Many times trucking companies will sign shipper contracts without reading the fine print. Here we have outlined a few provisions motor carriers should be wary of when entering into any contract. Failing to identify these situations can leave a motor carrier in a very precarious position.
1. Waiver of rights under Part B of Subtitle IV of Title 49. This waiver strips the motor carrier of its rights and benefits under the Carmack Amendment, including preemption of state and common law claims. This opens a carrier up to a plethora of lawsuits the Carmack Amendment was designed to stop.
2. Right of Shipper to set off claims against freight or other charges owed to Carrier. Not only can this have a profound impact on the motor carrier’s cash flow, but it cedes carrier leverage to deny the claim. This forces the motor carrier into fighting an uphill battle to get paid.
3. “Driver shall count all packages during loading/unloading and sign for the number of packages. If driver is unable or fails to count packages for any reason, the shipper’s package count as shown on the bill of lading or shipping document shall be BINDING on Carrier.” This burdens the motor carrier’s driver to do the shipper’s counting. Furthermore, as it is binding it disallows other evidence which could potentially rebut shipper’s count.
4. Agreement not to use subcontractors. This creates a practical operational problem for most motor carriers. Violating this provision could give the shipper and excuse to avoid one of its obligations under the agreement.
5. Disclaiming a conversion of the carrier’s liability to that of a warehouseman in the event of refused or undeliverable freight regardless of the time the carrier holds the goods. The standards of liability are much stricter for a carrier than for a warehouseman. This leaves the carrier on the hook with strict liability when a carrier’s level of liability should step down to that of regular negligence.
While this list doesn’t cover every pitfall for a motor carrier agreement, watching out for these five issues can potentially save a great deal of money down the road.
Johs Owings practices trucking litigation as well as insurance coverage and defense for Roberts Perryman.