In the world of freight and logistics, it’s common for manufacturers and shippers to rely on freight forwarders and brokers to handle the complex task of getting goods from point A to point B. But when payment breaks down somewhere in the chain, legal liability can come into sharp focus—and sometimes in unexpected ways.

That’s exactly what happened in Contship Containerlines, Inc. v. Howard Industries, Inc., 309 F.3d 910 (6th Cir. 2002), a case that’s become an example of how courts address unpaid freight charges under contract and quasi-contract theories. The case serves as a practical reminder: when services are rendered, and a benefit is received, someone is going to be on the hook—even if that someone thought they paid the right party.

The Players: Manufacturer, Forwarder, and Carrier

Howard Industries, a Houston-based producer of laundry detergent, contracted with Transworld Freight Forwarding to arrange for international shipments of its product to Syria. Transworld was the classic freight forwarder—hired to handle logistics, coordinate transportation, and make sure the shipments made it overseas.

To get the job done, Transworld secured Contship Containerlines, a maritime carrier, to transport the detergent by vessel. Contship did just that, carrying three shipments from Houston to Latakia, Syria in early 1999. The product was delivered safely and without issue.

Contship then billed for its services: $24,200 in total.

But Howard Industries didn’t pay. They claimed they already had—by paying Transworld.

The Problem: A Missing Link in the Payment Chain

When Contship didn’t receive payment from Transworld, it filed suit against both Transworld and Howard. Unsurprisingly, Transworld was either insolvent or unavailable, so Contship pursued Howard Industries, the company that had originated the shipment and benefited from the delivery.

Howard’s defense was based on two key points:

1. It had no contractual relationship with Contship;
2. It had already paid Transworld in full and believed that settled the matter.

Howard also pointed out that the bills of lading for the shipments—documents that normally outline the parties’ responsibilities—were unsigned, and therefore not binding.

But Contship pushed back with a simple and powerful set of facts: the goods were delivered by Howard directly to Contship’s vessels in Houston. Howard’s own president swore to that fact in an affidavit. Contship picked up the freight, shipped it overseas, and completed the job. They hadn’t been paid. Someone needed to pay the bill.

The Legal Question: Who’s Liable When There’s No Direct Contract?

The case raised an important legal issue that frequently arises in transportation disputes: Can a shipper be held liable to a carrier even when the shipper used a freight forwarder or broker and had no direct contract with the carrier?

At the district court level, the judge ruled in favor of Contship, holding that a contract implied in fact existed between Howard and Contship. This type of contract is not based on signed documents but inferred from the conduct of the parties. Since Howard had delivered its goods directly to Contship’s vessels, and Contship had delivered them overseas, the court concluded that their behavior showed mutual intent to contract—even if no formal agreement existed.

The court emphasized the “common understanding of men,” citing Luithly v. Cavalier Corp., which says that an implied-in-fact contract arises where the conduct and circumstances reflect an intent to do business together.

Howard appealed.

The Sixth Circuit’s Ruling: No Contract in Fact—But Still Liable

The Sixth Circuit agreed in part with Howard. They found that while there was a strong argument for Howard's liability, it was not properly based on a contract implied in fact. That type of contract requires a “meeting of the minds,” and Howard had consistently maintained that it didn’t even know Contship was the carrier.

That lack of mutual intent meant there was no actual agreement—express or implied in fact.

However, the appellate court went one step further. It affirmed the judgment anyway, under a different legal theory: contract implied in law, also known as quasi-contract.

Quasi-Contract: When Justice Demands Payment

A quasi-contract isn’t a contract in the traditional sense. It doesn’t arise from mutual consent, negotiation, or written terms. Instead, it’s a legal fiction designed to prevent one party from being unjustly enriched at the expense of another.

In the court’s words, “Howard Industries delivered its goods to Contship, and Contship transported those goods exactly as Howard Industries wished. In doing so, Contship conferred a benefit on Howard Industries.”

That was the key. Howard received the full benefit of Contship’s services, and Contship was never paid. Even if Howard didn’t intend to contract with Contship, the end result was the same: goods moved, services were rendered, and a benefit was conferred. Under well-settled law, that’s enough for quasi-contract liability.

The court cited United States v. California, noting that “[a]t the heart of an action based on quasi-contract lies a claim of unjust enrichment.”

What the Court Didn’t Say—but Implicitly Affirmed

What the Sixth Circuit didn’t do is penalize Howard for using a freight forwarder. It didn’t suggest that the business model of outsourcing logistics through intermediaries was flawed. Instead, the court zeroed in on the simple question: who received the benefit, and who failed to pay the provider of that benefit?

Howard made the business decision to route payment through Transworld. That decision backfired—but it didn’t shift the legal obligation away from Howard to the unpaid carrier.

In short, Howard’s payment to Transworld was “at its own risk.”

Practical Takeaways: Know Who’s Actually Owed

This case is especially relevant in an industry where shippers commonly use freight forwarders and brokers to manage their logistics. That model works—until someone in the chain doesn’t get paid. The Contship decision makes one thing clear: courts will look at who actually performed the service and whether the shipper received the benefit.

Howard’s mistake wasn’t using a freight forwarder. The problem was assuming that paying the forwarder absolved it of all liability, even when the carrier never received payment. When goods are handed off for shipment, shippers need to ensure that whoever receives them—whether through a direct contract or a brokered arrangement—gets paid for the service performed.

In practical terms:

1. Brokers and forwarders can still be part of a sound logistics strategy—but shippers need to be vigilant. Agreements with intermediaries should clearly define payment responsibility and indemnify against non-payment claims by downstream carriers.
2. If your freight is loaded directly onto a carrier’s vessel (or truck), you may be viewed as the contracting party—regardless of what’s in your broker agreement.
3. Courts won’t let you benefit from a service and dodge the bill based on internal arrangements. If the carrier performed, the law may step in and impose liability to prevent unjust enrichment.
4. Always verify that your forwarder or broker has properly paid carriers. Trust, but audit. A quick check on whether payments have been made can prevent disputes like this from escalating.

A Note for Carriers

For motor carriers and maritime shippers alike, this case provides some reassurance. Even without a signed contract, if you perform the service and deliver the goods, the courts may step in to ensure you’re paid—even if the shipper routed payment through a third party who defaulted. This reinforces the strength of quasi-contract as a tool for recovery.

Conclusion

Contship v. Howard Industries is more than just a freight dispute. It’s a snapshot of what happens when the modern supply chain’s legal and business realities collide. The Sixth Circuit reminded the industry that equity doesn’t depend on paper alone. If you benefit from a carrier’s performance, and the carrier doesn’t get paid, the law may come knocking.

The takeaway isn’t to abandon brokers or freight forwarders—they’re vital. The lesson is to understand where legal liability ultimately rests and to structure relationships and payment flows accordingly. Because in freight, as in law, someone always has to pay the carrier—and the courts won’t let that obligation slip through the cracks.