Claims for losses and damage involving interstate transportation between shippers and carriers are governed by federal statute and federal regulation. Under federal guidelines, a shipper must prove the following three elements in order to establish a claim against its carrier:
- Delivery of the goods to the initial carrier in good condition,
- Delivery of the shipment short, in damaged condition, or unreasonably late; and
- The amount of damages.
If the shipper proves these three elements, there is a presumption of liability against the carrier, even without proving any wrongdoing by the carrier. The carrier must then demonstrate that it was not negligent and the loss was caused by one of the following five conditions to avoid liability: An act of God, act of public enemy, act of shipper, act of public authority, or the inherent nature or vice of the goods.
We have found that these guidelines do not govern the transportation of perishable agricultural commodities. Frankly, the reason for this omission is not entirely clear. We have nevertheless found them helpful in analyzing a transportation carrier's liability for its handling of the produce in transit to the destination.
With limited regulations available, contracts, if any, between shippers and carriers and the bill of lading will be analyzed to determine the terms agreed upon by the shipper and carrier. As we have discussed in previous articles, a bill of lading is an offer by the shipper for the carrier to accept the terms of shipment. Once the driver signs the bill of lading on behalf of the carrier, the carrier agrees to carry and deliver the goods subject to those terms and conditions. The driver's signature also serves as confirmation that when the carrier received the commodities, they were "received in good shipping condition" with or without exceptions, a temperature recorder, if any, was placed on the truck, and what was loaded, and the count of the shipment. What is considered "received in good shipping condition" may be a subject of disagreement between the shipper and carrier, as each party may have different interpretations on whether the produce meets this condition at time of shipment.
To establish that the produce arrived in damaged condition or short, we recommend that shippers contact the carrier or broker immediately with any problems, take pictures of the produce, timely order a federal inspection, instruct the receiver to recover the temperature recorder, if one was placed on the truck, and have the receivers put notations on the bill of lading of any damage or shortage. All of this will be helpful, if not necessary, to establish that the produce arrived in poor condition and to prove that transit conditions were the source of the damage to the produce.
As illustrated, the terms on the bill of lading or a shipper-carrier contract play a critical part in resolving disputes between the shipper and carrier. Thus, the shipper should ensure that all terms of shipment are in writing, either on the bill of lading or in the contract, that the terms properly represent the desired conditions during transport, and that the load is properly accounted for. This will increase the shipper's likelihood of prevailing if a transportation dispute arises.
Should you have any questions concerning the contents of this article, do not hesitate to contact one of our attorneys. Meanwhile, in the coming weeks, we will continue our discussion on this topic by focusing on the amount of damages and also explore claims shippers may have against a transportation or freight broker.
