URGENT – Standard Form Transport and Storage Contract Exclusions Clauses are at Risk!

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By Frazer Hunt, Partner and Maurice Lynch, Special Counsel

On 1 April 2019, the Australian Competition and Consumer Commission accepted a court enforceable undertaking from Hutchison Ports Australia Pty Ltd in respect of its standard form Terminal Carrier Access Agreement of 1 January 2016.

This undertaking is historic as it is the first acknowledgment that the small business unfair contract terms regime in Schedule 2 of the Competition and Consumer Act 2010 (Cth) will make it difficult for transport service providers, including other stevedores, inland carriers, freight forwarders and warehouse operators exclude their liability in relation to the transportation and storage of goods. It is significant that this undertaking was provided by Hutchison following a review by ACCC of the three container stevedore companies’ agreements after ACCC raised concerns that certain terms in each of the stevedore agreements may be unfair contract terms.

Hutchison is a container stevedore operating international container terminals in Port Botany and the Port of Brisbane.

Through their undertaking, Hutchison has acknowledged that what is referred to as its limitation on liability clause may contravene the small business unfair contract terms. This clause is far from only a limitation of liability clause and is actually an exclusion clause which reads as follows:

HPA and its associated agencies and companies will not be liable for any loss (including without limitation, indirect, special or consequential loss of profits, loss of business opportunity or loss of good will), expense, damage, personal injury or death which is suffered or sustained (whether or not arising from any person’s negligence) in connection with the Carriers’ access to and use of the HPA Portal and the HPA Terminal services, except for any liability which cannot be excluded by law (in which case that liability is limited to the minimum allowable by law).

This exclusion clause is very similar to that seen in most freight forwarding standard terms, stevedore standard terms, and inland carrier standard terms.

The main concern of the ACCC was that the exclusion clause above:

  • enabled Hutchison to restrict its liability to small businesses in circumstances where the small business customers’ liability to Hutchison was not similarly limited;
  • was not reasonably necessary to protect Hutchison’s legitimate interests;
  • creates a significant imbalance between the rights of Hutchison and the rights of its small business customers; and
  • would cause detriment if applied or relied upon by Hutchison.

The unfair contract terms regime provides that a term of a small business contract is void if it is unfair and in a standard form. Accordingly, Hutchison has undertaken not to rely upon its exclusion clause in respect of standard term contracts to small businesses for a period of 3 years commencing 1 April 2019. This could create serious ramifications for its liability insurance regime and the price of the services provided.

With the Hutchison exclusion clause being almost identically worded to the exclusion clauses of Australian freight forwarders, stevedores, warehouses and inland carriers, there is a possibility that all transport industry stakeholders who have small business clients will be the subject of action by the ACCC, and/or will not be able to rely upon the exclusion clauses in their standard form contracts to exclude liability for claims by small businesses unless the company contracting with the freight forwarder or inland carrier can rely upon the same exclusion.

This regime only applies to contracts in a standard form to a small business which is considered one that employs less than 20 people including casual employees on a regular and systematic basis, and where the price payable under the contract is no more than $300,000 or $1,000,000 if the contract is for more than 12 months.

It does not apply to shipping contracts such as those the subject of a bill of lading or charterparty.

There is no better time for transport operators to update their standard terms and conditions and review their liability insurance cover.

For further information, please do not hesitate to contact us.

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