Broker Bond - Enforceable for Intra Can shipments?

[TransAction]

Here's a question that came up in the office that I can't give a difinitve answer on;

We have our broker bond and we are well aware that this is required by the FMCSA to have if you are brokering loads within, or in / out of the USA and is not mandated to have to broker Can-Can shipments. The question is, can a Canadian carrier put a claim against the bond if they have done a Can-Can shipment?

 

[economy]

We tried on couple of occasions to file a Surety Bond claim for Can-Can shipments, all were denied for not being cross border. To our knowledge Surety Bond covers transactions cross border or solely USA shipments. Hope it helps.

 

[loaders]

Correct. The surety bond requirement is for US registration with FMCSA. In days gone by, Ontario required a $10,000.00 bond to be registered as a load broker. Again, those days are long gone and all Ontario wants is for load brokers to maintain a trust account to be compliant with the Highway Traffic Act.

 

[Shakey]

Has anyone every used the Highway Traffic Act for this or does anyone know if you don't what the charge/fine can be?

 

[MikeJr]

If my menroy is correct and whomever told me knew what they were talking about, I understand the lack of trust account makes the director(s) personally liable in cases of insolvency.

$10k bond, lol, most of us handle that amount of business before we finish our morning coffee. I can see why it went by the wayside.

Keep well,
Mike

 

[Shakey]

If my menroy is correct and whomever told me knew what they were talking about, I understand the lack of trust account makes the director(s) personally liable in cases of insolvency.

$10k bond, lol, most of us handle that amount of business before we finish our morning coffee. I can see why it went by the wayside.

Keep well,
Mike

interesting thanks Mike and LMGFAO no kidding eh on that old 10K bond

 

[loaders]

You are correct Mike Jr. The Trust Fund provision of the HTA stipulates that monies received by a freight broker from his customer and owed to a licensed carrier must be kept separate from the brokers other operating funds, and held in a trust account. In the event of a bankruptcy but also during the regular course of operation, the monies owed to the carriers would be in the trust account and theoretically be available to be disbursed to the indebted carriers. If the funds were co-mingled and not available, the directors of the freight brokerage could be held personally liable, in spite of their brokerage company being a limited corporation. Of course very few freight brokers use a trust account and the few that do probably co-mingle their monies in it anyways. The downside to the trust account from a carriers perspective is until the broker’s customer pays him, there is technically no money (to be put into the trust account) to pay the carrier. As far as fines or penalties for non-complianice, I am not aware of any.