Time to Submit Bill

Time to Submit Bill

Copyright 2006, Traffic World, Inc.

Q:

My question concerns how long a carrier has to submit a bill for payment. I received a nastygram from a collection agency demanding payment of alleged demurrage from February 2002. First, there is no indication that this was actually delivered to my facility.

Second, assuming it is my bill, I have no way of knowing if the carrier called for an appointment or how long they may have had to wait if at all. There is no indication on the papers that were sent to me that indicated a particular carrier. It is also possible that these alleged shipments we purchased on an f.o.b. delivered basis so that the bills aren''t even ours to pay at all.

There is a note on what was sent to me that stated "rebill to XYZ Industries," which is us. I suspect that whoever''s bills these are has refused to pay and the collection agency is on a fishing expedition.

Is there not a statute of limitations on submission of a bill for payment? I have tried to research it and cannot find an answer. You advice would be greatly appreciated.

A:

No, there''s no time limit for carriers to present bills. Well, there is sort of a limit for motor carriers set forth in the Code of Federal Regulations (49 CFR ? 377.205(a)(2) and (b)(2)), but it''s toothless; there''s no penalty if the carrier submits its bill late. There''s no time limit at all for railroads.

There are, however, time limits for carriers to sue for unpaid freight charges. For motor carriers, it''s 18 months from the date of delivery, per 49 U.S.C. ? 14705(a). Railroads have twice that -- three years from delivery, per 49 U.S.C. ? 11705(a).

You don''t say whether the bills you''ve received relate to motor or rail service, and your text is ambiguous -- "demurrage" refers to rail service, but your talk about delivery appointments suggests motor carriage. It doesn''t matter, though; as I write this it''s mid-2006, which is four years (give or take) from the 2002 shipment date. So these bills are beyond both statutes of limitation, meaning that if you refuse to pay the collection agency (or carrier) has no legal recourse. So I suggest you do just that -- refuse to pay. Serves ''em right for dawdling.

Q:

We had a shipment delivered to us from a motor carrier we do not normally use. I don''t know what happened to the original freight bill, but when I saw it last week for the first time is was already over two months old.

We started getting calls from a collection agency, who are asking for the amount of the bill plus a late-payment penalty. Please correct me if I''m wrong but doesn''t the carrier have to state that a late-payment penalty applies on the face of the freight bill? And aren''t the collection charges supposed to be "reasonable?"

This carrier did not do the first and they are trying to collect 200 percent damages.

I have already argued with both the collection agency and the carrier and would like to make sure I am on solid ground.

A:

You are. Well, more or less. Don''t expect to win your argument, but if you stand pat and the carrier (or collection agency) sues you, you should prevail in court.

Under the Code of Federal Regulations, 49 CFR ? 377.205(c), carriers are obliged to notify shippers on or with each freight bill that late-payment penalties may apply if bills aren''t timely paid. If the carrier failed to do this, that blows the penalty out of the water.

There''s also a fairly vague rule in 49 CFR ? 377.203(g)(1) that carriers'' penalties must be "reasonable." But don''t count on this; subpart (ii) of this section allows revocation of discounts as a penalty. That''s what most carriers do, and it would account for the trebling of your freight bill, so you''re on shaky ground here.

A further downside is that although the Federal Motor Carrier Safety Administration maintains the rules, it couldn''t care less about them. They''re a 20-year-old legacy of the former Interstate Commerce Commission (the age accounting for why loss-of-discount penalties are allowed; discounts were a lot lower then), and I expect no FMCSA manager even knows they''re on the books. As for enforcement, forget it.

Nevertheless, the rules are on the books, and that ought to be enough if you wind up in court. What I suggest you do is, first, curb your inclination to tell the credit agency where to stick its penalty and be polite. But also be firm; the carrier didn''t warn you in advance about the penalty, and that breaks the rules. Pay the principal amount you owe nice and promptly, refuse the balance with this explanation and hold fast. Even if the original bill was a fairly hefty one, the penalty amount is probably too small to support a full-blown lawsuit with the rules stacked against the collection agency. And if worse comes to worst and you do get sued, I like your chances.



-- 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.