The Setoff Clause on a Rate Confirmation

What a setoff lets the broker subtract

Setoff means the broker pays you less than this load's rate because the broker claims you owe something else. The something else might be a damage number from another trip, an advance they sent you, a lumper code they say you did not document, a quick-pay fee, or a catch-all called any amount you owe us. Without that sentence, a clean freight bill is a clean freight bill. With the sentence, the clean freight bill is a collection device.

Find the sentence before you accept the load. It may say offset, setoff, deduction, or recoupment. It is often near the payment terms, not near the rate. How to read a rate confirmation is the tour of the form. Clauses carriers miss lines up the other paragraphs, including indemnity. This page stays on the subtraction. You do not need a theory of contract law to see that "we may deduct anything" is a different deal from the dollar figure at the top of the page.

This load versus any load you ever ran

Some clauses limit the deduction to costs of this shipment: a lumper on this delivery, an advance on this load. That version can still be abused, but it cannot reach back three weeks to a different receiver. The dangerous version says the broker may deduct any amount owed on any load, past or future, from any payment. That sentence can zero today's invoice because of an allegation on a load you have already forgotten. It can also sit on a load you have not run yet. Strike it or cap it before dispatch. A cap might be "deductions from this load only" or "no deduction above a stated amount without a separate written agreement." If the broker will not change the words, price the risk or refuse the load. Discovering the sentence on the remittance is too late.

A future-looking clause is how a broker who is angry about one POD holds every later check. You will feel it as a series of short-pays. They will describe it as enforcement of the packet you signed at setup. The carrier packet is where that agreement often hides. Read it when you are set up, not only on the rate confirmation the night you roll.

Claims that are not yet decided

An unresolved claim is not a decided debt. A broker email that says "we are being charged $600 for damage" is an allegation. A clause that lets the broker deduct any claim, whether or not you agree, turns the allegation into cash the same day. Do not agree to that in advance. Ask for a written claim, the documents, and a stated number of days to respond before any deduction. If the claim is valid, the deduction has a basis. If it is not, you have not funded the broker's customer out of a clean load.

Cargo value has its own rules. A setoff does not establish that the damage happened, that you caused it, or that the number is the legal measure. Rate-con liability caps is the valuation fight. The claims guide is the file. Keep those separate from the question on this page, which is only whether the broker may take the money out of a different check while the fight is open.

Advances, lumper codes, and quick-pay fees

Not every deduction is a damage story. An advance the broker sent for a lumper is their money until you bring a receipt and they add it to the freight bill. A quick-pay percent they disclosed is a price, not a surprise setoff, if it is the percent you agreed. An undisclosed fee taken under "any amount you owe us" is the setoff clause doing work the rate line did not show. Ask the remittance to name the category: advance, lumper, quick pay, or claim. A single "deduction" with no category is how a claim hides inside a lumper.

If you took a comcheck or an EFS code, the fee on that code and the principal can both come off the bill if the agreement says so. The money-code page is that fee. Do not let it be relabeled as cargo damage. Categories keep the next argument smaller.

How to mark it up before you accept

Before you roll, write three limits on the clause or in a reply that the broker accepts. Deductions only from this load. Only for amounts you have agreed in a writing that names the amount. Only after you have had the claim documents and a chance to answer. If the broker's revision does not contain those limits, you did not get them. A verbal "we never actually do that" does not amend the PDF. Save the revised PDF in the load folder.

You are not writing a treatise. You are deleting a sentence that treats every future check as collateral. If the broker needs a real deduction process, the claims process already exists. They do not need a silent right to net whatever they want against whatever you haul next.

What your factor does when the check is short

The factor does not absorb the setoff. The broker's check is short, so the factor chargebacks the difference against your reserve or your next advance. The clause hits you. The broker still collected their customer's deduction. The chargeback page is the full settlement pattern. The example that lets this page stand alone is simple, and it is an example, not a finding. A $2,000 load is funded. The broker deducts a $600 old claim and pays $1,400. The factor chargebacks the unpaid $600, subject to whatever fee rule your contract uses. You are out the $600 unless you win it back from the broker. The factor is even. The clean load was the collection account.

That is why you strike the cross-load sentence before dispatch instead of explaining it after the wire. The explanation does not put the $600 back. A written refusal of the deduction, sent the day the remittance arrives, is still worth doing. It is how you start the recovery. It is not a substitute for the markup you skipped.

If that reply is rejected, the rate at the top of the page is not the amount you should expect to keep.

Watch the setup packet, not only tonight's rate confirmation. A broker-carrier agreement signed months ago can contain the broad setoff, and tonight's rate confirmation can say the agreement controls. Striking a sentence on one load does not strike the packet. If the packet has the any-load version, amend the packet or expect the next clean invoice to be used the same way. Ask which document wins when they conflict, and get that answer in the revision.

If you are leased to a carrier and the broker pays that carrier, the setoff may hit the carrier's bill and then hit your settlement through the lease. Read the lease for a matching deduction right. Two setoff clauses, one in the rate con and one in the lease, can take the same $600 twice in the storytelling even when the cash only moved once. Follow the dollar to the settlement line before you argue it twice.

Frequently Asked Questions