How to Review a Logistics / Transport Agreement in India

A logistics or transport agreement looks simple: one party moves goods, the other pays for it. Most disputes do not come from a missing clause. They come from silence on the moment things go wrong, who bears a loss in transit, whether the declared value actually protects the shipper, and who eats the cost when a truck is stopped at a checkpost without a valid e-way bill. Indian law has specific, codified answers to most of these questions. Templates copied from a US freight contract or a generic vendor agreement usually do not reflect them.

Adira, which publishes this guide, makes contract review and CLM software, so we have a commercial interest in you reviewing logistics contracts carefully. The analysis below stands on its own regardless. If you want to mark up one transport agreement by hand today, free, Weave, Adira's browser-based contract tool, lets you do that without an account.

What this contract covers, and the one threshold question

A logistics agreement governs road movement of goods between a shipper (consignor) and a transporter (a common carrier, or a logistics company acting as one), sometimes bundled with short-term warehousing at a transit hub. It differs from a freight-forwarding agreement, where the counterparty arranges carriage through third-party truckers rather than carrying goods itself, and from a standalone warehousing agreement, governed by bailment law rather than carriage law.

The threshold question: is your counterparty a "common carrier" under the Carriage by Road Act, 2007, in the business of transporting goods for hire, for the general public, without a special contract excluding statutory liability, or a private/contract carrier outside it? That status decides which liability regime below actually applies.

Clause by clause

Scope and service levels. Name the lanes, the mode (FTL, LTL, dedicated fleet), and transit time as a number, not "timely delivery." State what delay is measured from, pickup, promised slot, or e-way bill generation, and put lane numbers in a schedule so they update without re-executing the agreement.

Rates and accessorials. Base freight, fuel surcharge (indexed or fixed), detention/demurrage beyond a stated free time, and multi-drop fees. No detention mechanism means every dock delay is a free option for the customer. State whether GST is inclusive or exclusive of freight; see our GST clause guide.

Liability for loss or damage. The clause most Indian logistics contracts get wrong, usually by importing US-style "carrier liability" that ignores the actual statutory cap. Covered below.

Insurance. A statutory liability cap is a ceiling on what the carrier owes, not insurance, and is only worth what an actual policy pays out. See our insurance clause guide for checking real covers and limits, not "adequate coverage."

Risk/title transfer and e-way bill/GST compliance are distinct questions, covered in their own sections below.

Indemnity. Beyond the statutory cap on cargo loss, indemnity should cover third-party claims: a driver-caused accident, dock property damage, or a fine from the transporter's own non-compliance. See our indemnity explainer.

Force majeure. Road transport has its own disruption list, strikes, highway closures, monsoon flooding, fuel shortages, that a generic services clause often skips. See our force majeure explainer.

Termination. Needs an express mechanic for goods already in transit or storage at exit, not silence.

The Indian position: liability under the Carriage by Road Act, 2007

Road transport for hire is governed by the Carriage by Road Act, 2007, in force from 1 March 2011, which repealed the 143-year-old Carriers Act, 1865. Section 10(1) sets the core rule:

"The liability of the common carrier for loss of, or damage to any consignment, shall be limited to such amount as may be prescribed having regard to the value, freight and nature of goods, documents or articles of the consignment, unless the consignor or any person duly authorised in that behalf have expressly undertaken to pay higher risk rate fixed by the common carrier under section 11." Source: Section 10, Carriage by Road Act, 2007

The "prescribed" amount, under Rule 10 of the Carriage by Road Rules, 2011, is the lower of ten times the freight paid or the value declared in the goods forwarding note. Never declare a value, or declare one carelessly, and the ten-times-freight figure alone can sit far below what the goods are actually worth, a real problem for high-value, low-weight cargo like electronics or pharma.

Section 11 lets the carrier charge a higher rate for a higher declared risk, but must display "a printed or written notice, in English and in the vernacular language of the region" of that option at its premises. If your standard rate never mentions it, negotiate an explicit clause fixing a higher declared value and rate for high-value cargo rather than assuming the standard rate already covers it.

Section 8 requires every goods forwarding note to declare a value, and makes the consignor "responsible for the correctness of the particulars," with a duty to indemnify the carrier for inaccurate ones, so a realistic declared value has to be entered on every note, not just assumed from the master agreement.

Section 12(1) ties liability to "any criminal act of the common carrier, or any of his servants or agents", theft or dishonest misappropriation, not simply negligence, spoilage, or an accident, read literally. Section 12(2) then reverses the burden of proof in the consignor's favour: the plaintiff does not have to prove negligence or a criminal act happened, the carrier has to disprove it. Source: Section 12, Carriage by Road Act, 2007.

This is a real shift from what most people still assume from the old law. In Patel Roadways Ltd. v. Birla Yamaha Ltd. (Supreme Court, 28 March 2000, (2000) 4 SCC 91, AIR 2000 SC 1461), the Court held "the liability of a carrier in India... is that of an insurer", near-absolute, limited only by an act of God or a special contract. Read it on Indian Kanoon. The 2007 Act replaced that uncapped liability with a statutory presumption in the consignor's favour on fault (Section 12(2)), plus a hard rupee cap on the amount (Section 10 and Rule 10, new since 2007). Net effect: easier to win the argument the carrier is responsible, much harder to recover full value, unless the declared value and Section 11 rate were fixed properly upfront.

E-way bill and GST: who is on the hook when a truck is stopped

Under Section 68, CGST Act, 2017, read with Rule 138, CGST Rules, 2017, any consignment over Rs 50,000 requires an e-way bill before movement. Who generates it depends on registration: a registered supplier (or an authorised recipient) generates it; where the supplier is unregistered and the recipient is registered, the recipient must; the transporter must generate Part B (vehicle details) once goods are handed over.

A contract silent on this creates a real gap. Fail to generate a correct e-way bill, or fail to update Part B before departure, and the vehicle can be detained under Section 129, CGST Act for goods moved "in contravention of the provisions of this Act," pending tax, penalty, or security. A workable clause names who generates the e-way bill per shipment type, requires the transporter to update Part B before departure, and puts any detention or demurrage caused by one party's documentation failure on that party, not shared by default.

Risk and title transfer

Carrier liability answers what you can recover from the transporter. It does not answer when risk shifts from seller to buyer in the underlying sale, a Sale of Goods Act question contracts routinely conflate with it. Section 39(1) sets the default:

"Where, in pursuance of a contract of sale, the seller is authorised or required to send the goods to the buyer, delivery of the goods to a carrier... is prima facie deemed to be a delivery of the goods to the buyer." Source: Section 39, Sale of Goods Act, 1930

Read literally, handing goods to the transporter is treated as delivery to the buyer, so transit risk sits with the buyer by default, even though the seller booked and paid for the transport. This is "prima facie", the contract can and usually should displace it with an express clause (risk passes at destination, or at loading), because leaving the default in place often surprises whichever side assumed the other was covering transit risk.

Warehousing legs: bailment, not carriage

Where the contract bundles storage, a cross-dock or transit hub, that leg sits under bailment law, not the Carriage by Road Act. Section 151, Indian Contract Act, 1872: "the bailee is bound to take as much care of the goods bailed to him as a man of ordinary prudence would, under similar circumstances, take of his own goods of the same bulk, quality and value." Section 152: the bailee is not liable for loss "if he has taken the amount of care of it described in section 151," absent a special contract. Source: Section 151, Section 152.

"Ordinary prudence" is meaningfully weaker for the shipper than carrier liability during actual transit, easier for the warehouse operator to escape by showing reasonable care. A logistics agreement with a storage leg needs its own liability clause for that leg; it should not assume the transit terms carry over automatically.

Red flags

Normal	Red flag	Why it matters
Transit time a number per lane, in a schedule	"Timely delivery," no figure	No basis to claim a delay happened
Declared value entered accurately on every note	Value left blank or nominal by habit	Rule 10 caps liability at the lower of ten times freight or declared value
Section 11 higher-risk rate priced for high-value cargo	No higher-risk option; freight too low vs cargo value	High-value, low-freight cargo is under-covered by the statutory cap
Names who generates the e-way bill and Part B	Silent on e-way bill responsibility	Section 129 detention lands wherever the contract failed to assign it
Detention/demurrage defined with a free time and rate	No detention clause at all	Dock delays become a free cost for the transporter
Risk/title transfer point stated explicitly	Silent, relying on the Section 39 default	The wrong side finds out it bore transit risk only after a loss
Storage leg has its own liability clause	Storage assumed covered by transit terms	Bailment (Sections 151-152) is a weaker default than carriage liability
Insurance clause names actual covers and limits	"Adequate insurance," nothing named	No way to check compliance before a loss happens
Force majeure list names transport-specific events	Generic list built for a services contract	The disruptions that actually stop trucks often go unlisted

Bad clause to better clause: liability for loss or damage

Bad: "The Transporter shall be responsible for the safe carriage of the Consignment and shall compensate the Consignor for any loss or damage to the Consignment during transit."

What is wrong: no reference to the goods forwarding note or a declared value, no figure or formula, no mention of Section 10 or Rule 10, so it reads as an open-ended promise the statutory cap will quietly override the moment there is an actual claim.

Better: "The Transporter's liability for loss of, or damage to, the Consignment shall be governed by Section 10 of the Carriage by Road Act, 2007 and the Carriage by Road Rules, 2011, subject to the declared value stated in the goods forwarding note executed under Section 8. The Consignor shall declare, for each Consignment, a value that reasonably reflects its actual worth. Where the Consignor requires cover above the amount prescribed under Rule 10, the Consignor may opt for the higher risk rate under Section 11, at the Transporter's published rate, and liability for that Consignment shall then extend to the declared value so covered. Nothing in this clause limits the Transporter's liability for loss arising from any criminal act of the Transporter or its servants or agents under Section 12, or affects the Consignor's rights under any goods-in-transit insurance separately maintained."

What changed: the clause names the actual statutory mechanism, ties recovery to an accurate declared value per note, and gives the Consignor a priced path to higher cover instead of discovering the gap after a loss.

The review checklist

1. Common carrier under the Act, or private carrier outside it?
2. Transit time a number per lane, with a defined delay trigger?
3. Declared value on every goods forwarding note reflects actual worth?
4. Section 11 higher-risk rate priced in where ten-times-freight would fall short?
5. Contract names who generates the e-way bill and Part B, per shipment type?
6. Detention/demurrage clause with a free time and rate?
7. Risk/title transfer point stated explicitly, not left to the Section 39 default?
8. Warehousing leg, if any, has its own liability clause?
9. Insurance clause names real covers and limits?
10. Force majeure list names transport-specific disruptions?
11. Indemnity separately covers third-party claims, distinct from the cargo-loss cap?
12. Termination clause covers goods already in transit or storage at exit?

US and global contrast

US domestic freight runs on the Carmack Amendment (49 U.S.C. § 14706), which, like the old Indian Carriers Act, imposes something close to strict carrier liability, subject to released-value tariffs the carrier can offer to cap its own exposure for a lower rate. That is the opposite structure from India's post-2007 default: here the cap (ten times freight or declared value, whichever is lower) applies unless the shipper actively opts in to higher cover under Section 11. A US-drafted template, built assuming near-full carrier liability as the baseline, understates what an Indian shipper needs to negotiate for explicitly.

FAQ

Does the Carriage by Road Act automatically limit what a transporter has to pay if my goods are lost? Yes, unless the contract and goods forwarding note fix a proper declared value and, where needed, pay for the Section 11 higher-risk rate. The Rule 10 default is the lower of ten times freight paid or the declared value.

We ship high-value, low-weight cargo. Is the standard freight-based cap enough? Usually not. Where freight is a small fraction of cargo value, electronics, pharma, precision components, ten times freight can sit far below the actual loss. Check whether the transporter offers a Section 11 higher-risk rate for that cargo class.

Who is responsible if a truck is detained for a missing e-way bill? Whoever the contract assigns it to. Under Rule 138, the registered supplier, recipient, or transporter can be the one required to generate it, depending on registration status. Name this per shipment type so a Section 129 detention cost does not default to whichever party has less leverage.

If our sale contract is silent on risk transfer, who bears the loss in transit? Under Section 39(1) of the Sale of Goods Act, 1930, handing goods to the carrier is, by default, delivery to the buyer, so transit risk sits with the buyer unless the sale contract says otherwise.

Does the same liability standard apply if the transporter also stores our goods before final delivery? No. Storage sits under bailment law, Sections 151 and 152 of the Indian Contract Act, an "ordinary prudence" standard, not the Carriage by Road Act's declared-value framework, so it needs its own liability clause.

Is a private fleet we operate ourselves subject to the Carriage by Road Act? The Act applies to common carriers, businesses carrying goods for hire for the general public. A company moving only its own goods, with no third-party hire business, generally sits outside its common-carrier framework.

This guide explains how a logistics or transport agreement is typically structured under Indian law, and the specific mechanics, the Carriage by Road Act's liability cap, e-way bill responsibility, and the Sale of Goods Act's risk-transfer default, that most templates get wrong. It is not legal advice, and it does not tell you whether your specific contract's declared values, rates, or liability terms are adequate for your actual cargo and risk. For that, especially before a high-value or long-term transport arrangement, have a lawyer review the actual document.