Trucking is one of the industries that people in Brampton see every day, on Steeles, on the 410, in the yards around the city’s industrial areas. Many of the region’s carriers started out as one driver and one truck, and they grew faster than their paperwork did. A deal agreed by phone, a rate confirmation signed with a thumb on a phone screen, and a contractor agreement copied from a friend might feel good enough right up until a load goes missing.
Then a few details decide everything: which document governed the load, what value was declared, whether notice of the claim arrived on time, and whether the “contractor” behind the wheel was really a contractor at all.
The following is general information about contracts in Ontario and Canadian road transport, not legal advice. Federal and provincial rules overlap in this industry, and which regime applies depends on where your loads run and how your business is organized.
Start With Who You Actually Are
Every logistics business plays one or more roles, and the same company may play several of them in a week.
A carrier physically moves freight and carries cargo liability. A freight broker arranges transport by another carrier. A shipper tenders the goods. A freight forwarder may consolidate shipments and can sometimes be treated as a carrier by the contract or by its conduct.
This matters because liability can follow the role that you actually performed, rather than the title on your website. A small broker who issues a bill of lading in its own name, or who promises a customer “we will deliver,” may find itself being treated like a carrier. Agreements, invoices and emails should all reflect the role you really intend to play.
The Bill of Lading and Ontario’s Uniform Conditions
For most Ontario-origin freight, O. Reg. 643/05 under the Highway Traffic Act sets uniform conditions of carriage that are deemed to form part of the contract, whether the people involved read them or not. Parcels weighing 45 kilograms or less are among the exclusions, and other provinces have comparable rules that apply depending on where a shipment originates.
One figure dominates these disputes. Under Schedule 1 to the regulation, a carrier’s liability for lost or damaged goods is generally limited to $4.41 per kilogram of the weight of the goods, unless a higher value is declared on the contract of carriage. On a hypothetical 500-kilogram pallet of electronics worth $120,000, that limit produces about $2,205. A shipper who wants full value needs to deal with it up front.
Courts have looked closely at what counts as a proper declaration. In National Refrigeration & Air Conditioning Canada Corp. v. Celadon Canada Inc., 2016 ONCA 339, the Ontario Court of Appeal applied the statutory limit where the value on a commercial invoice was not part of the contract of carriage. For a carrier, a declared value changes the risk, so the driver or dispatcher shouldn’t simply accept one without checking the cargo insurance. For a shipper, putting the value on the face of the bill of lading is far safer than assuming that an attached invoice will be enough.
Notice deadlines are just as dangerous. The uniform conditions set short time limits for written notice of loss or damage, generally 60 days after delivery for damage claims, and claims for non-delivery are subject to their own deadline. Many carrier bills and contracts set shorter periods. Check them on day one and put your claim in writing.
Shipper and Customer Agreements
Bigger shippers often have their own long-form transportation agreements. Before signing, a carrier should look for these provisions in particular:
- Liability above the regulatory limit. Some customer forms make you liable for full value, plus indirect losses. Your insurer needs to know before you agree.
- Indemnities. Broad language can make the carrier cover claims that aren’t related to its own conduct.
- Waivers of liens. Giving up a right to hold freight for non-payment removes useful leverage.
- Set-off. Customers may reserve the right to deduct claims from any of your invoices, which is especially painful for smaller fleets.
- Rate terms. Fuel surcharges, detention, accessorials, tolls, and border delay should be defined and not left for later argument.
- Exclusivity and service levels. Penalties for late delivery might exceed the profit on a load.
If you are a shipper, your concerns run the other way. Confirm insurance certificates, name who can subcontract, and be sure that value is properly stated.
Broker-Carrier Agreements and Double Brokering
Brokers and carriers usually sign a master agreement, with rate confirmations for individual loads. Read these together, because the rate confirmation may import terms or override the master agreement, depending on the wording.
Points to watch are payment timing, conditions such as delivery documents required before payment, any quick-pay discount, cargo liability terms, a prohibition on re-brokering and a non-solicitation clause preventing the carrier from approaching the broker’s customer directly.
Double brokering, where a carrier hands a load to someone else without authority, can create real exposure. If the cargo disappears or the actual carrier is unpaid, everyone’s contracts come under scrutiny. Verifying new carriers is practical protection against fraud too: check their operating authority, insurance directly with the insurer, and contact details rather than trusting an emailed certificate. Cargo theft and identity fraud are real risks in this sector.
Owner-Operators and the Driver Inc. Problem
This is the area where the stakes have been climbing. Under the “Driver Inc.” model, a driver incorporates and is paid gross as a contractor, while in reality working much like an employee of a single carrier.
Interprovincial and international carriers are generally federally regulated. Section 167.1 of the Canada Labour Code prohibits treating an employee as other than an employee in order to deprive the person of a right or benefit under the labour standards part of the Code, and where this is in dispute, the burden falls on the employer to prove the person isn’t an employee. Federal labour officials have been enforcing the rule, with tools that include compliance orders, payment orders and administrative monetary penalties.
Provincially regulated carriers, those running only inside Ontario, have a comparable concern under section 5.1 of the Employment Standards Act, 2000, which prohibits treating an employee as if they were not one. The CRA and WSIB apply their own tests too, so a person can be a contractor for one purpose and be viewed differently for another.
What the contract says matters, but a label doesn’t settle it. Authorities look at the real relationship: who controls the work, who owns the truck, who bears the risk and chance of profit, and whether the driver can actually work for others. Incorporating doesn’t automatically make someone independent. Federal officials have said self-incorporation is not itself prohibited, but genuine independence must exist in fact.
A true owner-operator agreement generally should address:
- Ownership or lease of the equipment and responsibility for its running costs
- Right to work for other carriers and any limits on this
- How compensation is calculated, and when and what can be deducted
- Insurance, including who covers cargo, liability and workplace coverage
- Safety compliance, CVOR implications and hours of service records
- Termination rights and return of plates or equipment
- Confidentiality and non-solicitation
Keep in mind that a non-compete imposed on an actual employee is generally prohibited in Ontario, with very limited exceptions. Be cautious with this clause if there’s any chance that your driver would be considered an employee.
Equipment Leases and Repair Liens
Trucks are expensive, and financing paperwork often contains the most lopsided terms a carrier will ever sign. Look for personal guarantees, cross-default clauses that link multiple trucks, how the buyout works, and what happens upon a repossession. Lease-to-own arrangements between a carrier and its own driver need special care, as they may affect the employment question.
Ontario’s Repair and Storage Liens Act lets repairers and storers retain property, or claim a lien on it, for unpaid work in certain circumstances. A truck held at a shop until a bill is paid can idle a business in a hurry, and a storage yard holding a seized unit can run up charges fast. Clarify rates in writing and don’t ignore a lien notice.
Getting Paid
Cash flow breaks more small carriers than cargo claims do. Good habits include setting credit limits before accepting a new customer’s freight, getting signed proof of delivery the same day, invoicing immediately, stating your interest rate correctly as an annual rate, and following up in writing as soon as payment is late. Factoring agreements need careful reading, including recourse terms and notices to customers.
If a shipper or broker refuses to pay, Small Claims Court can hear claims up to $50,000, and larger matters proceed in the Superior Court of Justice, which sits in Brampton at 7755 Hurontario Street. The general limitation period in Ontario is two years from discovering the claim, subject to the contract and the law that applies. Contractual claim periods in the transport sector can be far shorter, so read yours. If a dispute has started, see our business litigation page for how this kind of work is handled.
Keep the Paper in One Place
Good contracts don’t help if nobody can find them. Maintain a single file for each customer or carrier containing the master agreement, insurance certificates, rate confirmations and claims. Train dispatchers on what they can and can’t agree to by text. Make sure drivers know how to note damage on a delivery receipt, take photographs and report at once, since those few minutes often decide whether a claim is provable.
Review your templates yearly, or after any change in your insurance, operating area or fleet model. A cross-border lane, for example, brings U.S. rules into play and may need separate advice. For help with drafting or review, see our contracts page. Paperwork can feel like a distraction from moving freight, but it’s the thing that determines what happens when freight doesn’t arrive.