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Hi Johnny
you said :
I am currently negotiating with a major liquor supplier, they charge $7 fee per bottle (I assume including insurance) even for an item that costs $1000 . I am going to sell my products through them, however they require me to send it directly to the customer,
The first danger i see here is that they will only send it directly to the client. If an invoice or paperwork attached to the cargo is released they will automatically see who the supplier is. Have you got this covered with your courier company , to remove all paperwork off the cargo?. please check what the $7.00 covers. Never assume, cover yourself and make zero assumptions.

if I send a $1000 bottle and use a courier company such as smart send the shipping is approx $10 which im fine with, however adding insurance to the full value can go up to $50.

Have you read the terms for Smart and Send?. they can use sole traders/contractors to do your work. Clause 3.2 – H off their Terms:

h)you will not sue any person referred to in paragraph 1.7 for anything arising in connection with this Contract or the handling, transport or storage of the goods; and;

Clause 3.3? – It is agreed that the indemnities in this paragraph will operate irrespective of whether any loss or damages arises from a willful, deliberate or unauthorized act or omission by us or by any of the persons referred to in paragraph 1.7. ( 1.7 means their sub contractors, connects to Clause H)

So basically you can’t sue for any loss or damage to them or their subcontractors, you can’t take any action unto them unless they allow it.

Your goods fit into Class 3 of dangerous goods. Check with the courier if they will accept them.
http://www.dgiglobal.com/classes#liq <-- dangerous goods link to Alcohol Beverages
If this is so then :
Smart and Send Clause 4 :
4. If Goods are Dangerous

4.1 Goods are “dangerous” if they are classified by either the IATA Dangerous Goods Regulations or the Australian Dangerous Goods Code or if they might injure or damage people, property or the environment. They include goods that are or may become poisonous, corrosive, volatile, explosive, toxic, flammable or radioactive.

4.2 You promise to tell us if the goods are dangerous.

4.3 You understand that we will not carry any class of dangerous goods.

This one really makes me laugh, can’t even spell:

9.3 We and the persons referred to in paragraph 1.7 are not liable for any delay, loss or damage arising from the supply of or failure to supply services (including loss of, deterioration in, mis-delivery of, or failure to deliver, goods), for any reason whatsoever including breach of Contract, negligence, breach of duty as bailee, or our willful act or default. In the event there is any liability then, such claim must be made within seven (7) days of delivery and it is agreed that any such liability shall be limited to the price paid for the services rendered, and no other damages, monies payable and/or claims shall be paid.

Further to that it could be suggested that you seek out your own insurance for the goods from an insurance broker. Our broker insures our clients if requested. A client wanted their goods insured for 13,000 USD and it cost 50.00 AUD from Hong Kong to Sydney. You will have more better dealings with your own insurance then of some courier company. The insurance is called ” goods in transit “

Always check the terms you enter into or permit a solicitor to get involved, where you need to negotiate terms. Don’t be too ” cheapest price ” mentality. Reasonable pricing with reasonable protection to you is very important. If your a sole trader, you definitely need to cover yourself

Hope it helps .