In the previous issue of PARCEL Counsel, we looked at the first two critical elements of transportation contracting: rates and charges and limits of liability for loss and damage. In this installment, we will look at the remaining three elements.
The third critical element is the various time limits relating to such things as the time limit for a carrier to assert charges in addition to those originally invoiced or for a shipper to dispute the original invoice. Other time limits relate to the period of time to provide notice for loss and damage claims and the time limits for any legal action to be commenced if the claim is disputed. For international air and ocean shipments, the time limits relating to loss and damage claims are set by international treaties.
For shipments originating in the United States transported by regulated motor carriers, the governing statute is 49 USC 14706 — colloquially known as the Carmack Amendment. This statute does not set forth specific time limits relating to loss and damage claims. Rather, it specifies certain minimum periods e.g., nine months to file a claim for loss and damage and two years to start a lawsuit after the claim is denied in whole or in part.
While most motor carriers adopt these limits, it is to be noted that some major carriers are increasingly putting into their tariffs and service guides time periods which are less than those set forth in 49 USC 14706. The legal basis which would allow these carriers to establish these shorter time limits is unknown to me. These shorter limits could be addressed in negotiations.
Time limits between shippers, brokers, and carriers relating to payment of charges are clearly negotiable. For example, a shipper and carrier may agree that claims for overcharges and undercharges could be set at 60 days rather than the 180-day period set forth in the statutes.
The fourth critical element relates to issues of liability other than for loss and damage to cargo. Perhaps the most significant contingent monetary liability relates to liability to third parties arising out of a highway accident. The issues to be negotiated are who will bear the responsibility for payment of such claims and the extent of that responsibility. Related to this are provisions relating to the indemnification of the parties to each other and the type and amount of insurance for a carrier to hold.
The fifth critical element is how and where disputes are to be resolved. The “how” relates to whether it is to be resolved in court and, if so, will a jury trial be waived? Also, with respect to the “how,” there are options other than court that can be very advantageous, e.g., mediation and arbitration, to which the parties can agree in a contract.
The “where” relates to where a dispute will be venued, i.e., where will the court be geographically located? The parties almost always prefer to have their hometown be the chosen venue.
To conclude, since Part I of this column was written, capacity has tightened to an extent not seen in recent years. Accordingly, it may not be currently possible for a shipper to negotiate any terms significantly different than the carriers’ standard terms… but it might not hurt to ask.
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 in the “Content Library” on the PARCEL website (PARCELindustry.com). Your questions are welcome at firstname.lastname@example.org.
This article originally appeared in the July/August 2021 issue of PARCEL.