Concern that operators may be in the frame without knowing it
Transport and logistics firms are exposed to Australian Consumer Law (ACL) changes, industry lawyers have warned.
Cooper Grace Ward special counsel Gillian Bristow has flagged that transport and warehouse operators are on the hook for guaranteeing to provide their services with ‘due care and skill’ “unless both the consignor and consignee are each operating a business”.
Bristow expects a spike in claims against industry operators and complications for their insurers as a result.
“This amendment presents problems for both transport operators and their insurers,” she writes in an advisory.
“A transport operator providing services to a consignor who is operating a business may not know, or have any way of knowing, whether the consignee of those goods is operating a business.
“It may therefore be impossible for the transport operator to establish the contractual risk it is taking on when agreeing to provide transport services.
“There is no longer any comfort to be had for the transport operator in knowing that all of its contracts are on a ‘business to business’ basis.”
Bristow advises transport and warehouse operators should discuss the effect of this amendment with their insurance brokers and ensure they have appropriate insurance cover for goods in transit
An HWL Ebsworth team led, by law firm partners Teresa Torcasio and Richard Westmoreland, echoes the sentiments, saying the reform creates liability where it had not exited previously.
“Notably, providers of transport services to large business customers (such as department stores) may find that they are liable to those businesses under the consumer guarantees for those transport services, where the consignee (the department store’s customer) is acquiring goods for personal use,” they write.
“In this scenario, the transport service provider’s terms and conditions purporting to limit their liability would be of no effect and worse, potentially misleading or deceptive.”
Read Gillian Bristow’s take on COR reform, here
ACL is set out in Schedule 2 of the Competition and Consumer Act, the same act that covers the Australian Competition and Consumer Commission (ACCC).
Bristow explains Section 63 provides an exemption from these guarantees for services supplied under transport or storage contracts “where ‘the person for whom the goods are transported or stored’ entered into the contract for the purpose of carrying on a business. In such a situation, even though the contract for transport or storage services may be for less than $40,000, the consumer guarantees will not apply.
“Until the recent reforms, transport and warehouse operators could rely on section 63 to enter into contracts of ‘all care but no responsibility’ in their dealings with business operators.”
The government’s explanatory memorandum on the change presents it as reconciling consumer protections, where goods purchased for personal use attract consumer protections if damaged in transit and the disadvantaged party pursues a complaint against the transporter, while those for a business don’t.
Torcasio and Westmoreland point out that “the new law “is intended to give consignees of the goods the right to enforce the consumer guarantees directly against the transport or storage service provider (where they do not acquire goods for a business purpose), even in the absence of a contract between the consignee and the service provider”.
They see this as possibly conflicting with a previous High Court decision but expect clarification only when it is tested before a court or tribunal.