On the reverse of nearly every invoice,
bill of lading or airway bill, you will
find “terms and conditions of service” involving that shipment. It’s imperative that
corporate officers and heads of shipping
know how the legal ramifications of these
terms and conditions can result in large
payments either to or from their company.
Smart Business spoke to Francesca
Russo-Di Staulo, an attorney with Kluger,
Peretz, Kaplan & Berlin P.L., about how to
minimize financial losses due to goods that
are damaged in transit from or to a company.
What are terms and conditions?
In the daily transportation of goods, they
are preprinted, standard contract conditions that form part of the shipping contract between a shipper and a carrier that
set forth general conditions.
If you have purchased goods that are
being transported or delivered to your
warehouse or place of business, chances
are that the person or persons involved in
the handling, delivery and/or transportation of those goods will issue an invoice or
bill of lading containing terms and conditions of service.
If you are the person handling, delivering
or transporting the goods, you will not
want to do so without such terms and conditions of service.
If you are a shipper (the seller) or the
consignee (the buyer), then you need to be
aware that such terms and conditions exist
and that they may well regulate the shipment of your goods.
Are terms and conditions more applicable to
international shipments, or are they equally
applicable to domestic shipments?
They’re equally applicable to international and domestic shipments. What becomes
contentious are situations when more than
one governing statute is in place.
For example, if you have goods transported by interstate commerce by motor
carrier, then the Carmack Amendment —
the federal statute — applies, in addition to
whatever terms and conditions the carriers
may want to impose.
For international shipments, you have to
determine the mode of transport, who the
carriers are, and where the possible damage to the shipment occurred. If airlines
provided transport, the Warsaw
Convention can apply. The Carriage of
Goods by Sea Act (COGSA) applies to all
contracts for carriage of goods by sea to or
from ports of the United States in foreign
trade. The Convention on the International
Sale of Goods may also apply to questions
including when the title to the goods and
risk of loss pass from seller to the buyer
with or without transportation by a carrier.
How do terms and conditions apply?
They regulate and define the contract
between you, the person shipping the
goods or the person receiving the goods,
and the carrier, the person handling the
transportation. You can be subject to the
terms and conditions even if you did not
expressly acknowledge them and even if
you never read them, so long as they are
printed in legible form and so long as this is
not the first time you received such an
invoice containing identical terms and conditions.
They can also act as a waiver of your
rights and stop you from filing a claim to recover for the lost, damaged or delayed
shipment — unless you file a claim as soon
as you discover the problem. The claim
often can simply be a letter — as long as
you provide the carrier with reasonable
notice of the loss, including the claim for
the payment of a determinable amount of
What can shippers and carriers do to protect
If you are the shipper, you can avoid the
limits on liability by declaring a higher
value and paying a special compensation,
so that the limits of liability will not apply.
Typically, the invoice or the bill of lading
will provide a space for just such a purpose.
If you are the consignee, you often will be
handed a delivery bill of lading at the time
the goods are delivered. This will be the
first opportunity you would have to see a
bill of lading, let alone see the terms and
conditions. Don’t fret. The law provides
that unless the carrier issued the bill of lading prior to moving the goods and unless
you have been given a reasonable opportunity to choose between two levels of liability, a carrier may be hard-pressed to
impose such terms against you.
If your company acts as the carrier, you
naturally will want to make sure you issue
the bill of lading prior to the movement of
the goods, and you will want to make sure
the shipper or consignee received the bill
of lading containing the terms and conditions prior to the movement of the goods.
FRANCESCA RUSSO-Di STAULO is an attorney and a member of the litigation and dispute resolution practice with Kluger,
Peretz, Kaplan & Berlin P.L. Reach her at (305) 379-9000 or