The Model of a Contract
By Henry E. Seaton
August 2004
Reprinted from etrucker.com

Q I understand that major carrier and shipper groups have agreed to a model Shipper-Carrier Contract. Is this true, and what do you think of it?

A The American Trucking Associations and The National Industrial Transportation League have agreed to the terms and conditions of a model truckload contract, which can be found with commentary at www.trucking.org. The agreement, while lengthy, is comprehensive and addresses the accessorial service issues often left out of contracts.

I applaud both the ATA and the NITLeague for working through the issues that often divide shippers and carriers and for obtaining Justice Department approval to publish this collaborative effort.

In my book, Protecting Motor Carrier Interests in Contracts, I discuss the “Dirty Dozen” — 12 egregious contract provisions most often seen in shipper- and broker-drafted contracts. The model agreement steers clear of the most troublesome provisions I discussed. It requires payment of freight charges on time and without offset. There are provisions for interest and attorney’s fees in the event payment is not received in time. Overage, shortage and damage claims must be handled in accordance with the Carmack Amendment without special or consequential damages. The indemnity provision is reasonable, requiring only that you hold the shipper harmless from negligent acts or omissions of your employees and agents.

The model agreement includes provisions for important accessorial charges such as free time, detention and truck ordered but not used. The contract also addresses many of the nasty surprises I have cautioned about in prior articles.

Other issues of concern to shippers such as prohibition against double brokering without approval, reasonable assurances concerning insurance levels and inclusion of an arbitration clause are all present.

While it may be preferable for one to provide common carrier service under a bill of lading and a properly worded rules circular, if the written bilateral contract is a pre-condition for serving a shipper, the model ATA/NITLeague agreement is a good place to start. Moreover, because this contract has the blessing of one of the most reputable shippers groups, it is an evenhanded basis from which to begin negotiating.