Hidden Pitfalls in Carrier Contracts

Whether you are a carrier, broker, or performing carrier there are certain risks you take on when signing a contract.

The question is: Do you know the risks your company is agreeing to when signing a contract?

In a busy and competitive industry, it can be difficult to take the time necessary to thoroughly review contracts before signing. However, it is imperative that you take the time to review! There are certain risks your company may be assuming and certain types of authority you are giving up by signing  a contract without taking the time to understand what is written.

As your insurance partner, our aim is to empower you and your company with the resources necessary to operate profitability and safely. To do this it is important to be aware and informed before signing off on contract terms.

To support this discussion, we invited Gordon Hearn (email) and Carole McAfee (email) from Fernandes Hearn LLP to join us for a webinar. In the webinar Gordon and Carole discuss various aspects of shipper-carrier, shipper-broker and broker-carrier contracts.

What are the potential pitfalls in these contracts?

Current trends and potential pitfalls we are noticing include:

• A lack of equilibrium, especially the brokers who are often stuck in the middle;
• Brokers and carriers signing whatever the shipper or upstream broker want you to sign without assessing the risk;
• And when something happens being caught off-guard by surprise “special contract terms”. 

Click the play button to view the webinar

The webinar reviewed four key areas:

Aggressive Terms in Contracts

Contract wordings can be written in such a way to drastically shift the risk downstream. One of the areas where terms are becoming increasingly aggressive is in respect to cargo loss and damage. Gordon and Carole discuss concepts like “Conflicts of law”, cross-boarder shipping dynamics, the Carmack Amendment, and Canadian “uniform bill of lading” vs agreement by contract.

Are Your Terms of Service Even Applicable?

Do you even know whether your terms of service apply? The webinar discusses “by reference” vs. expressly being set forth, the “Loadlink” conundrum, and “Entire Agreement” clauses.

Liability Risk within Important Clauses

Are you brokering loads out? If so, are you ‘crossing the line’ in terms of ensuring that your performing carrier is an independent contractor? Do you know if you are even able to broker out loads based on contract terms?

We dive deep into important clauses for your operation to consider including:

• Force Majeure
  • “if either party is prevented from the performance of any service or act required by this contract by reason of strikes, lock-outs, labor troubles, inability to procure materials, failure of power, government act or regulations, riots, terrorism, war or other reasons of a like nature not the fault of, or under the control of, the party delayed in performing services or doing acts required under the terms of this agreement then performance of that act is excused for the period of the delay…provided that prompt notice be provided.”
• Indemnity Provisions
• Insurance Requirements
• Consequential Damages
• Deemed Loss Clauses
• Governing Law and Venue
• and the impact of the STF Rule (USA “Crush and Dump” issue)

Contracting Commercial Considerations

What risks are you assuming inside of these considerations?

We cover some of the most important areas to focus in on including:

• “Money for contract of carriage held in trust”
• The Bill of Lading Act
• Cargo Claim Set Off
• and No Back Solicitation

What should we do next?

Nearer to the end of the webinar, we share action items to take away for your operation. We advise watching the webinar throughout to learn why those recommendations are provided.

We do know that it is important to have a strategy in place. Part of a wise strategy is to have a strong relationship with legal professionals that specialize in the transportation industry. Both Gordon Hearn and Carole McAfee are transportation legal specialists that can support you and your company in making smart contract decisions.

To discuss more and set time to talk with Carole and Gordon please send them an email:

• You can email Carole McAfee here – carole@fernandeshearn.com
• You can email Gordon Hearn here – gord@fernandeshearn.com

About the Presenters:

Gordon Hearn

Gordon represents international and domestic interests involved in the transportation, supply chain and distribution of goods in litigation, regulatory and contractual matters.

He advises shippers, receivers, carriers, logistics providers (3PL’s, supply chain and “fulfillment” providers, freight forwarders, load brokers, customs brokers and warehousemen) and their insurers on their legal interest and exposure in the international, cross-border and domestic carriage of goods by all modes of carriage.

Gordon is a Past President of the Transportation Lawyers Association, an independent, international bar association whose members assist providers and commercial users of transportation and logistics services.

Gordon is a frequent speaker at conferences and seminars throughout North America on the above matters. Gordon has authored numerous related papers and articles.

Carole McAfee Wallace

Carole McAfee Wallace is a lawyer with Fernandes Hearn LLP, a Toronto based law firm that specializes in transportation.

Carole represents both domestic and international trucking and bus companies on a wide range of transportation matters including regulatory compliance, defence of provincial offences, contract drafting and commercial litigation.

Carole also practises employment law, advising both federally and provincially regulated employers in Canada, and employers internationally, on compliance with employment standards, the management of human rights issues, including the duty to accommodate, and on occupational health and safety compliance including responding to workplace harassment complaints.

She appears on her clients’ behalf before the Ontario Court of Justice, the Ontario Superior Court of Justice, the Ontario Court of Appeal, the Ontario Highway Transport Board, the Licence Appeal Tribunal, the Ontario Human Rights Tribunal and the Canadian Human Rights Tribunal.