Q: I filed a claim on a shipment using a National Motor Freight Classification item that has a released-value rating.
The bill of lading shows the commodity as an NMFC item for the same commodity but without a released valuation. Just above the body of the bill of lading, however, the shipper has a preprinted statement to the effect that if the rate on the commodity is subject to released value, they thereby release the commodity to the value that produces the lowest freight charges.
The carrier has declined my claim on the basis that we didn’t specifically name the released-rate item, and therefore the released rate doesn’t apply. There isn’t a ton of money involved, but I know we have been paid on this premise on previous claims.
What is the bottom line here?
A: The bottom line is that your bill of lading provision didn’t have one.
You sent me a copy of the B/L, and the thing that jumped off the page at me was that, although it has precisely the statement you mention about releasing the value to whatever produces the lowest freight rate, that’s all there is. There’s a great whopping space below in the box that contains this statement, but it’s empty.
There are two ways of looking at this, and I’m not going to guess at which one a court might choose. One way is that the statement is present about releasing the value to whatever commands the lowest rate, it’s unequivocal, and that’s enough to warrant application of the low released-value rate.
But this statement is, as you say, preprinted. It isn’t “executed” by a signature or other marking in that big blank space below to indicate it expressly applies to this particular shipment. That lack of execution weakens its effect.
As you probably know, the standard-form B/L contains similar language but with a big difference. The standard wording (unlike that of your version) says it applies only if the shipper executes the provision by signing it. A typewritten “signature” will do, but under the standard language, the shipper has to affirmatively sign off on the released value.
Admittedly, your bill doesn’t so state. But it does have that great big blank space that seems to invite some sort of signature, the wording is otherwise pretty similar to the standard language, and I’m not sure how a court would view all of this.
Say the circumstances were otherwise. Say the shipment was lost or damaged and a claim was filed. Now, of course, everybody’s arguing the other way; the carrier points to the preprinted language and says it was released value, and the shipper retorts that the provision wasn’t executed as it “clearly” needed to be. Which way might a court go?
I can see pretty decent arguments both ways.
The essential weakness of that preprinted statement is that it’s part of a form clearly intended to cover generic shipments and not specific to this one. The form also contains lots of other blanks — name of the carrier, the consignee, description of the commodity, etc. — and each one of those has been scrupulously filled in. But this one lonely little blank space remains pristine.
Especially given the similar provision of the standard-form B/L that expressly requires execution, and that there’s an evidence space for execution of the provision, I can see a court saying uh-uh, no execution means no released value, and the carrier owes full value on the loss-and-damage claim that I’ve postulated. I acknowledge that isn’t a literal construction, but I think it’s arguably a practical one.
That would mean, of course, that the carrier wouldn’t be protected by the liability limit offered by the released-value declaration. Inasmuch as this is the premise for the NMFC released-rate classification, the carrier has lost its benefit in allowing the lower rate.
You’ve been paid on past overcharge claims because carriers have been willing to extend you the benefit of the doubt, such as it is. But this time, one carrier isn’t. I can, as I say, see both sides of the argument, and I won’t say who’s right and who’s wrong.
But to eliminate any future question, simply execute the released-value provision on future shipments. Fill in that “bottom line” in the box on that sheet of paper. It’s simple enough, and it takes this uncertainty off the table and makes matters clear to everybody.
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 most recent 351-page compiled edition of past Q&A columns, published in 2010.