Understanding Payment Liability to Carriers

Kevin Anderson Bills of Lading, Contracts, Transportation

Carriers in the trucking industry lift the heavy load of physically transporting and moving America’s commercial goods. But there are many players involved in getting goods to a carrier, and arranging the details about payment, liability, and more. These arrangements can become quite complex, and may be modified through agreement at different stages.

One of the big issues that carriers will often face is regarding payment of freight charges. This is simple when there is only a shipper and carrier, and they deal with each other to move freight. Under that scenario the shipper is fully liable for the freight charges at the time a contract is struck. But what happens when there are subcontractors involved, and the freight charges are not paid?

9th Circuit Court of Appeals on Modifying Bills of Lading

This issue was addressed by the 9th Circuit Court of Appeals in 2000, in a case about a carrier seeking to make a shipper liable for the shipping charges. In that case, CAR Transp. Brokerage v. Darden Restaurants, the court looked at whether a bill of lading could be modified to relieve a shipper of freight charges, and whether two drivers could act as agents of a carrier to modify a bill of lading.

The case was important to define and instruct how 49 U.S.C. § 13706 applies to shipper liability after a shipper waives liability through a bill of lading, and payment to a subcontractor for the freight fees. In Darden, a restaurant made an agreement to have over $5,000 of shrimp shipped from California to Alabama. They paid a subcontractor who arranged freightage with the carrier, but that subcontractor subsequently went bankrupt and was unable to pay the freight bill.

It was at this point the carrier went after the restaurant shipper to have their bills paid. They argued that under 49 U.S.C. § 13706 the shipper was equally liable for the freightage charges. But the shipper argued that the carrier drivers waived liability through the bill of lading when they modified it, reflecting that the shipper already paid for the shipping charges.

Court Favors Modification

In this case the court came down on the side of shipper, agreeing that a bill of lading can be modified, and liability for payment waived. This is an important ruling because it should put carriers on notice about how to arrange their bills of lading, and not lose out on potential freight charges through oversight or technicalities of any kind.

This is only one of many rulings in the 9th Circuit and elsewhere dealing with the relationship between shipper, carrier, brokers, and others. Each opinion is important to trucking and transportation companies because they define and regulate these relationships. They establish who is liable for what and why.

Pacific Northwest Transportation Law Firm

Most trucking and transportation companies will encounter legal troubles at one point or another. At those times it is important to rely on a proved, experienced law firm which understands transportation law. That is what you will get from Anderson and Yamada. We have decades of experience helping transportation companies will a full range of legal issues. Contact us today.