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THE CARRIAGE OF GOODS AND THE LIABILITY OF AIR AND SEA

CARRIERS

THE CARRIAGE OF GOODS AND THE LIABILITY OF AIR AND SEA

CARRIERS

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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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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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LIABILITY OF INTERNATIONAL AIR CARRIERS: WARSAW

CONVENTION

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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WARSAW CONVENTION PROVISIONS (AS AMENDED)

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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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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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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LIABILITY FOR CARRIAGE OF GOODS BY SEA

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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COGSA PRINCIPLESCOGSA 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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COGSA PRINCIPLESCOGSA 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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COGSA EXCEPTIONS TO LIABILITY

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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COGSA: DEFENSES TO LIABILITY

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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THE CARGO SHORTAGE PROBLEM

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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COGSA “PACKAGE” LIMITATIONCOGSA “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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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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