Freight claim

Last updated

A freight claim or cargo claim is a legal demand by a shipper or consignee against a carrier in respect of damage to a shipment, or loss thereof. [1] [2] [3]

Contents

Typically, the claimant will seek damages (financial compensation for loss), but other remedies include "specific performance", where the cargo-owner seeks delivery of the goods as agreed. At common law, any carrier has a duty to act with reasonable despatch. [4] [5] A "common carrier" may have strict liability, [6] [7] but normally the standard of care is only one of "due diligence", or acting "properly and carefully". [8]

The purpose of a freight claim is for the carrier to reimburse the shipper / consignee so as to put them in the position is if the carriage had been properly had carried out according to the bill of lading. [9] [10] For this reason, claimants are generally expected to file a claim to recover their costs, excluding profits. In very rare cases some profits may be recoverable, but a court will normally consider lost profits as non-recoverable economic loss. [11]

In most cases, redress will be paid by the carrier's insurer or P&I Club, and so the law of insurance will determine quantum of damages. Loss is deemed either "total" (either "actual" or "constructive") or "partial". [12] [13] If the insurance policy is a "valued policy", the amount agreed is, in the absence of fraud, conclusive (except in cases of "constructive total loss", when the true market value prevails).

Under contract law, claimants are obliged to take reasonable measures to mitigate loss. For example, if the damaged product has retained some value, the carrier would only be required to pay for the difference between the original value and the damaged value. The claimant would then be free to salvage the damaged product by selling it at a reduced cost. [14]

The consignee is entitled to inspect the goods, and to reject them if they are damaged or fail to comply with description. The inspection should take place at the first reasonable place and opportunity; this will often be at the consignee's depot or place of business. At the time of delivery, the consignee should examine the shipment for loss or damage, and should note any issues on the delivery receipt; this will be used as evidence to back up the claim. [15]

If significant evidence of loss or damage is noticed on delivery, the consignee will be entitled to reject the shipment, [16] and may also have the option to cancel the entire contract.

If the consignee signs off on the delivery receipt but the damage is concealed (or "latent" or "hidden") and is discovered only subsequently, a claim will still be allowed provided it is made within a reasonable time. [17] In this case, the shipper or consignee must show that the damage was indeed caused by the carrier, rather than by the shipper or consignee. [15] [18] In general, some of shippers actively or passively use a shipping damage indicator [19] to help inspect concealed damage which decreases dispute of damage.

The carrier will normally require the shipper to pay freight (the "shipment invoice") in advance; otherwise a"clean" bill of lading will not be issued, and the document will declare "Freight Not Paid". In the event of loss or damage, the consignee would file a freight claim against the carrier for (i) damages to cover the loss and (ii) reimbursement of any freight paid. The shipper will not be able to make any claim except as an agent of the consignee.

Carrier liability

The extent of the carrier's liability may depend upon the shipping mode and the governing bodies. The Carmack amendment [ clarification needed ] states that motor or rail carriers are liable for the full loss.[ citation needed ] Conversely, the US COGSA states that the carrier is liable for no more than $500 per package. [20]

In the case of import/export transactions international conventions on limitation of liability may apply. [21] [22]

Article IV of the Hague-Visby Rules lists more than 17 exclusions of the carrier's liability. Other international conventions such as the Hague Rules, the Hamburg Rules and the Rotterdam Rules have similar provisions exempting liability.

Perhaps the four main scenarios in which a carrier is not deemed liable for damage to goods are: [23]

Filing a freight claim

Each carrier typically provides a standard form specifically for filing freight claims. However, by law, no particular form is necessary, as long as the following four details are present:

Information to identify the shipment may include the freight bill PRO #, the vehicle number, and the delivery date.

In addition to this basic information, the following documentation should also be provided:

Additional supporting documentation may also be included or required. [28]

Filing deadlines

Different rules and filing deadlines will apply depending on the shipping mode. This is due to differences in how specific shipping modes are governed.

Rail and motor carriers are governed by the Carmack Amendment. The Carmack Amendment states that claimants have a minimum of 9 months from the date of delivery to file a freight claim.

Conversely, ocean carriers that service the US are governed by the Carriage of Goods by Sea Act (COGSA). This act requires that claimants file a claim within 3 days of delivery. [29]

See also

Further reading

Freight Claims in Plain English (4th ed. 2009) by William J. Augello & George Carl Pezold

Related Research Articles

Protection and indemnity insurance, more commonly known as P&I insurance, is a form of mutual maritime insurance provided by a P&I club. Whereas a marine insurance company provides "hull and machinery" cover for shipowners, and cargo cover for cargo owners, a P&I club provides cover for open-ended risks that traditional insurers are reluctant to insure. Typical P&I cover includes: a carrier's third-party risks for damage caused to cargo during carriage; war risks; and risks of environmental damage such as oil spills and pollution. In the UK, both traditional underwriters and P&I clubs are subject to the Marine Insurance Act 1906.

In a contract of carriage, the consignee is the entity who is financially responsible for the receipt of a shipment. Generally, but not always, the consignee is the same as the receiver.

<span class="mw-page-title-main">Freight forwarder</span> Handles logistics for freight

A freight forwarder, or forwarding agent, is a person or a company who, for a fee, organizes shipments for the shipper by liaising with carriers. A forwarder does not move the goods but acts as an agent in the logistics network.

A charterparty is a maritime contract between a shipowner and a "charterer" for the hire of either a ship for the carriage of passengers or cargo, or a yacht for leisure.

The Carriage of Goods by Sea Act ("COGSA") is a United States statute governing the rights and responsibilities between shippers of cargo and ship-owners regarding ocean shipments to and from the United States. It is the U.S. enactment of the International Convention Regarding Bills of Lading, commonly known as the "Hague Rules". It was found in Title 46 Appendix of the United States Code, starting at Section 1301, but has been moved to a note in 46 United States Code 30701.

An air waybill (AWB) or air consignment note is a receipt issued by an international airline for goods and an evidence of the contract of carriage. It is not a document of title to the goods. The air waybill is non-negotiable.

<i>Vita Food Products Inc v Unus Shipping Co Ltd</i> JCPC decision on choice of law clauses

Vita Food Products Inc v Unus Shipping Co Ltd [1939] UKPC 7, is a leading decision of the Judicial Committee of the Privy Council on the conflict of laws. The case stands for the proposition that an express choice of law clause in a contract should be honoured as long as the agreement was bona fide and not against public policy. The case is significant in the field of contract law, as it greatly expanded the ability of parties to choose the jurisdiction of their contacts.

The Hague–Visby Rules is a set of international rules for the international carriage of goods by sea. They are a slightly updated version of the original Hague Rules which were drafted in Brussels in 1924.

The Hague Rules of 1924 is an international convention to impose minimum standards upon commercial carriers of goods by sea. Previously, only the common law provided protection to cargo-owners; but the Hague Rules should not be seen as a "consumers' charter" for shippers because the 1924 Convention actually favoured carriers and reduced their obligations to shippers.

<i>Georgia, Florida, & Alabama Railway Co. v. Blish Milling Co.</i> 1916 United States Supreme Court case

Georgia, Florida, & Alabama Railway Co. v. Blish Milling Co., 241 U.S. 190 (1916), was a case decided by the Supreme Court of the United States.

Affreightment is a legal term relating to shipping.

The Uniform Bills of Lading Act was adopted in 1909 and passed by the US Uniform Law Commission. The act addressed the judicial and legislative treatment of issues such as the extent of the carrier's liability to the consignee of the goods or to the buyer of the bill of lading based upon the carrier's issuance of the bill. It governed the relationship between persons with interest in the goods, and carriers who transported those goods. It set / described how a carrier could limit its liability.

<span class="mw-page-title-main">Rotterdam Rules</span>

The "Rotterdam Rules" is a treaty proposing new international rules to revise the legal framework for maritime affreightment and carriage of goods by sea. The Rules primarily address the legal relationship between carriers and cargo-owners.

<span class="mw-page-title-main">Deviation (law)</span>

The doctrine of deviation is a particular aspect of contracts of carriage of goods by sea. A deviation is a departure from the "agreed route" or the "usual route", and it can amount to a serious breach of contract.

<span class="mw-page-title-main">Carriage of Goods By Sea Act 1992</span> United Kingdom legislation

The Carriage of Goods By Sea Act 1992 is a UK Statute regarding bills for the lading of goods onto ships. It repealed the Bills of Lading Act 1855 and made new provisions.

<span class="mw-page-title-main">Bill of lading</span> Document issued by a carrier (or their agent) to acknowledge receipt of cargo for shipment

A bill of lading is a document issued by a carrier to acknowledge receipt of cargo for shipment. Although the term is historically related only to carriage by sea, a bill of lading may today be used for any type of carriage of goods. Bills of lading are one of three crucial documents used in international trade to ensure that exporters receive payment and importers receive the merchandise. The other two documents are a policy of insurance and an invoice. Whereas a bill of lading is negotiable, both a policy and an invoice are assignable. In international trade outside the United States, bills of lading are distinct from waybills in that the latter are not transferable and do not confer title. Nevertheless, the UK Carriage of Goods by Sea Act 1992 grants "all rights of suit under the contract of carriage" to the lawful holder of a bill of lading, or to the consignee under a sea waybill or a ship's delivery order.

Norfolk Southern Ry. v. James N. Kirby, Pty Ltd., 543 U.S. 14 (2004), was a United States Supreme Court case that dealt with the extent to which maritime bills of lading cover non-maritime portions of a shipment, together with connected clauses for exclusion of liability.

The law of carriage of goods by sea is a body of law that governs the rights and duties of shippers, carriers and consignees of marine cargo.

Grant v Norway (1851) is a case on the Law of Carriage of Goods by Sea; but since 1992 it has no longer been good law.

<i>Leduc v Ward</i>

Leduc v Ward is a leading English case on deviation within the law of carriage of goods by sea. The case also addresses bills of lading, and the parol evidence rule.

References

  1. ↑ Merriam Webster Dictionary - Online Edition. http://www.merriam-webster.com/dictionary/freight%20claim
  2. ↑ "Freight" has two meanings: in common parlance, it means "cargo"; in the law of carriage it means the "cost of carriage".
  3. ↑ Freight claims are also known as "shipping claims", "transportation claims", or "loss and damage claims".
  4. ↑ Hadley v Baxendale (1854)
  5. ↑ M'Andrew v Adams (1834) 1 Bing NC 29
  6. ↑ Liver Alkali v Johnson xx
  7. ↑ iLaw report on Liver Alkali v Johnson
  8. ↑ Hague-Visby Rules Art III Rules 1 & 2
  9. ↑ The bill of lading will evidence the terms of the contract of carriage
  10. ↑ TransportGistics. Over, Short and Damage Claims or Loss and Damage Claims http://www.insourceaudit.com/Whitepapers/ldclaims.asp
  11. ↑ TranSolutions Inc. Question: Can You Profit From a Freight Claim? http://www.transolutionsinc.com/blog/question-can-you-profit-from-a-freight-claim/
  12. ↑ Asfar v Blundell [1896] 1 QB 123]]
  13. ↑ Asfar v Blundell
  14. ↑ LeanCor Supply Chain Group. Freight Claims: How Much Are They Really Costing You? 2013. http://leanlogisticsblog.leancor.com/2013/02/13/freight-claims-how-much-are-they-really-costing-you/ Archived 2013-02-26 at the Wayback Machine
  15. 1 2 Broussard, Steve. Back to Basics: Receiving Procedures That Will Save You Money TRANSDIGEST-Volume XVII, Issue No. 175, September 2012
  16. ↑ Note: "rejection" of a consignment is NOT in itself a repudiation of the contract.
  17. ↑ Move-It With Jon Essential Rules On Freight Damage http://moveitwithjon.com/blog/essential-rules-freight-damage/ Archived 2015-12-08 at the Wayback Machine
  18. ↑ When damage is not immediately recognizable, this is known as a concealed damage claim.
  19. ↑ "Impact Label 75G |【Shipping Damage Indicator Factory】| WAN-YO". wan-yo.com. Retrieved 2021-08-02.
  20. ↑ Logistics Management Logistics and the Law: Freight claims in plain English page 2 http://www.logisticsmgmt.com/article/logistics_and_the_law_freight_claims_in_plain_english/D2/
  21. ↑ Scruttons v Midland Silicones [1962] AC 446
  22. ↑ NZ Shipping Co Ltd v A M Satterthwaite & Co Ltd [1974] UKPC 4
  23. ↑ Gregory v Commonwealth Railways Cmr (1941) 66 CLR 50 at 74
  24. ↑ ... such as insufficient packaging or labelling.
  25. ↑ Insufficiency of packing: Hague-Visby Rules Art IV, r 2(n)
  26. ↑ Goodwin v Lamport and Holt [1929] All ER 623
  27. ↑ Freight payment: 10 freight invoice facts everyone should know
  28. ↑ TranSolutions Inc. How To File A Freight Claim – The Beginner’s Guide http://www.transolutionsinc.com/blog/file-freight-claim-beginners-guide/
  29. ↑ Logistics Management Logistics and the Law: Freight claims in plain English page 1 http://www.logisticsmgmt.com/article/logistics_and_the_law_freight_claims_in_plain_english/D1/
This page is based on this Wikipedia article
Text is available under the CC BY-SA 4.0 license; additional terms may apply.
Images, videos and audio are available under their respective licenses.