Avoiding Shipper Double Payment of Freight Charges

John Anderson Bills of Lading, Q & A, Transportation

Question:   As a company who uses brokers to set up their truckload freight, how can we protect ourselves from liability of paying for a load twice, should the broker not pay the actual carrier?

Answer:   Shippers can protect themselves from having to pay twice. Shippers generally prepare the Bill of Lading (BOL), which the motor carrier “issues” when it picks up the load and the driver signs the BOL. In these situations the shipper can sign what is referred to as “Section 7,” which is the non-recourse provision. However, the BOL needs to contain the correct language. I have seen BOLs that refer to Section 7, but Section 7 is no where to be found – indeed, very few BOLs these days contain Section 7 or the other “standard” BOL terms and conditions. However, you can use alternative language rather than the standard Section 7 language. In addition, shippers should have a written Shipper-Broker Contract that (1) provides that the Broker is designated as the special limited agent for purposes of collection of freight charges so that payment to the Broker constitutes payment to the motor carrier’s agent and therefore the motor carrier, and (2) requires the Broker to enter into a written Broker-Carrier Contract that provides in part that the Carrier agrees to look solely to the Broker for payment of freight charges and to no other party.