As shippers, Canadian retailers and manufacturers should be
aware of potential liabilities related to payment of freight
charges. The transportation of a product commonly involves several
stakeholders: freight forwarders or brokers and multiple carriers.
Who should then be paid?
In the province of Quebec, the shipper is discharged by paying
one of the carriers. The outstanding carriers must then address
their claims to the paid carrier. However, payment of the freight
charges directly to a broker does not generally discharge a shipper
of its liability to the carriers.
Where a shipper can get involved in a dispute over the payment
of freight charges is when brokers, voluntarily or unknowingly, act
as carriers, even though they in fact do not operate any commercial
motor vehicles. The shipper may, in this case, be discharged by the
payment to the broker, acting as carrier, but other carriers, if
any, may of course dispute the qualification of the broker as such.
To determine if a broker acted as a carrier, contracts and other
arrangements will be scrutinized, as well as exchanges (via e-mail,
telephone or other means), the freight charges, the invoice and
prior and further arrangements between the parties. It could be
difficult to assert that a broker acted in that role only (and not
as a carrier) in circumstances in which it has designated itself as
the carrier on a bill of lading.
It may also be a challenge to determine if the parties to a
transportation contract agreed that the freight charges would be
discharged by their payment to the broker, or if the carrier acted
in a manner that would suggest that the broker had the mandate to
receive the payment. In such cases, if the parties agreed or acted
in a manner suggesting that the broker was entitled to receive the
payment of the freight charges, the shippers will be discharged by
the payment of the freight charges to the broker.
Otherwise, shippers that paid their brokers rather than the
carriers may face lawsuits from carriers that have not been paid by
their brokers, and eventually be ordered to pay twice, i.e. they
might also end up paying the carriers for the same freight charges
that were already paid to the brokers.
To ensure payment of the carriers in case of payment of the
freight charges to a broker, and avoid paying the freight charges
twice, considerations include: (i) the alternative adopted by
Ontario law: requesting that the amount received as payment of the
freight charges be maintained in a trust account for payment of
carriers; and (ii) requesting a quittance from a carrier upon
payment to the broker.
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