a Rejected Load
Careful Attention to Regulations Helps Protect Your Interests
Henry E. Seaton
Reprinted from etrucker.com
Consignees are refusing
shipments with increased frequency. For various reasons - the consignee
claims the shipment was partially damaged or that it arrived too late,
for example - you may be stuck with a shipment for which you have no
use, and the failure to deliver may not even be your fault. Most small
carriers don't have established procedures for handling rejected shipments
and often make the situation worse with sloppy salvage handling.
Some carriers assume that, because they are responsible for the count
and must pay for any shortage, an overage is theirs to keep; they deal
with a claim only if one is filed. This can be risky. Although the regulations
technically allow you to sell salvage after reasonable notice to the
shipper, your status is that of a warehouseman, not the owner of the
salvage. At least one small carrier has been indicted for criminal conversion
for selling a valuable overage and failing to pay the proceeds to the
rightful owner. That carrier's downfall was sloppy shipper notification
Although a criminal conviction for sloppy salvage procedures is not
likely in the absence of aggravating circumstances, civil liability
is. The shipper or beneficial owner may demand the full value of its
goods. On the distressed market, even undamaged goods can bring drastically
lower prices. You owe the shipper the duty to mitigate any loss by making
a reasonable attempt to obtain the best price. Be prepared to justify
any lower sales price as your maximum liability in the event you must
compensate the owner.
Proper disposition of overage and salvage involves three issues - notification,
inspection, and sale.
Notification. Regulations require "due notice." The
uniform bill of lading requires you to notify the shipper by telephone
or fax notice and to follow that with an on-hand notice and notice of
a sale. You also should put your notification procedures in your tariff.
When you face a salvage situation, start working the case early. By
phone and by fax, notify the shipper and consignee of any wrongful rejection
and try to get the consignee to accept the load.
You can - and should - send to both the shipper and consignee a formal
written notice identifying the shipment and providing for the storage
and detention charges you will assess if neither party arranges for
immediate disposition of the load. If the consignee will not accept
the load and the consignor will not reconsign the shipment and pay your
lawful charges, place the shipment in storage and send a second round
Inspection. Before disposing of the goods, inspect the shipment
and document any possible damage. If there is potential for a claim,
have your insurance adjuster examine the shipment. Independent expert
evaluations are wise, particularly if perishable commodities, rust or
moisture damage are involved. Based upon your inspection report, you
should once again notify the shipper and consignee, specifying the extent
of any damage and re-emphasizing their duty to accept undamaged articles
and make use of repairable items.
Sale. Under the terms and conditions of the uniform bill, if
you don't receive disposition instructions within 48 hours of the second
written notice, you can advertise the shipment in a newspaper of general
circulation. If you still have no instructions for disposal, you can
auction the goods after 10 days notice to the shipper or its designee.
If your shipment moved on a uniform bill, read the back side of the
bill carefully. If you have no other tariff provisions, comply with
these rules. This approach may not bring the best price, however. If
the newspaper/auction procedure won't maximize the returns, notify the
shipper of your plans for disposing of the goods and the reason why
you are choosing this approach.
If you adopt strong salvage handling procedures, the shipper can't successfully
claim that it lacked notice. And the burden is on the shipper to file
and process a claim in a timely manner. When cargo damage is not an
issue, you can legally recoup your costs from the sales proceeds and
tender only the balance to the shipper.
Copyright© 2006 Law Office of Seaton & Husk, LP. All rights