CTB Transportation Law & Regulatory Compliance 4 — Questions and Answers
Question 1: Under FMCSA regulations, a motor carrier's Certificate of Insurance (Form MCS-90) endorsement protects which party when the carrier's underlying insurance is deficient?
- The broker arranging the shipment
- Members of the public injured in accidents involving the carrier (Correct answer)
- The shipper for cargo loss or damage
- The carrier's employees for on-the-job injuries
Correct answer: Members of the public injured in accidents involving the carrier
The MCS-90 endorsement is a public protection mechanism that ensures innocent third parties injured by motor carriers can recover even if the policy has exclusions.
Question 2: A shipper files a complaint against a broker with the FMCSA for failure to pay a carrier. What is the FMCSA's primary regulatory remedy in this situation?
- Order the broker to immediately pay the carrier
- Suspend or revoke the broker's operating authority (Correct answer)
- Impose a civil fine of up to $500,000
- Require the broker to post additional bond
Correct answer: Suspend or revoke the broker's operating authority
FMCSA's primary enforcement tool is suspension or revocation of a broker's operating authority for regulatory violations including financial misconduct.
Question 3: What is the significance of the 'reasonable dispatch' standard in transportation law for freight brokers?
- It requires brokers to find the fastest available carrier regardless of cost
- It holds carriers to delivering goods within a reasonable time under the circumstances (Correct answer)
- It sets maximum transit times for interstate shipments by statute
- It only applies to household goods moves, not commercial freight
Correct answer: It holds carriers to delivering goods within a reasonable time under the circumstances
The reasonable dispatch standard requires carriers to transport and deliver goods within a reasonable time, and failure to do so can create liability for consequential damages.
Question 4: Under 49 U.S.C. § 14101(b), a shipper and carrier may waive certain Carmack Amendment rights. Which of the following rights CANNOT be waived?
- The right to full Carmack liability coverage
- The right to file claims within the statutory period
- The protection against unreasonable delay claims
- Protection against broker fraud under separate fraud statutes (Correct answer)
Correct answer: Protection against broker fraud under separate fraud statutes
Statutory protections under separate fraud statutes cannot be waived by private contract; parties may waive certain Carmack rights but not independent legal protections.
Question 5: Which federal statute prohibits brokers from engaging in price-fixing or market allocation schemes with other brokers?
- The Sherman Antitrust Act (Correct answer)
- The Federal Trade Commission Act exclusively
- The ICC Termination Act
- The Clayton Act only as applied to mergers
Correct answer: The Sherman Antitrust Act
The Sherman Antitrust Act prohibits anti-competitive agreements including price-fixing, bid-rigging, and market allocation among competitors, which applies to freight brokers.
Question 6: A broker's contract states that disputes will be resolved under the law of the broker's home state. Under what circumstances can a court refuse to enforce this choice-of-law clause in a freight dispute?
- When the shipper is located in a different state
- When federal law preempts state law on the subject matter at issue (Correct answer)
- Whenever the carrier objects to the chosen state's law
- Choice-of-law clauses in freight contracts are always enforceable
Correct answer: When federal law preempts state law on the subject matter at issue
Federal transportation law (including the Carmack Amendment) preempts state law on many freight liability issues, overriding contractual choice-of-law provisions.
Question 7: Under 49 CFR § 371.3, which record must a freight broker retain and make available to parties to the transaction upon request?
- A record of each transaction showing shipper, carrier, compensation paid to the carrier, and compensation received from the shipper (Correct answer)
- Only invoices and bills of lading
- Driver qualification files for carriers used
- Cargo insurance certificates for each shipment
Correct answer: A record of each transaction showing shipper, carrier, compensation paid to the carrier, and compensation received from the shipper
49 CFR § 371.3 requires brokers to keep transaction records showing all parties, the carrier used, compensation received from the shipper, and compensation paid to the carrier.
CTB Transportation Law & Regulatory Compliance 4
Under FMCSA regulations, a motor carrier's Certificate of Insurance (Form MCS-90) endorsement protects which party when the carrier's underlying insurance is deficient?