In the fast moving world of logistics, timing, trust and accuracy matter. Yet, you would be surprised by how many logistics companies still rely on outdated, generic or even borrowed contracts often without fully understanding what those terms actually mean or how they apply. As corporate commercial lawyers working closely with logistics companies across the UK, we have seen it all: contracts lifted from Google, small-print clauses no one notices and legal jargon no one ever reads… until something goes wrong!
And when things do go wrong, whether it is a missed delivery, lost goods or a breakdown in the supply chain, these moments often expose the very real risk of working without a well-drafted commercial contract.
James Kemball Ltd v “K” Line (Europe) Ltd [2022] EWHC 2239 (Comm)
A recent High Court decision illustrates how robust contractual drafting and clear limitation clauses can effectively shield a business from significant liability.
The background:
James Kemball Ltd (Kemball), a logistics company, entered into a longstanding agreement with K Line (Europe) Ltd (K Line), a shipping company, to provide haulage services. Under the contract K Line was required to provide a minimum volume of business, failing which a surcharge would be payable expressly described as Kemball’s sole and exclusive remedy.
When K Line ceased operations and stopped providing jobs Kemball terminated the contract and brought a claim for substantial damages, including future loss of income. K Line relied on its standard terms arguing that liability was limited and did not extend to the types of losses claimed.
The verdict:
The court found in favour of K Line, confirming that:
- The termination clause did not support termination for an anticipatory breach, it required an actual breach which had not occurred.
- The parties had agreed an exclusive remedy, a surcharge for failure to meet the minimum job threshold. Kemball could not claim wider damages in addition to or instead of that remedy.
- Although common law rights of termination may have been available, Kemball failed to rely on them in its termination notice.
Why this matters?
This case served as a strong reminder for logistics and haulage businesses of the legal and commercial risks that arise from poorly drafted or narrowly interpreted contract terms. It reinforces the importance of clear, well- structured clauses and the need to carefully consider available options, particularly in contracts involving ongoing obligations and long-term commercial relationships.
Key contract considerations for logistics companies
Protecting your business: Three things your contract must do:
- Terms must be properly drafted: Having clear and precise terms is essential and can fully protect logistics companies from significant liability. If they are ambiguous or poorly drafted, they may be struck out.
- Terms must be properly incorporated: If your business relies on standard terms (such as BIFA) to protect itself in the event of disputes, those terms must be clearly and expressly incorporated into the contract.
- Terms must be visible: Terms hidden in small print or buried on the back of a receipt will not help in a dispute. Ensure your customers understand what they are signing up for, ideally before any work commences.
Common contract disputes in the logistics sector
Let’s examine the top legal issues we encounter in the logistics industry, all of which stem from poor or incomplete contractual agreements.
- Delayed or failed deliveries: Goods not arriving on time are one of the most common triggers for contractual disputes. Whether caused by external disruptions (such as severe weather or traffic congestion) or internal issues (such as warehouse errors), such delays often result in customers seeking compensation. Clearly drafted commercial agreements including clauses that address delivery obligations, timelines and exceptions can help prevent unforeseen liability.
- Damage or loss of goods in transit: Disputes often arise over who bears the risk when goods are lost or damaged. Contracts should clearly define the point at which risk transfers from the logistics provider to the customer or third party, as well as the standard of care required during handling and transportation.
- Payment terms: Unclear or unenforced payment terms can lead to problems which typically arise where a contract is silent on matters such as payment deadlines, interest on late payments or credit limits. This can make debt recovery more complex and limit the company’s ability to take effective enforcement action, this is a key consideration in negotiating commercial contracts.
- Limitation of liability: It is important to consider robust limitation of liability clauses. Businesses often include such clauses without considering whether they have been properly incorporated or whether they meet the fairness requirements. A poorly worded or hidden clause may not be enforceable leaving the business unexpectedly liable for substantial sums.
- Termination: Termination rights must be clearly defined, if a contract includes exclusive remedies or narrowly drafted termination provisions, parties may find themselves without the ability to enforce their rights when things go wrong.
Final thoughts
As the logistics sector continues to evolve in response to operational pressures, technological developments and broader economic shifts, the value of precise drafting and negotiating commercial contracts is more imperative.
Regularly reviewing and updating your contractual framework ensures it reflects the realities of the operations and that key provisions remain enforceable, transparent, and commercially fair. With clearer drafting and proper incorporation of terms these so-called “logistical nightmares” can often be avoided altogether.
Put simply: in a world where the unexpected is inevitable, a strong contract is your best defence against a logistical nightmare.
If you are unsure whether your terms are fit for purpose, we are here to help. Tees’ commercial team are expert in drafting, reviewing or negotiating commercial contracts, ensuring they reflect how your business works and giving you solid protection when the unexpected hits.
Get in touch today and put your commercial contracts on a firmer footing.
