THE CARRIAGE OF GOODS AND

THE LIABILITY OF AIR AND SEA

CARRIERS

PREETHI.P
17MIB038

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 BAILMENTS & COMMON
CARRIER
• Bailment: l
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
 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
 LIABILITY OF INTERNATIONAL
AIR CARRIERS: WARSAW
• General PINCILPLE :AIR CARRIER
presumptively liable for all damage to
cargo UNLESSthe 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)

• 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 3rdparties

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WARSAW CONVENTION PROVISIONS
(AS AMENDED)

• Liability for Cargo Loss orDamage

• 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
 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 2years
 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
• USCarriage 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/Lvalid –Vimar
Seguros y Reaseguros S.A. v M/V Sky Reefer (USSC 1995)

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 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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 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
• Ifdamage not apparent or visible, give written notice within
3 days ofdelivery
• Failure to give notice creates presumption goods delivered
in good condition
• Suit must be brought within 1 year
• Pmust show goods loaded in good condition and lostor
unloaded in damaged condition
• Clean B/Lestablishes presumption goods delivered to
carrier in good condition –shifts burden to carrier
• Problem with sealed containers: clean B/Lonly establishes
outer condition of container

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 COGSA EXCEPTIONS TO
LIABILITY
• Errors in ship navigation • Acts of shipper
or management • Labor strikes
• Fire (unless carrier’s
• Riots
fault)
• Saving life or property
• Perils of the sea
at sea
• Act of God • Insufficient packing
• Act of war
• Inherent defect in
• Acts of public enemies goods
• Legal seizure • Inadequate marking of
• Quarantine goods
• Latent (hidden) defects
in ship

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 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
• Errorsin 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
• Carrier may be responsible unless can use Q
clause defense
• Pmust establish that shortage occurred
while goods in carrier’s custody:
• Pcan show weight or quantity at destination less
than that listed on B/L
• Disclaimer –“shipper’s weight”- on B/Lnot
recognized by court
• Westway Coffee Corp. v. M.V. Netuno (SDNY’81)
• ButPlastique Tags, Inc. v. Asia Trans Line, Inc. (11thCir.
1996)

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COGSA “PACKAGE” LIMITATION
• Limits carrier liability to $500per package
or customary freight unit unless shipper
declares (and pays for) highervalue
• Container not package under COGSA if
contents and number of units disclosed on B/L
• Z.K. Marine v. M/V Archigetis (SDFl 1991):
i
s 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 licensedto operate; regulated by USFed.
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. (2ndCir. 2000): FFnot
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