Cargo damage is a frequent source of dispute between businesses and carriers. While carriers generally bear responsibility for the safe transport of goods, there are several important exceptions to this liability.
The Carriage of Goods by Sea Act (COGSA) names 17 carrier immunities, which apply to all contracts for sea freight or transport from U.S. ports in foreign trade.
For businesses and other entities with interest in the cargo, understanding these exceptions can help aid better insurance decisions and dispute resolution. Here are some of the most common ones.
Act of God
Acts of God refer to natural events that are beyond human control. These include but are not limited to:
- Hurricanes
- Tsunamis
- Earthquakes
- Hail
However, a carrier must prove that the event was both unexpected and unavoidable. This means that even if a natural disaster occurs, the exception may not apply if they could have taken reasonable steps to avoid its impact.
Perils of the sea
This exception covers dangers that are inherent to maritime navigation, such as heavy storms or rogue waves. However, the danger must be extraordinary or very unexpected for the voyage’s particular route and season.
Inherent vice of the goods
Carriers can use this exception when the cargo has inherent defects or is prone to natural deterioration. Common examples include:
- Fruit ripening
- Meat spoiling
- Metal rusting
The carrier cannot be liable if the damage happens despite workers taking proper care of the cargo.
Insufficient packing
It is the shipper’s responsibility to prepare and pack all cargo for the rigors of sea transport. If they fail to do so, the carrier can argue that the damage occurred due to inadequate packaging.
Act or omission of the shipper
Carriers can use this exception if the shipper’s actions or negligence causes damage. Examples might include providing incorrect information about the cargo, which leads to improper handling. However, it may not be an acceptable defense if the carrier was also negligent.
Damaged cargo does not only lead to financial losses. It can also affect a business’s operations, supply chain and ultimately, the bottom line. While carriers can use these exceptions to avoid liability, careful legal interpretation is a must.
Lawyers can help businesses prove or disprove the application of these exceptions. With legal counsel and a proper understanding of the law, businesses can help protect their interests and seek more favorable outcomes for their claims.