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t it in ling!
Page 32
Page 33
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Is a handshake good enough or do you need a written contract? Adam Hill tells the 10
things you need to know about contract law.
There is no magic to contract law — it's based on a mixture of sensible business practice and common sense. However, hauliers tempted to follow the handshake route should read on because there are 10 things you definitely need to know...
1. Who are you working for?
When a new customer rings get the full name of your contact. Also, get a company name and address and don't be fobbed off with a mobile phone contact. Make sure you have a landlirte number too.
2. Does a verbal agreement count as a contract?
Yes. As does a nod, a wink or a handshake — in fact, anything does if it constitutes some kind of agreement that you will do something for someone else for some kind of consideration (preferably money). If it satisfies those criteria, it can be grandly termed a contract. Do be careful, however. "If you have an oral contract and you can say 'my commercial manager was standing next to me', that might be okay if you're prepared to stand up in court," says Heathrow-based specialist transport lawyer Raymond Clarke. But remember, it will be more difficult to prove who said what when things go wrong if there are no records.
3. Do I need to get something in writing?
No. Not in blood, at any rate. But it is desirable to have something written down. Even a onepage agreement is better than nothing, so fax one over as a back-up to your phone conversation or your chat down the pub — an e-mail has the same effect. At least that way you have something to refer to.
4. When will you be paid and who is going to pay you? Again, pretty straightforward. But make sure both parties know how much the job is for and when you expect to receive, or pay, the cash. "Our advice would be to have money, or at least a deposit, up front," says Karen Bright, commercial and litigation specialist in the St Albans office of solicitor Wedlake Saint. This 'idealworld' scenario is rarely possible in the real world of haulage, of course, but you can protect yourself. For a start, include payment terms in your conditions for the contract. For example: "Pay us within 20 days of completion or we will charge you 4% interest above base rate until
you do." Don't send these conditions with your invoice, however; it's too late by then. The Late Payment of Commercial Debts (Interest) Act 1998 has given some protection to firms seeking payment but it is obviously better if you can find common ground without recourse to the law. Due to forgeries, bankers' drafts are no longer taken as being the equivalent of cash, so treat them as you would a personal cheque. The Insolvency Service (see under contacts) will tell you if your customer has
gone out of business.
5. What are the terms and conditions of the deal?
What do you mean, you don't know? "The biggest mistake is saying: 'Yes, we'll do it for £200' without stipulating that this is subject to a set of terms and conditions," says Chrys Rampley, RHA manager, business affairs. "For example, it is desirable that you limit your liability: if something is pinched [from a load you're carrying]. The customer might want the full value of the goods."
A basic calculation, based on weight and agreed in advance, would save you hassle and money.Trade bodies such as the Road Haulage and FreightTransportAssociations offer useful services such as standard terms and conditions or legal helplines. Above all, outline what you are prepared to accept from the deal rather than leaving it to chance.
6. What if I'm not happy with a clause in the contract?
Simple. Either just cross it out or replace it with one that you are happy with. All they can do is disagree and bat it back to you. 7. Do lawyers have to be involved? No, not at all. A contract is just an agreement and most of the time the nod-and-handshake method works just fine. However, it might be worth contacting a lawyer and getting him to draw up some standard terms and conditions which you can use for all future contracts. The fee is unlikely to be outlandish and will prove
a sensible investment. Failing that, look at the terms and conditions which a large company insists upon. Adapting the bits which apply to you will be a good starting point for your own contractual ground rules. 8. Should I do some
background checks?
Yes. Remember that it is far from unknown for things to go wrong even if you have been dealing with a company for years. Companies House will provide you information on firms and there are a variety of credit checking agencies around. Yes, it will cost money but how much are you prepared to lose by not checking things out?
9. Is it safe to assume anything about a contract? Better not. Clarity is everything in law. 10. What can I do if
things turn sour? Write to your customer, explain that you want your money.As a last resort get a lawyer to issue a writ . But for sums under £5,000 you can take your case to the small claims process of the county court. It doesn't involve solicitors and your liability will be limited to the court fees, which are relatively small. You can also issue a claim online at: www.court service.gov.uk •