''Subject to Count''

''Subject to Count''

Copyright 2004, Traffic World, Inc.


We are a freight forwarder. Last year we moved a two-day air shipment, delivered as a live unload per appointment on March 11 (Tuesday), and received proof of delivery for the entire consignment.

The consignee, however, noted the delivery receipt as "subject to count" and on March 14 (Friday) reconciled the case count to its purchase order and alleged a shortage of 15 cartons. The consignee then created a new proof of delivery indicating the unload date as March 14 with a different signature. My customer filed a claim for the invoice value ($945) on June 20 and we acknowledged in a timely manner.

Our claims department did not advise the shipper of our limited liability ($50 per shipment) nor did it deny the claim. On September 16 the shipper advised our claims department of its intent to deduct its full loss from outstanding freight charges (not related to this specific shipment) and did so from a December 19 remittance.

Does the consignee''s "subject to count" notation have any validity? If not, can the shipper seek recourse from the consignee, not to mention pay its balance due to us? As I understand claims law, our liability was limited and the claimant is precluded from such unilateral deduction. Nonetheless, my issue deals specifically with the consignee''s notation and its revision of the proof of delivery.


The problem is neither of those things; it''s your claims department, which could do with a bit of tuning up.

You had two perfectly sound defenses. First, as you point out, is your tariff liability limit, which, since this was an air shipment, is perfectly legal and valid. Second, the consignee''s "reconciliation" of count with its purchase order isn''t proof of anything; the question isn''t how many it ordered, it''s how many were shipped, and you should have immediately insisted on proof of that.

Instead, your claims people apparently read the claim, issued a routine acknowledgment, and filed it away. Even when the claimant, after three months of inaction by you, threatened to set off, your people still didn''t react. You kept your liability limit a secret, you didn''t investigate, nothing.

Well, the claimant finally got your attention the only way it apparently could, after six months of being ignored. Yet you continue to treat it as a non-person and ask me whether you can extract the set-off $945 from the shipper? What''s wrong with this picture?

There are three things you need to do. Number one, talk to the claimant. Number two, talk to the claimant. Number three... well, you get the idea.

And I''d suggest that you start with a big apology. Not only was your cavalier treatment of its claim discourteous, it was a lousy way to foster good relations with a company that is apparently your customer on other traffic. Say the paperwork got lost, blame it on inept clerical work, use any excuses that come to mind, but most of all say you''re sorry, sorry, sorry, and it''ll never happen again. (And then make sure it doesn''t.)

Only after you''ve done your full measure of groveling is it time to get to the merits of the claim itself. And being that you''re now nearly eight months late in doing so (it was a further six weeks after the set-off that you contacted me), I''d advise that you continue to walk on eggshells as you do, notwithstanding that - as I wrote above - you have strong defenses.

At this point the claimant has no legal case for any money at all from you. Never mind the "subject to count" notation on the March 11 delivery receipt, it says nothing of legal consequence. Never mind, too, the substitute receipt it unilaterally issued March 14 showing the alleged shortage; that too is inconsequential in law. The question is one of fact - was there a shortage or not? - and the claimant has yet to prove its case.

That''s not to say it can''t offer such proof, only that it hasn''t yet done so by showing the quantity the shipper tendered to you at origin. And even if it does present such proof, your liability limit should, as I said earlier, stand up, meaning it owes you at least $895.

Your problem is how to get this money without having to go to court for it. It''s a problem you shouldn''t have, and probably wouldn''t if you''d treated this claim - and this claimant - with a bit more respect. I know there are some shippers who set off claims routinely irrespective of merit, but most won''t if it''s pointed out to them that they''re inarguably in the wrong. By this juncture, however, the claimant probably has its dander up, and it''s up to you to soothe the ruffled feathers and try to get your money voluntarily rather than sue for a sum that won''t even come close to the legal costs you''ll incur.

Because it''s only to the claimant that you may look for your money. Why would the shipper owe you anything? It''s already paid for this shipment. You said the consignee deducted the $945 from unrelated freight charges, so your suit, if you decide to file one, is for non-payment (or short-payment) of these charges, not those on the claimed-against shipment. And it was the claimant, not the long-ago shipper, who owed (owes) them.

But get that claims department up to speed, OK?

-- 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.