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5 steps to deal with a contractor that won’t comply

December 13, 2018


In the Chain of Responsibility (CoR), if you do or can exercise control or influence over any transport task, you fall within the CoR and have an obligation to ensure compliance with the Heavy Vehicle National Law (HVNL).

This includes ensuring compliance by your contractors.

Ideally, your contractors will have policies and procedures in place to manage their responsibilities under CoR.

But importantly, you must be able to manage your own compliance responsibilities under CoR before focusing on someone else’s compliance.

Your own compliance will involve implementing policies, work systems and training that are tailored towards meeting your CoR responsibilities.

It will provide the benchmark for assessing and monitoring the compliance of other parties, including contractors.

What if contractors aren’t following their CoR responsibilities?

The HVNL endorses the use of compliance assurance conditions in your contracts with contractors, as a contractor supervisory tool.

Compliance assurance conditions in commercial arrangements will include terms and conditions or compliance policies that you insist upon. These will put your business partners on notice of their obligations under the HVNL and require them to comply.

If your contractors fail or refuse to comply, you will need to activate your compliance assurance conditions to meet your obligations to control or influence the performance of your contractors.

5 steps to manage CoR compliance issues with contractors

When dealing with CoR compliance issues, you should consider incorporating the following steps into your arrangements with contractors.

This list is not exhaustive and how you apply the steps will often depend on the circumstances of each arrangement.

1: Issue a show cause notice outlining the activities carried out by the contractor that are non-compliant with their overall CoR responsibilities.

This will often be the only step required as many parties in the supply chain may be unaware that their systems and procedures are deficient and/or lacking in certain areas. Sometimes this is all that is necessary.

2: Engage in informal discussions with the contractor to outline the deficiencies in their systems and policies, and identify areas for improvement.

Subject to a few exceptions (e.g. major CoR breaches), this step allows both parties to discuss the issues in an informal environment, including what changes can be implemented to avoid ongoing compliance non-performance.

3: Engage in formal discussions with the contractor’s key personnel to outline the deficiencies in their systems and policies, and identify areas for improvement.

This step can be skipped if it appears from the previous steps that these discussions will not be productive.

4: Suspend performance of the contract until you are satisfied that the contractor has rectified any outstanding concerns.

You should ensure that this right to suspend performance is included in the compliance assurance conditions because it is often the most powerful tool available for ensuring compliance. However, these terms must be drafted carefully. Wrongfully suspending performance can possibly amount to a repudiatory breach and result in damages being awarded to the contractor.

5: Terminate the contract.

This should only be exercised in circumstances where the contractor refuses to comply with previous requests and it appears that their actions/activities will result in continued or severe breaches of their responsibilities under CoR.

Are you up-to-scratch on all of your CoR obligations?

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