Digital Edition

April 2 2018

Issue link:

Contents of this Issue


Page 43 of 47

44 The Journal of Commerce | April 2 2018 Q&A By Colin Barrett Don't despair yet, though. Your parents' salvation lies in your parenthetical comment that "they already paid for the product that was received," meaning, I assume, that they paid their vendor. Now the general tenor of your question tells me that your parents expected their vendor to prepay the carrier's charges based, presumably, on its terms of sale, and are accord- ingly a bit taken aback by the carrier's belated demand that they do so. The law covers this circumstance specifically. In such a case, it says the consignee is protected against the carrier's claim for its charges if it (the consignee) would wind up having to double-pay those charges by complying with the carrier's demand. This is the judicial doctrine of equitable estoppel, designed to introduce an element of fairness into the legal process. Postulating that your parents already had made their payment to their vendor before receiving the carrier's freight bill — and, of course, assuming that I'm correct in my conclusion that the vendor's sales terms made it responsible for the costs of transportation — this situ- ation falls under that umbrella. By paying the vendor's bill, your parents are legally presumed to have included in that payment some reimbursement for the "prepaid" freight charges. That's so whether the vendor's invoice included a specific sum for "shipping" (or some such) or did not. In the latter case, the transportation charges are deemed to be built into the base price. And here there's a bunch of legal authority. See Griffin Grocery Co. v. Penn. R. Co., 92 S.E.2d 854; C.F. Ar- rowhead Services Inc. v. AMCEC Corp. 614 F.Supp. 1384; Inman Freight Systems Inc. v. Olin Corp., 807 F.2d 117 (U.S.C.A.8, 1986); Southern Auto Sound Inc. v. Consolidat- ed Freightways Inc., 510 So.2d 1085; and In re Penn-Dixie Steel Corp., 6 B.R. 817, aff 'd 10 B.R. 878, among many others. If your parents simply explain the circumstances to the carrier with proper documentation of the vendor's sales terms and a copy of their check paying the vendor's bill, that should be an end to the matter. Don't bother with the explanation I've given here or, especially, my legal citations. These things will only be of interest to lawyers, and one thing I try to discourage is injecting all manner of legal niceties into the dialogue of laypeople simply trying to do business with one another. Because nobody but those in the legal profes- sion really understands these things, leave all that stuff to them and just stick to the facts. 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. Q A You wrote recently that "the legal default (when there are no payment terms marked on the bill of lading) is to deem the shipment as prepaid, with the shipper being primarily liable for the freight charges." What authority supports the contention that the legal default is to deem the shipment prepaid when no payment terms have been completed? I have a situation where the consignee (my parents' small business) signed a bill of lading. The bill of lading is not marked prepaid or collect (both boxes were le unchecked). If the default is to deem the shipment prepaid when payment is not delineated, I would think they aren't liable for the unpaid balance to the carrier (they already paid for the prod- uct that was received). Any direction on where I can find additional information is greatly appreciated. YOU'RE PROBABLY RIGHT about your folks not being lia- ble, although not for the reason you seem to think. There is no legal "authority" for the shipment being considered as prepaid if payment terms aren't specified on the B/L. That default is established by terms of the B/L itself, or at least the standard-form B/L as estab- lished by the National Motor Freight Classification. Even if your particular B/L deviates from the standard form (as many bills do these days) and doesn't include such a pro- vision, this principle is so well established by commercial custom that I suspect most courts would uphold it. But note what I said before in the quotation you provided: "the shipper (is) primarily liable," emphasis on the word "primarily." There's a corollary to that standard, which is that, by accepting the freight, the consignee also assumes liability for the freight charges if the primary payer — the shipper — fails to pay. I strongly suspect that's what happened with your parents' ship- ment, because otherwise the carrier wouldn't normally be seeking payment from them. And that's not so good, because under the law, they are collaterally liable for the freight charges, which would be so even if the B/L had been marked prepaid. Sales terms matter in freight charge claims One thing I try to discourage is injecting all manner of legal niceties into the dialogue of laypeople simply trying to do business with one another.

Articles in this issue

Links on this page

Archives of this issue

view archives of Digital Edition - April 2 2018