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July 23 2018

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44 The Journal of Commerce | July 23 2018 By Colin Barrett Q&A A Q Proper documentation would clear up liability I kindly ask for your advice on my case, as I'm not clear if I'm responsible to pay for this shipment. The transportation company sent me an invoice because the consignee hasn't paid them as it was supposed to. The only document that we have for this transport is a purchase order from my client (if you wonder why my signature is not on this; it has only the signature of the trans- portation company and the receiver — my client — on it). We provided our client baked goods, and the freight was coordinated by the client. We did not issue a bill of lading nor did the transportation company provide us one we could sign. Please advise. I'm a small company and this is our first encountered issue of any sort. Any recommendations or sug- gestions on what I could have done to protect my company would be appreciated. WELL, THIS IS a bit messy because there was no B/L, al- though that's not your fault. But I don't think the carrier can legally enforce payment against you. You sent me a copy of your client's P.O., which includes a signature that appears to be the carrier driver's accepting the shipment for transportation. It also in- cludes a specification that your client is supposed to pay for the shipment. But, as you say, you haven't signed it. Evidently, the carrier opted to use the P.O. in lieu of an actual B/L to document this shipment. Now, that's all well and good; neither the law nor government regula- tions specify a particular format for a bill of lading, and the P.O. contains most of the required information that would be included in a standard form B/L; the driver's notation also constitutes the carrier's requisite receipt for the goods. But, unlike a regular B/L, the P.O. has no Section 7 for you to have executed. Section 7, of course, is the shipper's (in this case, your) directive to the carrier that it not make delivery without collecting its freight charges. It's commonly executed (countersigned) by shippers on freight-collect shipments where the consignee is supposed to pay, and protects the shipper where, as here, the consignee de- faults on that obligation; having violated the instruction, the carrier can't come back against the shipper, who otherwise has default responsibility for the carrier's bill. Legally, it was the carrier's responsibility to issue a B/L; 49 U.S.C. Section 11707(a)(1). (Yes, I know B/Ls are normally prepared by shippers, but that's merely a convenience; the law imposes the duty on the carrier.) Its failure to meet that obligation can only redound to its own detriment, not to yours. In this case, the P.O. that the carrier chose to sub- stitute for an actual B/L has one other defect. It fails to establish any contractual relationship between you (who, again, never signed the document) and the carrier. The only parties to the P.O. were your client and you; the carrier wasn't even named in that document (though it wouldn't have mattered if it had been), and wasn't party to it since it dealt only with sale of the goods. Therefore, even in the absence of an executed Sec- tion 7, I see no contractual basis on which the carrier can hope to have responsibility for its unpaid freight charges enforced against you. Oh, it can argue that you implicitly contracted with it to move the shipment, by virtue of the fact that you tendered it the goods. But I think most courts would hold against it because of its failure to issue an actual B/L, in defiance of its obligation to do so. Now, what can you do to avoid such problems in the future? That's pretty easy; prepare your own bills of lad- ing, including a Section 7 provision (which you should be sure to execute for collect shipments), for all shipments that you dispatch. Yes, it's the carrier's legal responsibility, but how many truck drivers do you know who are up to making one out? Your customer billing software ought to have a routine for doing this document, and if it doesn't, invest in more professional programming. You got lucky this time in that the shipment wasn't lost or damaged en route; the P.O., instead of a real B/L, would have made it a lot tougher for you to hold the carrier liable. The B/L protects you as well as the carrier. You should insist on one every time a commercial carrier picks up your products for movement to a customer. JOC Consultant, author and educator Colin Barrett is president of Barrett Transportation Consultants. Send your questions to him at 5201 Whippoorwill Lane, Johns Island, S.C. 29455; phone, 843 559 1277; email, Contact him to order the most recent 351-page compiled edition of past Q&A columns, published in 2010. Now, what can you do to avoid such problems in the future? That's pretty easy; prepare your own bills of lading.

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