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23 January 2015

Holding Redlich


New Years Resolutions for the Transport Industry

The New Year is a time for reflection
and an opportunity for growth, but this
shouldnt be limited to personal selfimprovement. The transport industry is
one of the most regulated and complex.
Some of this burden and complexity can
drastically be reduced by a little postholiday detox and legal health check.
Participants in the transport industry
should take the opportunity to
implement a few easy changes or
reviews to ensure that they are in a
position to start the New Year strongly.
Now is the perfect time to take a few
simple steps to lay the foundations for
a trouble-free year, which should allow
you to focus on building your business,
rather than dealing with problems. We
outline below 7 suggested New Years
Contract terms and conditions
Do you have standard terms and
conditions? When did you last review
them? Are they still current and
effective? Are they being effectively
included or incorporated into your
contracts? If not, they will not apply
and are of no use.
Businesses should conduct a refresher
review of the content and method
of incorporation of their terms and
conditions. You should ensure that your
terms are current and deal with any
changes in law or industry practice. You
should also review your statements of
incorporation and/or check that copies
of standard terms are being sent out and
signed or acknowledged.

Limitation of liability
Most businesses within the transport
industry are entitled to limit their liability,
sometimes substantially. Failure to do so
in clear, legally enforceable terms means
that you are carrying legal and financial
risk when you do not have to. Further,
including effective limitations of liability
can often result in lower insurance

Uniform contractual liability provisions

need to be the subject of negotiations
from the outset and not left to the
last minute. Alternatively, a proactive
approach is for businesses to prepare
their own standard form of service or
supply agreement for sub-contractors or
suppliers of goods or services, so that it
is ready to roll out when any tender or
request for proposal is sought.

Businesses should review their terms

and conditions to make sure that they
are taking advantage of any available
limitations or exclusions of liability,
which in some cases can save millions
of dollars. A limitation or exclusion
clause which does not comply with
legal requirements may be wholly void
and ineffective, so careful and precise
drafting is required.

Credit risk management

Back-to-back (or better)


To cover any substantial exposure, at a

minimum you should review your credit
agreements and payment terms and
consider whether additional financial
safeguards are necessary, such as
effective personal or parent company
guarantees. If ignored, bad debts only
become bigger and worse, so businesses
need to commence recovery action and
exercise any security as soon as signs of
trouble emerge.

Many businesses within the transport

and project logistics industry are part
of a contract chain or network. It is
a vital contract risk management tool
that your contracts with sub-contractors
or suppliers of goods or services are
on back-to-back (or better) terms with
your contracts with your customer/
client/head contractor wherever this is
commercially achievable. If there is any
mis-match, you may find yourself liable
to your customer/client/head contractor
and unable to recover any such liability
in whole or part from those below you in
the contract chain.

The transport industry bears the full

force of economic cycles, with many
participants failing in tough times, often
leaving their partners with substantial
unpaid invoices and claims. Have you
conducted proper due diligence on your
business critical primary customers,
clients, head contractors, sub-contractors
and suppliers?

Preservation of your rights in

goods and property
Changes to personal property laws
under the Personal Property Securities
Act 2009 (Cth) mean that whenever your
goods, stock, property or equipment are


in the possession of a third party, they

may be able to be taken by the liquidator
of that third party unless you have
registered and preserved your interest.
Further, you may lose any entitlement
to security over the goods, stock,
property or equipment of others that
you hold unless you ensure that your
contractual provisions properly establish
your security interest over them and/or
you have registered and preserved your
interest. Any defect or mis-description
in your registration may mean that it is
void and of no effect.
Consider reviewing your contracts
to ensure that they are laying the
foundation for these security rights and
then ensure that you are effectively
registering your interests on the Personal
Property Securities Register.
Chain of Responsibility
Does your business consign, pack,
load, receive or transport goods carried
by road? If so, you must have in
place a Chain of Responsibility (CoR)
compliance policy and audit program
even if you do not physically pack, load
or transport the goods yourself. Failure
to do so could result in substantial fines,
with recent penalties exceeding $1
million and the companies concerned
suffering substantial reputational
damage. In addition, directors and
managers can be held personally liable
for any corporate breaches.
A CoR compliance policy and program
is a non-negotiable requirement for
every business in the road transport
chain. Businesses should conduct a
CoR risk assessment and prepare an
appropriate compliance policy and
audit program so that they are able to
avoid the substantial penalties for CoR

Work health and safety

The transport industry has one of the
highest workplace incident and injury
rates, costing millions in lost productivity,
penalties and personal injury claims.
Injured people are far more expensive
than damaged goods. The time taken
to prepare and implement effective
WHS policies and practices is not a
cost, but is a financial investment in your
business. In addition, it is a strict legal
requirement, where a failure to have in
place appropriate policies can result in
personal liability and fines for directors
and executives.
Businesses should conduct a WHS audit
to ensure that appropriate practices
and notices are in place and that their
implementation and monitoring are
being documented, in order to provide
evidence to respond to any WHS
investigation or defend any prosecution.
The above matters are each simple to
consider and implement and can help
ensure that the new year starts off on
the right foot and positions you to have a
less troublesome 2015. We recommend
that all businesses in the transport
industry review the above 7 steps and
would be happy to help if you need any
Author: Nathan Cecil

Key contacts
Geoff Farnsworth
T +61 2 8083 0416
Danella Wilmshurst
T +61 2 8083 0435
Nathan Cecil
T +61 2 8083 0425
Jeremy Loeliger
T +61 3 9321 9888
Jeremy Prentice
T +61 7 3135 0653

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