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they pay more, they can declare a value
on the shipment.”
Under federal law, the shipper must “They [coNTracTs] caN be
be informed that there is a liability
limitation and that the shipper can pay 800-pouNd gorillas.”
a higher rate and have the limitation
removed. As long as the shipper is noti- —eric Zalud, parTNer,
fied of the limitation and option to pay beNesch freidlaNder coplaN & arNoff
for more coverage, the liability limita-
tion will be effective, Zalud said.
Brokers, in theory, have no liability
for cargo loss or damage unless it results indemniTy This type of provision puts an
from the broker’s negligence. It’s good Indemnity is “one of the more improper burden on the driver to do the
to make that clear in a contract anyway, onerous things” carriers have to deal shipper’s counting, Zalud said.
Zalud said. with in contract negotiations, Zalud “Sometimes the drivers are not
Another aspect of spelling out the said. even allowed on the loading dock,” he
details of liability is specifying when the A lot of contracts contain indem- said. “Carriers should be careful about
carrier’s role as carrier ends — particu- nity clauses, which might try to shift all responsibilities being shifted to the driv-
larly in the event of a refused shipment. liability that results from the contract ers.”
It’s beneficial for a carrier to contractu- to the carrier — even liability for the
ally transition to a warehouseman role shipper’s negligence or the negligence of conTracT aLTeraTions
if it is unable to deliver the cargo imme- third parties like brokers, subcontrac- A good contract should specify
diately after it reaches the destination. tors and owner-operators. that any changes must be signed by
The standards of liability are higher for “This really comes into play with an authorized representative of both
warehousemen than for carriers, Zalud personal injury lawsuits where high dol- parties. This prevents a driver or dock
said. lars are involved,” Zalud said. “If a car- worker from changing the terms and
“You want the contract to say that rier is locked into an indemnity clause conditions inadvertently by signing a
carrier liability ends when the goods that forces it to indemnify the shipper bill of lading or other document that
are not in transit anymore,” he said. for everyone’s negligence, those costs has different terms and conditions.
“You want that status changed after the can mount tremendously.” It also guards against any promises
goods have arrived at their destination.” And once a carrier signs a contract a sales representative might make that
with an indemnity clause they’re typi- are contrary to what’s in the contract,
offseTs cally bound by that, Zalud said. Zalud said.
Shippers and brokers may some- “I’ve been on both sides of these, “One of the things contracts help
times use offsets in an attempt to more and it’s hard to get out from under do is let you think through the whole
quickly recover losses if they’ve filed them,” he said. relationship,” Zalud said. “But you can’t
a claim for lost or damaged cargo. An Indemnity is less of a problem than control what happens at the loading
offset occurs when a shipper deducts it used to be because 41 states, includ- dock. What the driver signs at the bill
the amount of the claim from what ing Arkansas, have passed laws limiting of lading — ‘Sure, we’ll take this’ — the
it owes the carrier for other unrelated indemnity clauses. commitments drivers make on the load-
shipments, or when the broker pays the “The best indemnity clause is each ing docks sometimes create liability for
claim but in turn deducts it from what party is responsible for its own negli- the motor carrier.”
the broker owes the carrier. gence,” Zalud said. “That’s the easiest If a contract is well drafted, Zalud
Offsets usually come into play way to handle it.” said, it will spell out that it supersedes
when carriers or their insurers don’t any promises made by employees before
settle claims or because the carrier’s driver responsiBiLiTies the contract was signed, and that any
insurance contains loopholes that allow Shippers will sometimes want to modifications have to be in writing and
denial of coverage. include contract provisions that make signed by both parties.
Offsets are harmful to carriers the driver responsible for counting every “That eliminates claims that some
because cargo claims are not adjusted package during loading, and state that if representative made after the contract
in accordance with federal law, insurers the driver does not count the packages, that’s in conflict with it,” Zalud said.
will not pay the carrier, and the carrier then the shipper’s package count as “It helps prevent a lot of that extrane-
is deprived of revenue it needs to oper- shown on the bill of lading or shipping ous potential liability.”
ate. document is binding on the carrier.

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