requires cross referencing to check meaning.
Avoid legalese and terms that are only well
understood by lawyers and, especially, never use Latin.
Don't impose monitoring or audit
obligations which you are not able or willing to follow
A fair allocation of risk and obligations is
often more effective than an unbalanced allocation and is more
likely to lead to a long term relationship.
Don't require or expect a party to control matters which
are beyond its practical control.
Never think the job is done once the contract
is signed. That is only the beginning of the job.
If in reviewing your own contracts in light of these rules you
realise that you or your advisers have fallen into the traditional
traps for the unwary, we suggest that you consult an experienced
transport lawyer about reviewing you current contract
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