The Road Haulage Association have gone live with a major update to their Conditions of Carriage (RHA 2020). Hauliers and their insurers need to be aware of the changes and consider the impact on their operations.
The RHA has been producing standard trading terms for its members for over half a century. Last updated in 2009, its Conditions of Carriage are widely recognised as industry standard and are used by carriers ranging from one-man bands to sophisticated logistics operations. The Conditions afford carriers important protection by limiting/excluding liability, imposing time limits for bringing claims, creating important rights for the carrier, and generally regulating the contract between customer and carrier. By incorporating the Conditions, members of the RHA are able to manage some of the key legal risks inherent in carrying goods for others.
The 2020 Conditions retain the overall liability regime familiar to both the purchasers and providers of haulage services, but contain a number of important revisions in favour of the carrier. Key changes (please note that this list is not intended to be exhaustive. Please refer to the RHA’s Explanatory Notes accompanying the new Conditions for full details of the changes) include:
- A new definition of the period of transit, which is now defined as commencing after the consignment has left the premises from which they were collected and ending upon arrival at the place of delivery, with the customer having risk in the goods outside this period (clause 7).
- Expansion of the list of excluded liabilities, to include contractual penalties, loss of profits, and other types of financial, indirect or consequential loss (clause 12).
- A new definition of force majeure event to exclude the carrier’s liability in certain defined situations (clause 10.2(c)).
- A more detailed regime for loading and unloading, with the risk placed squarely on the shoulders of the customer/consignor/consignee by default (clause 4). Customers will need to agree an express variation if they wish to shift this burden to the carrier.
- Clarification of the carrier’s rights of lien to increase the effectiveness and enforceability of this important mechanism for handling unpaid charges (clause 15).
- Clarification of the term ‘demurrage’ to make it clearer what carriers may wish to charge and recover from the customer (clause 1; see also clause 16).
- A reference to the use of third parties/subcontractors to make it clear that the contracting carrier may not be the performing carrier (clause 2(2)).
- Requiring the customer to pay the carrier’s incurred costs and expenses in the event of cancellation (clause 9(5); see also the new 9(3) regarding payment notwithstanding absence of a POD and 9(4) which deals with storage charges during exercise of lien).
- Refinements in the wording of the customer’s indemnity in favour of the carrier which requires the customer to indemnify the carrier in a wide variety of scenarios and for various categories of loss (clause 13).
- A new clause requiring the customer to provide various warranties in respect of the consignment, its nature, handling, health, safety and security, and the provision of information/materials. This new clause also sets out the consequences of any default by the customer which impacts the carrier’s performance under the contract (clause 5).
However, carriers (and their insurers) need to remember that:
- Only RHA members are authorised to use the Conditions. Unauthorised use of the Conditions can lead to infringement of copyright and possible legal action.
- The Conditions do not have mandatory application. They are contractual terms, and must be effectively incorporated into the contract with the customer to apply, either by express agreement or by explicit reference to the Conditions before the contract with the customer is concluded. Bear in mind also that references to earlier versions of RHA will continue to apply until they are updated. In our view it would also be prudent to advise the customer that the 2020 Conditions are materially different to the 2009 Conditions so that the customer is prompted to inform themselves of the changes.
- The Conditions regulate liability, but do not provide insurance to either the customer or the carrier. The customer should be encouraged to make sure they have taken out their own marine cargo insurance for the goods carried. Carriers should discuss their liability insurance with their brokers when changing to the 2020 Conditions.
- As contractual terms, the Conditions can be varied to reflect specific operational practices, but care should always be taken when this is done to ensure that the variation is clear and binding.
It is clear that, when properly incorporated, the Conditions will afford even greater protection to the carrier. What remains to be seen is whether there will be any pushback from customers, either commercially or legally, to this protective regime.