Is a carrier required to issue a bill of lading? No, which I am sure is a surprise to many of you. Courts have held that “nothing in the Carmack Amendment [49 USC 14706(a)(1)] requires a carrier to issue a bill of lading.” The U.S. District Court in Massachusetts stated this just last month. This is indeed surprising since the Carmack Amendment states that a carrier “shall issue a receipt or bill of lading …” and, in addition, 49 CFR 373.101 states that “[e]very motor common carrier shall issue a receipt or bill of lading …” However, courts point out that the Carmack Amendment also states that “[f]ailure to issue a receipt or bill of lading does not affect the liability of a carrier.”
What happens if a no one issues a bill of lading? The Carmack Amendment will determine the liabilities. This would mean that the carrier is giving up its right to limit its liability and incorporate the terms of it rules tariff. Carriers need to avoid this. Carriers need to have their own bill of lading which sets out on its face the limits of its liability (which itself must be done in a specific way) and incorporates its rules tariff, which also sets out the limits of liability and other critical terms and conditions applicable to the service provided.
Are Shipper-Prepared Bills of Lading Valid? Maybe. The bill of lading serves three purposes, it is the basic contract of carriage, it is a receipt, and it is evidence of the party entitled to delivery. If the only document that exists concerning a shipment is a shipper-prepared bill of lading, then it is the contract of carriage once the carrier’s driver signs it. Again, carriers should avoid this situation. Shippers also need to be careful about their own bills of lading. Frequently shipper-prepared bills of lading unwittingly incorporate carriers’ tariffs that limit the shipper’s recovery, a rude awakening for the shipper. Shippers cannot argue mistake since they drafted the bill of lading.
What should a carrier do? Carriers need to do several things: (1) prepare their own bill of lading that incorporates its rules tariff, and know what it says; (2) prepare a rules tariff that sets forth all of the terms and conditions of service and specifically states that all service is provided under and pursuant to the carrier’s bill of lading and tariff, that its drivers have no authority to change any terms and conditions, and that the driver’s signature serves as a receipt only; (3) make every effort to issue its own bill of lading on each shipment and have it signed by the shipper; (4) educate its customers about the terms and conditions of the service provided; and (5) consider the use of “pro stickers” when a shipper-prepared bill of lading is used. The larger LTL carriers routinely use pro stickers that are placed on shipper-prepared bills of lading by their drivers and state that service is subject to the terms and conditions set forth in its own rules tariff, which is incorporated. There is nothing stopping TL carriers from adopting this procedure.
These issues can be avoided altogether by carriers and shippers entering into a comprehensive written transportation contract which sets out the mutually agreed upon terms and conditions and renders the bill of lading as a receipt only.