This article originally appeared in our July/August issue
In the November-December 2016 issue of PARCEL, we took another look at the first rule of contracting: Know with Whom You Are Dealing. In this installment of PARCEL Counsel, we will revisit my sixth rule for contracting: Keep a Copy. At this point, you may be saying to yourself, “thanks for pointing out the obvious;” however, let me explain.
At a point in time when transportation contracting, as opposed to simply being governed by the carriers’ own tariffs, was in its infancy, the Interstate Commerce Commission issued a decision that set the stage for modern contracting. This was a very significant decision and was subsequently appealed and upheld by the Eighth Circuit Court of Appeals.
In its decision, the ICC was addressing the validity of a contract between a large shipper and a motor carrier. The shipper introduced into evidence an original contract, an addendum No. 1, and an addendum No. 3. Addendum No. 2 could not be located and, indeed, no one was sure if it ever existed. The shipper prevailed; however, in a slightly different scenario, the missing addendum could have been a fatal error leading to an unfavorable outcome.
A more recent example is when I asked a client to send over a copy of its current contract with a particular motor carrier. While I thought that this would be a simple request, it wasn’t. As you may be aware, transportation contracts will usually consist of a primary contract document… and separate schedules relating to rates and charges, and so forth. In this instance, gathering the contract was not at all easy. It turns out that the body of the contract was stored on one person’s computer and the various schedules were stored on the computers for the various business persons most affected by the schedules. Eventually, all of the parts and pieces of the contract were rounded up, but this is certainly not the best practice.
I realize that this may at first seem to be much ado about nothing and just more paperwork to attend to. However, it must be kept in mind that one of the primary purposes of a transportation contract is to address and minimize legal risks in the shipper-carrier relationship with the goal of avoiding litigation in the future. However, when litigation does occur, someone must be able to take the stand as a witness and testify under oath that a certain document represents the contract, in its entirety, that was in effect on a certain date or for a certain period of time.
It must also be kept in mind that in the absence of a properly written, individually negotiated contract, the bills of lading issued by the carrier become the “contract for carriage.” Accordingly, copies of the bills of lading and related documents, e.g., delivery receipts, payment invoices, evidence of payment, should be retained and readily available. I am not unaware of the fact that the carriers are subject to federal regulations governing the retention of these records; however, when a dispute arises, a shipper does not want to have to be in the position where they must go to the carrier to get copies of the contract documents… whether it be bills of lading or individually negotiated contracts.
All for now!
Brent Wm. Primus, J.D., is the CEO of Primus Law Office, P.A. and the Senior Editor of transportlawtexts, inc. Previous columns, including those of William J. Augello, may be found on the PARCEL website at http://parcelindustry.com/by-author-1130-1.html. Your questions are welcome at email@example.com.