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Do You Understand Your Liability?
Some callers seeking more information on the transportation/brokerage industries are concerned about being liable for accidents, damages and personal injury.
Normally, a freight broker assumes no liability in the event of an accident involving the broker’s carrier, the cargo itself and/or personal injury. However, there are several exceptions to these. For example,
If the freight broker is found either,
- Negligent in the selection of their carrier,
- Misrepresenting themselves to others,
- “Aiding and abetting” the carrier to violate safety regulations, or
- “Vicariously” liable,
The freight broker may indeed become liable.
Let’s look at each:
Negligence – to avoid liability a freight broker must obtain documentation of a carrier’s authority and insurance. This is a simple process done through the FMCSA website. A free report on the carrier’s safety record is also readily available.
Misrepresentation – to avoid liability a freight broker must not perform any brokerage service under any name other than that for which it is registered. Also, the freight broker shall not represent itself as a carrier.
“Aiding and Abetting” – this can get complicated. Essentially, if the freight broker is or is not knowledgeable about carrier regulations and if the freight broker encourages the driver to violate these regulations, the freight broker may be liable. The facts pertaining to each specific incident would govern the ultimate decision when attempting to define guilt.
“Vicarious liability” – this is when the freight broker has contracted with a carrier and the broker exercises too much control over the carrier to the point where the independent contractor relationship is severed the broker can assume liability for the wrongful actions of the trucker.
There could be many “what if” situations as one ponders a freight broker’s liability in these scenarios. Nevertheless, just understanding the four items above can go a long way toward helping to avoid freight broker liability.
Generally, cargo damage or missing pieces are clearly within the realm of carrier liability. Why? The freight broker never takes possession of the cargo. And, the Carmack Amendment deals with this in a straight-forward manner.
However, there are relatively new laws that can hold the broker liable without his taking possession of the cargo. A case in point is the Food and Drug Administration’s mandate on food transportation.
Personal injury or death, however, can be a different story. John C. Lane in his article, “Broker Liability for Casualty Claims” states,
There appears to be an expansive attempt of plaintiffs’
attorneys, especially the personal injury area, to
formulate theories of liability for actual negligence or
of vicarious liability, beyond the traditional views.
These are some of the legal issues we tackle during freight broker training. Running a successful freight brokerage is more than ensuring cargo gets moved from Point A to Point B.
There are potential legal consequences for not understanding regulations affecting brokers.
Here’s a related post on freight broker liability. If you want, just skip down and read the last four or five paragraphs. You’ll get the central idea:
Got questions? To get a more in depth understanding you may want to consider our freight broker training. We dwell on these issues in much more detail.
Call me for more detail.