Transportation Services Agreement Overview

A transportation services agreement is a contract made between goods providers and those who offer transportation for those goods. In such an agreement, the goods provider, which is typically a wholesaler or manufacturer, will agree to pay the transporter to deliver the material goods to retailers and other distributors. The party being contracted, which is usually a trucking company, shipping provider, airline, or railroad line, is under the obligation to deliver the shipped goods on time and in condition to sell. If not, a breach of contract will have been committed, with negotiated penalties to follow.

Transportation Services Agreement Outline

Although a transportation services agreement will vary depending upon the necessities of the business deal and how negotiations turn out, most will follow a similar format and cover similar basic concepts, including:

  1. Third-Party Services. This will cover in specific detail what services the transportation provider will provide in exchange for payment, which will include shipping, handling, and storing the materials provided.
  2. Third-Party Liability Limitations. If the transporter contracts transportation work out further to subcontractors, which may include truck drivers, customs brokers, warehouse workers, and forwarders, whether the transporter will be liable for lost or damaged goods or other damages detrimental to the original contracting party will be stated here. Usually, the transporter will not be liable for subcontractor actions.
  3. Choice of Agents and Routes. Usually, unless the contract states specifically otherwise or specific instructions are given by the contracting party, the contract will stipulate that the transporter will have total freedom to choose the means and route of transportation to get the contracting party’s materials to their intended destination.
  4. Quotations. This refers to the charged cost of the shipping the material, which will usually only be an estimate and subject to change due to the unpredictable nature of shipping. The transportation provider will not be bound to any estimate it gives unless this is agreed to specifically in writing.
  5. Furnishing Information Duty. This section describes what obligations the contracting party will be under to furnish information necessary to the proper transport of the materials, such as documents for U.S. Customs, if the transport is to be done internationally. The transporter will generally be indemnified from any responsibility insofar as the accuracy of the documents is concerned, including penalties arising from inaccurate documents.
  6. Insurance. This section will state how insurance for the goods is to be handled, with the shipper usually not purchasing insurance unless specifically instructed to by the manufacturer. If insurance is taken out on a shipment, any disputes will be resolved by the manufacturer, not the shipper.
  7. Liability. This will cover whether the transporter will be held liable for lost or damaged goods, and if so, to what extent and under what circumstances they will be liable.
  8. Claims. This covers how claims will be handled, including the time limitation on filing for such claims.
  9. Money Advancement. Whether the company will be paid beforehand by the manufacturer for expenses related to shipping, including insuring, forwarding, importing, coopering, and storing, will be stated here.
  10. Indemnification. Under what circumstances the shipper will be held harmless, or indemnified, for losses or other damages related to shipping, including penalties, fines, and liquidated damages, will be covered in this section.
  11. C.O.D. Shipments. This covers how goods received under “Collect on Delivery” terms will be handled, with the shipper’s preference being that the they will not be responsible for or will be reimbursed for payments related thereto, nor will the shipper be responsible for any negligence conducted by any third party related to these payments.
  12. General Lien on Property. How a lien to compensate the shipping company for any expenses incurred on behalf of the manufacturer will be handled will be covered in this section. What circumstances will trigger the use of the lien and how it may be used will also be stated.
  13. Compensation. What amount the shipping company will be paid and how it will be paid, including what payment schedule will be used, if any, will be set out in this section.
  14. Names and Signatures. The contract should finish with a section for the names of the parties involved and the signatures of those parties and their representatives, as well as the dates on which the document was signed.

All agreements should be reviewed thoroughly before they are signed. If there is any part of an agreement that you do not understand, you should seek legal counsel before you sign it. If you need help understanding any portion of a transportation services agreement, you can post your legal need on UpCounsel’s marketplace. UpCounsel accepts only the top 5 percent of lawyers. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.