A freight contract is a legally binding agreement that sets the terms for moving goods between a shipper and a carrier, often through a broker. It names the parties, describes the cargo, fixes the rate, and allocates the risks that come with hauling freight: damage, delay, unpaid invoices, accidents on the road. Because interstate shipping is heavily regulated, a freight contract does not sit alone. Federal statutes on carrier liability, minimum insurance, broker bonds, and electronic signatures all push into the agreement whether the parties write them in or not.
The stakes are concrete. A sloppy contract can leave a shipper with no path to recover a destroyed load, or stick a carrier with weeks of unpaid detention and no leverage to collect. What follows is what the document should contain, which rules override it, and where disputes tend to break.
Spot Agreements vs. Term Contracts
Freight agreements come in two basic shapes. A spot agreement covers a single shipment at the going market rate. The shipper posts a load, a carrier or broker accepts it at a negotiated price, and the deal ends when delivery is confirmed and payment clears. Spot rates swing with capacity, fuel, weather, and season. The flexibility is the point; so is the exposure when capacity tightens.
A term contract locks in the relationship for a set period, often one to three years. The carrier guarantees equipment or capacity, and the shipper commits to a minimum volume at a pre-negotiated rate. Both sides trade upside for predictability. If the shipper’s volume drops below the minimum, the contract may impose rate adjustments, loss of discounts, or dead freight charges to compensate the carrier for reserved but unused capacity. If market rates spike, the carrier eats the difference.
Shippers with steady, high-volume freight usually benefit from term contracts. Those with seasonal or irregular needs often run both, keeping term commitments for predictable lanes and spot for the rest.
What a Freight Contract Must Contain
A workable freight contract has to identify the players, describe the cargo, set the price, and assign risk. Gaps in any of these turn into billing disputes or litigation.
The Parties
Full legal names, addresses, and USDOT numbers for the carrier and any broker involved. The USDOT number is the identifier FMCSA uses to track safety records, inspections, and compliance history.1Federal Motor Carrier Safety Administration. Do I Need a USDOT Number Any company operating commercial vehicles hauling cargo in interstate commerce must have one, so a missing number on a contract is a reason to stop and ask questions.
The Cargo and the Bill of Lading
The contract or accompanying bill of lading needs a clear description of the freight: weight, dimensions, freight class, and whether the load qualifies as hazardous material. Accurate descriptions drive the shipping rate, the insurance coverage required, and the carrier’s legal obligations in transit. Mislabeling hazmat or understating weight is not just a billing problem; it can trigger federal enforcement.
The bill of lading itself does three jobs at once. It is a receipt confirming the carrier took possession, a contract of carriage reciting the terms, and a document of title that can transfer ownership of the goods. Under the Carmack Amendment, the bill of lading is what establishes a carrier’s liability for lost or damaged property during interstate transport.2Office of the Law Revision Counsel. 49 USC 14706 – Liability of Carriers Under Receipts and Bills of Lading Without a bill of lading documenting condition at pickup, proving a damage claim later gets much harder.
Payment Terms and Accessorial Charges
The payment section should state the base rate, the payment cycle (commonly Net 15 or Net 30), late-payment penalties, and how fuel surcharges are calculated. Fuel surcharges often track the national diesel price index and may appear as a separate line item.
Accessorial charges are where surprise invoices come from. Common ones include:
- Detention, charged when a truck waits beyond its allotted free time (usually one to two hours) for loading or unloading, with hourly rates commonly $50 to $100.
- Lumper fees for third-party labor used to load or unload freight.
- Liftgate service when there is no loading dock at the delivery site.
- Redelivery charges when a delivery attempt fails and has to be rescheduled.
- Residential and limited-access fees for non-commercial addresses, construction sites, schools, or secured facilities.
The strongest contracts spell out exactly which services trigger additional charges, how much they cost, and who pays. Vague accessorial language is an invitation to argue after the truck has already left.
Insurance Floors and Broker Bonds
Federal law sets minimum insurance a motor carrier must carry before it can legally operate. FMCSA will not register a carrier without proof of coverage.
For-hire carriers hauling non-hazardous property in interstate commerce with vehicles over 10,001 pounds must maintain at least $750,000 in public liability coverage.3eCFR. 49 CFR Part 387 – Minimum Levels of Financial Responsibility for Motor Carriers Carriers transporting oil, hazardous waste, or hazardous substances outside the highest-danger categories need at least $1,000,000. For bulk explosives, certain poisonous gases, or highway route-controlled radioactive materials, the floor is $5,000,000.4eCFR. 49 CFR 387.9 – Financial Responsibility, Minimum Levels
These are liability minimums, not cargo insurance. Liability covers third-party injury and property damage from the truck itself. Cargo insurance covers the freight. They are separate policies, and the federal liability floor is not a substitute. Shippers moving high-value goods should verify the carrier’s cargo policy matches the actual value of the shipment.
Brokers face their own security requirement. Every freight broker must maintain a $75,000 surety bond (FMCSA Form BMC-84) or a $75,000 trust fund (Form BMC-85) to hold operating authority.5eCFR. 49 CFR Part 387 Subpart C – Surety Bonds and Policies of Insurance for Property Brokers and Freight Forwarders The bond exists to protect shippers and carriers when a broker fails to pay. Before tendering freight to a broker, check the bond status through FMCSA’s SAFER system.
Vetting the Carrier Before You Sign
FMCSA assigns motor carriers one of three safety ratings after a compliance review. A Satisfactory rating means the carrier has functioning safety management controls appropriate for its operation. A Conditional rating means those controls are inadequate and could produce safety failures. An Unsatisfactory rating means the deficiencies have already produced failures.6eCFR. 49 CFR 385.3 – Definitions and Acronyms An Unsatisfactory rating ultimately leads to revocation of the carrier’s operating authority.7eCFR. 49 CFR 385.13 – Unsatisfactory Safety Rating
Vetting is no longer just a best practice for brokers. In May 2026, the U.S. Supreme Court ruled in Montgomery v. Caribe Transport II, LLC that state-law negligent-hiring claims against freight brokers are not preempted by the Federal Aviation Administration Authorization Act, because they fall under the statute’s safety exception.8Legal Information Institute. Montgomery v. Caribe Transport II, LLC In plain terms, a broker who selects a carrier with known safety problems can be sued in state court when someone gets hurt.
The practical response is documentation. Pull the FMCSA safety rating, verify insurance, review out-of-service rates, and confirm operating authority before tendering a load. Keep the records. If a negligent-hiring claim arrives, that paper trail is the defense.
Who Pays When Freight Is Lost or Damaged
The Carmack Amendment is the federal statute that controls what happens when freight is lost, damaged, or destroyed during interstate shipment, and anyone signing a freight contract needs to understand how it works.
The Liability Standard
A carrier is liable for the actual loss or injury to property it receives for transportation.2Office of the Law Revision Counsel. 49 USC 14706 – Liability of Carriers Under Receipts and Bills of Lading The shipper proves the cargo was in good condition at pickup, that it arrived damaged or not at all, and the amount of the loss. Once the shipper clears that bar, the carrier is presumed responsible.
Carriers can escape liability by proving the damage was caused by one of five recognized defenses: an act of God, an act of a public enemy, an act or default of the shipper (such as improper packaging), government authority (seizure, quarantine), or the inherent nature of the goods (perishable cargo that spoils despite proper handling). The defenses are narrow, and the carrier carries the burden.
Carmack Preempts State Claims
Carmack provides the exclusive remedy for cargo loss and damage against interstate carriers. Courts have consistently held that it preempts state-law claims for negligence, state-law breach of contract, and consumer protection when the underlying dispute involves lost or damaged freight in interstate commerce. Shippers who try to add state claims for punitive or broader damages see those claims dismissed. The federal statute is the only road.
Carmack also runs against carriers, not brokers. Brokers are not liable under Carmack, and sending a written claim to the broker does not stop the clock.
The Deadlines That Kill Claims
A carrier cannot set a claims-filing window shorter than nine months from the date of loss. After the carrier formally denies all or part of the claim in writing, the shipper has at least two years to file a lawsuit.2Office of the Law Revision Counsel. 49 USC 14706 – Liability of Carriers Under Receipts and Bills of Lading Many carriers set their windows at exactly nine months, so waiting too long to file the written claim can forfeit an otherwise solid case. A settlement offer from the carrier does not count as a denial unless it says, in writing, which parts of the claim are disallowed and why.
Force Majeure, Detention, and Delay
Force majeure clauses define what happens when extraordinary events prevent performance. Standard triggers include natural disasters, wars, labor strikes, government-ordered shutdowns, and epidemics. The clause decides whether a carrier that misses a delivery because of a hurricane owes damages or gets a pass.
Two drafting details separate a useful clause from a useless one. First, the triggering events should be listed specifically rather than hidden in vague language about “circumstances beyond control.” Second, the clause should require prompt written notice, including expected duration and the specific obligations affected. Courts and arbitrators look at whether the event truly prevented performance, as opposed to making it merely more expensive, and whether the affected party took reasonable steps to limit the disruption.
Detention and demurrage cover the other side of delay: a truck or container sitting idle. Detention kicks in after a free-time window, with the contract setting the hourly rate and daily cap. Demurrage works the same way for containers and trailers held past their allotted time. Contracts should also address truck-order-not-used fees for the case where a carrier dispatches a truck and the shipper has no freight ready. Without a written provision, those charges become a negotiation after the fact.
Signing and Record-Keeping
Freight contracts can be signed electronically or on paper. The federal ESIGN Act provides that a contract cannot be denied legal effect solely because it was signed electronically, as long as the transaction affects interstate commerce.9Office of the Law Revision Counsel. 15 USC Chapter 96 – Electronic Signatures in Global and National Commerce Each party should retain an identical executed copy.
Federal regulations require freight brokers to keep records of every transaction for at least three years, including the consignor’s name and address, the carrier’s name and USDOT number, the bill of lading or freight bill number, and all compensation received.10eCFR. 49 CFR 371.3 – Records to Be Kept by Brokers The safe practice for everyone involved is to retain contracts, bills of lading, invoices, proof of delivery, and insurance certificates for at least three years, which covers audit windows and the Carmack litigation timeline.
How Disputes Get Resolved
Most modern freight contracts include mandatory arbitration clauses that send disputes to a neutral arbitrator instead of a courtroom. Arbitration is usually faster and cheaper than litigation, but the decisions are typically binding with narrow appeal rights. Some contracts require mediation first, giving both sides a chance to negotiate with a mediator before escalating. Mediation is not binding; if it fails, the dispute moves on.
If the contract does not require arbitration, disputes land in court. Choice-of-law and forum-selection clauses decide which state’s law applies and where the case is filed, and those choices can reshape a case before anyone argues the merits. For cargo damage, Carmack channels the claim into federal law regardless of which court hears it, and the written-claim and two-year lawsuit deadlines still apply.