The Carmack Amendment is a law that standardizes carrier liability rules in interstate commerce. In simple terms, it sets the ground rules for who is responsible for lost and damaged goods during shipping across state lines. Whether you manage trucking companies, railroads or shipping lines, understanding your liability under this law is crucial. Let’s break down what this means for you and your business.
The law generally assumes carriers have full liability
At its core, the Carmack Amendment operates on the principle of full liability for carriers. This means that if something goes wrong with a shipment, the carrier is generally responsible for the entire value of the lost or damaged goods.
Carriers can avoid liability only if they prove one of these factors caused the loss or damage:
- An act of God
- A public enemy
- An act of the shipper
- Public authority
- The inherent nature of the goods
If you’re claiming an exception, you must provide clear evidence that the loss or damage was due to one of these factors.
There are some ways to limit liability
The Carmack Amendment allows carriers to limit their liability, but there are specific rules to follow. You can’t just decide to limit your liability on your own. Instead, you need to create a written agreement with the shipper. Some usually offer the shipper a choice of freight rates, such as a lower shipping rate in exchange for limited liability in case something goes wrong. Take note that the shipper must have a reasonable opportunity to choose between liability options.
Another common way to limit liability is through “released value.” This is an agreed-upon maximum value for a shipment. If you and the shipper agree that a shipment is worth no more than $1,000, this amount will cap your liability should the goods go missing or suffer damage.
Know your rights and liabilities
Understanding the Carmack Amendment is crucial, but applying it to your specific operations can be challenging. If you’re dealing with a complicated liability issue or interstate dispute, consider reaching out to an attorney.
