Transport Law - penalty for contact with client 1

Transport Law – penalty for contact with client

The introduction of non-competition provisions into contracts is very common among Polish transport companies. However, this does lead to questions regarding validity.

In the judgment of 11.09.2013 r. the Supreme Court stated that the contractual penalty for breach of the non – competition provision is valid (act signature III CKN 579/01). However, the Supreme Court added that these non-competition provisions are only binding during the execution of the order when parties have a longer contract. In Poland, the most common provisions are for non-competition obligation usually 24 months after the transport has been realised.

In that case, the Court of Appeal in Gdańsk in the judgment of 20.10.2016 r. stated that the non-competition provision is not valid if the third party doesn’t have any additional revenue for non-competition obligation (act signature I ACa 174/13). In practice, it is very rare for additional compensation to be predicted in the transport order for non-competition obligation. For this reason, these types of provisions are very often ineffective.

Moreover, in the transport industry, there is a specific model for concluding a contract. Usually, the principal sends an email with a caveat that if the receiver doesn’t return it, then that contract is accepted and binding. Obviously, this raises another question about validity, if the recipient sends a truck and takes a cargo that means he approves the contract and the email was effective.

According to the court, the above method of contracting is indeed valid but only regarding the core obligation. However, it is invalid with regards to the non-competition provision. This is because the email is received by an employee who often doesn’t have the power to conclude an agreement which includes a non-competition provision and contractual penalty. That kind of provision must be approved by a person authorized to represent the firm.

In addition, in the transport market, firms are stipulating very high contractual penalties relative to the harm they suffer. For example, the contractual penalty stands at 25.000 PLN (approximately 7500 EURO) for each contact with a client. Profit for a transport company could be no more than 1000 (250 EURO). In this example, there is a huge gap between the contractual penalty and harm. In the judgement of 26.10.2016 r. the Supreme Court stated that if a contractual penalty is much higher than any potential harm caused, then the contractual penalty stipulation is void (act signature III CSK 312/15).

In brief, as a rule, it is possible to stipulate non-competition and associated contractual penalty provisions in transport orders. However, introducing such caveats must comply with rules described above.

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Krzysztof Wites

Krzysztof Wites

legal advisor Krzysztof Wites