There are a number of things to consider before your operation signs off on the next shipping agreement that comes through the door.

This article is from the Winter 2017 issue of The Quill. To view the full issue, visit The Quill archive.

In a perfect world, contracts between motor carriers and shippers are merely a formality. The drafting and signing of agreements do not have implications because everything runs smoothly: Each load is shipped and delivered on time, no complications arise and both parties to the agreement are highly satisfied at the end of the day. However, in the real world things rarely go so smoothly. This article will highlight a number of things to consider before your operation signs off on the next shipping agreement that comes through the door.

One of the most critical mistakes that motor carriers make is failing to understand the implications of a signed contract. A standard shipping contract is created by one party, usually the shipper, and given to the other party to review and sign. It is important to understand that once both parties sign the contract, the terms contained in the contract are binding. It is crucial to have a general understanding of the terms that are in standard shipping contracts and the impact of those terms on your operation. An additional key factor to keep in mind is that, more often than not, shippers draft contracts in a way that protects their own interests, not yours. It is up to you to look out for your best interests.

When presented with a new shipping contract, it is always in your best interest to read and review the contract in its entirety. Usually, there are preliminary discussions between the shipper and the motor carrier that address some of the main concerns between the parties, however, by thoroughly reading and reviewing the agreement, you will be able to better understand the business relationship that your operation is starting, and also get an opportunity to verify that those preliminary discussions were incorporated into the final version of the contract. A thorough review of the agreement can help you understand what is expected of your drivers, what you can expect from the shipper and what to do in the event of a dispute, among many other things. This is possibly the most important step in the process. There is no excuse for not reading and reviewing a contract before signing.

Finally, now that the contract has been read and reviewed, it is important to engage the shipper and your own team. If you have any questions or concerns, contact the shipping company. After all, the point of reading and reviewing the agreement is to make sure that your operation and the shipping company are on the same page. Ask the shipper for clarification if the terms of the contract are unclear or unfamiliar. If there are terms that you think are unfair, request that the shipper change the language. Engage your own team and make sure that you’re comfortable with the terms and conditions contained in the agreement as well as the operational requirements that are imposed on you by the shipper.

When it comes to understanding, reviewing and signing contracts, the tips provided in this article can only get you so far. It is important to discuss any concerns that you have with your attorney or seek the advice of a qualified attorney if you do not have one. While our hope is always that each and every shipment goes according to plan, the tips provided in this article are provided to assist you in establishing good practices to keep in mind when engaging new shippers and signing new shipping agreements.