Does anyone ever read these contracts before signing and if you did why would you sign most of them. I had one sent to me recently, 24 hours after getting a load confirmation which was a variation of the TIA/nitn contract which had inserted a clause which said I would pay any legal fees. It should have included a T-Shirt saying "sue me I'll pay your legal bills". It said broker was to be sole payer to carrier but they removed the part in TIA contract which says in case of non-payment by broker all other legal means of collection are OK. Then they inserted clause saying the only dispute mechanism in Ontario would be binding arbitration even tho Ontario's Consumer Protection Act says this is illegal, and not much wonder with arbitrater's fees being $500 an hour or more. They would be better off getting an attorney with transport experience to make a 1 page contract which says broker and carrier agree to obey all laws in all jurisdictions involved, no back solicitation,no double brokering and payment terms.
Brokers Contracts
- Thread starter louis1955
- Start date
10
TIA and NTBA Contracts
If the contracts from the TIA or NTBA are altered, even by one word, the logo must be removed from them. It might be easier if you agree with the standard contracts, most carriers and brokers, do, to just sign that you agree to the TIA or NTBA standard contract rev. xxx. That way you don't get caught agreeing to something that has been "slipped" in.
In general, these contracts protect brokers, shippers and carriers. In my opinion they are balanced. Sure brokers would like to see it tougher on back solicitation and no recourse to the shipper, the carrier would like to see it easier to collect directly from the shipper, etc. But, in my opinion, the trade off's made are fair to both sides.
If the contracts from the TIA or NTBA are altered, even by one word, the logo must be removed from them. It might be easier if you agree with the standard contracts, most carriers and brokers, do, to just sign that you agree to the TIA or NTBA standard contract rev. xxx. That way you don't get caught agreeing to something that has been "slipped" in.
In general, these contracts protect brokers, shippers and carriers. In my opinion they are balanced. Sure brokers would like to see it tougher on back solicitation and no recourse to the shipper, the carrier would like to see it easier to collect directly from the shipper, etc. But, in my opinion, the trade off's made are fair to both sides.
30
I agree with Louis1955 - if most dispatchers read broker contracts - many would not be signed. I don't see broker confirmation sheets that often - being in accounting - but I have seen a few horrible ones in my time. Withholding funds when a POD is not provided in 24-48 hours - on shipments going out West! Absolutely ridiculous! It has been my experience that the "smaller" the type on broker confirmations outlining their requirements - the more "closely" they need to be read. Now our dispatchers will simply black something off that they can't read or do not agree with. When it comes down to it - many of these "mice type" broker requirements will not hold up in court anyway. But then you would be paying all the court costs anyways - so doesn't hurt to try!
20
NTBA contact
SCAM CHASER--After reading both versions of the NTBA contract I still think it reads more like a brokers Christmas wish list than a fair, balanced contract. For example the part where carrier relieves broker of requirement to maintain a trust account which is required by FMCSA and Ontario Highway Traffic Act 191.01.(3). I didn't know carriers COULD relieve brokers of their legal obligations. The part which says carrier has checked brokers credit is unrealistic since it takes about 24 hours to do a credit search(Links credit numbers are not reliable) and broker needs carrier to make a decision NOW, not 24 hours later. The part which makes broker sole party responsible for payment is contadicted by many court decisions the latest of which is in OTA's fall/winter 2008 newsletter involving Molsens. I think they should have hired an attorney with some transportation experience to write their contract.
SCAM CHASER--After reading both versions of the NTBA contract I still think it reads more like a brokers Christmas wish list than a fair, balanced contract. For example the part where carrier relieves broker of requirement to maintain a trust account which is required by FMCSA and Ontario Highway Traffic Act 191.01.(3). I didn't know carriers COULD relieve brokers of their legal obligations. The part which says carrier has checked brokers credit is unrealistic since it takes about 24 hours to do a credit search(Links credit numbers are not reliable) and broker needs carrier to make a decision NOW, not 24 hours later. The part which makes broker sole party responsible for payment is contadicted by many court decisions the latest of which is in OTA's fall/winter 2008 newsletter involving Molsens. I think they should have hired an attorney with some transportation experience to write their contract.
10
Some more things to think about
I'd be interested to know where the FMCSA requires a trust account for brokers. As far as I can tell they require a $10,000 insurance bond and a process agent in every state.
In regards to trust accounts think about the following:
What happens if the shipper doesn't pay the broker? By definition of a trust, the broker doesn't have to pay the carrier. If there is no money in the trust, it can't possibly be paid. How does the contract balance this, well it makes the broker solely responsible for payment regardless of whether or not the shipper pays. This protects the carrier. In return the carrier waives the responsibility to maintain a trust account.
The other biggie is back solicitation by the carrier vs. the carrier going to the shipper for payment. In the contract the broker agrees that the carrier can go to the shipper if they don't get paid by the broker (this clears up all the legal grey area) in return the broker gets some protection against back solicitation, which, shouldn't be an issue if you're not going to back solicit anyway.
I assure you the NTBA met with carriers and brokers. It was a long and drawn out process to come up with this agreement. If you were part of the process maybe you would understand how it got to where it is. And yes, the NTBA hired a very knowledgable transportation lawyer to help draft it.
As far as credit checks go... we can do one in 5 minutes on line through any of the major credit services on the internet. How it takes you 24 hours, must be an internal issue at your company. It is inexcusable that a carrier would extend credit to anyone without a proper credit check. If you choose that level of risk, then you must also accept the concequences of that decision.
Alot of people put a lot of hard work into the contract. If you have an alternate suggestion of how the contract should read, I urge you to please send your version of the contract to the NTBA for review.
P.S. - I'm assuming your a carrier. I was wonder if you ever broker loads to other carriers and do you keep a trust account?
I'd be interested to know where the FMCSA requires a trust account for brokers. As far as I can tell they require a $10,000 insurance bond and a process agent in every state.
In regards to trust accounts think about the following:
What happens if the shipper doesn't pay the broker? By definition of a trust, the broker doesn't have to pay the carrier. If there is no money in the trust, it can't possibly be paid. How does the contract balance this, well it makes the broker solely responsible for payment regardless of whether or not the shipper pays. This protects the carrier. In return the carrier waives the responsibility to maintain a trust account.
The other biggie is back solicitation by the carrier vs. the carrier going to the shipper for payment. In the contract the broker agrees that the carrier can go to the shipper if they don't get paid by the broker (this clears up all the legal grey area) in return the broker gets some protection against back solicitation, which, shouldn't be an issue if you're not going to back solicit anyway.
I assure you the NTBA met with carriers and brokers. It was a long and drawn out process to come up with this agreement. If you were part of the process maybe you would understand how it got to where it is. And yes, the NTBA hired a very knowledgable transportation lawyer to help draft it.
As far as credit checks go... we can do one in 5 minutes on line through any of the major credit services on the internet. How it takes you 24 hours, must be an internal issue at your company. It is inexcusable that a carrier would extend credit to anyone without a proper credit check. If you choose that level of risk, then you must also accept the concequences of that decision.
Alot of people put a lot of hard work into the contract. If you have an alternate suggestion of how the contract should read, I urge you to please send your version of the contract to the NTBA for review.
P.S. - I'm assuming your a carrier. I was wonder if you ever broker loads to other carriers and do you keep a trust account?
20
FMCSA as stated by Pablo requires a licensed broker to have either a trust account in place with a minimum of $10,000 in it OR a surety bond of $10,000, not both. If a carrier took the position on a transborder shipment to only use brokers that held a FMCSA motor carrier property brokers license (as an immediate credit check), their collection problem would disappear. Unfortunately, the need for freight usually supercedes the need for credit checking.
The fourth paragraph of the HTA regarding trust accounts is usually overlooked by everyone, other than the masterminds at the NTBA who drafted the contract. That paragraph reads:
******************************************************
Other rights unaffected
(4) Nothing in subsection (3) derogates from the contractual or other legal rights of the consignor, the consignee, the operator or the person who arranged for the carriage of the goods with respect to the money that is held in trust under that subsection. 2002, c. 18, Sched. P, s. 34.
********************************************************
derogates means simply "takes away". It is reported that even the MTO recognizes the ability for parties to contract out of the trust requirement.
20
