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Sept.19. 2016

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Q&A 52 THE JOURNAL OF COMMERCE SEPTEMBER 19.2016 By Colin Barrett PAY THE CARRIER; IT'S INNOCENT Q: WE HAVE A few motor carrier invoices that we contested because the shipper marked the bills of lading as "collect" when our contract with it calls for prepaid shipments. What is the time limit, if any, for the carrier to sue for this type of claim? I know what it is for undercharges and overcharges and was wondering what it is for this scenario. I have declined to pay numerous times. A: "A (MOTOR) CARRIER … MUST beg in a civil action to recover charges for transportation or ser - vice provided by the carrier within 18 months after" the date of deliv- ery; 49 U.S.C. Section 14705(a). That applies to both undercharges and unpaid bills. I have to tell you, though, that I think you're making a dreadful mistake in choosing the path you've selected to try to enforce the terms of your contract with your ship- per that it pre-pay all shipments addressed to you. I'm reminded of the apocryphal epitaph engraved on a tombstone: "Here lies the body of Jonathan Day/Who died defend- ing the right of way/He was right as he drove his car along/But he's just as dead as if he'd been wrong." That has the potential to be you. Consider that, if you were the carrier, wouldn't you get fairly ada- mant about collecting your money from the consignee in such circum- stances? The bill of lading clearly says "freight collect." It doesn't say that because you, the carrier, arbi- trarily decided that it should. To be sure, it's the carrier's legal responsi- bility to prepare the B/L; 49 U.S.C. Section 14706(a). But that doesn't include selecting freight payment terms. On this point, it must take the instructions given it by the shipper. The carrier, of course, isn't privy to the provisions of the consignee's agreement with the shipper, nor does it have any obligation to enforce those provisions. Therefore, it has no reason, and no standing, to insist the shipment be prepaid. Me a nt i me , t he con sig ne e accepted the shipment under the B/L terms. The bill of lading is a legally binding contract, and the consignee becomes party to it, and bound by its terms, by taking delivery of the shipment; Corpus Juris Secundum, 13 C.J.S. Carriers Section 478. So you, as the carrier, have every reason to look to the consignee for your money, and not to the shipper. Indeed, if Sec- tion 7 of the B/L was executed, you'd be legally barred from seeking to col- lect from the shipper. The reality is that your dispute isn't with the carrier at all, Rather, it's with your trading partner, the shipper, and the carrier has every right to be upset that you're trying to drag it into the middle of that dis- pute. So the carrier, in fact, is pretty likely to sue you (and, as I noted pre- viously, it has lots of time to do that) if you persist in your refusal to pay. Given the B/L terms, it's quite likely it'd win — including any penalties for nonpayment that it has written into its tariff (which may be substan- tial, including reimbursement of its own legal fees and perhaps more). I doubt a court would even allow you to enter your contract with the shipper into evidence, because the carrier wasn't party to that contract. If you're adamant about not pay- ing carriers' freight bills, your only legal recourse is to refuse delivery of all shipments billed as freight collect. Admittedly, that's probably unrealistic, because you likely have an operational need for the goods coming in. But there's a good second choice: Accept the shipment, pay the carrier's bill (which, as I've pointed out, you're legally obliged to do any- how) and then offset the amount against the shipper's invoice — plus, if you're sufficiently bloody-minded and have the economic muscle to carry it off, an administrative pen- alty for the inconvenience. But simply refusing to pay the freight bill isn't a viable option. Again, you're not quarreling with the carrier over the amount of its bill, so why take out your frustration on it? Put the blame squarely on the party responsible — the shipper — and direct any retaliatory measures accordingly without involving the carrier, who is, so far as this matter goes, strictly an innocent bystander. In other words, fulfill the legal obligation you undertook by accept- ing delivery of the shipment with the B/L contract under which it was shipped, and pay the carrier. If you insist on doing otherwise, you're tak- ing on a legal battle you can't win. 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, Contact him to order the most recent 351-page compiled edition of past Q&A columns, published in 2010. I have to tell you that I think you're making a dreadful mistake.

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