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October 29 2018

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52 The Journal of Commerce | October 29 2018 By Colin Barrett Q&A A Q Addressing a foreign misconception We accidently put a foreign address as a bill-to party on a recent less-than-truckload shipment with a well-known commercial carrier. We also filled out Section 7. The carrier delivered to the (correct) domestic address and now won't accept our corrected bill of lading showing it is collect to the delivered address. Because we put a bad address (a foreign address) in the bill-to section, it says that negates the Section 7. It seems to me a foreign address would have stood out like a sore thumb for it to catch and it could have held up delivery until it was straightened out. If I put in the wrong address but was still showing a domestic billing, would that be any different and again could the carrier claim Section 7 is nullified? THE CARRIER IS probably correct, but not for the reason it's given you. Section 7 directs a carrier not to make delivery without first collecting its freight charges. If the carrier violates this instruction, as your carrier did, the carrier is precluded from coming back on the shipper for the unpaid charges, as seems to be happening in your case. Ordinarily, Section 7 is used only for freight-col- lect shipments, where the consignee is responsible for paying the carrier. Indeed, this is the only use con- templated in the fine print instructions on the back of the standard-form bill of lading as incorporated in the National Motor Freight Classification. Your shipment wasn't originally billed as collect. Rather, you set up a third-party payment arrangement. It's on that basis that your execution of Section 7 is arguably invalid, without regard to whether your designated third-party payor had a domestic or foreign address, which isn't relevant. Now, you clearly can't correct your bill of lading in this regard after the carrier's already made delivery, because your correction would alter the delivery instruc- tions. So again, the carrier has this part right. But note that I've used the words "probably" and "arguably" in backing the carrier's position on the valid- ity of Section 7, because there's another legal viewpoint. I said the standard-form bill of lading instructions only contemplate execution of Section 7 on collect ship- ments, but they don't explicitly prohibit any other use, such as on third-party payment arrangements. Furthermore, these instructions are pre-printed on the back of the bill of lading form. And, as you point out (although in a different context), your execution of Section 7 in connection with your third-party pay direc- tive should have "stood out like a sore thumb for it to catch" when you tendered the shipment. The carrier nevertheless accepted the shipment and made delivery. A basic rule of law when there are internal conflicts in any document is that the most recent (in time) of conflicting provisions takes precedence. Here your execution of Section 7 obviously post-dates the preprinted material on the back. Therefore it's legally arguable that the carrier's acceptance of your directive overrides the pre- printed limitation on the use of Section 7 only for collect shipments, and thus Section 7 is valid for this shipment. I acknowledge that this isn't the strongest legal case I've ever seen, but I also say it's not without merit. And, as I've already noted the foreign address you provided for your bill-to party has nothing to do with whether Section 7 is or isn't valid. That issue isn't discussed even in the pre-printed matter. So, if push comes to shove, you aren't out of the game. On the other hand, I see no real reason why push has to come to shove here. Your initial intention, as you indi- cate, was to make this a freight-collect shipment with the consignee paying the carrier's bill. Can't you simply sort out this problem with your consignee, either by per- suading it to pay the carrier directly (getting you off the hook with the carrier) or paying the carrier off yourself and having the consignee reimburse you? If your relations with your consignee aren't such that this kind of no-harm, no-foul resolution will work out, then I suppose you can go to war with the carrier in court if you must. But I doubt the amount of the freight charges is enough to warrant that kind of battle. You and the carri- er made mistakes here, you by misusing Section 7 and the carrier by accepting the bill of lading with that misuse. I'll bet you can reach a compromise that reflects this reality while avoiding the carrier's bum arguments. 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. I acknowledge that this isn't the strongest legal case I've ever seen, but I also say it's not without merit.

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