Carrier "Doesn''t Recognize" Section 7

Carrier "Doesn''t Recognize" Section 7

Copyright 2007, Traffic World, Inc.

Q:

My question concerns section 7 of the bill of lading.

I have a carrier who states "we don''t recognize section 7." They''ve carried this far enough that I''ve just received papers from a law firm on a shipment where the carrier failed to collect from the consignee.

To clarify, the sales terms are F.O.B. origin. My customer asks that I ship via this particular carrier collect. I do this and of course sign section 7 on my straight uniform B/L. So it was with this shipment.

In several conversations with representatives from the carrier we put forth our position that we executed section 7 and it is the carrier''s responsibility to arrange for payment prior to tendering delivery. We pointed out the carrier accepted the B/L with these terms, thereby accepting their responsibility under section 7.

From brief discussions with the carrier''s employees I sense they have little experience in transport law, but seem only to know their company''s policy about not recognizing section 7.

Can you help with prior case law in this area or some other method I have not considered? I tried referencing the B/L rules as listed in National Motor Freight Classification (I reference this in my contract language when both parties are members).

My hope is I can find some legal citation that I can reference to the legal counsel and that will be the end, since I cannot get through to the company representatives.

A:

You know, the arrogance of some companies astonishes me. I''ve seen it over and over again; they take the position that thus-and-such is "our policy" and then treat it as though it''s embossed on the walls of every court in the country.

Lest I be accused of playing favorites, let me point out that I wrote "companies" above, not "carriers." I''ve seen a lot of shippers display the same attitude. But in this case it''s a carrier, and the carrier is so wrong that I have to question the legal ethics of any attorney who''s trying to pressure you into going along with this nonsense.

Saying that one "doesn''t recognize" the plainly stated terms of a legal document to which one willingly became a party is nincompoopery. The language of section 7 is crystal clear:

"[C]ollect shipments may move without recourse to the consignor when the consignor so stipulates by signature or endorsement in the space provided on the face of the bill of lading."

You did so stipulate. Moreover, if, as you say, you used a standard uniform bill of lading, your signature in the "space provided" on the B/L face serves to activate a directive that the carrier not make delivery without first collecting its freight charges. If it did otherwise, as clearly it must have or it wouldn''t be badgering you, it''s also guilty of breach of contract.

As for the carrier''s policy, well, it''s certainly free to implement that policy if it likes. Subsection 7(c) of the B/L says that "[n]othing in this bill of lading shall limit the right of the carrier to require the prepayment or guarantee of the charges at the time of shipment or prior to delivery." It could have taken this course if it had chosen, but it didn''t.

You asked for some legal citations in support of your position. Let''s start with the respected legal compendium Corpus Juris Secundum:

"If the consignor executes a nonrecourse clause [i.e., section 7] in a Federal bill of lading directing the carrier not to make delivery without requiring payment of the charges from the consignee, and the carrier makes delivery without requiring such payment, the consignor is not liable..."; 13 C.J.S. Carriers ? 477(a).

Corpus Juris also cites two Supreme Court cases in support: Southern Pac. Transp. Co. v. Commercial Metals Co., 456 U.S. 336 (1982), on remand 686 F.2d 264; and Illinois Steel Co. v. Baltimore & O. R. Co., 320 U.S. 508 (1944). Read in total, they''re pretty clear on the subject.

All the legal citations in the world probably won''t avail you with the carrier, which has its eyes unwaveringly locked on its stupid "policy." A firm stance may discourage the lawyer, although don''t count on that either; as I say, I can''t imagine that the lawyer contacted you in good faith.

I want to tell you to turn the whole matter over to your legal department, but I''ve dealt with corporate lawyers before. They tend to be litigation-shy, and are much too prone to cave in to even frivolous demands (as this one most assuredly is) rather than risk - oh horrors! - actually going to court.

You''ll have to deal with your counsel eventually if the lawyer is dumb or audacious enough to sue. Meantime, however, since you seem to have authority to do so (otherwise you wouldn''t be writing me), I''d suggest you respond by telling the lawyer he can shove both the unpaid bill and his client''s policy in the same place.

And then make a vow to never, ever, deal with this idiot carrier again.



-- Consultant, author and educator Colin Barrett is president of Barrett Transportation Consultants. Send your questions to him at P.O. Box 76, Morganton, Ga. 30560; phone, (706) 374-7201; fax, (706) 374-7202; 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.