Avoiding a logistical nightmare: The importance of clear contract terms

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 Yet, you would be surprised by how many logistics companies still rely on outdated, generic or even borrowed contracts often without fully understanding what those terms actually mean or how they apply.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.

  1. 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.
  1. 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.
  1. 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.
  1. 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.
  1. 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.

Logistics health and safety laws

Logistics and haulage companies have faced unprecedented challenges in recent years. From considerable post Brexit-disruption, inflated fuel prices and other cost increases to substantial driver shortages. Given these onerous external pressures, it is perhaps unsurprising that good health and safety practices can be overlooked or neglected.

Many see health and safety as endless paperwork, red tape, expense and rules that are difficult to understand. However, an employer has a legal duty to make sure that people are safe in the workplace they control, even where they are employed by others or are members of the public. Controlling health and safety risks can be achieved with a little effort and as a result, many accidents can be prevented.

It can be a daunting prospect to consider hazards and risks, but the HSELogistics UK, and the Road Haulage Association all provide guidance that can assist you in this process.

The logistics and haulage sector has a lot of moving parts ranging from people and vehicles operating alongside each other, the loading and unloading of vehicles and the distribution of goods. Not all hazards involve operational activities. They also include tasks like cleaning, refuelling, replacing propane cylinders, using high-pressure water hoses and detergents to clean vehicles or carrying out vehicle maintenance activities.

It is vital to have a comprehensive understanding of your responsibility as an employer.

Where to start with logistics health and safety arrangements

The starting point is by examining what actually goes on in your business, removing and controlling hazards as far as possible and taking the necessary managerial and supervisory steps to make sure what is supposed to happen does happen.

A hazard is simply something that can cause harm. Risk is the chance of anyone suffering harm from a hazard. For example, a slippery path is a hazard. The more slippery it is, and the more people walk along it, the greater the risk of someone falling and injured.

The language can be confusing – but focus on the basic common sense factors and focus on whether something could cause harm.

Common areas of risk within the logistics sector are:

Pedestrians and vehicles – health and safety

Segregation is the key message and every workplace should be organised so that pedestrians and vehicles can circulate safely by keeping well clear of one another.

Vehicle movements in the workplace require careful management to control and reduce the likelihood of accidents occurring. Every site, every yard and every warehouse are different in terms of layout, operations and vehicle movements and each will present its own hazards and risks. However, a well-designed and maintained site with suitable segregation of vehicles and pedestrians will make workplace transport accidents less likely. When considering traffic routes, the guidance highlights the following should be considered.

  • the vehicles being used,
  • minimising the need for reversing,
  • avoiding sharp bends and blind corners,
  • maintenance – do not allow potholes to develop,
  • anything that can affect load stability e.g., steep slopes.

The most effective way of ensuring vehicles and pedestrians move safely around a workplace is to provide separate pedestrian and vehicle traffic routes. Where possible, there should be a one-way system as this will reduce the need for vehicles to reverse and will help pedestrians and vehicle drivers.

Often complete segregation within warehouses or within yard areas is not possible or practical and therefore the regulations would require employers to have clearly marked pedestrian and vehicle traffic routes, using measures such as barriers, signs and marked routes.

Vehicle maintenance – health and safety

Vehicles should be maintained in good working order in accordance with the manufacturer’s recommendations, so they remain mechanically sound and function properly.

Planned inspections are a vital part of preventative maintenance. These may include daily safety checks carried out by drivers and regular maintenance inspections based on time or mileage. Drivers should be provided with a list of the daily checks to be signed off at the start of each shift. This should be monitored to ensure the checks are carried out properly and acted upon if any defects are reported.

You should have:

  • a documented pre-shift check,
  • a system for reporting defects and for ensuring that remedial work is carried out,
  • a planned routine maintenance system,
  • a thorough examination/safety inspection regime for each truck.

Loading and unloading – – health and safety

Minimising the risks associated with loading and unloading activities can require the careful consideration of multiple assessments. For example, the hazards will vary depending on the type of vehicle involved (e.g., rigid container, curtainsider, flatbed truck etc), where it is being loaded or unloaded (e.g., at a dock, in the middle of the yard) and the type of load involved (e.g., is it being handballed, does it have to be moved using a mechanical aid?).

To minimise the risks to those involved in loading and unloading, information should be provided on the nature of the load and how it should be properly loaded, secured and unloaded. Make sure vehicles and trailers have their brakes applied and all stabilisers are in

the correct position before loading or unloading. There should be a safe place where drivers can wait throughout loading and unloading. Make sure you take measures to prevent vehicles from being driven off during either loading or unloading at loading bays. These can include measures such as traffic lights on loading bays or vehicle or trailer restraints.

This information should accompany the load and be available to those involved in the loading, transportation and unloading activities. The loading and unloading area should be clear of traffic and people not involved in the activity. It should be undertaken on level ground and away from other work activities.

Prior to any loading or unloading consideration should be given to the location to ensure there is no risk from overhead cables, pipes and other obstructions.

For risk assessments to be “suitable and sufficient,” you will need to consider all these permutations so that you can develop safe systems of work (sometimes known as standard operations procedures or work instructions) to ensure every worker understands how that activity should be carried out to minimise health and safety risks. This includes both employees and non-employees who are visiting a site.

Storage – health and safety

A variety of systems are used for storing goods, from pallets to static racking. The method of storage largely depends on the shape and fragility of the goods being stored and the location. Storage areas should be properly designated and clearly marked. The layout of storage and handling areas should avoid tight corners, awkwardly placed doors, pillars, uneven surfaces and changes in gradient.

Systematic risk assessments of haulage yard activities will identify the different methods of storage used by the organisation. This would also include the equipment used, such as containers, racking as well as stacking. Identifying the different types of goods that are stored may indicate that there are specific hazards associated with their storage. These will need to be considered when developing standards, for example, their ability to bear weight or the stability of the stack.