Stick with Federal Law
By Henry E. Seaton
February 2007
Reprinted from etrucker.com

Q How does the ATA model contract treat bill of lading terms and conditions, carrier rules circulars, and general principles of federal transportation law?

A This is the final installment of a four-part series addressing issues of concern in the American Trucking Associations’ model broker-carrier contract. Traditional principles of federal transportation law for regulated for-hire transportation are found in various sections of 49 U.S. Code and 49 C.F.R. Together with the established terms of the Uniform Bill of Lading or Standard Truckload Bill of Lading, they contain general principles of federal transportation law. In my view, these established rules should not be quickly jettisoned, nor should the uniformity they provide be quickly surrendered to state law principles or application.

Unfortunately, the ATA model contract does not expressly incorporate general principles of federal transportation law. It expressly waives applications of federal statutes pursuant to Section 14101(b) to the extent inconsistent with the agreement. While this alone is not a problem, the contract then applies state law except to the extent prohibited by federal statutes. Arguably, these provisions taken together deny consistency, predictability, federal court jurisdiction over cargo claims, reliance on federal statutes and the bill of lading for consignor and consignee liability, required broker compliance with federal regulations, and other valuable tools. Any multi-state contract should be governed by uniform standards, and should not from the outset be subject to the vicissitude of the laws of 50 different states.

Furthermore, the model contract expressly incorporates the uniform straight bill of lading provisions governing refused freight, salvage and the carrier’s subsequent status as a warehouseman, but it otherwise allows for the use of conflicting bills of lading, receipts and other transportation to the extent not inconsistent with the model agreement.

Carrier interests are far better protected, I believe, by specifying that all the terms and conditions of the Uniform Bill of Lading or Standard Truckload Bill of Lading apply, and that nonconforming bills are signed by the driver as receipt for goods only. Then, if the broker or its customers are unwilling to accept any part of the federal regulatory framework, the contract should manage the issue by exception.

Furthermore, while the model contract provides for an addendum that addresses many of the standard accessorial charges, it excludes a place for incorporation of a carrier’s service conditions by reference and accordingly deprives the carrier of the ability to incorporate its own procedures when dealing with special accessorials, handling claims and mitigation, credit and collection issues, transborder and other intermodal issues. The contract leaves out many accessorial issues of particular interest to draymen, temperature-controlled carriers, heavy and specialized haulers, and bulk haulers with unique service requirements and accessorial costs.

For consistency, completeness and uniformity, carrier’s interests would be better served to begin with the federal statutes and rules, their own published service conditions, and standard bill of lading terms and conditions.

Finally, the ATA model contract places the burden on brokers to transmit payments within 30 days, but does not expressly provide for interest and attorney’s fees on delinquent accounts. If antitrust was a concern, the model did not need to suggest an interest rate percentage or collection fee amount, but omission of any provision for credit terms is prejudicial to motor carrier interests. Motor carriers are the only vendors that extend credit without charging interest on delinquent accounts or providing for collection fees. As a result, carriers fare poorly in bankruptcies and are easy targets for preference actions. Properly seen, the issue should not be whether to have collection terms for delinquent accounts, but rather what should be the amount to be paid.