1. Do you have a consignment note?
A consignment note evidences a written agreement between you and your customer. It is not only a receipt for the goods at the time of pick up and again at delivery but more importantly, it sets out the terms and conditions that govern your carriage of the goods.
2. Is a consignment note important?
Yes. Unless you have a written agreement with your customer, the courts will imply their own conditions of carriage. This means that you will be taken to have promised to use all due care and skill in the carriage of the goods.
3. What does this mean?
You will be legally responsible if any goods are lost, damaged or destroyed unless you can prove that you have used ‘proper care’. This is a high threshold and the onus is on you to prove it.
4. The customer already has insurance. Why should I worry?
Because if the unthinkable occurs and the goods are damaged, you are still liable. The customer’s insurer will pay out the customer’s claim. But the insurer will then turn to you and sue you in the name of the customer. This is called ‘subrogation’.
5. What if I am a subcontractor and I have no contact with the owner of the goods. Can I still be liable?
Yes. Despite the owner not having any contractual relationship with you, you are the ‘bailee’ of the owner’s goods and as such, the owner is entitled to sue you on this basis. Alternatively, the owner can sue your customer (the principal carrier) who may then in turn sue you for any loss or damage.
6. So, if I subcontract to other large transport firms, who do I get to sign the consignment note?
As a subcontractor, your contract is with the carrier who has asked you to undertake the job. That carrier should sign your consignment note. Do not have the carrier’s customer sign your consignment note. You have no contractual relationship with this entity.
7. What happens if the carrier’s customer signs the consignment note and an incident occurs?
Your consignment note is essentially worthless. You do not have a written agreement between you and your customer governing the terms of the delivery. You revert to the position of having to prove that you have used ‘proper care’ in the delivery of the goods.
8. What if no one is available to sign my consignment note at the pick-up address?
In order to avoid this type of scenario, if you work for regular customers we recommend you enter into a ‘global’ written agreement with them which includes all of the terms and conditions which are written on the back of your consignment note. You will then have a ‘fallback’ position in the event that you can’t get the consignment note signed on a particular day.
9. My current consignment note contains a clause that says I am not liable for anything that happens to the goods even if I am grossly negligent. Won’t this protect me?
Not necessarily. Courts have said that a properly worded exclusion clause can work to protect a carrier but you will run into difficulties if:
- the clause is ambiguous or capable of having more than one meaning – in which case it will be construed in favour of the customer;
- your behaviour as a carrier is so far outside what you agreed to do such that you should not be entitled to rely on the clause. An example of such behaviour might be if one of your drivers “borrowed” a set of golf clubs and took them to the driving range and damaged them; and
- your customer is not the owner of the goods. In these circumstances, the owner may sue you and argue that your customer had no authority to agree to your terms and conditions of carriage.