Comment on Terms of Carriage on BOL

Below I am posting the comment made from Mr. John M. Daley in the discussion Did you ever read the backside ( risks, obligations, jurisdictions ) of you Bills of Lading which  has been opened at the  Freight and Logistics Professionals group of Linkedin.

Comment on Terms of Carriage on the backside of the BOL

by John Daley

Since I frequently write the terms and conditions on bills of lading for my clients (including motor carriers, NVOCC’s and ground and air freight forwarders), I am pretty familiar with the terms on bills of lading for all modes domestically, and for air and ocean internationally.

Although carriers do try to limit their liability, they are restricted from doing so by various laws (including the Carmack Amendment for motor carriage) and international carriage (e.g., the Montreal Convention for air carriage and Hague Rules for ocean carriage, adopted in the U.S. as the Carriage of Goods by Sea Act). For example, under the Carmack Amendment, motor carriers must offer shippers a “choice of rates” to enforce a limitation of liability. Although COGSA does not have a “choice of rates” requirement, the $500 per package limitation is more than adequate for many situations, although not all.

There is a historical basis for these limitations, and there are always ongoing discussions about whether the limitations should be increased. For example, the U.S. and several other countries recently signed off on the “Rotterdam Rules,” which, if adopted, will increase both the amount and the scope of the ocean carriage limitation of liability (if you are interested, I have a discussion of the Rotterdam Rules in an article posted on my web site at In 1995, the U.S. Department of Transportation conducted a study of cargo loss limitations, but nobody seemed all that interested in doing anything about it.

So what should a shipper do? In many cases, shippers have the option of increasing the limitation of liability by paying a higher rate. In ocean and motor carrier, shippers can also enter into contracts with carriers. For many shippers, however, the best option is to carry appropriate cargo insurance.

As Mr. Serfass points out, however, policies of insurance (including those issued to carriers, by the way) always have limitations and exclusions, so anyone who purchases a policy of insurance should be sure to read the policy as soon as it arrives, before there is a claim. If a problem is noted (e.g., if a shipper frequently ships a product which is excluded from coverage), it is frequently possible to obtain a rider which will resolve the problem, sometimes at no additional cost.

If you are a shipper and have an ongoing relationship with a carrier and are concerned with a specific term or condition, you should bring the problem to the carrier’s attention and see if it can be modified. Since we are no longer in a government regulated tariff environment, individual modifications are possible.

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