The Carmack Amendment still governs the movement of most truck freight in the USA. In this legislation, a motor carrier has the burden of proof to show that they weren’t negligent in damaging goods while they are responsible for them. Under this strict liability regime, the carrier is guilty unless they can prove their innocence.
However, the motor carrier is granted relief from this standard in five instances, which are commonly referred to as “carrier defenses”.
They are:
1) Act of the Shipper
2) Act of God
3) Act of a Public Enemy
4) Act of Public Authority
5) Inherent vice or nature of the goods
Of these 5, only 2 are very commonly used and those are the first two. We’ll discuss Act of the Shipper tomorrow.
For now, let’s think about Acts of God.
Now, this one is pretty interesting because it involves politics, the general public, law, (usually courts) and of course the shipper, carrier and consignee.
The way it works is the a motor carrier generally isn’t liable for Acts of God under Carmack (49 USC 14706) unless they are negligent in preventing the loss.
Losses stemming from Tornado, Fire and Earth Movement/Earthquake are generally granted free passes because these are typically not foreseen very easily.
Windstorm (especially coastal windstorm) and flood damage are much trickier because you can generally tell when these events are going to take place and you can use that advance notice to mitigate potential damage or loss.
I’ve seen carriers be held liable for flood damage losses simply by operating a terminal in a known high hazard flood zone. In one specific instance, a carrier had two loaded trailers on their terminal location when floodwaters rose and damaged the contents of the trailers.
The carrier was found liable because they missed the negligence boat in two ways. First, they could have moved the trailers away from the premises to nearby higher ground or to a different terminal location in their network. Secondly, the location that the terminal occupied was in a high hazard flood zone and there was a history of occasional flooding at the premises.
In a coastal wind event, you have advance notice of a storm coming. You could potentially move the trailers/goods out of harm’s way or you could arrange for the storage of the goods in a location that is less likely to be damaged (inside of a well constructed warehouse, for instance). Another option would be to simply avoid bringing the goods into your network prior to the storm to reduce the exposure to loss altogether.
So, the moral of the story is don’t rely on the law to protect the motor carrier from being liable in the case of an Act of God.
Also, don’t try to be funny and attempt to waive the Carmack Amendment and language regarding it in your shipping contracts.
Remember, statute typically trumps private contracts and the law has been upheld many many times over almost 80 years. Trying to monkey with the freight loss and damage section of your contract really only serves to complicate claims settlement and line the pockets of the attorneys that everyone will have to hire just to solve a problem that probably didn’t exist in the first place…
