Payment Terms: Stick to the B/L

Q: We’re a shipper, and have a case where our customer is billing us back-freight charges plus an administrative fine for sending a shipment collect when it should have been prepaid.

In doing the research. I found we issued the bill of lading as prepaid, but the carrier billed the shipment as collect. The customer paid the freight bill and deducted the charges and fine from us.

I want to charge the difference of what we should have paid in freight and the charge-back assessed by our customer to the carrier for its error.

What type of claim would this be? This does not fit the definition of an overcharge claim, but this is the closest I can think of.

Any suggestions?

A: I’m told that some nitwit once said there’s nothing new under the sun.

Well, maybe that was true from his perspective, but this is sure a new one on me. I see absolutely no reason why a carrier would change the payment terms this way. And in fact I am driven to wonder whether it really did.

To actually change the terms, the carrier would have had to alter the bill of lading itself, so it showed “freight collect” terms. I doubt this happened for two reasons: First, I see no possible benefit to the carrier in changing the terms. Second, in transit, the bill of lading would have been in the sole custody of the driver, who couldn’t care less who pays the charges.

Still, I’m mindful of the tale of Sky Masterson (Marlon Brando) in the movie version of “Guys and Dolls” relating the advice he received as a boy from his father. “One of these days in your travels,” Masterson was told, “a guy is going to come to you and show you a nice, brand new deck of cards on which the seal has not yet been broken. This man is going to offer to bet you that he can make the jack of spades jump out of the deck and squirt cider in your ear.

“Now, son,” the father said, “do not bet this man, for as sure as you stand there, you are going to wind up with an earful of cider.”

Not wishing cider in my ear, I’ll refrain from asserting positively that the bill of lading was not in fact altered.

Even so, a much more likely scenario is that the B/L was unchanged and did indeed show terms as prepaid. Then the carrier’s billing clerk erred and sent the freight bill to the consignee, who also erred in paying it without double-checking the corresponding B/L.

A third possibility is that, again, the bill of lading correctly showed terms as prepaid but you were slow in paying. The carrier therefore had the right to rebill the consignee, who paid and expressed its irritation at you for the inconvenience by assessing the penalty.

But no matter which of these things is true, I’m sorry to tell you that you have no valid claim against the carrier.

In the first scenario, the carrier was not only solely at fault, but it improperly altered a legal document. That’s your strongest case if, in fact, the carrier did that.

In the second scenario, the carrier erred but so did the consignee, by paying a bill it shouldn’t have. You have a good argument for abatement of the penalty, but it’s one to be made to your customer.

And in the third scenario, the fault is primarily yours, if you were tardy in paying, and you probably deserve the penalty.

You’re right that what you have “does not fit the definition of an overcharge claim.” It isn’t one; it’s a claim for economic injury. You have, though, no legal entitlement to recompense.

Even if the carrier was solely to blame, your unsolvable problem is the injury — your customer’s assessment of the penalty against you — is too far removed from the cause. It’s an indirect result, rather than a direct one.

That is, in this particular case, your customer penalized you. But not every customer would have reacted that way. It may be that your customer had no contractual right to assess a penalty, nor you an obligation to accept it. And even if it did and you did, the carrier had no means of knowing this in advance and thus weighing its risk intelligently.

If the bill of lading was altered, you certainly can yell long and loudly at the carrier. You have cause to discontinue using the carrier, and may tell it so. That might well induce the carrier to voluntarily pay your customer’s penalty.

However, if matters went to court, I seriously doubt you’d prevail — which means, I’m afraid, you have no legally sustainable claim.

Consultant, author and educator Colin Barrett is president of Barrett Transportation Consultants. Send your questions to him at 5201 Whippoorwill Lane, Johns Island, S.C. 29455; phone, 843-559-1277; e-mail, BarrettTrn@aol.com. Contact him to order the 536-page compiled edition of past Q&A columns, published in 2001, at $80 plus shipping.
 

For the full story: Log In, Register for Free or Subscribe