Freight claims in interstate commerce are either based upon the Carmack Amendment or a contract of carriage. Both claims can often come down to two important considerations:
(1) Was the required documentation that damage occurred during transportation of the load received in a timely manner? and (2) The business decision. While all proven cargo claims should be paid, those that are clearly contestable will sometimes come down to the business decision. Is this a customer you have dealt with in the past, for whom you haul tons of freight? Is this a new customer with great potential? Is this a one-time customer with little to no likelihood of additional freight?
The amount you must pay will be determined by the nature of the claim. Whether the claim is based upon the Carmack Amendment or a contract will determine your exposure. The Carmack Amendment to the Interstate Commerce Act, 49 U.S.C. I 14706, was enacted in 1906 by Congress to create a national scheme of carrier liability for goods damaged or lost during interstate shipment under a valid bill of lading. It governs the liability of carriers for lost or damaged goods and preempts state law claims against carriers.
The Carmack Amendment can be a useful shield in limiting a carrier’s liability for cargo damage. In today’s transportation world, more and more shippers are requiring carriers to sign contracts that call for a waiver of the protections that the Carmack Amendment affords and increases the liability of carriers for damages not recoverable under the law. I suggest great caution in signing such contracts, as they can put your company at risk ofadditional exposure in cargo losses.
In bringing an action under the Carmack Amendment, a claimant need only plead and prove delivery of the goods to the initial carrier in good condition; damage of tbe goods before their delivery to the final destination; and the amount of damages. A carrier has two defenses to a claim under the Carmack Amendment. First, the carrier can prove that it was free of negligence. Second, the carrier can show that the damage was caused by an act of God; an act of the public enemy; an act of the shipper itself; an act of public authority; or inherent vice or nature of the goods.
For more on this complex issue, read our article.