Transportation Brief: Warehouse Chargebacks

by Caroline D. Milner, Kevin  M. Phillips

May 22, 2018

Chargebacks are most common in the retail industry, but they have application in other industries as well.  A chargeback generally involves a return of funds to a customer by a shipper or intermediary and may include a fee.  In the supply chain, a chargeback may occur when a vendor, such as a property broker, transportation company or warehousing entity, fails to meet certain standards of service, such as late delivery, poor packaging, or incorrect labeling.  Given the substantial cost associated with chargebacks, warehousing clients have inquired as to whether they may be held responsible for chargebacks.  Even when the applicable warehouse agreement is silent on the issue, some court have held chargebacks to be non-recoverable consequential damages if they were not reasonably foreseeable or contemplated by the parties during the negotiation or execution of the warehouse agreement. Nevertheless, Scopelitis attorneys recommend that warehouse companies should include language within their warehouse agreements disclaiming responsibility for chargebacks and consequential damages.
 

Scopelitis’ Transportation Brief® is intended as a report to our clients and friends on developments affecting the transportation industry. The published material does not constitute an exhaustive legal study and should not be regarded or relied upon as individual legal advice or opinion.

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