Transport Contracts: Everything You Need to Know
Transport contracts refer to legally enforceable agreements for the provision of transportation services. 3 min read
Updated November 10, 2020:
Transport contracts refer to legally enforceable agreements for the provision of transportation services. These contracts can be created for a wide range of transportation services, from domestic rail freight transportation to motor carrier services. A transport contract documents all the important details of a transportation service agreement, including the obligations of both parties, shipping method, delivery times, and fees and costs.
What Is a Transport Contract?
Almost every business has a relationship with a transportation company that will or should be eventually documented in a formal contract. A transport contract is a legally binding contract that deals with freight transportation services such as domestic freight forwarding services, motor carriers, local rail drayage services, domestic water carriers, and others. Nonetheless, a transport contract is not used for transportation services acquired by domestic or international air carriers or international water carriers, as well as freight services negotiated for lower rates or rendered under bills of lading.
What Is Included in a Transport Contract?
Transport contracts can vary significantly in terms of format and content, but they generally include the following items:
Billing and Payment
A transport contract must provide detailed information about billing and payment, including payment due dates and late payment penalties, such as interests, collection costs, and legal fees.
Certifications and Warranties
It is important not to promise complete accuracy of anything, such as the exact pickup or delivery time, 100-percent satisfaction, or absolute compliance with all regulations. If you are faced with high expectations, consider using contract language that keeps promises to a reasonable level.
There should also be a waiver of consequential damages in a transport contract. Such damages include loss of profits or other types of indirect loss and the shutting down of manufacturing processes that are only remotely related to your services.
Your transport contract should also have a clause on safety. This clause should clearly state that the individual or entity that performs a specific task will be responsible for job safety.
It is also important that you include a liability limitation clause in your transport contract. This clause will specify the maximum amount of liability you will be exposed to if a claim arises from the provision of the transportation services.
Alternative Dispute Resolution
Although it is an informal approach, mediation has been proven to be an effective dispute resolution method, especially if used early in a dispute. As such, you should make it the first step in managing disputes with your clients.
Scope of Services
It is important to have a clause describing each service that you will be offering to your client, including those that come with additional charges. A detailed list of services can help prevent possible controversies in the future.
Standard of Care
The standard of care that you will be providing for your client should be affirmatively defined. While you should not describe your standard of care as “perfect,” it should be high enough to meet your client's expectations.
There should also be a termination clause in the contract that describes the circumstances under which the legal relationship can be terminated. Contracts that never expire can be problematic after some time. The best thing to do is to allow renewals at certain intervals.
The transport contract must also address the possibility of third-party claims, which are claims of individuals and entities outside the contractual relationship. You can form ground rules for court mediators to use for guiding interpretation.
You should not just ask an attorney to go over the transport contract and approve it just because you have been working on it for a month or so. Having a lawyer involved in the early stages of the drafting process can enhance your leverage and well-being.
State Transport Contracts
State transport contracts can be one-off jobs or short- or long-term services. Some examples of state transportation opportunities include providing bus services for group outings, temporary transportation for government employees, sedans for transporting officials and dignitaries, and a daily shuttle service for a public university.
Types of Transportation Services
- Taxi service
- Limousine service
- Bicycle rental
- Owner or operator trucking
- Moving van business
- Specialty transportation
- Livestock transportation
- Medical transportation
- Senior transportation services
- Marine shipping
- Air transport
If you need help with drafting or reviewing transport contracts, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.