Is Time on Your Side?
Watch Procedural Deadlines Governing Claims and Charges Carefully
By Henry E. Seaton
March 2000
Reprinted from

Regulations and statutes governing cargo claims and freight charges are often complex, and even the most innocent-sounding provision may carry huge implications for your business. That's why it's so important to understand the procedures and statute of limitations in these requirements.

Cargo claims

Nine-month deadline. You may require any cargo claims to be filed nine months of the loss or damage. Although this nine-month deadline appears on the back of the uniform bill of lading, it's crucial that you specify this deadline in your contracts and rules tariffs. Recently, courts have sided with shippers whose carriers failed to declare the nine-month limitation by contract, tariff or bill of lading. With a valid nine-month defense, you may be able to defeat belated cargo claims when shippers unilaterally offset claims against freight charges.

The regulations and case law are clear on what constitutes a valid claim. The shipper must file a written claim that contains sufficient facts to identify the shipment, asserts liability for the loss and delay and makes a claim for a specific amount of money. Ordinarily, claimants attach the bill of lading and an invoice showing the value of the shipment; a bad order report, a notice of short and damage or a delivery receipt alone is not sufficient. These are nice protections if you are acting as a carrier, but it's something to watch if you are acting as a third-party logistics company.

The two-year statute. In addition to setting a nine-month time limit for filing claims, a carrier can establish a statute of limitations of two years for the filing of a civil action against it. The uniform bill of lading provides for the two-year statute of limitations. But be sure to establish the limitation in your rules and contracts as well. You can no longer be sure shippers will use the uniform bill.

The clock on the statute of limitations starts when you deny a formal claim, so its important to follow the claims rules to the letter and formally deny claims in writing. If you leave the claim open and "under investigation," the time limit for filing suit will never run out.

Freight charges

The 180-day rule. To correct the abuses of delayed post-audits, Congress passed the so-called 180-day rule. This law preserves a carrier's right to collect additional charges - but only if it issues the revised bill within 180 days of the original bill. Similarly, it preserves a shippers right to recover overcharges only if it contests the original or amended bill within 180 days of receipt.

The Surface Transportation Board has concluded that the 180-day-rule requires carriers and shippers to contest undercharges or overcharges within that time frame if they want to preserve their right to sue in court. You can't afford, therefore, to wait to bill for accessorial charges. If you accumulate detention and pallet charges, you may find that recovery is barred.

The 180-day-rule gives you some protection against the "chicken hawk" post-audit firms that to try to recover old overcharges for shippers.

The 18-month statute of limitation. You don't have much time to file suit to recover freight charges. The statute of limitations once was three years, but now it's 18 months. Recently, some courts have held that this limit applies not only to carrier suits for freight charges but also to suits brought by brokers in cases where interstate surface transportation is involved.

Many contracts specify which state's laws apply, and many states provide statutes of limitations longer than 18 months. But unless the shipper waives the federal statute, expect the 18-month statute to apply and don't expect to recover charges more than 18 months old when you sue.

It's important to be professional in your claims and collections procedures. If you understand the filing deadlines and the statutes of limitations, you can avoid losing your collection rights or paying time-barred claims.
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