For better or worse, there is no escaping my international trade legal life - not even on vacation. The liabilities and implications about “you-name-it” run through my head as scenarios present themselves.
I am currently sitting on a train in DC without air conditioning with a temperature of 93 degrees Fahrenheit outside. The engine needs to be replaced for our journey, and well, Amtrak figures it’s better to do that now than endure a long train ride to NYC without A/C. In an effort to keep my thoughts elsewhere, I am observing everything around.
One thing that caught my eye was a guy driving a United Tractor with cargo stacked on a pallet. Around the cargo was plastic wrap which is intended to keep the boxes on top of the pallet secure. What I specifically noticed was that the lowest layer of the plastic wrap had come undone and not only that, but the operator drove right over the plastic wrap until it snapped off. I thought at some point there might be a box or two that would fall off but it didn’t happen. Not yet anyway…
Now, one type of transit that I rarely think about is that of moving cargo by train. While in certain jurisdictions, incidents involving the rails could come in under COGSA (Carriage of Goods by Sea Act) as an extension of the waterborne shipment, representation of railroads is not a typical part of my practice.
Observing this about-to-be-damaged-cargo scene got me thinking about liabilities and causation.
The question is always the same in cargo loss cases – where did the damage happen? Right now, the cargo was probably delivered in “good condition” and can possibly be placed on the train as well in good condition. But what about when it comes off the train? What if a box falls off and then something inside gets damaged? Or what if it gets picked up by a trucker which makes no notation of the missing plastic – i.e., potential liability – because it never saw that piece of plastic wrap and doesn’t know that it was even missing? Then, what if when it gets delivered, something is found to be damaged? I could go through a bunch of “what if” scenarios – trust me. But I will spare you.
The point of all of this is that since cargo can be damaged during any part of the journey and for any reason, be it oversight or otherwise, intentional or unintentional, it is important that as a participant in the movement of cargo, that the terms and conditions under which it's transit is to take place must be (a) clear and (b) have real limits to liability, such as a $50 limitation per shipment unless the shipper declares a specific amount and pays a premium for having coverage that would cover the cost of the shipment in the event of an accident.
The terms and conditions should also have specific provisions regarding making claims, such as timeframes from the date of the incident for filing, as well as a protocol for making such claims.
Lastly, there needs to be something indicating the assent of the shipper to the terms and conditions under which the transit is to occur.
At the end of the day, any prudent shipper of cargo will have purchased insurance on the shipment, so that merely filing an insurance claim is all to be done. These terms and conditions therefore become important in terms of defending a claim for monetary damages when the insurance company turns around and sues the transit parties in subrogation.
Rather than being faced with payment of a proportional share of the overall cost of damages to the cargo, the ceiling becomes your limitation – at least in theory anyway. Sometimes it is just cheaper to kick in $1K or $2K to get rid of a case than to hold out to test the theory, given the high cost of litigation and all.
Questions/comments? Post below or email me at clark.deanna@gmail.com
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