Broker Carrier Agreement Template

In plain language: Identifies the broker and carrier by legal name, state of formation, FMCSA MC number, and DOT number, and states that both parties hold the required operating authority.

Common mistake: Using a trade name instead of the registered legal entity. If the carrier's name on the agreement doesn't match their FMCSA authority, the insurance certificate and claim paperwork won't align, complicating any cargo claim.

In plain language: States that compensation for each load is set in a load-specific rate confirmation issued by the broker, and that the rate confirmation incorporates the terms of this master agreement.

Common mistake: Embedding a fixed rate schedule in the master agreement rather than a rate confirmation process. Static rates become outdated and require contract amendments; a rate confirmation process keeps the master agreement evergreen.

In plain language: Sets the payment cycle — typically Net 15 to Net 30 from delivery and receipt of required documents — and lists the documents the carrier must submit to trigger payment.

Common mistake: Not specifying which documents trigger the payment clock. Carriers that submit an invoice without a signed POD get indefinite payment delays because the clock never starts.

In plain language: Sets the minimum insurance coverage the carrier must maintain — typically $1M auto liability, $100K cargo, and $1M general liability — and requires the broker to be named as an additional insured or certificate holder.

Common mistake: Accepting a certificate of insurance without confirming coverage is active at the time of each load. Carrier policies can lapse between the signing date and a specific haul — a COI pull at load time catches this.

In plain language: Allocates liability for cargo loss, damage, or delay between the broker and carrier, establishes the claim notice and filing timeline, and references the Carmack Amendment as the governing standard.

Common mistake: Including a per-pound liability cap without also specifying a minimum floor. Some carriers insert sub-Carmack caps that dramatically limit recovery — and shippers expect the broker's contract to hold the carrier to full Carmack standards.

In plain language: Requires the carrier to maintain all federal and applicable state operating authority, comply with FMCSA hours-of-service rules, drug and alcohol testing requirements, and applicable hazmat regulations.

Common mistake: Referencing compliance obligations generically without citing the specific CFR parts. A vague 'comply with all laws' clause is difficult to enforce — specific regulatory citations give both parties clear benchmarks.

In plain language: Expressly prohibits double brokering, re-brokering, or sub-contracting the load to another carrier without the broker's prior written consent.

Common mistake: Omitting the consequence of double brokering in the clause. Without a stated consequence — forfeiture of compensation and potential damages — carriers have little contractual deterrent against the practice.

In plain language: Each party agrees to indemnify and hold the other harmless from claims, damages, and liabilities arising from their own negligence, regulatory violations, or breach of this agreement.

Common mistake: Using a one-sided indemnification clause that only protects the broker. Carriers increasingly refuse to sign unilateral indemnification agreements — a mutual clause closes deals faster and is more defensible in litigation.

In plain language: Prohibits the carrier from using the broker's shipper identity to solicit freight directly and restricts both parties from disclosing the other's confidential business information.

Common mistake: Setting a non-circumvention period shorter than 12 months or omitting it entirely. A 6-month window is rarely long enough to protect the broker's shipper relationships — 18 to 24 months is the enforceable standard in most jurisdictions.

In plain language: States the agreement's initial term, the notice required to terminate, survival of key obligations after termination, and the governing state law and dispute resolution mechanism.

Common mistake: Choosing a governing law state with no connection to either party's operations. Some jurisdictions have carrier-friendly Carmack preemption interpretations that affect claim outcomes — choose the governing state deliberately.

A broker carrier agreement is a master contract between a licensed freight broker and a motor carrier establishing the terms under which the carrier will transport loads tendered by the broker. It covers compensation, insurance requirements, cargo liability, regulatory compliance, payment terms, and prohibited practices like double brokering. It is signed once and governs all future loads between the two parties unless the terms are amended.

Federal law does not explicitly mandate a written broker carrier agreement, but FMCSA regulations require freight brokers to maintain records of each transaction including carrier agreements. Many shippers contractually require their brokers to have signed agreements with every carrier in their network. As a practical matter, any broker operating without one exposes themselves to unenforceable insurance, payment, and liability terms.

At minimum, require $1,000,000 in commercial auto liability, $100,000 in cargo insurance, and $1,000,000 in general liability. For hazmat loads, federal regulations require auto liability of $1,000,000 to $5,000,000 depending on the material class. Some shippers — particularly large retailers — impose higher cargo minimums of $250,000 or more as a condition of their shipper agreements, which the broker should pass through to the carrier contract.

Double brokering occurs when a carrier accepts a load from a broker and then secretly re-tenders it to a different carrier without the originating broker's knowledge or consent. The shipper ends up with an unvetted carrier they never approved, cargo claims become nearly impossible to resolve because neither carrier's insurance acknowledges the load, and the broker faces shipper liability for a carrier they never actually dispatched. A well-drafted broker carrier agreement expressly prohibits the practice and voids the carrier's right to payment if they do it.

The Carmack Amendment is a federal law codified at 49 U.S.C. §14706 that governs carrier liability for loss or damage to freight moving in interstate commerce. Under Carmack, a carrier is liable for the actual loss or damage to the shipment unless it can prove one of five recognized defenses — act of God, act of public enemy, act of shipper, inherent vice of goods, or act of public authority. Broker carrier agreements typically reference Carmack as the liability standard and set claim notice and filing deadlines consistent with its requirements.

Most broker carrier agreements are evergreen — they renew automatically on a one-year term unless either party provides written notice of termination, typically 30 days in advance. This structure avoids the administrative burden of annual re-signing while giving both parties an exit if the relationship sours. Key obligations — indemnification, confidentiality, non-circumvention, and pending cargo claims — should survive termination explicitly in the agreement.

A broker carrier agreement is the master contract governing the overall relationship — insurance, liability, compliance, payment terms, and prohibited practices. A rate confirmation is a load-specific document issued for each individual shipment confirming the agreed rate, origin, destination, pick-up window, delivery deadline, and special handling instructions. The rate confirmation incorporates the master agreement by reference, so both documents together govern each haul.

A standard domestic broker carrier agreement is designed for US interstate commerce under FMCSA jurisdiction. Cross-border shipments into Canada or Mexico involve different regulatory frameworks — Transport Canada and the SCT respectively — and may require additional insurance endorsements, customs broker references, and jurisdiction-specific liability clauses. Consider a separate international freight agreement or addendum for cross-border lanes.

For standard domestic broker-carrier relationships, a high-quality template reviewed against your specific insurance requirements and shipper pass-through obligations is typically sufficient. Engage a transportation attorney when your shipper agreements impose non-standard carrier obligations you need to pass through, when you are operating cross-border, when a cargo claim dispute is likely, or when a carrier pushes back materially on your standard terms and proposes their own contract instead.