What You Should Know About COD Shipments
By Michael Dennis and Steven Kozack

A client presented the following problem to us. We shipped COD company check. The carrier apparently either never picked up the check or lost it. They refuse to make good on it, and we have been unable to collect from the recipient. Do we have to exhaust legal remedies against the buyer before we can proceed against the carrier for failing to deliver the check to us?

We shared some 'bad' news with our client based on the typical limitation of liability relating to a carrier's failure to pick up, or failure to deliver a COD payment. Usually, the carrier's limitation of liability as spelled out in their contract includes language such as this:

"Our [the carrier's] liability for failure to collect the C.O.D. amount, failure to collect the specified form of payment, collection of the wrong amount, or failure or delay in delivering the payment instrument to the shipper is limited to the declared value of the shipment and to any other limitations under "Declared Value and Limits of Liability."

In other words, the carrier was only liable for the 'declared value' of the shipment, and under the shipper's contract failing to declare a value limited the carrier's liability to a maximum of $250. We explained that the only 'solution' for shippers wanting to protect themselves would be to declare a value on COD shipments and pay whatever additional charges apply when doing so.

We encourage readers to review their contracts and make certain they have taken the necessary steps to protect themselves and their employers if COD payments are lost.

If you have any comments or questions, please contact Michael Dennis by email at: mcdennis@coveringcredit.com