CPC-L3 CILT(UK) Certificate of Professional Competence for Transport Managers Generic Material
Unit purpose and aim This qualification is offered on behalf of the Department for Transport and in relation to the current EU Directive. It is suitable for those wishing to enter the profession of Passenger Transport Management or demonstrate professional competence to meet the Operator Licensing requirements. Elements A
Business and financial management of the undertaking
Access to the market
Technical standards and technical aspects of operation
Element A A1.
Be familiar with the main types of contract used in road transport and with the rights and obligations arising therefrom A1.1.
Apply the elements required for the formation of any legally binding contract:
A1.2. Know about Acceptance/ Consideration / Intention. A1.3. Know Legal capacity/Legal purpose /Formalities. A2.
Be capable of negotiating a legally valid transport contract, notably with regard to conditions of carriage. A2.1. Perform enforcement of contracts
THE PRINCIPLES OF LAW In the United Kingdom we have traditionally introduced and passed laws either by Acts of Parliament (Statute) or through sets of standards which have become accepted as appropriate custom and within society as a whole â€“ also known as precedents (Common Law). These distinctions are applied in both criminal law (where someone is considered to have offended against society as a whole), and civil law (which deals with problems between individuals) Both statute and common laws apply to transport businesses and have for many years. For instance, vehicle speed limits are clearly a statutory issue whilst claims for loss or delay of goods may be a Common Law issue. The way each type of law is dealt with also differs. Criminal law is enforced by the state and its agencies through the punishment of prosecution, whilst civil law is dealt with through the civil courts for damages or some form of court order. However, more recently, we find that the transport industry, and industry as a whole, also needs to comply with laws emanating from the EU. Managers must learn to raise their awareness of EU legislation, including intended legislation, and to make whatever preparation and changes are required in order to accommodate it when it is introduced as it can have a significant impact on business. Throughout this module you will be learning about many legal obligations and constraints that affect general business and road haulage businesses. Some of the principal obligations to any business result from working with suppliers and customers and revolve around contractual obligations.
Origin Offence Method of hearing Objective
Representation Proof Question/Test
Civil Law Ancient law, precedent, principles Wrong is considered a ‘tort’ Civil court
Criminal Law Written statute, law
Aims to compensate (damages) or to make good for loss or harm suffered Individual v Individual (e.g. company) On balance of probabilities
Aims to punish and change behaviour
Are you liable? Were you negligent?
Breach is considered a ‘crime’ Criminal Courts
State v Individual Beyond reasonable doubt based on evidence Are you guilty?
CONTRACTS Contracts play a vital role in industry and the road haulage industry is no exception. A contract can simply be defined as ‘a legally binding agreement’. This legally binding agreement does not have to be written down, witnessed or signed; verbal agreements can suffice. CONTRACT ELEMENTS In spite of being easily formed there are several elements that need to be present in order for a contract to be ‘legally binding’, these components are: 1. 2. 3. 4. 5. 6. 7.
An offer Acceptance Consideration Capacity Intention Legality Formalities
Each of these components is now outlined below.
1. Firstly, there must be an offer. The offer is made by the ‘offeror’ to the person who is expected to receive the offer, who is termed the ‘offeree’. The offer must be a firm offer with clearly laid out terms. Without this degree of clarity a legally enforceable contract is unlikely to be able to be formed. Under contract law, an offer may be withdrawn at any time up to acceptance. Any attempt to withdraw after acceptance can be termed a breach of contract and the offeree may be able to sue for such a breach. 2. The next component of a contract is acceptance. Acceptance is seen as the natural ‘next step’ after the offer has been made. Acceptance is defined as ‘an affirmative response to an invitation’. This means that the offer is the invitation and agreement to the offer is the acceptance. However, acceptance cannot be deemed to be complete until the acceptance has been communicated. This is important where acceptance is posted to the offeror because acceptance is deemed to be complete upon the act of posting and not actual physical receipt of the acceptance by the offeror. 3. English Law insists that, for a contract to be legally binding there must be consideration of some kind. Consideration is based upon the point of common law that takes the view that the law can only support bargains and transactions, it cannot support promises. This may seem a strange concept but consideration means that, in reality, the agreement has been ‘purchased’ by one or both of the parties involved because one or both must have gained some right or privilege (the product or service) and one or the other must have suffered some sort of loss (the provision of the same). A key point in relation to consideration is that consideration must be ‘fair’. The law allows each party in a contract to gain the maximum advantage from a transaction providing it is gained fairly. In addition, the law allows minimum advantage, as in the case of some concessionary fares for bus passengers, providing some consideration is derived.
An example of consideration might be seen as an operator purchasing vehicle insurance. In this case the consideration is the price paid by the operator, for which the insurance company agrees to provide a certain level of cover. 4. No contract can be deemed lawful unless all the parties involved have the capacity to enter into a contract. In English law, this means that people under 18 years of age, and people of unsound mind, do not have the capacity to enter into legally binding contracts. It also means that companies which are formed under the Companies Act effectively limit their capacity to the extent laid out and detailed in the objects clause of their Memorandum of Association. 5. Unless there is the intention between all parties to create a legal relationship there will only be an agreement not a contract. For any agreement to become a legally binding contract it must be an agreement clearly intending to create a legal relationship between all relevant parties. 6. No contract can in itself be either unlawful or carried out in an unlawful manner. If they are, then there cannot be legality. Without legality there can be no contract. For instance any road haulage operator who knowingly scheduled vehicles in such a way that they could not comply with any legal provision relating to the driverâ€™s hours of work or rest, and were found out, would be deemed to have broken the terms of the contract any company, or companies, they were supplying. 7. Certain formalities may have to be adhered to in order to make a contract legal and binding. Where formalities exist they must be observed. In business, formalities are regularly encountered in contracts relating to the sale of land and buildings and other major assets. The seven elements all have to be in place for the contract to be termed â€˜legal and bindingâ€™. Should any of the elements be omitted or not properly constituted, then the contract is broken and any parties who feel aggrieved may take action and sue for damages.
CONTRACTS OF CARRIAGE The most common form of contract encountered in the transport industry is probably a contract of carriage. Examples of road haulage conditions of carriage are available to view on trade association websites, company websites and are sometimes displayed at company premises. Most commonly they are to be found on company stationery (including quotation forms and tickets), clearly setting out the rules and conditions relating to a legally binding contract of carriage of goods or passengers. They cover such things as payment, actions in the event of loss or damage, punctuality, levels of liability etc. For this qualification you need to understand definitions relating to contract exclusions and typical limits of liability that are generally accepted as current best practice. EXEMPTION CLAUSES These are clauses limiting liability in contracts of carriage. The main point to be remembered about any exemption clauses are that they must be clearly communicated by the offeror to the offeree. (This type of communication often forms the â€˜small printâ€™ on the reverse of contractual documentation). However, it is not possible to exclude items which, in themselves, might constitute a breach of contract. For instance, if a road haulage operator failed to provide a service, on a day when the service should have been provided, they cannot exempt themselves from a breach of contract.
STANDARD CONDITIONS The two standard conditions of carriage which are often referred to really relate to the freight sector. These are the Road Haulage Association (RHA) conditions of carriage and Freight Transport Association (FTA) conditions of carriage. Both sets of conditions have been developed for private carriers and cover such things as: • The liability of the carrier • Acts of God, war and hostilities, etc. • Negligence by the sender, or other persons, outside the control of the carrier • Delivery time criteria These conditions of carriage also cover sub-contracting (see below) and the right of lien. Lien is the right a carrier has to retain goods until the price for the goods has been paid. Should payment not be made, the carrier then has the right to sell the goods, take what they are owed, recover any expenses incurred and return the balance to the customer. Importantly, the RHA conditions of carriage currently limit the carrier’s liability to £1300 per tonne or £500 for the entire consignment, whichever is the greater.
SUB CONTRACTOR A sub-contractor is deemed to be any person who, by agreement with a carrier, acts to undertake a part, or parts, of that carrier’s original contract. In any event it must be remembered that the original carrier retains overall responsibility for any of the terms and/or conditions laid out within the contract even though they may choose to sub-contract certain items. This means that if work is sub-contracted to a second operator, and that second operator fails to run within the agreed contract tolerances, it is the original contractor who is liable, not the sub-contractor. The original carrier need not disclose to the customer what he pays any sub-contractor but he must ensure that any sub-contractor used has sufficient insurance cover to cover the sub-contracted activity. In turn, the subcontractor has a responsibility to ensure they have sufficient insurance and that they are diligent in carrying out the work within any prescribed terms and informing the original contractor of any issues. Finally, if a sub-contractor further sub-contracts any work to another sub-contractor it is the first sub-contractor who remains liable to the original contractor, in the same way that the original contractor remains liable to the customer. CONTRACTS IN LAW As set out earlier in this section, contracts are dealt with under Civil Law, and the means of dealing with a potential claim for a breach of contract is through the Civil Courts (commencing in the County Court for claims under £50,000 or the High Court for larger claims). The claimant is normally expected to take all reasonable steps to resolve the issue before reaching court, by sending a ‘Letter before action’ to the defendant clearly setting out what you believe should happen (normally a compensation payment to cover losses). This is because the court process is a complex, costly and time consuming process for all involved.