Menacing Middleman: What Can a Carrier do when a Broker Doesn’t Pay or Can’t Pay

A carrier must be paid.  Carriers often are hired by brokers to transport shipments.

Brokers are hired by the shippers to contact carriers and get the freight moving to its destination.  After the carrier gets the freight where it is supposed to go, the carrier will contact the shipper to get paid.  What if the shipper already paid the broker and now the broker won’t (or can’t) pay?  Is the shipper or the broker liable to the carrier?  The answer is (as lawyers usually state)—it depends.  Here are a few general things to consider:

1. There is a statute of limitations on the ability to pursue an action for transportation costs. Carriers should not take too long in trying to get freight charges paid.  Under 49 U.S.C. § 14705, a lawsuit to recover money must be brought within eighteen months. 
2. Take a close look at the written agreements involved. Shipping relationships are formed through contracts and bills of lading.  A bill of lading may contain provisions that release the consignor from any obligation to pay the carrier.  On the other hand, a transportation contract may cover shipments for a certain period of time and may state that it controls no matter what the bill of lading might provide.  On top of the different contracts that could be in play, those contracts can also be modified.  Basically, the situation can become quite complex due to conflicting contracts between different parties. 
3. The law protects carriers. Getting a shipper or consignee to pay may be like pulling teeth, but the general rule is that a carrier must be paid, primarily by the shipper and secondarily by the consigner.  This, as stated above, could vary depending on the contracts involved.  That’s why contracts should be frequently reviewed and kept current. 

These are only a few general considerations to keep in mind when a carrier needs to get paid.  There is also an option of getting a broker’s bond, but this option doesn’t help if the broker owes a several others money as well.  Your best bet, then, is to check on your contracts and bills of lading for each shipment.  And, remember, the law is on the side of carriers, unless there is some kind of malfeasance by the carrier.

In short, situations could become highly complex when multiple bills of lading and contracts are involved.  If you need your transportation contracts reviewed or need help collecting money owed to you, contact the experienced trial attorneys at Goosmann Law Firm, PLC, in our Omaha, Sioux City, or Sioux Falls offices.