Broker-Carrier Agreements: Everything You Need to Know

May 27, 2025

Broker-Carrier Agreements: All You Need to Know

Broker-Carrier Agreements: Everything You Need to Know

Working with carriers without a formal broker–carrier agreement is risky. It can lead to payment delays, misunderstandings about responsibilities, and legal disputes.

This article explains broker–carrier agreements, why they matter, and what they should include.

What Is a Freight Broker Carrier Agreement?

A broker-carrier agreement is a legal contract that defines the relationship between a broker and a motor carrier. This document ensures both parties agree on the responsibilities and expectations when transporting goods.

Key Elements in Broker-Carrier Agreements

Formats may differ, but they usually include the following sections:

  1. Contact information. The legal business names, MC numbers, DOT numbers, addresses, and other information.
  2. Scope of services. Defines the transportation services provided during the agreement period.
  3. Carrier authority and compliance. Proof that a carrier operates legally and complies with the FMCSA regulations on hazardous substances.
  4. Insurance requirements. Specifies the minimum coverage for cargo, auto liability, general liability, and workers’ compensation in cases of bodily injury.
  5. Payment terms. Details whether shippers pay brokers directly for freight transported, or if the shipper owes carriers directly, and how such amounts are tracked and documented.
  6. Liability and claims. Determines who holds full liability in case of freight loss, property damage, or personal injury. It also specifies the party responsible for covering costs like reasonable attorney fees if such claims result in legal action.
  7. Indemnification clause. Ensures the carrier agrees to hold brokers harmless and indemnify them against any third-party claims resulting from the carrier’s failure to perform or violations of this agreement. The carrier acknowledges responsibility for protecting the broker and other persons involved with the load.
  8. Non-solicitation clause. Prevents a carrier from working directly with a broker’s customers without express written consent.
  9. Termination conditions. Circumstances under which the prior agreements will end, with an advance written notice.
  10. Governing law. Specifies which applicable law will govern the contract, and the competent jurisdiction that will handle disputes.
  11. Confidentiality. Protects financial data and other sensitive business information shared with the other party from material breach.
  12. Signatures. Includes legal confirmations or stamps of approval.

Why Broker-Carrier Agreement Matters

This document is vital because it:

  • Protects both the broker and the carrier from disputes caused by the carrier’s failure.
  • Sets clear expectations on rates and communication, and who is solely responsible for delays, freight bills, or cargo loss.
  • Ensures FMCSA and DOT compliance.
  • Prevents double brokering.
  • Documents processes regarding services rendered and load confirmation.

Tips for Successful Broker-Carrier Relationships

Building strong relationships with carriers requires diligence and clear communication. Follow these practices:

  1. Always check a carrier’s operating authority, insurance, and safety rating before signing.
  2. Keep carriers informed about load status, potential issues, and any changes.
  3. Follow up on shipments tendered with written confirmation.
  4. Store delivery receipts and broker’s payment records properly.
  5. Review and update agreements regularly to reflect changes in regulations and best practices.
  6. The carrier is an independent contractor. Treat them respectfully and ensure the carrier receives payment on time.
  7. Ensure the delivering carrier keeps the seal intact on shipments hereunder.

FAQs

1. Do I need a broker-carrier agreement for every load?

No, you do not need a new agreement for every load. Unless otherwise stated, most agreements cover all shipments between the broker and the carrier.

2. How can I find good carriers to work with?

You can find them through load boards, carrier databases, and referrals from your network.

3. What is double brokering, and why is it illegal?

Double brokering occurs when a carrier reassigns a load to other carriers without the broker’s prior written consent. This practice is illegal because it violates the terms of the original agreement. When confusion about carrier liability arises, disputes may require litigation.

Final Thoughts

A solid broker-carrier agreement is key. It protects your brokerage and helps you form strong partnerships. If you’re ready to start your journey as a broker, get our 90-Day Freight Broker Course. It covers finding and vetting carriers, negotiating profitable deals, and more.

Sign up today to get started.

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