Freight Claim Resolution

[loaders]

I would be interested in hearing from other members of this site regarding a freight claim situation. A carrier we still use, has admitted liability for a freight claim of less than $2000.00, but has not issued payment. Due to the delay on the part of the carrier, we have issued payment to the shipper based on $2.00/lb. When would it be reasonable to hold back the amount of this claim from the invoices due the carrier? Obviously, this is not something we want to do, but resolution of a legitimate freight claim is the responsibility of the carrier and in this case, the carrier has failed to accept that responsibility. I appreciate any and all thoughts on this.

 

[ralphthetrucker]

Can you do a conference call with yourself, their receivables person and their payables person to see how they want the transaction to transpire? Trading cheques OR short pay? If you got both departments on the phone together it might be a quicker resolution to the dilema.

 

[loaders]

Thanks Ralph. We have tried that route, but the best offer they can make is $50.00 off every invoice til the claim is paid. At that rate, we'd have to do approx. 35 LTL orders with them, a little too long in my books. What's to stop them from not taking our freight before the claim is paid? My suggestion was, 1/3, 1/3, 1/3 over 3 months. Unfortunately, I think that this will have to be short paying all outstanding invoices up to the claim amount. I'll let you know what happens.

 

[Pablo]

You're not a bank

If it's a good carrier for you, then I suggest trying to work something out with them. Unfortunately, in Canada, a claim is not a claim without a copy of the paid frieght bill. While I love this when dealing with my customers I really hate it when dealing with a carrier who is trying to avoid paying a claim.

I would suggest if things are ugly. Pay the freight bill to your lawyer or paralegal "in trust" to realeased upon full payment of the claim amount.

If they are denying the claim outright, then I would suggest sending a letter to their insurance company stating your are making a claim against their policy. This will get things moving.

 

[Activet]

Paid freight bill ??

Just to note, there is jurisprudence in Canada for not having to pay a freight bill prior to instituting a claim for damages.

In the case of: Lentia Manufacturing Ltd. v. Inter-city Truck Lines (Canada) Ltd., 1990

If you want to read the whole thing, here's the link.
Lentia Manufacturing Ltd. v. Inter-city Truck Lines (Canada) Ltd., 1990

A partial quote from that decision follows:
Counsel before us pointed to the wording in Clause 12b and argued that at the commencement of the action which is the subject of the appeal, the respondent owed $7,557.04 in freight charges to the appellant for costs incurred in transporting the goods from British Columbia to Ontario and return, and that the respondent, by not paying the respondent's freight charges, had not met either the required statutory precondition, or a contractual precondition, under the bill of lading. The wording of Article 12a and 12b of the Motor Carrier Regulations was incorporated in the bill of lading. Counsel submitted that the respondent was not entitled to bring the action for damages without first paying the freight bill.


I am unable to accept that submission. In the first place the wording of Article 12a and 12b and the wording of the bill of lading does not clearly state that it is a condition precedent to the bringing of an action for damage, which is claimed to be the responsibility of the carrier, that the freight bill be paid. As I mentioned during the hearing of the appeal I would have expected much more precise language to be used before an obligation was imposed on the respondent to pay the freight charges as a condition to it bringing the action for damages. Further, it would be illogical to require the respondent to pay the freight charges as a precondition to commencing its action when its action is for damages to the goods in question. These freight charges would then became an expense incurred in connection with that damage claim. It is illogical to require the respondent to pay this expense as a condition to its right to recover that expense and other damages from the appellant.
End of quote.

I'm not sure how much you value your relationship with the carrier, but their seemingly lack of care about retaining you as a customer would indicate future behavior. Personally, I wouldn't pay the bill until a legitimate claim against the carriers insurance was acknowledged by the insurer, or they made good your loss. As far as settling with the shipper, your were acting in good faith to mitigate the loss.

 

[ralphthetrucker]

My suggestion was, 1/3, 1/3, 1/3 over 3 months. Unfortunately, I think that this will have to be short paying all outstanding invoices up to the claim amount. I'll let you know what happens.

I see this going sideways in a hurry. Their suggestion was/is ridiculous at best. Tell them to "put their big boy pants on", pony up the cash and move on! If they are that destitute I would be concerned about their viability past the resolution of the claim.

 

[loaders]

Again, thank you all for the insightful responses to my question. I think that my situation is indicative of the harsh economic times we find ourselves in. The carrier is a relatively small entity, certainly facing some hardships but continuing to struggle on. The claim amount as indicated, was under $2000.00 and less than their deductible. The freight bill (less than $300.00) for this shipment was never tendered by the carrier. I agree with Ralph's very appropriate comment about "putting on your big boy pants" because lets face it - freight claims do happen in our business and are no less a part of it than flat tires and frozen brake lines or any one of a number of unfortunate events. We are continuing to use this carrier to move LTL and they are showing the $50.00 deductions off each invoice - so far they are honouring their commitment. My concern remains however, that will they be around long enough for me to re-coup the total amount of the claim? This wasn't what I had in mind when I suggested that brokers and carriers should "support" each other!

 

[bubba-one]

Freight damage vs Freight Bill

Just a note that I believe most standard bills of lading include, that claims are a seperate issue, you can't deduct a claim from the payment of freight charges unless mutually agreeded upon. The carrier in question hasn't sent you a bill for freight, so all you can do is send them a bill for damages, and forward a copy to their insurance, wait the 30 days for payment, failing payment take it to small claims.

 

[Pablo]

Cool!

Thanks Activet for the case law. I was always under the impression you had to pay the freight bill. It clearly says so in the Province of Ontario Reg 26/89 that the claim must be submitted with a copy of the paid freight bill. I guess the case law trumps that.

 

[Activet]

Ontario regulations

Thanks Activet for the case law. I was always under the impression you had to pay the freight bill. It clearly says so in the Province of Ontario Reg 26/89 that the claim must be submitted with a copy of the paid freight bill. I guess the case law trumps that.

Thanks Pablo.
Indeed, the law can be very confusing. Some people in this industry (aka: truckstop lawyers), think that the terms and conditions as printed on the BOL, which contain excerpts from the Bill of Lading Act, or Ontario Regulations, are the whole of the contract of carriage. Apparently, this is not so. Especially when read in conjunction with the terms and conditions in most carrier confirmations.

The following is a quote from the book: Seven Rules of Interpretation of Bills of Lading, by Prof. William Tetley, Q.C. of McGill University.

"It should be remembered that courts construe bills of lading in the same manner as they do other contracts. Courts try to give a natural construction of the whole bill of lading, and they try to give a meaningful effect to every individual clause it contains. Of course, because the bill of lading is not in itself the contract of carriage, but only the best evidence of it, when construing the contract of carriage between the shipper (or consignee) and the carrier, "it may be necessary to inquire what the actual contract between them was; merely to look at the bill of lading may not in all cases suffice.

In all cases, judges strive to interpret contracts according to the common intention of the parties to it. In common law jurisdictions, common intention is determined according to an objective standard: what a reasonable person would have intended if he had been in the position of the actual parties to the contract at the time of contracting."

I hope this dispels some of the misconceptions that are in use out there.