Liability in Logistics Contracts

We have written in the past on the topic of the need for logistics and transport companies to utilize provisions of the UCC to limit their exposure to liability.    Follow this link to an article which demonstrates the type of disastrous liabilities that can hit a company that is improperly...

Damage Limitations in Logistics Contracts

As the “logistics” industry has boomed, many small businesses have tried to expand their businesses from just transportation to warehousing and even fulfillment, without having thought through the ramifications of their newly offered services.   Conversely, some warehousing companies have begun to offer transportation services either directly or as “brokers”.   These enterprises need to pay close attention to limiting their damages for providing services which they may not have extensive experience providing.   The UCC provides helpful provisions which can allow parties to specifically limit damages (to a per pound amount, or other measure).   Often clients think of provisions like this, buried in a contract, as “boilerplate” language.   However, most “boilerplate” is in contracts for very specific reasons and can prevent some very unpleasant ramifications when a problem occurs.   Service providers can substantially reduce their risk by taking advantage of these damage limitation provisions and then manage risks more economically with insurance or reinsurance.   The days of a handshake deal are over and operators who do not want to incur the cost of hiring an attorney to draft a good contract are incurring the risk of financial...

Understanding The First Breach Doctrine

Businesses deal with contracts on a daily basis. While it is always preferable to have your contracts in writing, oral contracts are enforceable, with certain limited exceptions. This is not news to most of you in the business world. A lesser known tenet of contract law is the first breach doctrine. This doctrine stands for the rather common sense notion that when a party to a contract does not live up to his own obligations owed under the contract, he may not sue to enforce the contract against the other party. Stated another way, if a party has committed the “first breach”, it cannot thereafter sue to enforce provisions of the contract that are favorable to that party, even if there is a subsequent “breach” by the other party. For this doctrine to apply, the first breach must be “material” to the agreement between the parties. A common example would be if an employer fails to pay an employee all that is owed pursuant to an employment contract, that employer will not be allowed to enforce non-competition and non-solicitation covenants contained in that same contract. It is also well established that a failure to pay an amount owed under a contract is a “material breach.” In the case of Licocci v. Cardinal Associates, the Indiana Court of Appeals succinctly stated this principle, which has been consistently enforced since the time of the Licocci decision: “As a rule, a party first guilty of a substantial or material breach of contract cannot complain if the other party thereafter refuses to perform … where a contract is not performed the party is...

When in Doubt, Look It Up

As the parent of school age children, I get asked lots of questions about all sorts of topics, most if which I know not nearly enough about. Many times these questions are on topics that I “kind of, sort of” think I know the answer, but I am not real confident in my ability to explain it to those inquiring minds. Also, they are getting old enough that I can no longer get away with just making it up. As a result, I will often do what any good parent will do: I tell the children to go look it up (or Google it….) and report back to me. That way we can all learn something. The Indiana Court of Appeals recently dealt with a situation where it was confronted with interpreting terms that are frequently used in certain contracts, and are terms that we all “kind of, sort of” think we know what they mean, but they are certainly susceptible to some discussion about what their effect is in a contract. Specifically, the Court was asked to determine what parties to a “non-solicitation” contract mean when they agree not to “solicit” or “induce” customers or employees of each other.. In examining the issue, the Court noted that although these terms are routinely used in contracts, no Indiana case had addressed what they really mean. Therefore, because courts, like parents, cannot get away with just making something up, the Court used the tried and true method of opening up a dictionary and using the definition found in the dictionary, then applying that definition to the facts in the case....

Beware Of The First Breach

Businesses deal with contracts on a daily basis. While it is always preferable to have your contracts in writing, oral contracts are enforceable, with certain limited exceptions. This is not news to most of you in the business world. A lesser known tenet of contract law is the first breach doctrine. This doctrine stands for the rather common sense notion that when a party to a contract does not live up to his own obligations owed under the contract, he may not sue to enforce the contract against the other party. Stated another way, if a party has committed the “first breach”, it cannot thereafter sue to enforce provisions of the contract that are favorable to that party, even if there is a subsequent “breach” by the other party. For this doctrine to apply, the first breach must be “material” to the agreement between the parties. A common example would be if an employer fails to pay an employee all that is owed pursuant to an employment contract, that employer will not be allowed to enforce non-competition and non-solicitation covenants contained in that same contract. It is also well established that a failure to pay an amount owed under a contract is a “material breach.” In 1983, in the case of Licocci v. Cardinal Associates, the Indiana Court of Appeals succinctly stated this principle, which has been consistently upheld since that time: “As a rule, a party first guilty of a substantial or material breach of contract cannot complain if the other party thereafter refuses to perform … where a contract is not performed the party is guilty of...
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