The American Trucking Associations has expressed significant concerns with several of the provisions of the newly released Transportation Intermediaries Association model agreement for structuring the legal relationship between carriers and brokers. ATA believes that in many instances, the model agreement inherently favors the interests of brokers and their shipper customers over that of the motor carrier.
For example, the contract has language whereby a carrier would agree that the broker “is the sole party responsible for payment of carrier’s charges,” and an absolute prohibition against motor carriers seeking payment of freight charges from a shipper that has paid a broker. These provisions would eliminate the motor carrier’s right to collect unpaid freight charges from a shipper that has an agency relationship with its chosen broker.
Other objectionable provisions include one designed to shorten the 120-day period motor carriers currently have by law to react to cargo claims, with a default to full carrier liability; and a provision creating exposure to consequential damages related to unauthorized rebrokering of loads.
ATA suggests that motor carriers that are presented with a contract based on the TIA model should consult with their attorneys regarding the legal ramifications of its provisions and understand that they are under no obligation to accept terms they find objectionable.
TIA says its formed a committee comprised of an equal number of asset-based and non-asset-based TIA members to develop the model contract. “Our sole objective for the TIA Model Broker-Carrier Contract was to create a fair and balanced template contract that would raise the standard and suit the best interests of both brokers and carriers,” says Robert Voltmann, TIA’s president and chief executive officer. “Carriers and brokers can both safely sign the TIA Model Broker-Carrier Contract without fear of hidden provisions. We believe, therefore, that the TIA Model Broker-Carrier Contract will make both parties more efficient.”
TIA says it spent more than a year analyzing the best practices and contracts throughout the industry. “We wanted this contract to equally represent both parties, so we elicited feedback from every major industry organization,” Voltmann says. “We have incorporated many of the suggestions we received, such as the Recourse and Broker Must Pay clauses. We are confident that this contract will become the industry standard.”