DELIVERY, DEMURRAGE AND FORCE MAJEURE

Deliveries and penalties: Haulage contracts should be explicit about the service given such as how the goods are received, delivered or passed on to another freight system. In some cases, this section of the agreement will also cover curtailment and assessments needed to ensure the quality of the delivery. Following from these, it will also cover the duration of the service and expected distribution or delivery time. Penalties for failure to deliver as at when expected or for faulty/damaged delivery including modalities for its estimation must also be inserted in the contract. Same also applies to demurrage for idle vehicles either at delivery points or loading bays. Due to complex legal issues regarding ownership and delivery, many haulage firms now insert specific legal statements as to who can sign for or claim bulk or break bulk goods, the specific product and the amount of entitlement the receiving party has.

Force Majeure: Haulage contracts should also cover what would happen to the specific delivery or distribution change in the event of force majeure (defined as chance occurrences), accidents, acts of God or situations where the transport action cannot be completed. When reading legal agreements, whether as a client, a firm or an independent contractor, it is important to understand all the major aspects where you can be held liable and what you have minimal control over.

DURATION AND TERMINATION OF CONTRACT

The contract agreement must specify how long the contract will run and whether there is a clause or provision for renewal of contract for a further term, where both parties are interested in progressing with the relationship. The conditions for a renewable contract and the assessment criteria (where applicable) must also be clearly spelt out.

While most contracts will normally run through the course of the tenor as specified in the agreement, there are some legally permissible instances where either party may want to terminate the relationship prior to expiration. Therefore, the Contract must clearly state how the agreement is to be terminated? Usually the contract may only be terminated early upon the occurrence of some extraordinary event such as repeated service failure, breach of fundamental conditions of the contract, ethical violations, criminal conduct of drivers or other officials of the haulage company, bankruptcy or simply due to irreconcilable differences on some extant clauses in the contract. In the light of this, a good contract should stipulate conditions and mediating authorities for dispute resolution. Most organizations would naturally stipulate the constitution of mutually acceptable Arbitration Panel as a more flexible and less expensive option to the law courts. Hence clauses like:

If within fifteen (15) days after the meeting (that is, between the contracting parties), the parties have not succeeded in resolving the dispute, the parties hereby agree to submit the dispute to conciliation under the Arbitration and Conciliation Act Cap 18 Laws of the Federation of Nigeria 2004.

The other reason is to minimize the damaging effect of negative publicity on both organisations that may be generated by going to the law courts.

RESTRAINING AND CONFIDENTIALITY CLAUSE

Contract Transferability: So what happens to the contract if the haulage company wants to sell its business as a going concern to another party? Can the Contract be transferred to the new owners of the business? If yes, under what terms and conditions can the transfer be done, and if no, what are the conditions for the refusal? Most Contracts would normally have confidentiality clause and/or the restraint of trade clause. Is there a buy-in price? If so, can it be recovered at the end of the agreement? If you are paying a large price to gain the benefit of the contract, it will be important to know that the buy-in price can be recouped later.

Restraint of Trade: Situations also abound where companies forbid contracted haulage firms from offering similar assets to some firms that are competing with them. This is not strange. Reason may be to guide against confidential information or trade secrets getting into the hands of the competitor. The contract will also contain a ‘restraint of trade’ clause, preventing the driver from working within a particular area or for particular customers for a specified period of time. If the restraint is too broad, there may be a need to negotiate a limit to the broadness prior to the signing of contract papers. The fact remains that the contract should be very clear about these issues to avoid the expensive and frustrating option of inviting law courts for interpretations. If the assets or vehicles are specially designed for the present contract, what happens when the contract expires? Will there be any restriction against the operation of such vehicle after the contract ends? If so, how will the interest of the haulage firm be taken care of?

CONTRACT NEGOTIATION AND CLARIFICATION

It must be borne in mind that contracts are only set in stone once both parties agree to the terms involved. Everything is subject to change until that happens. Hence no party should stonewall the other when it comes to finalising the details. It is important that both parties present documents as it is, listen well to request for a modification of any part, make counteroffers or concessions as may be deemed necessary, but never pretend that terms and conditions are cast in stone!

Most especially for the haulage firm, it is extremely necessary to ensure that all aspects of the contract are well read, vetted and digested. In some cases, it pays to speak with your lawyers and financial advisers. A good understanding of the history of the client with particular reference to its relationship with previous or existing haulage contractors may also assist in knowing what special clauses or terms and conditions you may push forward for inclusion in the contract.

CONCLUSION

As it does happen, where the Company promises that a particular clause will not be enforced, it should be outrightly deleted. And if the promise is that an unacceptable clause will be reviewed or changed later, the haulage firm has an obligation to ensure that the change is inserted into the contract before signing. Where some clauses are plainly unclear, this may be a perfect time to invite your lawyers for legal clarification.

Finally, it must be stated that having gone through the tortuous task of understanding your contract, it is imperative that parties file the completed and signed document for future reference. However, it does not stop there. Back at their respective organizations, contract contents should be deliberated upon in-house and relevant units advised with expectations as defined by the contract terms. In the case of the haulage company for instance, it is imperative that Accounts Unit have information concerning agreed rates for each route, penalty clauses/rates and processes for filing invoices and tracking payments. Department such as Fleet Division should also have details regarding loading, delivery and guidelines for reporting exceptions.

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