Nothing but the original?

Q As a carrier, we signed an agreement with a broker which required submission of an original proof of delivery (P.O.D.) in order to get paid. The original P.O.D. that we sent was apparently lost in the mail and now the broker refuses to pay us. Is this proper?

A I have seen a number of broker agreements that require the submission of an original proof of delivery as a prerequisite for payment. Some say this is because of a shipper requirement. Others say that the carrier cannot be trusted to provide an otherwise unaltered copy. Neither of these arguments is persuasive to me.

With EDI, imaging and electronic payment of freight charges, the digitizing of shipping documents is becoming the norm. Many shippers do not want original proofs of delivery. Increasingly, the large carriers are providing P.O.D.s only upon special request and for a charge.

The federal statutes governing motor carriers do not require the submission of an original proof of delivery as a prerequisite for payment. In fact, the regulations governing the payment of freight charges expressly contemplate “billing by the use of electronic media.”

See 49 C.F.R. Sec. 377.207. Carriers must preserve for one year their records regarding the movement of freight, including copies of bills of lading and other documents furnished to the carrier. But even these records can be preserved “by any technology that is immune to alteration, modification or erasure of the underlying data” and that can be reproduced on “an accurate and unadulterated paper copy.” See 49 C.F.R. Sec.379.

Consistent with the intent of these regulations is the business record rule, which is an established evidentiary principle. It holds that in the absence of evidence to the contrary, a record kept in the ordinary course of one’s business will be admitted into evidence and given probative weight.

Thus, even the most demanding shipper or broker should be reasonable and accept a faxed or imaged copy of a proof of delivery as adequate support for a carrier’s freight invoice. I advise carrier clients to use a P.O.D. stamp to provide a written certification on the face of any copy attesting to its authenticity. Certainly, this should be enough to satisfy the shipper or broker. Moreover, if the invoice or P.O.D. can be sent electronically or by fax, the carrier achieves two additional benefits. First, it has confirmation that the billing was actually received. Second, any delay in the billing process caused by slow mail is eliminated.

One final thought relates to the issue of whether a broker can arbitrarily deny payment because an original P.O.D. is not provided. I do not think so. If the broker has collected the freight charges for the shipment in question from its shipper, it has an obligation to discharge the shipper’s payment obligation by transmitting the proceeds to the carrier. It would violate the spirit and intent of the broker regulations to permit a broker to keep the carrier’s money and receive a windfall at the carrier’s expense when there was no issue about the services provided.

If, on the other hand, the shipper refuses to pay based upon a certified P.O.D., it should be up to the shipper to prove that the consignee never received the shipment and has accordingly refused to pay for the goods.