Opinion: Standard Forms Are Risky Business
By Joseph E. Gotch Jr. and Jonathan E. Eady
Global Logistics & Transportation
Arnall Golden Gregory LLP
This Opinion piece appears in the Feb. 11 print edition of Transport Topics. Click here to subscribe today.
As transportation and logistics businesses expand their services and customer bases in the rapidly evolving third-party logistics environment, many firms unknowingly expose themselves to legal risks by using a single, standard form of terms and conditions for all customer arrangements.
Whether developed in-house by the business itself or adopted from applicable trade groups, one-size-fits-all documents are often inadequate to cover the new services or specialized risks common to customers operating in industry segments in which the service provider has no prior experience.
A hypothetical scenario illustrates a few of the risks that may arise: A trucking company that normally operates within the United States plans to begin offering freight-forwarding services and arranging the movement of its customers’ goods from overseas origin points to various destinations by land, sea or air.
Given the service provider’s lack of experience in freight forwarding, it decides to adopt the standard terms and conditions of service published by a national industry trade association for use as its sole documentation for all services performed on behalf of such customers.
The following are three examples of how things might go awry:
• Force Majeure: If a hurricane or other natural disaster prevents the goods from arriving at the U.S. port of entry or onward destinations or significantly delays that arrival, then a customer might make a claim against the service provider for damages alleged to have resulted from the ensuing delays in the movement of the goods. To protect against such risk, parties often include “force majeure” provisions in contracts, which are intended to excuse the nonperformance of the parties for the duration of an act of nature or other occurrence outside their control.
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