Service Transportation Agreement
- Mar 1, 2023
- 3 min read
Written by Sudipta Bandyopadhyay, Lawyer
Introduction
Many companies and manufacturing institutions need vehicles to transport goods from one place to another. These two parties enter into Transport Service Agreement to supply the goods or products to the concerned parties. This agreement is governed by the Indian Contract Act of 1872 and the Carriers Act of 1865. One party is known as “FIRST PART,” and another is known as “PROVIDER.” Both parties must follow the crucial clauses of the agreement.
Essential Clauses of the Agreement
Parties: Parties should mention their names and registered address in the agreement.
Term: Parties should mention the commencement date and the duration of the term of the agreement.
Services: The First Part must mention that it is a licensed transport company that provides transport services. The other party should mention the type of business for which the vehicles are necessary for the transportation. The agreement must note that the provider will supply those products to the distributors; an authorized transport company is required for that purpose. For this purpose, tenders are invited.
Acceptance of tenders: After selecting a tender amongst all the tenders, the ‘Provider” company will inform the chosen company with a letter. The letter will ask the transport company to deposit an amount to process the deal.
Annexure: A copy of the tender and acceptance letter will be annexed to this agreement.
List of distributors: The ‘ Provider’ will mention the name and list of distributors to the transport company. It will also mention the number of products sent to the distributors. The transport company will also agree to carry those products to the distributors as per the clauses of the agreement.
The number of trucks: The manufacturing company or the provider will inform the transport company about the number of trucks required to distribute the products.
Payment for the trucks: The Provider will pay a certain amount for every truck agreed upon between the parties. If any truck or vehicle is not used, then also payment will be made by the transport company.
Payment of taxes: The clauses of the agreement will mention that the manufacturing company will pay all the toll taxes and other requisite duties.
Insured vehicles: The agreement mentions that the transport company will agree to provide insured vehicles with adequately licensed drivers. The manufacturing company will have the right to inspect the vehicles, insurance papers, and driving licenses. If the company finds any provided vehicle has a defect and lacks insurance papers, it can return those vehicles.
Proper packing: The supplied materials must be packed in boxes, and the details should be written on paper and duly signed by both parties. The duly signed documents will be given to the distributor and transport company and kept by the manufacturing company.
Delivery certificate: The transport company will receive a delivery certificate/ challan after delivering to the distributors.
Loss or Damage: If there is any damage during transit, the transport company must inform the manufacturing companies about the damages. Authorities of the manufacturing company will inspect the damages. Later the Transport Company will compensate for the damages. If the transport company cannot deliver the products within the given time, then the transport company has to repay the damages.
Force Majeure: If the delay is caused by natural calamities or an act of God, then the transport company will not be liable for any damages.
Payments: The transport company has to submit due bills and delivery receipts to the account manager of the manufacturing company. After verifying the invoices, the manufacturing company will clear the payments within the specified date; if there is any delay, the manufacturing company has to pay with interest as agreed.
Termination: The agreement can be terminated if there is any breach of the conditions agreed between the parties. The parties seeking termination have to send a notice for termination.
Sign and a common seal: Both parties must sign the document with unsound mind and free consent. The agreement should be stamped with a proper seal.
Conclusion
A service transportation agreement is a legal document that outlines the roles and responsibilities of parties to a contract. It minimizes the occurrence of disputes among parties. It also acts as evidence in initiating proceedings in a court of law. So it has to be drafted carefully with utmost care and caution, disclosing all aspects related.
References:
VPS Law Firm, Agreement FQR Transporting Goods on Regular Basis (divorcelawyerindia)
Word Document, Inland Transport Agreement Example
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