Logistics Contracts - A Quick Step to Help Ensure You Get Paid
The importance of getting the paperwork right cannot be overstated. Many problems and disputes arise simply because this has been overlooked.
It is fundamental that you know what terms you are contracting on. If you are using your own terms, or the terms of an association such as BIFA, RHA, FTA or UKWA, then some simple steps will ensure that these are part of your contract. This should mean among other things that you have:
- limits and exclusions of liability if something goes wrong (so your liability insurers will be happy)
- the rights of a general lien, if your customer can't pay.
However, it is worthwhile considering extra terms if these are not included in your standard terms. Many logistics companies have to provide extended credit, and may face problems when trying to change the terms. In addition, a general lien can, in most cases, only be exercised on sums which have actually become ‘due’ and this can be a particular problem if an administrator has been appointed when the insolvent company is still on credit.
These issues can be helped by an acceleration clause (along the lines set out below) to be included into an umbrella contract or credit agreement (if not already included, for example, in cl 8(2) of the RHA
2009 terms). Specific legal advice should be obtained on whether this wording is compatible with the contract you are negotiating and this is only general wording.
If the Customer becomes insolvent, goes into administration, administrative receivership or any analogous procedure, or if any sums owed by the Customer on any invoice or account with the Company become overdue for payment, any credit terms shall be cancelled with immediate effect and all invoices and accounts issued by the Company shall immediately be deemed due for payment and thereupon become payable. Any indulgence, grant of time, acceptance of late payment or reinstatement of credit terms by the company in this respect shall not constitute any waiver of the Company’s rights under this clause.