Hello,
I’m looking for some guidance on whether it is legal for a shipper to withhold payment on previously completed shipments due to a separate, unresolved claim.
We moved several loads for a customer involving rejected freight that required FDA clearance and the appropriate stamps before returning to Canada. We hired a carrier to handle the transportation, but the carrier failed to stop at the FDA office as instructed.
Our customer has since applied for relief with the FDA. In the meantime, they are withholding approximately $30,000 in payments until we agree to certain conditions. We have explained that once the final amount of the fine or penalty is confirmed, we will either pay it if the amount is relatively small or pursue a claim through the carrier’s insurance if appropriate.
However, the customer is now refusing to release payment on our other outstanding invoices, including invoices for shipments completed before this incident. Most of these invoices are more than 40 days overdue, and the freight was delivered to major big-box retailers.
My questions are:
Thanks
I’m looking for some guidance on whether it is legal for a shipper to withhold payment on previously completed shipments due to a separate, unresolved claim.
We moved several loads for a customer involving rejected freight that required FDA clearance and the appropriate stamps before returning to Canada. We hired a carrier to handle the transportation, but the carrier failed to stop at the FDA office as instructed.
Our customer has since applied for relief with the FDA. In the meantime, they are withholding approximately $30,000 in payments until we agree to certain conditions. We have explained that once the final amount of the fine or penalty is confirmed, we will either pay it if the amount is relatively small or pursue a claim through the carrier’s insurance if appropriate.
However, the customer is now refusing to release payment on our other outstanding invoices, including invoices for shipments completed before this incident. Most of these invoices are more than 40 days overdue, and the freight was delivered to major big-box retailers.
My questions are:
- Is the customer legally entitled to withhold payment on all our outstanding invoices because of this separate, unresolved claim?
- Can we demand immediate payment of the overdue invoices while the FDA matter and insurance claim are being investigated?
- If the customer continues withholding payment, would it be legally appropriate to contact the big-box retailers that received the freight to explore whether there is any way to recover the outstanding amounts directly from them, or could doing so expose us to legal risks?
- What would be the best course of action to recover our outstanding payments without compromising our position regarding the insurance claim?
Thanks
