OUTSTANDING FREIGHT CLAIM AND WITHOLDING INVOICES

M

ManU

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Feb 2, 2011
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I'd appreciate it if anyone can steer me to right website or provide a snipit of transportation law which prohibits a shipper from withholding invoices in lieu of an outstanding claim? I know it is illegal but I'd like to quote something in writing. I moved a shipment Canada to US (1 skid) and it was damaged. Receiver did not note any damages when he signed for the freight so technically I can argue the freight was received free and clear and deny any claim. Customer has $25000 in outstanding freight charges he won't pay me until claim is resolved. Any help much appreciated.
Thank you
 
Sounds like a bogus claim to me. I had a similar situation a few years back where receiver tried to pin a claim on me even though the shipment was signed off free and clear on the POD. Fortunately, in my case the shipper was responsible for paying the freight, and I told the receiver to go pound sand. If the POD is signed off clean then they have no case unless they have overriding proof (like a video) clearly showing that your co. damaged the goods. Otherwise anything could have happened to the skid after it came off your truck that could have caused the damage.
 
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In this situation and at 25,000$ of unpaid invoices, I would send this to collection right away - specially if he don't want to pay.
 
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Sounds like a shipper who needs to understand the law. One letter from a transportation lawyer sent to him with a copy to the President of his company should get this resolved quick. You may lose the account but you will get your money.
 
A claim can still be filed even if the bill of lading was signed without any notation of damage. It presents more challenges for the receiver to prove the damage occurred while in the possession of the carrier. A carrier must still respond to the claim and the "clear" bill of lading will provide a certain degree of defence, but there must be a response. Man U, are there any other details of this claim you can offer, such as the amount of the claim and a description of the shipment? The outstanding invoices for other shipments are a completely separate matter and should not be used as leverage to stimulate a response to the claim. It has been my experience that if a claim cannot be settled amicably between the parties, it is best handed over to your insurer for settlement or denial.
 
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The issue is not necessarily that the claim was filed, it is that the party responsible for paying the freight is making a contra on invoices for it. Some contracts between shippper and carrier or broker have these clauses to enforce if a claim is not processed within a certain period of time, but it's not arbitrary and if a claim is in dispute they still don't do it.

I find in my experience that the only times it has happened to me is when the buyer of the freight either owns the company, or sometimes if you're dealing with a commodity broker where you are shipping the commodity. If you take them to court you will win.
 
I would agree that in some cases, he might want to hold back some funds. but my point was, why is it taking so long for an insurance claim to be done?
 
There is not enough information available to us about this matter to make real suggestions or comments. All we know is that alleged damage to a 1skid shipment has resulted in a shipper/receiver withholding payment for 25k in unrelated freight invoices. Has it been submitted to the carriers insurer, what was the amount of the claim, was there a declared value indicated on the b/l.? These and other pieces of information make it difficult to provide anything more than speculation.
 
loaders is 110% correct. If a claim is filed against you, you must respond to the claim even if the response is to deny the claim. If you fail to respond within the mandated time period, you are liable for the claim. However, the claim against you must be filed in the correct manner and also within the mandated time period.
If you are not at all certain how to handle claims properly, give them to your insurance company immediately, regardless of the amount of the claim, and let them deal with it. They have experts in these matters, and that is what you pay them for.
 
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Hello ManU,


Two sources of law might apply this situation:

1. Uniform Conditions of Carriage. A regulation under Highway Traffic Act. Section 12 governs process of filing a claim against carrier. If your shipment was originated in Ontario. Broker must file a claim within 60 days and most important, the final statement of claim should be accompanied by the proof of paid freight charges. In other words, if this claim will go to your insurance company's adjuster, most likely he would ask broker to pay outstanding freight charge for this shipment before proceeding the claim.

2. Contract between your company and this load broker (the "Carrier Agreement"). If such agreement exists it may contain a contractual right of set-off entitling broker to withhold and offset any compensations owed to carrier on any occasion when a shipment tendered was damaged in transit.

Broker may rely on this agreement and the contractual terms of agreement will replace the Uniform Conditions of Carriage.

In this situation you need to decide whether or not you are in agreement with the fact that your company have caused damage to the goods as broker claims and whether or not you agreeing to the amount of damage. If you can prove that damage caused by other party or you have valid reason to dispute the amounts of damage you may file a small claims court claim in order to collect freight charges.

If there is no Carrier Agreement, broker have no right for contractual set off.

In any event having more details, I would be able to comment in this situation more accurately. Our company recently have been awarded a judgment in case with similar circumstances. A judgment was issued in writing, so if you would send us your email address we can provide you a copy for informative reading.

Our email is: info@economyfinance.ca
 
A couple things ....
1) The statement of claim must include proof of the paid freight charges. It's not an option.
2) Contracts cannot supersede law unless they provide for more than the law specifies. i.e. If the law says you have 60 days to file, a contract cannot limit that to 30 days. However, a contract can lengthen it to 90 days. The same holds true for off-setting "rights". It is illegal to offset money owed from money earned unless you have the person or entities express written permission for each and every transaction. Keep in mind the law leans towards the contractee, not the contractor.
 
I think where some people get confused, and both Michael and I have addressed this issue in previous threads, is the difference between an Intent to Claim, and the Statement of Claim. I am sure we all agree, no one likes to receive a notice of freight damage, and some carriers will immediately get their backs up, especially if they feel there is no negligence on their part. There seem to be some out there that believe they are under no obligation to investigate, or notify their insurers, unless they have a copy of the paid freight bill in their hands. A carrier is obligated to respond to a freight claim, investigate as required and if necessary, contact their insurer regardless if the freight bill has been paid or not. It is only when the claim is finally being settled (why it is called the Statement of Claim), does the issue of the paid freight bill become relevant. If a shipper is off setting outstanding invoices due to an unpaid or denied freight claim, the carrier certainly has the right to pursue that matter in Small Claims Court.
 
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Michael Ludwig - "contract cannot supersede the law". The regulation which create the Uniform Conditions of Carriage deem to be a part of every contract for the transportation. The language of statute is clear; it is not "shall be a part of every contract". Therefore if there is a written contract signed by both parties and provisions pertaining damaged cargo is different from Uniform Condition, the court will most likely decide to rely on the contractual provision.

This is why I asked ManU: if there is a contract in place. If no contract, he/her should rely on Uniform Conditions of Carriage.
 
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It's never right to contra invoices to settle a claim. A freight claim is to be treated separately from actual services rendered. If there is resolution to a claim and an arrangement is made to pay a net balance on a cheque run of outstanding invoices from the freight claim, it's one thing ... but the whole idea of doing a contra on invoice to settle a claim is a one-sided claim resolution.

This used to be very common back in the day where I dealt with people at the OFTB and there was a claim ... it actually led to me souring on hauling produce for anyone except a chain store. The only other time I have come across this in my fairly long career was when I dealt with a company where the owner was in charge of the freight. Guess what ... we sued him.

The other times we had a claim we went through a process, got paid for the freight, and at the time of resolution of the claim we sent the customer a cheque for it.
 
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We had a claim last year that involved a collision and an entire load of shingles was destroyed. Our customer took the full value of the shingles off their next payment to us... It was pretty painful for us, but our insurance company was very understanding and expedited the claim so we were not on the hook for too long...

The customer had an off-setting clause in their contract, so it was their right... It was pretty frustrating, but all worked out in the end.
 
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