Bill of Lading vs. Transportation Contract

Carriers and shippers often enter transportation contracts covering the transportation of the shipper’s freight (the “Contract”).  However, each individual shipment is covered by a Bill of Lading (the “B/L”).  The B/L operates at law as both a receipt for the goods and the basic transportation contract between the shipper and consignor.

What happens when the terms of the B/L conflict with the terms of the Contract?  For example, suppose the carrier is transporting freight worth $1,000,000, the contract requires the carrier to pay full value for freight damage, but the B/L has a limitation provision limiting the carrier’s liability for freight damage to $10,000.  These types of issues arise all the time.

The cases look at all the facts and circumstances and closely review the Contract and B/L provisions.  It appears that the terms of the B/L often prevail over the Contract for several reasons.  First, the B/L is usually prepared by the shipper and the courts tend to enforce the B/L provisions against the shipper for that reason.  Second, the B/L usually comes after the Contract and the courts have held that the B/L represents an amendment of the prior Contract.  Third, the courts have found the B/L to be a more specific agreement relating to an individual shipment.  Thus, the courts tend to enforce the B/L terms in cases involving the shipment covered by the B/L.

Carriers and shippers that work together should have transportation contracts.  They should make sure that their B/Ls do not conflict with their contracts.  Chauvel & Glatt regularly prepares such contracts and litigates disputes where there are conflicts between these agreements.  Should you need any assistance or have any questions, please do not hesitate to contact us.

This material in this article, provided by Chauvel & Glatt, is designed to provide informative and current information as of the date of the post. It should not be considered, nor is it intended to constitute, legal advice or promise similar outcomes.  For information on your particular circumstances, please contact Chauvel & Glatt at 650-573-9500. (Photo credit: 123rf.com)

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