Quarterly insights from the Commercial Litigation team

Home-to-School Transport Contracts Awarded: What PSV Operators Need to Know

As local authorities have now awarded home-to-school transport contracts for the September school term, many PSV operators are preparing to deliver services, while others may be considering their options following an unsuccessful tender or contractual concerns.

While these contracts can provide a valuable and reliable source of income, they can also give rise to disputes. Whether concerns relate to the procurement process, the award of a contract or the interpretation and performance of contractual obligations, obtaining specialist legal advice at an early stage can help operators understand their legal position, protect their commercial interests and, where appropriate, challenge procurement decisions. Early advice is particularly important, as procurement disputes are often subject to strict legal time limits.

Our Commercial Litigation Team has extensive experience advising PSV operators on procurement disputes, contract challenges and a broad range of commercial litigation matters affecting the transport sector. We provide practical, commercially focused advice to help operators protect their businesses and resolve disputes efficiently, allowing them to remain focused on delivering essential transport services.

Late Payment of Debts

Late payment of invoices and unresponsive customers can be frustrating for any business, but the issue becomes far more significant when a debtor stops engaging altogether. For operators, unpaid invoices can have a direct impact on cash flow and day-to-day operations, making effective credit control essential.

One of the best ways to minimise the risk of bad debt is to ensure that clear payment terms are agreed at the outset of the contractual relationship. Where possible, operators should seek to agree payment within 30 days. If a longer payment period is required, businesses should carefully assess whether their cash flow can accommodate the extended terms.

Practical steps such as issuing prompt payment reminders, clearly communicating payment due dates and requiring settlement of overdue invoices before undertaking further work can also help reduce the risk of non-payment. In many cases, businesses may also be entitled to recover interest and fixed compensation on overdue invoices, either under the terms of the contract or pursuant to the Late Payment of Commercial Debts (Interest) Act 1998.

When invoices remain unpaid despite reminders and engagement has broken down, taking early legal advice can often improve the prospects of recovery. Acting promptly may help preserve commercial relationships, maximise recovery options and avoid disputes escalating unnecessarily. Where court proceedings become necessary, having clear contractual terms and a well-documented payment history will place your business in the strongest possible position.

Goods in Transits Claims: What Should Operators Do?

Goods in transit claims can arise for a variety of reasons, including damage, loss, theft or delays during transportation. Whether acting as a carrier, haulier or logistics provider, operators can quickly find themselves facing claims from customers seeking compensation.

The starting point is to establish where responsibility lies. Liability will often depend on the terms of the contract, any applicable insurance policies and whether the carriage was subject to conventions such as the Convention on the Contract for the International Carriage of Goods by Road (CMR).

Where a claim is received, operators should preserve all relevant evidence, including delivery notes, photographs, vehicle inspection records, tachograph data and correspondence with the customer. Prompt notification should also be given to insurers where appropriate, as failure to do so may affect cover.

Early legal advice can help determine whether liability can be disputed, whether contractual limitations apply and how best to resolve the matter before costs escalate.

Our Commercial Litigation Team regularly advises HGV and PSV operators on goods in transit disputes, contractual liability and recovery proceedings, providing practical advice to protect businesses and minimise disruption.

I purchased a HGV or PSV that is not fir for purpose- what are my options?

Purchasing an HGV or PSV is a significant investment for any transport business. When a vehicle fails to perform as expected or is unsuitable for its intended use, the consequences can be costly, affecting operations, contracts and profitability.

If you have purchased a commercial vehicle under a business-to-business (“B2B”) agreement, your legal rights will differ from those available to consumers. The terms of the purchase contract, together with the circumstances surrounding the sale, will often determine what remedies are available.

What does “fit for purpose” mean?

In a B2B transaction, a vehicle should generally be capable of carrying out the purpose for which it was supplied. If, before the sale, the seller knew that the vehicle was required for a particular purpose—for example, operating a school bus route, carrying specialist loads or undertaking long-distance haulage—and the vehicle is incapable of performing that role, there may be grounds for a claim.

Whether a vehicle is “fit for purpose” will depend on the facts of each case, including the contractual terms, any representations made by the seller and the condition of the vehicle at the time of sale.

What if I purchased the vehicle through finance?

This can make matters more complicated.

Where a vehicle has been purchased under a finance arrangement, the contractual structure is often different from a straightforward purchase. In many cases, the finance company purchases the vehicle from the dealer and finances its use by the operator. As a result, there may be arguments over who is contractually responsible for any defects or misrepresentations.

Finance agreements also frequently contain clauses limiting or excluding the finance company’s liability for the condition or quality of the vehicle. This can leave operators in the difficult position of making finance payments for a vehicle that is not fit for purpose while trying to establish who, if anyone, is legally responsible.

Determining whether a claim should be pursued against the supplier, the finance company or another party will depend on the structure of the transaction and the contractual documentation.

What evidence should I keep?

If problems arise, it is important to retain:

• the purchase order and sales agreement;
• the finance agreement (if applicable);
• vehicle specifications and advertisements;
• emails and correspondence with the supplier;
• inspection and maintenance records; and
• any independent engineer’s reports identifying the defects.

This evidence can be crucial in establishing what was promised, whether the vehicle met those expectations and who may be responsible.

When should I seek legal advice?

Disputes involving commercial vehicle purchases can quickly become complex, particularly where finance companies, dealers and manufacturers each seek to deny responsibility. Obtaining legal advice at an early stage can help identify the correct defendant, assess the strength of any claim and avoid unnecessary costs or delays.

Our Commercial Litigation Team regularly advises HGV and PSV operators on disputes arising from the purchase and financing of commercial vehicles. We work with operators to establish their legal position, resolve disputes efficiently and protect their commercial interests while minimising disruption to their business.

Disputes with Insurers

Insurance plays a vital role in protecting transport businesses, but disputes can arise when insurers decline cover, reduce settlements or question liability following an incident.

Common disputes include rejected claims following road traffic accidents, disagreements over vehicle damage, cargo losses, business interruption claims or allegations that policy terms have not been complied with.

If an insurer disputes a claim, operators should carefully review the policy wording, gather supporting evidence and avoid making assumptions about their legal position. Policy wording can be complex, and insurers’ decisions are not always final.

Early legal advice can help identify whether a claim has been wrongly declined, whether policy exclusions genuinely apply and whether further action should be taken through negotiation or litigation.

Our Commercial Litigation Team regularly advises transport operators on insurance disputes, helping businesses recover losses and resolve disagreements with insurers efficiently.

Winding Up Petitions: Why Acting Early is Critical

Receiving a letter threatening a winding up petition can be alarming, but it should never be ignored. Many businesses mistakenly assume it is simply another debt recovery letter and continue attempting to resolve the matter themselves. In reality, a winding up petition is one of the most serious debt recovery tools available to creditors and can have significant consequences if swift action is not taken.

A winding up petition is typically presented where a creditor is owed an undisputed debt and believes the company is unable to pay. While the petition itself is a serious step, the position can become considerably more difficult once it has been advertised.

Once a winding up petition is advertised in The Gazette, the consequences can escalate rapidly. Banks frequently become aware of the advertisement and may freeze the company’s bank accounts to protect themselves from potential liability. For transport businesses, this can have an immediate impact on day-to-day operations, affecting payroll, supplier payments, fuel costs and other essential business expenses.

Advertisement of the petition can also have wider commercial consequences. Existing and prospective customers, suppliers and finance providers may become aware of the proceedings, potentially damaging confidence in the business. Importantly, other creditors who become aware of the petition may decide to support it or seek to recover their own outstanding debts, significantly increasing the financial pressure on the company.

For these reasons, businesses should seek legal advice as soon as they receive a letter threatening winding up proceedings. In many cases, there may still be opportunities to negotiate payment terms, dispute the debt where there are genuine grounds to do so or otherwise resolve matters before a petition is presented or advertised. Once the petition has been advertised, the available options become more limited, and reversing the situation can be significantly more complex, time-consuming and costly.

Equally, creditors considering winding up proceedings should ensure that the debt is genuinely undisputed and that the correct procedural steps have been followed. Misusing the insolvency process where there is a genuine dispute can have serious legal consequences.

Our Commercial Litigation Team regularly advises businesses across the transport sector on both pursuing and defending winding up petitions. Whether you have received a statutory demand, a letter threatening a winding up petition or have already been served with a petition, obtaining specialist legal advice at the earliest opportunity can make a significant difference to the outcome.

Clandestine Entrants: Why Prevention and Preparation Matter

The discovery of clandestine entrants in a commercial vehicle can expose both HGV and PSV operators to significant financial and operational consequences. While international HGV operators are most commonly affected by the civil penalty regime, all operators should ensure they have robust security procedures, driver training and compliance processes in place to minimise risk.

Operators carrying out international journeys are expected to take all reasonable steps to prevent clandestine entrants from gaining access to their vehicles. Where the relevant authorities consider that adequate preventative measures have not been implemented, substantial civil penalties may be imposed on both operators and drivers.

One of the most effective ways to protect your business is to ensure that comprehensive training and documented procedures are in place. Drivers should receive regular training on vehicle security, including conducting and recording vehicle security checks, seal inspections where appropriate and reporting any concerns immediately. It is equally important that operators retain clear records demonstrating that drivers have been trained and that company procedures have been followed consistently.

Membership of the Civil Penalty Accreditation Scheme can provide significant benefits. The scheme is free to join and recognises operators that have implemented effective systems to prevent clandestine entrants. Where an operator and driver can demonstrate that they have followed the required processes, they may be eligible for a reduction of up to 50% in any civil penalty. In some cases, where full compliance with the scheme’s requirements can be demonstrated, it may be possible for the penalty to be cancelled altogether.

Unfortunately, we continue to see a high volume of civil penalties being issued to transport operators. Receiving a penalty does not necessarily mean it should be accepted without challenge. The circumstances of each incident, the security measures in place and the evidence available will all be relevant when considering whether there are grounds to submit a Notice of Objection or pursue an appeal.

Our Commercial Litigation Team regularly advises transport operators on all aspects of the civil penalty regime. We assist operators with Notices of Objection, appeals against civil penalties and applications to join the Civil Penalty Accreditation Scheme. We continue to encourage operators undertaking international transport to join the Accreditation Scheme and to review their internal policies and driver training regularly, ensuring they are in the strongest possible position should an incident occur.

Your questions about the Entry/Exit System (EES) answered

The new Entry / Exit System (EES) implemented within the Schengen Area in April 2026 has not been without its problems.

We have put together a Q and A with three of our senior lawyers to attempt to tackle some of the difficulties operators could be faced with when navigating the new EES.

• What is the Schengen Area? – Steven Meyerhoff

The Schengen Area is a region within Europe consisting of 29 countries, that allows citizens and international visitors to travel within the area passport free. Each individual can travel within the area for up to 90 days within a rolling 180-day period.

• What is the EES? – James Backhouse

The Entry/ Exit System or EES, is a digital system implemented within the Schengen Area used to keep a record of each individuals movements in and out of the area. This new system replaces the need for passport stamps.

• What issues the EES is causing? – James Backhouse

The EES has not been without its teething problems – we have received multiple reports of individuals not being properly recorded as exiting the Schengen Area. As such, the allowed 90 days continues accruing, despite the person not being physically in the Schengen Area.

This can result in individuals facing fines and even bans from the area despite doing nothing wrong.

• What can be done to challenge a fine or ban? – Libby Pritchard

Everyone that travels within the Schengen Area holds a right to appeal a ban imposed against them. The process for appealing a penalty/ban differs depending on the Country that issued the ban and so it is important to confirm which jurisdiction is issuing the penalty/ban.

Each county has their own specified deadline for making an appeal, ranging from 30 days to as short as 3 days for urgent review in Germany. It is important that you file your appeal as soon as possible after receiving the relevant paperwork, or you get in touch with somebody that can file the appeal for you.

This is something Backhouse Jones can help with and we urge you to get in touch as soon as a ban or fine is received, especially given the tight deadlines.

• Practical pointers, how to avoid a fine or ban in the first place:

To avoid a ban for overstaying in the Schengen Area, you should not spend more than 90 days within the area in a rolling 180 day period. Individuals should also follow the process presented to them by each countries border force to ensure their movements are accurately recorded.

Where an exit is not recorded properly, we suggest maintaining a working record for the period you spend outside of the Schengen Area, so that your whereabouts are accounted for.

As a business this may include a detailed record of a drivers movements, which are generally kept anyway for the purpose of drivers hours, so if you do have to appeal any ban the information is available.

If you have any questions about the Schengen Entry/Exit System (EES), or need advice on challenging a fine or entry ban, our team is here to help. Contact us at enquiries@backhouses.co.uk or call 01254 828 300.

Team Spotlight: Ellie Kenyon

This month, we are delighted to shine the spotlight on Ellie Kenyon, recently promoted to Senior Associate Solicitor in our Dispute Resolution team. Ellie’s dedication, expertise and commitment have made her a valued member of Backhouse Jones since joining the firm in January 2016.

After achieving a first-class honours degree, Ellie began her career at Backhouse Jones as a Paralegal in the Road Regulatory department before successfully completing a two-year training contract with the firm. Since then, Ellie has continued to build an impressive practice, with her recent promotion to Senior Associate recognising her hard work, expertise and contribution to the firm.

Today, Ellie advises clients on a wide range of commercial disputes as part of the firm’s Dispute Resolution team. She has developed a particular niche in discrimination claims and is heavily involved in the firm’s work on the ground-breaking Truck Cartel litigation.

Ellie’s expertise and commitment to client service have also been recognised externally, with her being mentioned in The Legal 500. Known for her approachable manner, attention to detail and determination to achieve the best possible outcomes, Ellie is highly regarded by both clients and colleagues.

Outside of work, Ellie is a passionate equestrian who regularly competes in a variety of disciplines across the local area. She is also a keen runner and is currently training for her first marathon, the Berlin Marathon, which she is due to run this September. Her dedication and determination outside of work reflects the same qualities she brings to her legal career.

Back on the road – where to find us

Members of the Commercial Litigation team will be out and about over the coming months at key industry events. We hope to see many of you there:

• 10 September, UK Bus Summit, Liverpool

• 26 September, CPT Souths West Dinner, Torquay

• 6 October, Women in Bus & Coach Awards Ceremony

If you are attending, please come and say hello — we always welcome the opportunity to catch up with clients and colleagues from across the transport sector.

Get in touch

Whether you’re dealing with contractual complexities, enforcement issues or looking for strategic legal support, our Commercial Litigation team is here to help.