When a Rate-Con Liability Cap Loses to Carmack

The rate confirmation is not the bill of lading

The bill of lading is the receipt for the goods and the document Carmack talks about. The rate confirmation is the broker's deal with the carrier about the load: the rate, the stops, and a stack of terms. They can refer to each other. They are not the same paper. A liability number that appears only on the rate confirmation has not, just by appearing there, been written into the bill the shipper signed.

Look at the bill before you argue the number. If the bill has its own released value, that value is the Carmack conversation, and the test for whether it sticks is the released-value page. If the bill is silent and the rate con is loud, you have a broker form and a bill with no valuation on it. Do not let the loud form convince you the statute moved.

How to read a rate confirmation walks the rest of the form, the addresses, the charges, the appointments. This page refuses that tour. If the sentence in front of you is not about the dollars of cargo liability, you are on the wrong article.

What Carmack allows a carrier to limit

14706 starts from actual loss. A carrier may limit liability to a value the shipper establishes by written or electronic declaration, or by written agreement between the carrier and the shipper, when the statute's conditions are met, including that the value would be reasonable under the circumstances. That agreement is with the shipper. A form between the broker and the carrier, which the shipper never saw and never signed, is a poor fit for those words.

So the carrier's real question is narrow. Is there a value on the bill or in a writing with the shipper? If yes, test it. If no, a rate-con cap does not fill the blank. You can still have a contract fight with the broker about what the broker will reimburse you, or what you promised the broker. That fight is not the shipper's Carmack measure. Losing it can still cost you money through indemnity or setoff. Winning the Carmack point against the shipper does not automatically win the broker contract. Read both, and do not pretend they are one.

This page does not say every cap is illegal. A cap that is actually the shipper's declared value, done the way the statute describes, is the kind of limit the statute allows. A cap that is only the broker's boilerplate is not that kind of limit just because the boilerplate uses a dollar figure. Ask which document controls. Then ask what you want changed before the truck rolls, not after the claim arrives.

What a broker can limit for itself

Brokers are not the Carmack carrier merely because they sent the rate confirmation. A broker's contract with the shipper, or with the broker's customer, can limit what that broker owes that customer for a brokerage failure. That kind of cap can be real between those two parties. It does not travel downstream and become the motor carrier's maximum liability to the cargo owner.

Carriers get hurt when they assume the opposite in both directions. They assume the broker's cap protects the truck, and they also assume that if the broker is capped the carrier is free. The shipper, or the shipper's insurer, can still pursue the carrier under the bill. The broker cap is the broker's shield, if it works, not yours. Your shield, if you have one, is the bill.

If a broker tells you "we're only on the hook for a small amount, so you are too," ask them to show you the shipper's agreement to that amount on the bill. If they cannot, price the load and your cargo insurance as if actual loss still applies. Do not invent an insurance premium in that conversation. Just do not pretend the small number is the exposure.

Indemnity clauses that try to shift the whole claim

A valuation clause says the goods are deemed worth no more than a stated measure. An indemnity clause says you will pay the broker back for claims, sometimes "any and all" claims, sometimes including claims caused by the broker's own negligence, sometimes including the broker's attorney's fees. Those are not the same sentence. A carrier can satisfy itself that the cents-per-pound line is harmless and still sign an indemnity that writes a blank check.

Flag the any-and-all paragraph. Ask whether it covers the broker's negligence. Ask whether it covers cargo loss that Carmack would measure differently. The clauses carriers miss is the place those paragraphs are lined up. This page's only job is to stop you from calling indemnity a "liability cap." A cap limits a number. An indemnity creates a payment. You want to see both before dispatch.

Setoff clauses that take it out of the freight bill

A setoff, or offset, lets the broker subtract amounts from the freight bill: this claim, an old claim, an advance, a lumper code, or "any amount you owe us." The deduction can happen on this load or the next one. That is a cash-flow term. The money leaves your settlement whether or not the Carmack measure has been decided. You can be right about actual loss and still be short on Friday because the broker deducted the shipper's full invoice.

Read the setoff clause before you treat the deduction as the valuation. Ask, before you roll, whether cargo claims can be deducted before they are allowed, and whether you can dispute the deduction without losing the rest of the settlement. This page will not restate the setoff article. It will tell you the deduction is not the legal measure of the pounds.

What to ask the broker to change before you roll

You do not have to declare the cap illegal to ask for a change. Ask for three edits, in writing, on this load. First, strike a liability number that does not appear on the bill, or add the words that the carrier's cargo liability is as provided by the bill of lading and applicable law, not by this confirmation. Second, narrow any-and-all indemnity so it does not make you pay for the broker's negligence. Third, require that a cargo deduction wait until the claim is documented, or at least that a disputed amount not be taken from unrelated loads. The broker may say no. A no is information. You can refuse the load. You cannot unread the sentence after a loss and pretend you asked.

Do not send a speech about Carmack as a substitute for the edit. The edit is one paragraph. The speech is how loads get accepted at 4 p.m. with the original PDF still in force. If the broker will not change the PDF, save the refusal. If the broker sends a revised PDF, check that the liability sentence actually changed and that the indemnity and the setoff did not get worse in the revision.

The how-to-read page can take you through the rest of the boxes. The number that decides a cargo loss is the one this article is about, and it is usually on a different document from the one the broker highlighted.

Frequently Asked Questions