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In this series, we are going to try to answer some of the questions that I have come across my desk. Hopefully, we can pass on some of this knowledge to our readers.
Q: I have three questions: 1) If Section 7 is signed, but the bill of lading is marked “prepaid”, who owes the freight? 2) If Section 7 is signed, but the bill of lading is not marked “prepaid” or “collect”, who owes the freight? Can you share a legal authority for these responses? 3) Where can I learn more about transportation? Please help me with this problem…Sam H, Los Angeles, CA.
A: This is so important that I recommend that each 10-4 reader stop and tear this out right now. NTA in association with Cal State Long Beach now offers a Global Logistics Specialist college degree. Enter the world of logistics and learn all the areas of the supply chain all in the comfort of your own home or office. Just go to our web site and click on GLS Degree to answer your questions. Next, we should first get all the facts straightened out. Let’s start by looking at the current version of the Uniform Straight Bill of Lading.
Section 7 – “Non-recourse” Provision. The face of the current Uniform Straight Bill of Lading as set forth in the National Freight Classification, and which became effective December 27, 1997, contains a box that states: FOR FREIGHT COLLECT SHIPMENTS: “If this shipment is to be delivered to the consignee, without recourse on the consignor, the consignor shall sign the following statement: The carrier may decline to make delivery of this shipment without payment of freight and all other lawful charges.”
On the reverse side of the bill of lading there is following language: Sec.7. (a) The consignor or consignee shall be liable for the freight and other lawful charges accruing on the shipment, as billed or corrected, except that collect 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. Nevertheless, the consignor shall remain liable for transportation charges where there has been an erroneous determination of the freight charges assessed, based upon incomplete or incorrect information provided by the consignor. (b) Notwithstanding the provisions of subsection (a) above, the consignee’s liability for payment of additional charges that may be found to be due after delivery shall be as specified by 49 U.S.C. § 13706, except that the consignee need not provide the specified written notice to the delivering carrier if the consignee is a for-hire carrier. (c) Nothing 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. If the description of articles or other information on this bill of lading is found to be incorrect or incomplete, the freight charges must be paid based upon the articles actually shipped.
It should be noted that the word “Freight Collect” in the box on the face of the bill of lading, and the limitation to “collect shipments” in the Terms and Condition on the reverse side, were not present in earlier versions of the Uniform Straight Bill of Lading and were added in the version which became effective December 27, 1997.
Prepaid vs Collect – It should also be observed that the face of the current version of the Uniform Straight Bill of Lading, effective December 27, 1997, contains another box that states: “Freight Charges are PREPAID unless marked collect. Check Box if Collect”
This was also changed when the NMFC bill of lading was revised in 1977. The previous language stated: If charges are to be prepaid, write or stamp here “To Be Prepaid.” Thus, in the new bill of lading, if nothing is done, the presumption is that the charges are “prepaid”, instead of “collect”.
Now back to your question, If Section 7 is signed, but the bill of lading is marked ”prepaid”, who owes the freight charges? The answer is bills of lading are not marked “prepaid”, they are prepaid unless marked “collect.” The current NMFC bill of lading does not permit the use of Section 7 for a prepaid shipment.
Under the court decisions interpreting the old (pre 19997) bill of lading, a shipper could sign Section 7 on a prepaid bill of lading. Usually this meant that the shipper would pay the freight charges agreed at the time of shipment, but would not be liable for charges accruing afterwards, such as detention or redelivery charges. There was some authority that the shipper could avoid all liability, even for the agreed prepaid charges. In other words, if the shipper did not pay the agreed prepaid charges, the carrier could collect only from the consignee.
In other words, if your driver picks up a load where Section 7 is signed, the driver should immediately call his dispatcher or boss. This is because if the shipper signs Section 7 and the consignee does not pay the freight charges the motor carrier can not go back to the shipper to be paid. If Section 7 is signed, you as the motor carrier should demand payment before making the delivery. You should simply treat this shipment as a C.O.D. “Cash on Delivery”.
On your second question, If Section 7 is signed, but the bill of lading is not marked “prepaid” or “collect”, who owes the freight charges? As noted above, if the bill of lading is not marked at all, the shipment will automatically be considered prepaid, and the answer to question 1 will apply.
Q: I have a broker who has not paid me for several moves and he owes me several thousand dollars. He says he will pay me when he gets paid. Can you help?…Jose D, Bakersfield, CA.
A: Don’t worry as a NTA member, we offer a “special collection service” in dealing with brokers who don’t pay our members. We have heard this old song many a time. Have you hear the joke,: “Where does an 800 lb gorilla sleep? Anywhere he wants.” A letter from OUR 800 lb gorilla usually makes quite a difference in their attitude. Just give us a call.
Send your questions to Wayne Schooling at NorthAmerican Transportation Association, 2533 N Carson St, Suite 346, Carson City, NV 89706-0147
The NTA is a premier Nationwide Transportation Benefits Association established to provide services, benefits and information to Private Fleets, Trucking Companies and Owner-Operators. We provide our members with more FREE services and benefits than any other association.
For more information or details call (562) 279-0557 in California or 800 805-0040 or you can E-Mail me at wayne@ntassoc.com Remember, tell those who doubt your profession, " If you've got it ….A TRUCKER BROUGHT IT! Until next month, " Drive Safely - Drive Smart ! "
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