Can I sue a freight forwarder for loss of future business?
May 17, 2012 5:44 AM   Subscribe

My company lost its largest customer due to a freight forwarder screwing up and delivering an order a month late. Can I sue the freight company?

The order was worth well over $100,000. In addition, this customer is a regular buyer with a track record of steady large orders totaling about $400k in the past year.

I hired a new freight forwarder to get the product from the factory in China to the customer's warehouse in Chicago, and due to a series of documentation problems (their fault completely; they had no idea how to do export docs, even though they promised me the world), the last order was a month late. The customer has already fired me.

Is there any kind of case here to sue the forwarder for loss of trade or business? I'm in Wisconsin.

If it means anything, the customer and I are friendly... it's just a business thing. He would definitely provide information to verify the volume of business I've lost.
posted by PSB to Work & Money (7 answers total)
Lawyer. Now. It all depends on the contract with the forwarder.
posted by scruss at 6:19 AM on May 17, 2012

Was the freight company aware of the importance of on-time delivery? Did they know how much you stood to lose? I think this is an important question - If they were not aware of losses incurred from late delivery, I do not think they can be held responsible.

But really, what you need to do is - talk to a lawyer.
posted by Flood at 6:21 AM on May 17, 2012

Generally, you will not be able to recover incidental damages, loss of income, etc., etc. It's baked into every transportation contact I've ever seen. The potential risk and value of a shipment getting where it's going on time is so far above what a freight company could ever get paid. Damages are limited to refund of the transportation expense, generally.

Two observations from someone who does international freight:

a) YOU are responsible for shadowing it every step of the way and anticipating every possible way someone up or down the chain could possibly screw up. Nerve-wracking, yes. Fair, no. But that's the way it is.

b) A customer who is supposedly a friend who has been a regular buyer who fires you over one shipment. Huh.
posted by randomkeystrike at 6:24 AM on May 17, 2012 [5 favorites]

No one here will be able to give you much in the way of competent legal advice over the internet, but this is certainly something you should talk to a lawyer about; on its face, your claim sounds like it might have merit. When you look for a lawyer, the phrase "commercial transactions" or "commercial disputes" might help you find one. Also "business torts."

A few issues that you might want to cover with a lawyer when you do meet:

-what does the contract between you and the freight forwarder actually promise? Speaking very generally, promises like "Sure, we can do this" are going to be a lot tougher to enforce than terms of the contract that were obviously broken ("We will have the product delivered within three business days.")

-in which jurisdiction is the freight forwarder?

-how much are your damages? You've lost a customer, and that will no doubt lose money for you down the road, but it's going to be tough to pin all of those future losses on this one unfortunate transaction, even if you can get some kind of recovery. So your recoverable losses might not be as great as you think. Similarly, some of what you're describing is risk you took on yourself--you used a "new" freight forwarder, so regarding how that could affect your relationship with your current customers, well, some of that is on you.

In any event, it helps that your former customer is cooperative, and it is probably worth your time to meet with a lawyer to at least see what options you have. It might be that you decide that it's not worth it. But this isn't one of those situations (IMO) where it seems likely that meeting with a lawyer would be a total waste of your time.

Good luck.
posted by MoonOrb at 6:27 AM on May 17, 2012

You absolutely need a lawyer. And probably one from a large-ish firm. This is not the kind of thing a solo practitioner or even a small firm is going to be able to handle, either in terms of expertise or simple manpower. I'm thinking you're going to need to look in Madison or Milwaukee if not actually Chicago.

This is going to be expensive, I'm afraid.
posted by valkyryn at 6:56 AM on May 17, 2012

You can try to lawyer up, but every freight contract I've dealt with severely limits or eliminates the liability of the freight company, beyond the shipping fees they charged to you. I've had orders that were stuck in customs or delayed by weather, and I've lost a few sales because of it.

I would also consider which option is likely to be less costly now, and more productive in the long run: Trying to lawyer up to squeeze the freight company for some undetermined amount, or going above and beyond to win back this very important client?

No business is perfect and shit happens. Mistakes are frustrating, even sometimes very costly when they happen, and most people understand this. It is strange that this friendly, long-time customer would dump you completely over one (admittedly large) mistake, especially since it wasn't directly your fault.
posted by xedrik at 10:33 PM on May 19, 2012

This is awfully late but if you are still reading: It is strange that this friendly, long-time customer would dump you completely over one (admittedly large) mistake, especially since it wasn't directly your fault.

I think this is the key. I would surmise that their "one strike and you're out" policy was because they found another vendor and were looking for an excuse to dump you anyway; your company made a mistake, and they pounced. Or else they are the kind of company that has vendors begging to do business with them, and receive constant solicitations and sales pitches, and so to them their suppliers/vendors are pretty easy to replace and get no second chance.

It might be easier to approach this customer and ask, "How can we put things right and get your business back again?" rather than sue the freight company. A lawsuit might feel like good revenge but it won't get your customer back (or bring in new ones). If approaching your former customer with an offer to put things right and negotiate on getting their business back is met with "sorry, no can do" then concentrate on bringing in new business.

I know it would feel good to make the freight company that "lost" you business to pay, but a long-time customer dumping you over one mistake sounds to me like they were looking for an excuse to cut you loose anyway.
posted by Rosie M. Banks at 12:50 PM on May 28, 2012

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