Courier Liability and unfair contract terms

[jfhall82]

I’ve been researching into ‘typical’ courier terms and conditions, with a particular interest in liability clauses. I’ve long been of the opinion the majority constitute unfair contracts and a shirking of responsibilities at the expense of consumer rights.

 

 

What annoys me more than anything is the tendency for couriers to imply consumers require (and should pay for) additional insurance against loss, theft and damage. In my opinion if any of these eventualities occur it is as a result of negligence and (or) failure of the supplier to exercise reasonable care and skill.

 

 

It is for the supplier to arrange their own liability insurance for such eventualities and neither fair nor reasonable to expect the consumer to be made responsible for supplier negligence. To this end I am particularly fond of point 18.2.3 in the OFT, which among other things states that “The supplier should not make the consumer his insurer”.

 

 

For the purposes of this post I have analysed CityLinks terms and conditions which I assume to be typical of most. I have highlighted each clause which I believe to be at odds or at least questionable according to the OFT Unfair Contract Guidance.

Please note the following are not the FULL terms and conditions provided by Citylink, they are merely the ones I deem relevant or dubious:

 

 

 

 

 

11 Indemnities

a. You will be responsible for protecting us from, not holding us responsible for and paying any liabilities, claims, loss, damage, fines, costs or expenses arising from:

 

**See Group 18(b): Transferring inappropriate risks to consumers, 18.2.7 Indemnities against risk**

us following your instructions;

any claim or action brought by any person who has an interest in your goods even if we have been negligent or are in default;

**See Group 18(b): Transferring inappropriate risks to consumers, 18.2.7 Indemnities against risk**

your failure to correctly package any goods;

you breaking any of these conditions (including but not limited to your failure to comply with the conditions of accepting your goods in clause 3);

your negligence; or

 

any and all duties, taxes and so on charged by any authority together with all payments, fines, costs, expenses, loss or damage relating to your goods.

b. You must pay any claim under clause 11a above within seven days of the date of the relevant invoice. After seven days we will treat the claim as a payment due to us under clause 6 of these conditions.

 

 

 

 

12 Limits on our liability

a. Our liability for loss of or damage to your goods, or any other failure to keep to these conditions, is limited as set out in the rest of this clause and clause 13, and by the effect of certain other clauses of these conditions. Clause 12l will always apply.

** See Group 2(b): Exclusion of liability for poor service 2.2.1, 2.2.2 and Group 2©: Limitations of liability 2.3.1, 2.3.2, 2.3.3**

b. All the limitations and exclusions set out within these conditions are ‘cumulative’. This means that if more than one limitation or exclusion applies in a particular situation, we will have the benefit of each and every limitation that applies.

c. Unless you and we agree otherwise in writing under clause 1e, or unless you and we have agreed Additional Liability Cover (ALC), (see 12e below), our liability for any damage to or loss of the goods, however it arises, will be limited to whichever is the less of:

 

• £10 for every kilogram of the gross weight (or volumetric weight if we charge by this measure) of your goods (rounded up to the nearest kilogram);

• the value of the goods; or

• the total amount of liability specified in clause 12e below. “Value” means the value of the goods, based on:

 

the cost you bought the goods for, less an amount for depreciation (loss of value) and wear and tear;

 

the cost of any necessary repair;

 

the cost of the goods less any salvage value; or

 

the cost of replacing the goods; whichever is less, as decided by us.

 

** See Group 18(f): Exclusions and reservations of special rights 18.6.1. and Group 2©: Limitations of liability. 2.3.3**

** See Group 2(b): Exclusion of liability for poor service 2.2.1, 2.2.2 and Group 2©: Limitations of liability 2.3.1, 2.3.2, 2.3.3**

 

d. In all other cases, our liability (however it arises, including for a delay in or failing to provide the services) will be limited to an amount equal to the charges you must pay to us (not including VAT or other taxes) in connection with the goods the claim relates to.

** See Group 2(b): Exclusion of liability for poor service 2.2.1, 2.2.2 and Group 2©: Limitations of liability 2.3.1, 2.3.2, 2.3.3**

e Where we have agreed to provide Additional Liability Cover (ALC), we will be liable to compensate you for any damage to or loss of the goods, based on the value of the goods as defined in clause 12 © up to a limit of £15,000 depending on the amount of ALC you have agreed to purchase. For the avoidance of doubt ALC will not apply to Post.

 

 

** See Group 18(b): Transferring inappropriate risks to consumers, 18.2.1, 18.2.2,18.2.3**

f. Our total liability to you for all claims for loss of or damage to any goods, however that loss or damage arises, will not be more than £50,000 in respect of any one incident or occurrence, or series of incidents or occurrences having the same or similar cause: in the case of our Sameday service our liability will be limited to £15,000 in respect of any one incident or occurrence, or series of incidents or occurrences having the same or similar cause.

 

 

g. Our liability shall not exceed £100,000 in aggregate in respect of all claims howsoever arising under this agreement.

 

 

 

h. In no circumstances will we have any liability for:

 

any loss of or damage to profit, turnover, income, goodwill, expected savings, information (or data) or use; or

 

any indirect or consequential loss or damage of any kind such as, but not limited to any interest, costs, extra charges or costs of repackaging and resending your goods and so on.

** See Group 2©: Limitations of liability. 2.3.3 D, 2.3.6, 2.3.7**

 

i. We will not be liable to you for any damage to your goods, any loss of or from your goods, or any other loss you suffer that is caused by, or contributed to by, any or all of the following:

 

you breaking any of these conditions.

 

your goods needing special handling which you had not told us about and we had not agreed to in line with clauses 1a, 1b or 1e.

 

natural loss of bulk or weight, a hidden or built-in fault, or natural wear and tear or loss of value.

 

your failure to correctly package any goods.

 

your or anyone else’s criminal activities.

 

 

 

** See Group 2©: Limitations of liability. 2.3.3 D, 2.3.6, 2.3.7 and Group 2(b): Exclusion of liability for poor service 2.2.7 **

 

circumstances beyond our reasonable control.

 

carrying any goods falling under clause 2.

 

seizure or forfeiture under legal process.

 

In respect of post services ( except International “tracked” post services) any loss of or damage or delay to any post, or for any deviation in delivery, mis-delivery, non-delivery or detention of any post, which is due to any act, omission, error, neglect or default on the part of the relevant Postal Operator

 

j. The loss and damage referred to in this clause 12 includes that from all causes and actions that give rise to liability under the whole agreement between us. The term ‘however it arises’ in these conditions includes all liability from all causes and actions including for negligence, breaking this or any other contract or any other legal cause.

 

 

 

**See Exclusion and limitation clauses in general 1.2, 1.3, 1.5**

k. The limits in this clause 12 apply whether or not the loss or damage could be expected or whether you told us about the possibility of any greater loss or damage.

 

 

 

l. Even if these conditions say otherwise, the limits in this clause 12 will only apply to the extent allowed by law. In particular, nothing in these conditions will limit our liability for death or personal injury caused by our negligence or for fraud.

 

 

 

 

 

The corresponding sections from the guidance are:

 

 

 

 

 

Exclusion and limitation clauses in general

 

1.1 Terms which serve to exclude or limit liability (also known as disclaimers,

or exemption clauses) take many different forms. Detailed comments on

particular types of disclaimer which may be unfair can be found in

subsections 2(a) to 2(h) below. But some comments can be made which

apply to all of them.

 

1.2 Rights and duties under a contract cannot be considered evenly balanced

unless both parties are equally bound by their obligations under the contract

and the general law. Any term that undermines the value of such

obligations by preventing or hindering the consumer from seeking redress from a supplier who has not complied with them falls under suspicion of unfairness.

 

1.3 A disclaimer will often exclude or limit liability for breach of the 'implied'

terms that the law presumes are included in a contract when nothing is

expressly agreed on the issues involved. These help ensure agreements are

workable, and generally reflect what the law considers a reasonable person

would have agreed. Excluding them can have the effect of allowing one

party to act unreasonably or negligently to the other without consequences.

Any term which can have that effect in a consumer contract is particularly

 

likely to be considered unfair.

 

 

Group 2(b): Exclusion of liability for poor service

2.2.1 A business that supplies services to consumers accepts certain contractual

obligations as a matter of law. In particular, consumers can normally expect

services to be carried out to a reasonable standard. That applies not just to

the main tasks the supplier agrees to perform, but to everything that is

done, or should be done, as part of the transaction.

 

2.2.2 See paragraphs 1.1 to 1.9 for an explanation of the OFT's objections to

disclaimers generally. A term which could – whether or not that is the

intention – serve to relieve a supplier of services of the obligation to take

reasonable care in any of its dealings with consumers is particularly liable to

be considered unfair. Where goods or materials are supplied along with a

service, the same requirements as to description and quality apply as are

described in paragraph 2.1.1.

 

 

Group 2©: Limitations of liability

2.3.1 If a contract is to be fully and equally binding on both seller and buyer,

each party should be entitled to full compensation where the other fails to

honour its obligations. Clauses which limit liability are open to the same

objections as those which exclude it altogether. See Group 1 for the OFT's

objections to disclaimers generally.

 

2.3.2 In a contract for the sale of goods, use of a term either excluding or

restricting consumers' statutory rights is always ineffective in law

regardless of its fairness, and its use may give rise to enforcement action

as a misleading commercial practice (see above, page 10), in the same way

as the use of a term which excludes such rights altogether.

 

2.3.3 Many types of contractual provision – not just terms which simply place an

overall cap on available compensation – can have the effect of limiting a

supplier's liability. They include, for example, terms which:

(a) require consumers to meet costs that in law might be for the supplier

to pay – for example, by making call-out charges non-refundable, or

obliging the consumer to meet the costs of returning faulty goods to

the supplier

(b) say the supplier is liable only to the extent that he can claim against

the manufacturer

© limit the types of redress that are available – for example, allowing

only credit notes, not cash refunds – or which give the supplier the

choice as to what type of redress to give, and

(d) limit the kinds of loss for which redress is given, for example by

excluding 'consequential' loss (see below).

 

2.3.4 The OFT's view of what makes terms of this kind fair and unfair is

illustrated by examples published at Annexe A– see terms in Group 2©.

These show that the OFT has no objection to terms which, for example,

allow the supplier to charge reasonably for dealing with problems which

Unfair contract terms guidance 24

arise owing to the consumer's fault (but see Group 5 on the need to avoid

imposing any unfair penalty).

 

2.3.5 As already explained (paragraph 1.5), the mere addition of wording saying

that the consumer's statutory rights are not affected, without explanation,

cannot on its own make a limitation clause acceptable.

 

2.3.6 Consequential loss exclusions.4 Terms excluding claims for consequential

loss are supposed to protect the supplier from remote or unforeseeable

liability. Such a term effectively disclaims liability for any loss or damage

resulting from any breach of contract by the supplier unless it would have

been generally obvious to anyone that the breach in question would cause

that loss or damage. The OFT considers they can stop the consumer from

seeking redress in certain circumstances when it ought to be available.

 

2.3.7 This can allow a supplier to escape liability for negligently causing a serious

problem for the consumer, even if, for example, the consumer actually told

him about it and asked him to take care to avoid causing it. An example

would be where the supplier of a service has been told that if it is not

performed on time, the consumer will incur a financial penalty or lose an

advantage such as a discount under another contract. The supplier should

not be able to escape liability for that loss, just because the risk of its

happening would not have been obvious to the world at large.

 

2.3.8 Under the ordinary rules of law, compensation is awarded for loss or

damage that the parties themselves could reasonably have been expected

to foresee, at the time of entering the contract, even if no-one else could

have foreseen it. The OFT considers consumers should not be deprived of

the right to claim for damages they may be legitimately able to claim.

 

2.3.9 In any case, the technical meaning of 'consequential loss' is unknown to

most people. Its use in standard contracts can lead to consumers thinking –

and being told – that they have no claim for any loss which is a

consequence of a supplier's breach of contract. This may effectively

 

 

Group 2(g): Exclusion of liability for failure to perform

contractual obligations12

2.7.1 A term which could allow the supplier to refuse to carry out his side of the

contract or any important obligation under it, at his discretion and without

liability, has clear potential to upset the balance of the contract to the

consumer's disadvantage. This applies not only to terms which allow the

supplier to refuse to carry out his side of the bargain altogether, but also to

those which permit him to suspend provision of any significant benefit

under the contract – see paragraph 15.4.

 

2.7.2 These terms may be unobjectionable if – for example, they

• enable the supplier to deal with technical problems or other

circumstances outside his control

• or if they protect the interests of other innocent third parties, and

• or if they act to enhance service to the customer.

But the potential effect, as well as the intention behind, contract terms has

to be considered. If an exclusion clause goes further than is strictly

necessary to achieve a legitimate purpose it could be open to abuse, and is

liable to be seen as unbalancing the contract.

 

2.7.3 Such a term is more likely to be considered fair if:

(a) it is narrowed in effect, so that it cannot be used to distort the

balance of the contract to the disadvantage of the consumer;

(b) it is qualified in such a way – for example, by specifying exactly the

circumstances in which it can be used – that consumers will know

when and how they are likely to be affected;

Unfair contract terms guidance 34

© there is a duty on the supplier to give notice of any proposal to rely

on the term, and a right for the consumer to cancel before being

affected by it, without penalty or otherwise being worse off for

having entered the contract.

 

2.7.4 Sometimes such terms operate in effect as penalties, allowing the supplier

to deny consumers a benefit under the contract on the grounds that they

are in breach of their obligations. In such a case, it is essential that undue

discretion is not reserved to the supplier in making the decision, and that

there is no scope to impose a disproportionate sanction – see Part III,

Group 18©.

2.7.5 See examples of terms considered by the OFT at Annexe A under Group

2(g).

 

 

Group 18(b): Transferring inappropriate risks to consumers

18.2.1 A contract may be considered unbalanced if it contains a term the supplier

is better able to bear. A risk lies more appropriately with the supplier if:

• it is within their control

• it is a risk the consumer cannot be expected to know about, or

• the supplier can insure against it more cheaply than the consumer.

 

18.2.2 Particular suspicion falls on any term which makes the consumer bear a risk

that the supplier could remove or at least reduce by taking reasonable care

– for example, of damage to equipment that he himself operates, or the risk

of encountering foreseeable structural problems in installation work. Such a

term effectively allows him to be negligent with impunity. As such, it is

open to the objections to exclusion clauses which are set out under Groups

1 and 2.

 

18.2.3 Objections are likely even where a risk is outside the supplier's control (for

example, weather damage) if the consumer cannot reasonably be expected

to know about and deal with it. The supplier should not make the consumer

his insurer. The argument that such a term enables prices to be kept down

cannot be accepted unless suitable insurance is easily available to the

consumer at reasonable cost. If it is not, the end result is that the

consumer pays more overall, or goes unprotected against the risk in

question.

 

 

Group 18(f): Exclusions and reservations of special rights

18.6.1 Any contract wording which could have the effect of depriving consumers

of protection normally afforded to them under the law is open to suspicion

of unfairness. The Regulations indicate specifically that terms excluding

rights to redress for breach of contract may be unfair (see Groups 1 and 2).

But consumers also enjoy protection under legislation that operates

separately from contract law.

 

I also felt the following section was useful for when the supplier tries to push toward the subcontractor (perhaps if you used a parcel broker service)

 

 

 

1.9 Subcontractors. A disclaimer covering problems caused by a trader's

suppliers or subcontractors is regarded in the same way as one covering

loss or damage caused directly by his own fault. The consumer has no

choice as to whom they are, and has no contractual rights against them.

The business has chosen to enter agreements with them, and therefore

should not seek to disclaim responsibility for their defaults.

 

I hope people find this useful when taking these organisations to task.

[citizenB]

You make some very points, can I just point out that the OFT no longer exist - they were replaced by the Financial Conduct Authority (FCA). It is my understanding that the first step to complaining regarding some thing like this is, first to the trader and then Trading Standards.

[jfhall82]

This is true, though the points should still be valid or at a minimum helpful until equivalent guidance is produced by the CMA or FCA. In the first instance yes contact the trader and escalate as required. Given the high number of posts on here where the supplier is seemingly pre-disposed to reject claims for compensation (or make it as painful and drawn out as possible) I felt something meaty was required to combat their default attitude and reliance on terms & conditions which are for the most part unfair. If people use this information in support of their claims it can't do any harm.

[citizenB]

You will probably find that the FCA have already incorporated the OFT guidance into their own. I was just pointing out that the OFT no longer exist