In brief - Freight carriers should take steps to minimise the
risk of disputes
You should ensure that your customers sign an acknowledgement at
the outset that your standard conditions of carriage apply, before
any goods are carried.
Standard conditions of carriage vital to limit risk
It is industry practice for carriers of goods to contract on the
basis of standard conditions of carriage that, among other matters,
seek to exclude liability on the part of the carrier for
negligence, breach of bailment, consequential loss and other causes
of action or losses that may arise during the course of
Such conditions of carriage are important not only to limit the
risk to which a carrier of goods is exposed in the event of loss or
damage to goods, but also from the perspective of indemnity under
carriers' goods in transit and other similar policies of
Disputes following incidents during transit involving damage to
While it is commonly understood in the transport industry that
carriage is ordinarily conducted on such terms (with the risk of
loss, damage or delay in respect of the carriage of the goods
falling not on the carrier, but rather upon the consignor, the
consignee or their insurers), disputes habitually arise following
an incident during transit involving damage to goods.
Often in such disputes, one of the central areas of argument
between the parties is whether a carrier's standard conditions
of carriage have been properly incorporated into and form part of
the contract of carriage between the parties and consequently,
whether they are capable of providing a contractual defence to the
It is therefore imperative that carriers that wish to rely upon
their standard conditions of carriage have proper systems in place
to ensure that their conditions of carriage form part of the terms
of the contract of carriage, to minimise disputes regarding their
application in the event of an incident.
Sending standard conditions to customers after carriage of
It is not uncommon for carriers to issue invoices to customers
which, although they refer to or even annex or set out the
carrier's standard conditions of carriage, are issued after the
carriage of goods has already been completed.
In such circumstances, in the event of an incident involving the
goods, a properly advised claimant is likely to argue that by the
time the carrier issues its invoice, the carriage was complete and
the terms of the contract were already agreed and it is too late
for the carrier to seek to incorporate further terms limiting the
Need for strong evidence if relying upon a prior course of
Whilst the courts recognise that terms and conditions can be
deemed to be incorporated by virtue of a prior course of dealing
between a carrier and a regular customer, it can be difficult to
succeed in such an argument. The courts require evidence of
numerous transactions in which there has been a proper
incorporation of the standard conditions of carriage between the
carrier and the customer.
In addition, evidence that the customer at any point rejected or
disputed the carrier's terms and conditions can be fatal to the
carrier's contractual defence. It can also be particularly
difficult to establish that the customer had actual knowledge or
was referred explicitly to or accepted the carrier's standard
terms and conditions at an early stage of the business
Written acknowledgement that the customer accepts your standard
Ideally, carriers should request their customers to sign an
acknowledgement that the standard conditions apply to the carriage
and attach those conditions at the very outset, before any goods
Such an acknowledgment can take the form of a properly drafted
commercial credit application or consignment note which sets out
the terms and conditions, is evidence of the contract of carriage
and sets out any instructions given to the carrier.
Seek legal advice to ensure your standard conditions will
exclude your liability for loss
Carriers should seek legal advice regarding the procedures and
documentation that they have in place to ensure that the risk of a
dispute about the incorporation of their standard conditions of
carriage is minimised and that their rights under any policies of
goods in transit insurance (or similar) are not prejudiced.
Finally (and obviously), care also needs to be taken regarding
the wording of the conditions of carriage, as the courts have
historically viewed clauses which exclude liability for loss and
damage caused by the carrier or the carrier's agents, strictly.
Carriers should obtain legal advice to ensure that their standard
conditions of carriage will be effective to exclude liability for
loss resulting from faults by the carrier.
The failure of a party to call a witness does not necessarily give rise to an adverse inference being drawn in accordance with Jones v Dunkel (1959) 101 CLR 298. An unfavourable inference is drawn only if evidence otherwise provides a basis on which that unfavourable inference can be drawn.
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