Section 7 / No-Recourse: How Consignor Liability Works After the 2021 NMFTA Change

For 100+ years, every Uniform Straight Bill of Lading carried a front-of-form "Section 7" checkbox. Consignors shipping Collect would check the box to disclaim liability for freight charges if the consignee didn't pay. The box is gone. The non-recourse concept lives on — but only if you sign the right statement on the right kind of move. Here's exactly how it works today and why thousands of consignors are still operating off pre-2021 templates that no longer protect them.

What Section 7 Was (Pre-April 2021)

Section 7 of the Uniform Straight Bill of Lading conditions has, since the early 20th century, been the "non-recourse" or "consignor non-liability" covenant. The deal is simple: when freight is shipped on Collect terms, the consignee owes the freight charges. If the consignee doesn't pay, the carrier (railroad or trucking company) historically had recourse back to the consignor under the BoL contract. Section 7 was the consignor's way to opt out of that recourse.

On the pre-2021 Uniform Straight BoL form, this looked like a small checkbox near the freight-terms block labeled "Section 7" or "Subject to Section 7." A consignor shipping Collect would tick the box and sign. If the consignee later stiffed the carrier, the carrier had to chase the consignee, not the consignor.

The actual contract clause — the legal substance — lived in two places: Section 7 of the 49 CFR Part 1035 Uniform Straight Bill of Lading contract terms (the federal codification), and the corresponding text in the NMFTA's NMF 100 tariff (the industry-published BoL conditions). The checkbox was just the consignor's way of invoking the clause on a specific shipment.

What Changed in April 2021

NMFTA published Supplement 1 to NMF 100-AU, effective April 10, 2021. The Supplement removed the Section 7 checkbox from the front of the Uniform Straight BoL form. NMFTA's stated reasoning, summarized in the TLC Council whitepaper "What Happened to Section 7" (Sept 2023):

• The checkbox was being misused. Consignors were checking it on Prepaid moves where non-recourse doesn't apply.
• Carriers had complained that the box's small size and casual placement allowed it to be checked inadvertently, defeating their ability to collect.
• Many shippers and brokers conflated the box with a general liability disclaimer rather than the specific collect-freight non-recourse covenant it actually was.

The Supplement did not remove Section 7 from the 49 CFR Part 1035 contract terms. The federal contract clause is still in force. NMFTA simply changed the format of how consignors invoke it.

What Still Exists in 49 CFR Part 1035

The federal codification of the Uniform Straight Bill of Lading lives at 49 CFR Part 1035. Section 7 of the Conditions remains in full force as a contract clause. The verbatim text the consignor signs to invoke it (on collect freight) is:

"Subject to Section 7 of the conditions of applicable bill of lading, if this shipment is to be delivered to the consignee without recourse on the consignor, the consignor shall sign the following statement: The carrier shall not make delivery of this shipment without payment of freight and all other lawful charges."

This statement is a separate signed block on the BoL, not a checkbox. The consignor signs this exact wording on the BoL form to invoke non-recourse on a Collect shipment. No signature on this statement = no non-recourse protection = the carrier can come after the consignor for unpaid charges if the consignee defaults.

How Consignors Actually Invoke Non-Recourse Today

Three-step pattern for any post-2021 Collect rail BoL:

1. Set freight terms to Collect. If the move is Prepaid or 3rd-Party Bill, Section 7 doesn't apply — the consignor isn't liable in the first place because the consignor or a third party is paying upfront.
2. Render the verbatim consignor non-recourse statement on the BoL. Use the exact wording above. Do not paraphrase. Do not summarize.
3. Have the consignor sign it. Same signature rules as the rest of the BoL — manual, typewritten, mechanical means, or for electronic transmission, a name in a designated computer field. The signature must be a duly authorized representative of the consignor.

If you skip step 2 or 3, you don't get the protection. The freight terms alone don't invoke non-recourse — the consignor's signed statement does.

Why It Only Applies to Collect Freight

This is the most-missed nuance. Section 7 / non-recourse only matters on Collect freight, because that's the only freight-terms scenario where the consignor could be on the hook for charges in the first place.

• Prepaid: shipper pays the carrier upfront. No future liability to disclaim. Section 7 doesn't apply.
• Collect: consignee pays on delivery. If the consignee doesn't pay, the carrier may try to recover from the consignor under the BoL contract. Section 7 (signed) disclaims that recourse.
• Third-Party Bill: a named third party pays. Generally the consignor isn't on the hook, but the specific allocation depends on the BoL contract and the 3PB agreement.

So if you're shipping Prepaid, you don't need to think about Section 7. If you're shipping Collect, you absolutely do.

What Goes Wrong on Outdated Templates

The TLC Council whitepaper documented multiple post-2021 disputes where consignors believed they had invoked non-recourse but hadn't, because:

• The template still had a "Section 7" checkbox. The consignor checked it; the carrier's accounting team ignored it (because under the post-2021 form, the box isn't operative); the consignee defaulted; the carrier billed the consignor; the consignor's "protection" turned out to be nothing.
• The template had no Section 7 mention at all. Some 2022-2024 reconstructions of the Uniform Straight BoL simply dropped Section 7 entirely. Consignors shipped on these BoLs assuming the default was non-recourse. It isn't — the default is recourse to the consignor.
• The template had the wording but in a footnote. The verbatim statement appeared on the BoL but with no signature line. No consignor signature = no invocation.

Three years into the post-2021 regime, these issues are still showing up. If your standard BoL template was last revised before April 2021, or if it carries a "Section 7 checkbox" anywhere, replace it.

How the BoL Builder Handles It

The free Rail Bill of Lading Builder handles Section 7 with explicit conditional logic:

• When freight terms = Prepaid: the Section 7 block doesn't render. It's irrelevant.
• When freight terms = Collect: the Section 7 block renders with the verbatim consignor non-recourse statement, a labeled signature line, and a date field. The consignor signs to invoke. If the consignor doesn't sign, the BoL still validates and submits, but with no non-recourse protection.
• When freight terms = 3rd-Party Bill: the block renders only if the consignor explicitly opts in (since the default 3PB scenario doesn't expose the consignor).

Internal liability counsel for some larger shippers requires the Section 7 statement to be signed on every Collect BoL as a matter of policy. The BoL Builder supports that workflow: turn on "Always render Section 7 on Collect" in the template settings, and the block appears every time without manual selection.

For shippers with mixed Prepaid and Collect lanes, getting this right on every car is the difference between protected consignor liability and chasing thousands of dollars of bad freight charges across a year. The 60-second BoL Builder run is cheap insurance. Open the BoL Builder →