This article originally appeared in LawNews (ADLS) and is here with permission.
Have you ever felt frustrated when that parcel you’re expecting is delivered to the wrong address? Or is stolen from your doorstep? Or, even worse, the courier has forged your signature and your parcel is nowhere to be found?
Forced out of the malls and supermarkets by pandemic restrictions, consumers are increasingly shopping online. But there’s a downside to the speed and convenience of online shopping: complaints about non-delivery of goods and shoddy service are rising sharply.
Consumers are piling onto Facebook community groups with desperate pleas for help to locate missing parcels and complaints about poor courier behaviour. Videos of couriers lobbing parcels over fences go viral.
So, if a parcel doesn’t make it into the hands of a purchaser, who is liable to make good the loss? Is it a simple matter of a contract being breached?
It all depends, says Dr Zhixiong (Leo) Liao, senior lecturer at the University of Waikato. There are scenarios where the courier might be able to justify this behaviour and just who is left holding the baby under contract law can be a complicated issue.
The carriage of goods in New Zealand, including courier deliveries, is governed principally by the Contract and Commercial Law Act 2017 (CCLA), says Richard Massey, a senior associate at Bell Gully. The Consumer Guarantees Act and Fair Trading Act might also be relevant.
Courier companies use standard-form contracts and each is different, although there are many similarities. The rights and liabilities of the contracting parties depend on the type of contract of carriage the parties enter into, Massey says. The four types recognised by the CCLA are:
- at ‘declared value risk’ where the carrier is liable for loss of or damage to goods up to an amount specified in the contract;
- at ‘owner’s risk’ where the carrier is liable only for damage intentionally caused by the carrier;
- on ‘declared terms’: under these contracts, all the terms are negotiated and the carrier’s liability is governed by the specific terms of the contract; and
- at ‘limited carrier’s risk’ where the carrier’s liability for unintentional damage is capped at $2,000 per ‘unit’.
The default position in New Zealand is the limited carrier’s risk.
What happens when a courier contract goes wrong depends first on who the contractual parties are. The most common contract is between the consignor (sender) and the courier company but sometimes it’s the consignee (receiver) and the courier company.
Consumer Guarantees Act
While most consumers assume if their goods don’t turn up they’ve lost money, the reality is that they’re protected by the Consumer Guarantees Act 1993.
The Act provides that where a supplier is responsible for arranging delivery of goods to a consumer, there is a guarantee that the goods will be received by the consumer at an agreed time if applicable or otherwise within a reasonable time, Massey says.
“Where delivery of the goods fails to comply with that guarantee, the Consumer Guarantees Act gives the consumer a direct right of redress against the supplier, including a right to reject the goods if the failure is of a substantial character, and to obtain damages.”
Courier companies understand the Consumer Guarantees Act and when it comes to business customers, they add exclusions to their terms and conditions.
The contracts themselves are full of exemption clauses that limit the liability of the courier company. For example, says Liao, in the New Zealand Couriers’ contract, clauses 4 and 19 limit the provisions of the Contract and Commercial Law Act.
There are limits as to who can make a claim, limits to the compensation, a timeframe limit, limited liability for breach of contract and exemptions liability for tort, even if the breach was a result of negligence or an intentional act of the employee of the courier company.
Such teflon-coated clauses where nothing sticks might not surprise members of the public if they read and understood them.
Who is liable?
The big question for many consignors and consignees is where the liabilities lie when parcels are not delivered according to the service they signed up for.
Once again, the courier contracts are teflon-coated. "Provided the carrier delivers goods in accordance with the manner expressed or implied in the contract, the contracting carrier’s responsibility for the goods generally ends upon delivery to the recipient [the ‘consignee’], Massey says.
In cases where a call-to-collect card is left at a property, with goods to be collected by the consignee, the carrier’s responsibility ends when the goods are collected by the consignee or on the expiry of the fifth day after the date on which the carrier notifies the consignee that the goods are available for collection.
What is ‘delivered’?
But the more you dig, the murkier it gets. What does ‘delivered’ actually mean? Left in your letterbox? Handed to whoever opens the door, even if it’s your untrustworthy flatmate? That may well turn out to be the meaning of ‘delivery’ in many cases.
Or, for example, clause 2 of the NZ Post (CourierPost) service terms and specifications outlines the situation where the parcel is collected by the recipient or other authorised person. Once that has happened, the courier company is off the hook, even if the person in possession of the call-to-collect card isn’t the correct recipient.
“However, where a signature is required, if the parcel is left somewhere without the signature of the intended recipient or his or her agent, including an employee or sub-contractor of the courier with the authority to sign, the courier company would have breached the contract,” says Liao.
What are you implying?
It’s with the word ‘implied’ where parcel deliveries can really come unstuck. If, for example, you signed a form allowing the courier to sign on your behalf and leave the parcel at your front door, then agency law comes into play and the parcel is deemed to have been delivered once it is left at your front door by your ‘agent’, the courier.
That raises the issue of double agency, Liao says. “[It’s a] conflict of interest issue, in that the authorised person has a duty to act in the best interest of the recipient who has given the authorisation but the authorised person is also an employee of the courier company.”
There’s also apparent or ostensible agency to consider, he says. “The employee of the courier company may argue that he or she has reasonable grounds to believe someone answering the door or the receptionist of the office has the authority to sign or receive the parcel.”
It sounds very unsatisfactory for the consignors, who are left holding the baby under the Consumer Guarantees Act if a parcel goes walkabout. On the other hand, you also need to consider the commercial reality of running a courier operation.
Some might argue the prevailing delivery practices are so well known that they becomes notorious business practices that are necessary for business efficacy, Liao says.
“The users and the law may have to put up with this widely accepted practice if there are no better or practical alternatives. Otherwise, nobody would be brave enough to run such a business.”
The underlying policies may also be relevant. If you’re paying $4.49 for Aramex to deliver a 10kg parcel in a banana box, the balance between expectation of high-quality of services versus the costs/business risks isn’t that great.
Without authority, signing on behalf of a customer may be deceptive conduct or an ineffective recognition of the reception of the parcel, says Liao.
NZ Post, owner of CourierPost, says it doesn’t condone its couriers signing on behalf of clients.
“No, it is not acceptable for a signature-required parcel to be signed for by our couriers when there is no authorisation to do so,” the company says. “It is expected that all our contractors follow our standard processes and, in the case of a signature-required parcel, that they obtain a signature from someone at the address.”
NZ Post says it takes instances such as these seriously and disciplinary action can be taken. “This might include 'non-compliance' being lodged on a courier's record with us and in some instances their contract with us may be terminated.”
To sue or not to sue?
In reality, little case law exists because the value of each contract is generally low and the standard- form contracts exclude or limit liability in most cases.
For example, says Liao, clause 13 of the NZ Post service terms says: ‘We will not pay compensation for any other direct or indirect loss or damage caused to you or your items, even if caused by an intentional act or negligence of our employees, unless we are required to by law.” In other words, take us to court or you’ll get nothing.
A ‘frame of reasoning’ exists when assessing whether the exclusion or limitation of liability clauses might protect the courier company from liability, Liao says.
“Because the exemption clauses are part of the standard from terms and conditions, it is very unlikely that a user would have actually read them before entering into the contract. In such a circumstance, the issue is whether a reasonable notice has been given prior to the contract.
“What amounts to a reasonable notice could be a complicated issue, which requires the assessment of all the relevant facts in the particular circumstances. Generally, the wider the exemption scope, the more serious the breach or conducts being covered [and] the higher the standard of reasonableness.
“For exclusion of negligence or intentional act, the notice needs to be more readily available and easier to draw to the user's attention.” Applying this standard of reasonableness, clause 13 of the
NZ Post service agreement may be an issue because it’s not set out in bold type.
“Secondly, assuming an exemption clause is a part of the contract, the issue is then whether the breach of contract, failure of delivery, loss of or damage to the parcel falls within the coverage of the exemption clause.”
Where there is an ambiguity, the court will interpret the clause against the courier company, “but will not do a hostile interpretation,” says Liao. “This is because the court may not ignore the freedom [of parties to] contract which is the cornerstone of contract law and a must for a market economy.
“If it is clear that the loss and how it was caused falls within the coverage of the exemption clause, the court will have to allow the protection of the clause to be available to the courier company, unless mandatory statutory requirements provide otherwise.”
This will be the case, even if the courier company has completely failed to perform its contractual obligations or is in “fundamental breach” of the contract.
DHL International NZ Ltd v Richmond
The Court of Appeal in DHL International NZ Ltd v Richmond  3 NZLR 10 allowed the exemption clauses, even for fundamental breach.
In that case, Liao says, DHL mistakenly delivered export documents to the wrong party. This enabled an Italian importer to use the documents to uplift goods without paying.
Richmond sued DHL, but the latter relied on the exemption clauses including one limiting the liability for direct losses to $100. “The Court of Appeal held that the exemption clauses clearly applied so that DHL may rely on them.”
Most courier companies’ terms and conditions, such as clause 16.3 in the NZ Post contract, preclude the consignees from suing.
The recipient could argue under common law that as the owner of the parcel, even if not a party to the courier service contract, he or she could still sue the courier in tort. “Of course, the cost of time, money and worthiness of the litigation is another issue,” says Liao.
Disgruntled recipients could also complain to the Commerce Commission, which could issue warning notices, impose a fine or bring a court proceeding against errant courier companies.
Grounds could be breach of the Fair Trading Act if the courier company’s employees (or contract drivers) forged signatures or intentionally destroyed or dumped the parcels rather than delivering them to the recipients, says Liao.
To the lay person, it might seem that contract law hasn’t caught up with Covid and the 21st century. But Liao argues that common law develops slowly and that new legislation could have unintended consequences.
Courier companies, as service providers, are also entitled to protection and the freedom of contract principle must be respected.
“No benefit comes without a cost,” he says. And the public needs to weigh up its tolerance of the problems versus the cost of sending parcels. Do they want their Noel Leeming deliveries, for example, to cost $10 a time instead of $5?
So, the public needs to consider this question: how much are they willing to pay in exchange for better or more reliable service from courier companies?
A better solution, Liao argues, would be increased competition among the courier service providers. “In this regard, the Commerce Commission may have a greater role.”
This article originally appeared in LawNews (ADLS) and is here with permission.