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July10, 2017

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Q&A 60 THE JOURNAL OF COMMERCE JULY 10.2017 By Colin Barrett ILLEGAL 'HOSTAGE' TAKING Q: WE USE A freight forwarder for our incoming international ship- ments. There is a dispute about one of our forwarder's recent billings, so we haven't paid that bill. Our prob- lem came about when we had a new shipment coming in. The forwarder refused to release that shipment until we had paid for the previous one, notwithstanding the ongoing dispute. Ultimately, they did release the shipment after we had paid the charges due on it (but not on the pre- vious one). However, they had held it for several days while detention charges accrued. In the past, you have written that it's improper for carriers to hold shipments "hostage" for past unpaid charges in this fashion. We feel this forwarder violated that principle of law, and are thinking about suing the forwarder for the injury their action caused us — specifically, the detention charges. The forwarder makes no bones about what they did. They acknowl- edged that our payment to them applied as we intended, that is, for the charges accruing on that shipment and not the past one. We also have emails from them basically acknowl- edging that they were holding the shipment based on our refusal to pay the disputed charges on the previous shipment. Would you please comment on the validity of our claim against them in these circumstances? A: I THINK YOU HAVE A pretty good case, assuming that you can show the detention charges resulted solely or primarily from the forwarder's refusal to release your shipment in a timely manner. The basic legal standard in the transportation industr y is that the relationship between a carrier (or, in this case, forwarder) and a shipper is strictly transactional in nature, with each individual trans- action — shipment — regarded as a separate and independent entity. Thus, as particularly applicable here, the carrier (or forwarder) is considered to have a lien on a shipment for these charges due on that particular shipment, but not those applicable to any other prior ones. (There's a limited statutory exception to this rule in California state law, though not, so far as I'm aware, the law of any other state.) In other words, so far as a carri- er's handling of any given shipment is concerned, the parties are con- sidered in law to come to each other with a clean slate between them, irrespective of what dealings they may have had with each other in the past. The carrier is forbidden from allowing residual problems left over from previous transactions to affect its behavior in fulfilling the under- taking to which it has agreed with respect to a present shipment. This forwarder basically went against the rule of law that I just described. It had a grudge against you resulting from the balance due (or at least that it considered due) on the previous shipment, and let that spill over to the more recent one. Legally, it's not allowed to do that. While I can certainly understand why it might consider its posses - sion of your goods as leverage to collect its past due bill, the law unfortunately doesn't agree with that attitude. Therefore, its action in holding up release of your shipment was legally unsupportable. Accordingly, any injury you suffered as a result of that action is properly compensable as a matter of law. What you've told me is that the delay caused you to incur detention charges on the shipment, charges that you say you would not otherwise have incurred. If you can prove this in court, you should have a valid suit against the forwarder. Even so, you may want to con- sider carefully whether you file such a suit. Pretty clearly, the forwarder quickly (well, at least fairly quickly) reconsidered it s posit ion a nd released your new shipment with- out receiving its prior charges. If you plan to continue doing business with this particular forwarder in the future, you might consider com- promising by agreeing out of court to payment of some portion of the detention charges without pursuing the rest. That might be an especially good idea if the dispute over those prior charges was resolved largely against you. That is to say, I think you've made your point with this for- warder. In the circumstances, it may be desirable, in the interest of good future business relations, for you to make an effort to give a little rather than insisting on full repara- tions. Don't, that is, stubbornly rub your (presumptive) future business partner's nose in its unfortunate mistake. JOC Consultant, author, and educator Colin Barrett is president of Barrett Transportation Consultants. Send your questions to him at 5201 Whippoorwill Lane, Johns Island, SC 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. If you plan to continue doing business with this particular forwarder in the future, you might consider compromising.

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