Motor Carriers Should Limit their Liability for Cargo Damage
Motor carriers may and should limit their liability for freight loss or damage. Limitations are permitted by California and federal laws (Cal. Comm. Code 7309; 49 USCA 14706).
In Rational Software v. Sterling, 2393 F. 3d 276, a shipper hired the carrier to move a computer worth $ 250,000. After the carrier’s employees broke the computer during the move, the shipper filed suit to recover its value. The carrier’s bill of lading limiting its liability was not delivered to the carrier until after the damage. Nevertheless, the court held that the carrier’s liability was limited to about $950. The shipper had used the carrier over 200 times in the past and for each job had received a bill of lading that prominently displayed a provision limiting the carrier’s liability to $.60/pound. Through prior course of dealing, the court determined that the shipper had agreed to limit the carrier’s liability regardless of when the bill of lading was delivered.
The above case is a great example of why carriers should limit their liability. Suppose the carrier was to be paid $500 for the transportation requested by the shipper. Why would any carrier agree to accept cargo liability of $250,000 for a $500 transportation rate?
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