Part 2 in Our Series: Do You Know What’s In Your Broker/Shipper Contracts?
The advancement of technology has changed life as we know it. We now live in a world where most people have access to a smart phone or a computer. The ability to gather facts so quickly is both amazing and terrifying-- all thanks to the internet. Advancements in technology have drastically changed our lives in a short period of time. In a span of years, we went from flip phones to smart phones. From cars with roll up windows, to all electric vehicles that can autonomously drive us. The speed at which technology is advancing is incredible and has not only improved our personal lives, but our work lives as well.
Transaction Expeditors has seen firsthand what technology can do for the transportation industry. We are a team of transportation veterans that have partnered with LegalSifter , a technology company, to pair their artificial intelligence with our human expertise to assist in reviewing transportation contracts. The tool reads the language in a contract in a minute or two and quickly shows the user the concepts that are either found or missing and offers helpful information about the concepts along with sample language.
In this article, the second in a series of three, we will examine important concepts found and missing in Broker/Shipper agreements. Article one of the series (Do You Know What is in Your Shipper/Carrier Contracts? — Transaction Expeditors) focused on Shipper/Carrier agreements.
Our database of publicly available contracts allows us the ability to analyze vital information that is crucial to our customers when reviewing transportation contracts. Through this data, we have found that Broker/Shipper agreements are among the longest contracts in our industry. Anecdotal experience also indicates that across the board, Brokers are being asked to sign the Shipper’s contract. Reviewing a third-party contract, especially one that is complex, and has the potential to be revenue generating, can introduce a lot of risk for Brokers as to what’s found or missing in their contracts.
In a sample of publicly available Broker/Shipper contracts the following were FOUND:
Governing Law was found 85% of the time. This means the Shipper is likely choosing the law most favorable to its business.
Indemnification was found 93% of the time. This means Shippers are likely transferring risk to brokers via contractual indemnity.
Liability for delay related expenses was found 55% of the time. This likely means that a Shipper is including a provision regarding liability for delayed loads. As anyone in the industry knows, such liability can be unpredictable and expensive.
Now let’s look at what was MISSING in the same sample of publicly available contracts:
An overall cap on a Broker’s liability was missing 78% of the time. This means that a Broker’s total liability under the contract may be uncapped.
A cap on cargo liability was missing 43% of the time. This critical term was missing in just under half of all Broker/Shipper contracts examined.
Who has the right to invoice the Shipper (i.e.., the Carrier or just the Broker) was missing from 52% of the contracts examined, potentially creating confusion.
Using AI to review contracts not only helps you understand what’s in them, but it also makes the review of them faster, easier, and more consistent. Think about navigating somewhere you’ve never been without using Google maps! If you are tired of spending time you don’t have reviewing contracts and having bad visibility into what’s in them, please send us an email or give us a call. We are always happy to find the best solution to make contracts easier. Reach out to us at: info@transactionexp.com