Carriers that transport goods by air or sea have legal liability for any loss or damage to cargo during transport. For air carriers, the Warsaw Convention establishes that carriers are presumptively liable unless they can prove the damage was not their fault. It also limits liability amounts. For sea carriers, COGSA defines their liability and also places the burden on carriers to prove an exception applies, such as an act of God, if cargo is damaged. Both conventions require notice of damage be provided and lawsuits be filed within certain timeframes.

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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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