A new law in Kentucky covers unfair clauses in trucking contracts.
Gov. Steve Beshear signed a bill into law to do away with indemnification clauses in trucking contracts. The clauses are set up to protect shippers or hold them harmless from anything that happens with a shipment.
Effective July 15, provisions in contracts are outlawed that provide for shippers to be indemnified for losses caused by their own negligence and make them “void and unenforceable.”
Sen. Stan Humphries, R-Cadiz, said SB59 prevents truck drivers from being obligated to pay any claim that may come up from a contract, regardless of fault.
“This would protect motor carriers from clauses in shipping contracts that require them to assume liability for all accidents even if they’re not at fault,” Humphries wrote in a statement.
States lawmakers across the country have been active the past few years changing rules on indemnity clauses. Including Kentucky, 41 states have acted to forbid unfair provisions from contracts.
A full list of states, and the laws, where protections are in place is available. States yet to adopt protections are Arkansas, Delaware, Mississippi, New Hampshire, New Jersey, New York, Ohio, Rhode Island and Vermont. Colorado lawmakers approved a bill last month that removes their state from the short list.
Advocates for the rule change say that truck drivers doing business in states that have yet to act have little or no choice but to accept the unfair terms. Another complaint is the contract clauses create a safety issue because the shipper’s incentive to perform its duties in a prudent and reasonably safe manner is eliminated.
Affected contracts in Kentucky are defined as “a contract, agreement, or understanding” between a motor carrier and a shipper covering the transportation of property for hire by the motor carrier, entry on property to load, unload, or transport property, including the storage of property.
The protection does not apply to intermodal chassis, or other intermodal equipment.
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