When Rebrokering Goes Bust

Q: My company, a third-party broker, was given a load by one of our good customers. We contracted with a licensed motor carrier to pick up and deliver the load for us for $2,550.

We have all the normal carrier information, insurance and a contract specifically stating no double-brokering, as well as signed rate confirmation. We paid the carrier for the load once it provided a delivery receipt and its bill. Load all done, we thought.

Now, three months later, we find out it must have double-brokered the load because my customer is receiving phone calls from a collection agency stating another motor carrier says it hauled the load and was not paid $2,750 as agreed by the carrier we hired. Apparently, that carrier has gone out of business, and we can’t get hold of them. We booked with our chosen carrier for $2,550, and it must have booked with the other carrier for $2,750 — $200 higher!

I need your advice on this matter as this has happened three times over the past six months. We paid one to keep our customer happy, and on another, the customer just told the collection agency to take a hike. Is my customer liable even though it never contracted, authorized or even knew this happened?

A: Legendary impresario P.T. Barnum is reputed to have said there’s a sucker born every minute. Whether he really said it or not, I guess this proves it’s so.

No, I don’t mean you, nor your client. The sucker I mean is the carrier that took on this load and found itself left out in the cold when payment time rolled around. And unless you take on the role of Santa Claus, as you say you did once before, out in the cold is where it’s destined to stay.

I know times are tough economically, but I’m still flabbergasted by how often this seems to happen. You tell me you’ve seen three such cases in the past six months, but I get similar inquiries a lot more frequently than that, and I’m sure they’re only the tip of the iceberg.

It’s really hard for me to understand why carriers so trustingly take on these random loads from other carriers, from brokers, etc., who they don’t know from Adam’s housecat, and then expect to get paid for hauling the loads. Oh, maybe sometimes they get some money. But from all I’m told, it’s a lot more frequent that they don’t. And mostly they do little or nothing to protect themselves.

In this instance, it’s pretty patent the carrier you hired had no intention of paying its subcontractor. As you point out, the carrier subbed the load for an agreed $200 more than you were paying. The only way that makes sense is if it planned all along to stiff the second carrier.

You and I spoke on the phone, and I learned this situation was even more egregious than most that I run across. The carrier that actually hauled the load didn’t even issue a bill of lading; you tell me the B/L (prepared by the shipper, your customer) didn’t name it anywhere. It didn’t even annotate the copy used as a delivery receipt.

So on what possible basis does it expect you or your customer to pay? It has nothing even resembling a contract with either of you. In fact, all you have is its word that it did the haul at all; it has no documentary evidence of even that simple question.

And this is what I mean when I tell you the second carrier appears to have the word “sucker” tattooed across its figurative forehead. It put no effort at all into protecting its own interests; it simply agreed to blindly haul a shipment with nothing but the promise of a stranger to pay for doing so.

Its sole contract, if it can even be called that, is with the carrier that did the hiring. It has no agreement with you, much less your customer, on which it can rely. And both of you have properly paid the parties with whom you did have agreements — your customer paid you, you paid your selected carrier — and that’s an end to it.

To be sure, the hauling carrier has a case against the carrier that hired it — probably for fraud, given the circumstances you’ve described. But that’s neither your nor your customer’s responsibility; let the hauling carrier pursue it if it can find the other carrier.

Meantime, tell the collection agency to buzz off.

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.

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