KELOWNA, B.C. – Carriers take huge risks transporting valuable goods from a shipper to a receiver, and according to Michael Silva, a lawyer with Whitelaw Twining Law, bills of lading may not be enough.
If a common carrier, whose liability amounts to the liability of an insurer, picks up an undamaged load and delivers a damaged product, the carrier, barring an act of God, riot, defect or inherent vice in the goods, or acts of default by the shipper, will be liable for that damage.
Uniform conditions should be present in a bill of lading and must be intended to define the contract of carriage between a carrier and shipper. Within these conditions is a provision that limits a carrier’s liability to $2 per pound based on the weight of the cargo, but a shipper can place a higher value on the goods and are often charged a premium by the carrier due to the increased risk during transport.
The $2 per pound rule, however, does not apply to business losses.
Because each province has been delegated by the federal government to regulate their own motor carrier legislation, there are some differences from province to province, making it important when determining which province’s laws will apply to a shipment.
A properly drafted and signed bill of lading is vital to carriers looking to limit their liability, but because this is determined differently depending on the province of origin, it is important to first nail down which provincial law will govern the contract.
Seven of ten provinces have rules that state that contracts made in their respective province is a matter of law, while B.C., Saskatchewan, and Prince Edward Island require a bill of lading be issued and the uniform conditions be contained in the bill.
Alberta and Ontario have no requirement to properly issue bills of lading, while in B.C. and Saskatchewan the opposite is true.
But Silva said it is important to ensure you have a primary contract that stands above all other contract, including bill of lading. In circumstances where there are multiple bills of lading for a single shipment, problems can arise if there is no primary contract to fall back on. The contract should include details pertaining to all aspects of the shipment.
There are also times when trucking companies cannot get every provision it desires in a bill of lading, Silva pointed out, citing an example that if a large company like Coca Cola had certain requirements one carrier had an issue with, it would simply hire another company that would not.
With multi-modal transport operations, there is the through bill of lading, which leaves open the issue of who performs the carriage. The contract permits the original carrier to perform the carriage or subcontract it out to a third party.
The Himalaya clause is a key feature of through bills of lading by extending the bill’s exemption and limitation of liability clauses to third parties before loading and after discharge, but the clause’s effectiveness depends on the language used and the court’s interpretation of that language.
Silva, speaking during the B.C. Trucking Association AGM and Management Conference June 3, underscored that the Canadian trucking industry generates $67 billion in revenue each year, with road-based trade from Canada to the U.S. totaling $327 billion per year.
“This is a massive industry,” he said, “and there is a huge amount of cross-border work.”
Despite the Carmack Amendment, which was enacted by the U.S. congress in 1935 in an effort to achieve uniformity in rights, duties and liabilities governing interstate shipments, Canadian carriers could face large losses for damaged shipments south of the border if they don’t properly establish the value of the shipment.
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