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January 20 2020

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44 The Journal of Commerce | Januar y 20 2020 By Colin Barrett Q&A Q A Who pays the freight? I'm an attorney. I was contacted by an out- of-state transportation broker to pursue an outstanding freight charge from a shipper. The small claim (under $10,000) isn't worth litigating, but I promised to write a letter requesting full payment based on the shipper's failure to sign the non-recourse clause (section 7) of the bill of lading. From what I've read about section 7 and the shipper's responsibility for freight charges in the event it isn't signed, it seemed to be straightforward. Well, I thought it was open and shut until the shipper's attorney introduced me to Thunderbird v. Seaman Timber, 734 F.2d 630 (U.S.C.A. 11, 1984) which turns the case history of section 7 on its head. In Thunderbird, the court decided that a shipper's failure to sign section 7 did not necessarily result in the shipper's liability for the transportation costs if the ship- per and carrier had limited contacts. The Thunderbird court emphasized that the only contact between the shipper and carrier was when the carrier picked up the load(s). In my case, there were probably greater contacts between shipper and broker than in Thunderbird, but not by much. To be honest, a strict application against Seaman Timber would arguably have led to an inequitable result, so I can understand the result-oriented decision. However, Thun- derbird seems to run counter to what I understand to be the prevailing school of thought. Are you aware of any decisions that rebut Thunderbird by subscribing to the rule of strict construction: no section 7, no defense? YOU'RE MAKING TOO much of the Thunderbird case, which is highly fact-bound, and you're missing your real problem. I wasn't familiar with this specific case previously, but after reading it I have to disagree with your charac- terization that it "turns the case history on section 7 on its head." In fact, it has little to do with section 7. Section 7, although commonly known by the term you apply — the "non-recourse clause" — doesn't actually disclaim liability of the shipper for freight charges. It just tells the carrier not to deliver without first collecting its charges, generally from the consignee. The shipper's immunity from carrier demands for freight charges derives from the fact that, if the carrier does deliver without getting paid up front (the only reason why it's now going back to the shipper for its money), it has breached the contract by failing to abide by its terms. That is, the carrier has, against instructions, extended credit to the consignee, and the shipper isn't liable when the consignee proves uncreditworthy. But who is the shipper? Generally, that party is presumed to be the one who turned the goods over to the carrier for transportation, but Thunderbird's point is that this is a rebuttable presumption. In that case, the consignee made all the arrangements with the carrier; the actual shipper — Seaman Timber — had nothing to do with them, had no knowledge of the carrier at all, and in fact did no more than turn the goods over to it at the consignee's direction. Matters might have been simpler if the shipper had executed section 7, but the point was that there was no genuine contract between Seaman and the carrier under which the carrier could seek to collect from Seaman. That's no reversal of standards of freight charge liabil- ity, it's simply a recognition of the facts of this particular case. What seems to be throwing you is simply that these facts are a bit unusual as transportation arrangements go. But as to your case, who cares? You started off saying you were hired by a broker, not a carrier. Well, the bill of lading, where section 7 is found, is a contract of carriage, in which the broker, as a non-carrier, is ineligible to par- ticipate in that capacity. Brokers and shippers may — and sometimes do — enter into other agreements or con- tracts with one another, but the B/L isn't one of them. Now, I expect your B/L shows your broker client in the "carrier" block; B/Ls often do. But that doesn't magically transform your client into a carrier, and thus it doesn't constitute a contract between your client and the shipper. Section 7, if executed, would have amount- ed to a directive to the actual carrier, so it's irrelevant. It's up to you to find some other proof that the carrier committed to pay your client. By the way, if the shipper's lawyer is throwing Thunder- bird at you, he or she may also have missed this point. You may be able to take advantage of this if you come up with your alternative proof, but the B/L won't help you. 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, e-mail For compiled past columns and other transportation-related publications visit If the shipper's lawyer is throwing Thunderbird at you, he or she may also have missed this point.

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