Q&A: Overcharges: Too Late?

Q&A: Overcharges: Too Late?

Copyright 2003, Traffic World, Inc.

Q:

My group is conducting an intensive post-audit. We have found in some cases that our carriers did not provide for our standard discount percentage.

My team has filed overcharge claims only to be denied due to a time limit of 180 days imposed by the carrier and documented on the back of their invoice. We have not found this statute of limitation to apply to other carriers, just this specific one.

I'm inquiring about the standard rule of thumb for post-audit claims. I've been told it could be as much as two years but now I'm concerned that carriers can impose whatever time limit they desire. Can you advise?

A:

Whoa, you have completely the wrong idea here.

The 180-day time limit for overcharge claims is not "imposed by the carrier"; it's in the law. "A shipper must contest the original (freight) bill or subsequent bill within 180 days of receipt of the bill in order to have the right to contest such charges"; 49 U.S.C. section 13710(a)(3)(B). Obviously the filing of an overcharge claim is a form of "contesting" a freight bill, so it must be done within the 180-day limit.

Now, this time limit isn't binding on carriers, who may opt to voluntarily pay claims filed beyond this period. Perhaps some of your carriers have done so, giving rise to your view that the statute of limitation doesn't apply to others. But in fact it does, and your "rule of thumb" for filing claims should be based on that.

Who to Pay?

Q:

We've recently been reading about third parties who have lost a lot of money for their customers, and have a question about a tangential set of circumstances.

Say we offer a shipment to Trust Me Truck Brokerage and fax pertinent information in a contract form to TMTB about the shipment, such as origin, destination, freight rate, etc. TMTB accepts the shipment, signs our faxed document and transmits it back to us.

After the shipment has been delivered, we receive a freight bill from TMTB, but the attached bill of lading and delivery ticket show Good Guy Trucking Co. as the carrier. Prior to this, we were not aware of the existence of GGTC and the paperwork we received has no address, phone number or any other contact information concerning GGTC.

It seems that if we remit directly to TMTB, there is a possibility that TMTB will not pay GGTC. If we remit directly to GGTC, we could lose TMTB as a valuable resource for moving our shipments. If we show both companies as payee on our check, they both may be discouraged from dealing with us in the future. What is our legal requirement for remitting freight charges under these circumstances where a truck broker is involved?

A:

Since the broker billed you, it's the party you should pay. And you'll probably be all right if you do so.

The only reservation I have regards the bill of lading which, as you describe it, identifies you as the shipper, GGTC as the carrier (nice coining of names, by the way) and seemingly includes no reference at all to TMTB. The bill of lading is, on its face, the contract of carriage - a contract that as executed is strictly between you and GGTC, with the broker not in any way involved.

OK, say you pay the broker but it fails to pay the carrier. The carrier now bills you on the basis of the B/L contract, arguing that TMTB was acting as your agent in securing its (GGTC's) services to haul your shipment and therefore you, as principal, are responsible to make good your agent's default.

Your defense is that no, the broker wasn't your agent but rather acted as an independent contractor. You further contend that, by billing TMTB instead of you, GGTC has at least tacitly accepted the broker as its agent for the purpose of receiving your payment on this shipment.

Provided you have a judge who's either knowledgeable about the practices and customs of transportation brokerage or is open to education in this area by the evidence and argument offered by your counsel, you'll probably prevail in court. Unless you're somehow affiliated or otherwise provably cozy with the broker, its independent contractor status will be upheld and you'll be relieved of having to repair its failure to pay the carrier.

But there's a respectable case for concluding otherwise. After all, it was you who approached the broker, engaging it to commission a transportation service you were well aware it wouldn't itself be performing - arguably making it your agent for that purpose. The carrier's failure to bill you directly may be excused by its recognition of the broker's agency capacity. And in a few instances courts have indeed held that the contractual relationship between carrier and shipper trumps any reliance on the third-party role.

The sure protection is to make sure the broker is fully identified and its role clarified in the B/L, and to respectfully decline to do business with brokers who won't agree to prepare bills of lading meeting that test. Without this your risk of being legally compelled to double-pay in the event of a broker default is admittedly small; but it does, I'm afraid, exist.

-- 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.