1. www.StudsPlanet.com
THE CARRIAGE OF GOODS AND
THE LIABILITY OF AIR AND SEA
CARRIERS
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2. BAILMENTS & COMMON
CARRIERS• Bailment: legal concept where owner of
property transfers possession to bailee, but
retains ownership
• Shipper is bailor
• Carrier is bailee
• Common Carrier: carrier contracting with public
for transport services
• Contract of Carriage: contract btwn shipper and
carrier – in transport documents
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3. BAILMENT LAW
• Bailee (Carrier) must return property to
bailor in same condition as it was
received
• Carriers liable for damage or loss to
cargo, except caused by:
• Acts of God
• Acts of public enemy or terrorist
• Acts of govt. intervention or court order
• Acts of shipper
• Inherent characteristics of cargo that cause its
destruction
• Carrier may use disclaimers, but legal
limitations on use
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4. LIABILITY OF INTERNATIONAL
AIR CARRIERS: WARSAW
CONVENTION• General Principle: Air Carrier is
presumptively liable for all damage to
cargo UNLESS the airline shows:
• Not at fault or negligent
• Shipper was negligent
• Air Carrier liable for death or bodily injury
resulting from accident aboard aircraft or
in boarding or disembarking
• Accident: event that is peculiar risk of air
travel and “external” to passenger
• Warsaw Convention is exclusive remedy
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5. WARSAW CONVENTION
PROVISIONS (AS AMENDED)
• Limits liability of Air Carrier
• For death or bodily injury, 1999 Montreal
Convention abolished $75K limit; carrier
strictly liable for 100K SDR (Subject to
contributory negligence)
• Carrier liable for damages beyond 100K SDR
unless unless:
• Not due to negligence of airline, employees or agents
• Due to negligence or wrongful acts of 3rd
parties
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6. WARSAW CONVENTION PROVISIONS
(AS AMENDED)
• Liability for Cargo Loss or Damage
• Protocol 4 of 1999: Carrier liable unless due to:
• Inherent defect, quality or vice of cargo
• Defective packaging not by carrier
• Act of war or armed conflict
• Act of public authority
• Contributory negligence of shipper
• Cargo: Liability limited to 17 SDR per Kg unless shipper
declares higher value ( and pays additional fee if required)
• Limitation doesn’t apply if damage due to intentional act
or act done recklessly
• Baggage: Liability limited to 1000 SDR per passenger unless
has declared higher value; can’t recover more than actual
value
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7. ENFORCING WARSAW
CONVENTION
• Suits can only be brought in countries that
are signatories
• Where ticket purchased, final destination or
where carrier has principal place of business
• Montreal Convention: suits for death or injury
in passenger’s principal residence if carrier
operates there
• Time Limits
• Must file notice:
• Cargo or baggage damage: notify within 7 days of
receipt of checked luggage, 14 days from receipt of
cargo
• Delay of baggage or cargo: notify in writing no later
than 21 days from date of actual delivery
• Must file suit against air carrier within 2 years
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8. LIABILITY FOR CARRIAGE OF GOODS
BY SEA
• Historically, carrier absolutely liable
• Carriers used exculpatory clauses
• Legal limitations on such clauses
• Hague Rules – 1924 Convention defines liability for ocean
carriers
• US Carriage of Goods by Sea Act codifies Hague
Rules
• Covers liability from loading to unloading (“tackle to
tackle”)
• Parties can extend application beyond “tackle to tackle”
by provisions in Bill of Lading (B/L)
• Invalidates all exculpatory clauses in B/L
• Forum selection and arbitration clause in B/L valid – Vimar
Seguros y Reaseguros S.A. v M/V Sky Reefer (USSC 1995)
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9. COGSA PRINCIPLES
• Carrier must use due diligence in providing
seaworthy vessel at beginning of voyage
• Carrier liable for failure to use due diligence
• But carrier not liable for damage due to fire, storms, and
negligence in navigating or managing ship
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10. COGSA PRINCIPLES
• Delivery of damaged cargo: shipper must give written notice
to carrier at port of discharge
• For visible damage: give notice before or at time goods
taken from carrier’s custody
• If damage not apparent or visible, give written notice within
3 days of delivery
• Failure to give notice creates presumption goods delivered
in good condition
• Suit must be brought within 1 year
• P must show goods loaded in good condition and lost or
unloaded in damaged condition
• Clean B/L establishes presumption goods delivered to
carrier in good condition – shifts burden to carrier
• Problem with sealed containers: clean B/L only establishes
outer condition of container
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11. COGSA EXCEPTIONS TO
LIABILITY
• Errors in ship navigation
or management
• Fire (unless carrier’s
fault)
• Perils of the sea
• Act of God
• Act of war
• Acts of public enemies
• Legal seizure
• Quarantine
• Acts of shipper
• Labor strikes
• Riots
• Saving life or property
at sea
• Insufficient packing
• Inherent defect in
goods
• Inadequate marking of
goods
• Latent (hidden) defects
in ship
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12. COGSA: DEFENSES TO
LIABILITY
• “Warranty of Seaworthiness”: ship reasonably fit to
carry cargo undertaken on intended journey
• Competence of crew, suitability of equipment, etc.
• Carrier responsibility for proper loading, storing and
carrying, and unloading goods
• May presume unseaworthy if breaks down shortly after
departure
• Errors in Navigation or Management of ship:
carrier not liable for errors of master, mariner, pilot
or crew member
• Depends on severity of storm and how cargo damaged
• Negligence of crew may void defense
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13. THE CARGO SHORTAGE
PROBLEM
• Carrier may be responsible unless can use Q
clause defense
• P must establish that shortage occurred
while goods in carrier’s custody:
• P can show weight or quantity at destination less
than that listed on B/L
• Disclaimer – “shipper’s weight”- on B/L not
recognized by court
• Westway Coffee Corp. v. M.V. Netuno (SDNY ’81)
• But Plastique Tags, Inc. v. Asia Trans Line, Inc. (11th
Cir.
1996)
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14. COGSA “PACKAGE” LIMITATION
• Limits carrier liability to $500 per package
or customary freight unit unless shipper
declares (and pays for) higher value
• Container not package under COGSA if
contents and number of units disclosed on B/L
• Z.K. Marine v. M/V Archigetis (SDFl 1991): is
yacht a “package”?
• COGSA limitations generally don’t apply
to goods carried above deck – but
parties can provide for coverage in B/L
(clause paramount)
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15. LIABILITY OF TRANSPORT
INTERMEDIARIES
• Freight Forwarders: act as agent of
shippers
• US: must be licensed to operate; regulated by US Fed.
Maritime Comm. and Int. Air Transport Assoc.
• May also act as Customs Brokers
• Must post bond and have power of attorney
• Prima US Inc. v. Panalpina, Inc. (2nd
Cir. 2000): FF not
liable for cargo during shipment
• Non-Vessel Operating Common Carriers:
act as freight consolidators for smaller
shippers
• Issue B/L
• Liable for loss or damage to goods during transport
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