Reliable freight arrangements are now an indispensable part of life. Harrods aside, in house delivery services are long-gone. Product manufacture is outsourced, frequently involving several different transport, logistics or freight providers as the product moves through various stages from concept to point of sale. Also, increasingly, products don’t even reach consumers without a carrier.

Here are three reasons why that fine print is important.

  • What happens if my carrier goes bust?

Generally, the music stops and you risk losing money.  A liquidator or receiver will be appointed, who then works out what assets the carrier has, and how much the creditors are owed.  Next (generally speaking, assuming it’s not decided to keep the business trading), the liquidator will sell the assets in order to pay the carrier’s creditors.  The bank will usually come first, followed by the employees and the IRD, and unsecured creditors (ie customers) get what’s left.

Critical for you, whose goods are in the carrier’s warehouse, is whether the liquidator recognises those goods as yours.  The difference is stark: if the goods are “yours”, by and large you get them back but if, not you lose them.  Which applies will come down to the terms of your contract with the carrier – which will probably be in the terms and conditions on the carrier’s website.   Check for a paragraph that grants you, the customer, a “security interest” in goods held by the carrier pending delivery.   Cutting a long story short, having no registered security interest will make things very much more difficult for you.   This is worth checking as liquidations can and do happen, and even to good people who have been around for years.

  • What happens if my carrier loses a consignment?

Not much that’s good.  You spend time spent trying to find the consignment.  Production is delayed until you do find it, and then you deal with the downstream consequences of that delay.  Who pays for all that time and cost?   The answer lies, once again, in the fine print.  Unless you have made special arrangements with the carrier, they will generally only be liable to you for a maximum of $2,000  and you will have to absorb the rest.  If you have appropriate insurance, then this could help too.   With all the process improvements in the logistics industry, less and less gets lost but if (say, as has happened) your $12,000 consignment of chocolate, heading for a cake company in East Tamaki, ends up in a non-refrigerated container in Tonga, this suddenly becomes important.

  • Is it my fault if an on-line purchase never arrives?

More than likely.  If a customer buys a dress from you online, and you – the retailer – arrange the delivery (as usually happens), then yes it is “your fault” if the dress never arrives.  The customer has rights against you under the Consumer Guarantees Act in respect to the delivery of that item.  If the dress never arrives then you will have to give the customer a new dress or refund the purchase price.   No amount of fine print will get around this responsibility, although you may be able to recoup some or all of the loss from the carrier, and/or claim under your insurance.  Practically, however, the answer lies in using a reliable delivery system (which ideally required the customer to sign for the package), such that the problem never arises in the first place.

Time spent finding, reading and understanding the terms of your arrangements with all involved in your distribution network is time well spent.  (If it makes a difference, these terms are usually only a few pages long.  It’s not like trying to read and understand the I-tunes or Google fine print, which is a whole different story.)

By Charlotte McLoughlin
Special Counsel
Hudson Gavin Martin