As a general rule and in the absence of fraud or imposition, a common carrier is answerable for the loss of a package of goods though s/he is ignorant of its contents and its contents are valuable, if s/he does not make a special acceptance[i].
The liability of federally certified air common carriers for the loss of goods in transit is controlled by federal law[ii].
The airbill and applicable service guide create, define, and limit the rights and responsibilities of the parties with respect to shipment. Such airbills form the basic contract between the shipper and the carrier[iii]. The terms of shipment contained in airbills may be validly supplemented by incorporating the carrier’s service guides by reference[iv].
A tariff filed by an air carrier has the force and effect of law[v]. A duly filed tariff which limits liability for lost baggage is not only incorporated into the contract with the passenger, but also constitutes the law governing the air carrier’s liability for any loss or damage to property. Where the air waybill conflicts with the tariff, the latter prevails[vi].
Article 18 of the Warsaw Convention provides that[vii]:
- A carrier will be liable for damage sustained in the event of the destruction or loss of, or damage to, any checked baggage or any goods, if the occurrence which caused the damage occurred during transportation by air.
- Transportation by air is the period during which the baggage or goods are in charge of the carrier, whether in an airport or on board an aircraft, or, in the case of a landing outside an airport, in any place whatsoever.
- The period of transportation by air will not extend to any transportation by land, sea, or by river performed outside an airport. If, however, such transportation takes place in the performance of a contract for transportation by air, for the purpose of lading, delivery, or trans-shipment, any damages presumed, subject to proof of the contrary, to have been the result of an event which took place during the transportation by air.
The law governing the liability of interstate carriers makes plain that in cases involving an intermediate freight handler between the carrier and the original shipper, the carrier’s liability runs to the middleman alone[viii].
A carrier cannot limit by contract the period, starting from the written disallowance of a claim that one can bring an action against it, to less than two years[ix].
A common carrier may, by special contract, limit his/her common-law liability; but s/he cannot exempt itself from the consequences of its own negligence or that of its servants[x].
The responsibility of a common carrier may be limited by an express agreement made with his/her employer at the time of his/her accepting goods for transportation, provided the limitation is such as the law can recognize as reasonable and not inconsistent with sound public policy[xi].
A limitation of liability provision contained in a contract of carriage generally is enforceable if[xii]:
- it resulted from a fair, open, just, and reasonable agreement between carrier and shipper, entered into by the shipper for the purposes of obtaining the lower of two or more shipping rates proportioned to the amount of risk, and
- the shipper was given the option of additional recovery upon paying a greater rate.
In determining whether the above requirements have been met, the courts consider the following factors[xiii]:
- whether the carrier was given adequate notice of the limitation of liability to the shipper;
- the economic stature and commercial sophistication of the parties; and
- the availability of spot insurance to cover the shipper’s exposure.
[i] Hart v. Pennsylvania R. Co., 112 U.S. 331 (U.S. 1884).
[ii] Zubaz, Inc. v. Federal Express Corp., 864 F. Supp. 723 (W.D. Tenn. 1994).
[iii] Caporicci Footwear v. Federal Express Corp., 894 F. Supp. 258 (E.D. Va. 1995).
[iv] Zubaz, Inc. v. Federal Express Corp., 864 F. Supp. 723 (W.D. Tenn. 1994).
[v] Wackenhut Corp. v. Lippert, 609 So. 2d 1304 (Fla. 1992).
[vi] General Elec. Co. v. Harper Robinson & Co., 818 F. Supp. 31 (E.D.N.Y. 1993).
[viii] Neal v. Republic Airlines, Inc., 605 F. Supp. 1145 (N.D. Ill. 1985).
[ix] Burlington Air Express v. Ga. Pac. Corp., 211 Ga. App. 113 (Ga. Ct. App. 1993).
[x] Hart v. Pennsylvania R. Co., 112 U.S. 331 (U.S. 1884).
[xii] Owens-Corning Fiberglas Corp. v. U.S. Air, 853 F. Supp. 656 (E.D.N.Y. 1994).